1. *SAMAHAN NG MANGGAGAWA SA HANJIN employers may form a workers' association.
It further
SHIPYARD REP. BY ITS PRESIDENT, ALFIE
ALIPIO
VS.
BUREAU OF LABOR RELATIONS, HANJIN
HEAVY INDUSTRIES AND CONSTRUCTION
CO., LTD. (HHIC-PIDL.)
G.R. No. 211145
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
Decision 4 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 application for
registration 5 of its name "Samahan ng Mga
Manggagawa sa Hanjin Shipyard" with the 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. The application stated that the
association had a total of 120 members.
On February 26, 2010, the DOLE Regional Office No. 3,
City of San Fernando, Pampanga (DOLE-Pampanga),
issued the corresponding certificate of registration6 in
favor of Samahan.
On March 15, 2010, respondent Hanjin Heavy Industries
and Construction Co., Ltd. Philippines (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 Samahan' s association on
the ground that its members did not fall under any of the
types of workers enumerated in the second sentence of
Article 243 (now 249).
Hanjin opined that only ambulant, intermittent, itinerant,
rural workers, self-employed, and those without definite
posited that one third (1/3) of the members of the
association had definite employers and the continued
existence and registration of the association would
prejudice the company's goodwill.
On March 18, 2010, Hanjin filed a supplemental petition,8
adding the alternative ground that Samahan committed a
misrepresentation in connection with the list of members
and/or voters who took part in the ratification of their
constitution and by-laws in its application for registration.
Hanjin claimed that Samahan made it appear that its
members were all qualified to become members of the
workers' association.
On March 26, 2010, DOLE-Pampanga called for a
conference, wherein Samahan requested for a 10-day
period to file a responsive pleading. No pleading,
however, was submitted. Instead, Samahan filed a motion
to dismiss on April 14, 2010.9
The Ruling of the DOLE Regional Director
On April 20, 2010, DOLE Regional Director Ernesto Bihis
ruled in favor of Hanjin. He found that the 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:
KAMI, ang mga Manggagawa sa HANJIN Shipyard
(SAMAHAN) ay naglalayong na isulong ang 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 mga angking lakas, kaalaman at
kasanayan ay aming maitataguyod at makapag-aambag
sa kaunlaran ng isang lipunan. Na mararating at
makakamit ang antas ng pagkilala, pagdakila at
pagpapahalaga sa mga tulad naming mga manggagawa.
XXX10
The same claim was made by Samahan in its motion to
dismiss, but it failed to adduce evidence that the
remaining 63 members were also employees of Hanjin.
Its admission bolstered Hanjin's claim that Samahan
committed misrepresentation in its application for
registration as it made an express representation that all
of its members were employees of the former. Having a
definite employer, 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:
WHEREFORE, premises considered, the petition is
hereby GRANTED. Consequently, the Certificate of
Registration as Legitimate Workers Association (LWA)
issued to the SAMAHAN NG MGA MANGGAGAWA SA
HANJIN SHIPYARD (SAMAHAN) with Registration
Numbers R0300-1002-WA-009 dated February 26, 2010
is hereby CANCELLED, and said association is dropped
from the roster of labor organizations of this Office.
SO DECIDED.12
The Ruling of the Bureau of Labor Relations
Aggrieved, Samahan filed an appeal13 before the BLR,
arguing that Hanjin had no right to petition for 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 that when a shipyard was put up
in Subic, Zambales, it became known as Hanjin Shipyard.
Further, 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 had no leg to
stand on.14
In its Comment to the Appeal,15 Hanjin averred that it was
a party-ininterest. It reiterated that Samahan committed
misrepresentation in its application for registration before
DOLE Pampanga. 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.
On September 6, 2010, the BLR granted Samahan's
appeal and reversed the ruling of the Regional Director. It
stated that the law clearly afforded the right to self-
organization to all workers including 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 subject to the limitation that it was only for
mutual aid and protection.17 Nowhere could it be found
that to form a workers' association was prohibited or that
the exercise of a workers' right to self-organization was
limited to collective bargaining.18
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 Shipyard." The use of the preposition "at" instead
of "of' would indicate that "Hanjin Shipyard" was intended
to describe a place.19 Should Hanjin feel that the use of its
name had affected the goodwill of 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 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 dated
20 April 2010 is REVERSED and SET ASIDE.
Accordingly, Samahan ng mga Manggagawa sa Hanjin
Shipyard shall remain in the roster of legitimate workers'
association.21
On October 14, 2010, Hanjin filed its motion for
reconsideration.22
In its Resolution,23 dated November 28, 2011, the BLR
affirmed its September 6, 2010 Decision, but 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 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
was to direct Samahan to drop the name "Hanjin
Shipyard" without delisting it from the roster of legitimate
labor organizations. The fallo reads:
WHEREFORE, premises considered, our Decision dated
6 September 2010 is hereby AFFIRMED with a
DIRECTIVE for SAMAHAN to remove "HANJIN
SHIPYARD" from its name.
SO RESOLVED.24
Unsatisfied, Samahan filed a petition for certiorari25 under
Rule 65 before the CA, docketed as CA-G.R. SP No.
123397.
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 dismissalof 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 rightto 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. Ro300-1003-CP-
001, which ordered the cancellation of petitioner
association's registration is REINSTATED.
ISSUES
I. THE COURT OF APPEALS SEfilOUSLY ERRED IN
FINDING THAT SAMAHAN CANNOT FORM A
WORKERS' ASSOCIATION OF EMPLOYEES IN
HANJIN AND INSTEAD SHOULD HA VE 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
COMP ANY 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 fer 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 o[
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
selforganization. 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, selfemployed 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. 0.) 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 HANJIN 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. R0300-oo-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.1âwphi1 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.59Having 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
selforganization 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.
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.
2. *Dr. Carlos Sevilla and Lina O. Sevilla
v. The Court of Appeals
G.R. N o. L-41182-3 April 16, 1988
Facts
On Oct. 19, 1960, Mrs. Noguera leased her property to
Tourist World Service (TWS) represented by Eliseo
Canilao in Mabini
St., Manila with Lina Sevilla holding herself solidarily liable
for the payment of the monthly rentals agreed on. A
branch was opened in said property by TWS, the same
was run by the herein appellant payable to Tourist World
Service Inc. by any airline for any fare brought in on the
efforts of Mrs. Lina Sevilla, 4% was to go to Lina Sevilla
and 3% was to be withheld by TWS.
However, on November 24, 1961, the board of TWS
decided to abolish said branch on the ground that it was
losing and the alleged connection of Sevilla with a rival
firm, Philippine Travel Bureau. The board also authorized
the corporate secretary (Gabino Canilao) to receive the
properties of the Tourist World Service then located at the
said branch office. Later on, the corporate secretary went
to the branch and upon the finding that it was locked and
being unable to contact Sevilla, he padlocked the
premises of the branch. When neither the appellant Lina
Sevilla nor any of her employees could enter the locked
premises, a complaint was filed by the herein appellants
against the appellees with a prayer for the issuance of
mandatory preliminary injunction (with claim for damages
invoking the provisions of the NCC on human relations).
Both appellees answered with counterclaims. For
apparent lack of interest of the parties therein, the trial
court ordered the dismissal of the case without prejudice.
However, on June 17,1963 both parties refiled their
respective claims he court a quo ordered both cases to be
dismissed for lack of merit. On appeal, petitioners claim
that there was no employer - employee relationship
between her and TWS and what exists was that of one of
a joint business venture and that TWS had no right to
unilaterally evict Sevilla from the Mabini Office.
Issues
WON Sevilla is an employee of Tourist World Services
rendering the lower court without jurisdiction for such case
is within the ambit of the jurisdiction of the Bureau of Labor
Relations.
Decision
Sevilla is not an employee of TWS. The court relied on the
Right of Control Test "where the person for whom the
services are
performed reserves a right to control not only the end to
be achieved but also the means to be used in reaching
such end.” In addition to the standard of right-of control,
the existing economic conditions prevailing between the
parties, like the inclusion of the employee in the payrolls,
in determining the existence of an employer-employee
relationship. The records will show that the petitioner, Lina
Sevilla, was not subject to control by the private
respondent Tourist World Service, Inc., either as to the
result of the enterprise or as to the means used in
connection therewith for the following reasons:
(1) She bound herself in solidumas (solidary) and for
rental payments of the Mabini property although the lower
court reduced such in to a mere guaranty this does not
make her an employee of TWS. A true employee cannot
be made to part with his own money in pursuance of his
employer's business, or otherwise, assume any liability
thereof.
(2) As found by the Appellate Court, '[w]hen the branch
office was opened, the same was run by the herein
appellant Lina O. Sevilla payable to Tourist World
Service, Inc. by any airline for any fare brought in on the
effort of Mrs. Lina Sevilla. Under these circumstances, it
cannot be said that Sevilla was under the control of
Tourist World Service, Inc. "as to the means used." Sevilla
in pursuing the business, obviously relied on her own gifts
and capabilities.
(3) Sevilla was not in the company's payroll. For her
efforts, she retained 4% in commissions from airline
bookings, the remaining 3% going to Tourist World.
(4) Contrary to the claims of both parties, what exist
between them seems to be that of a contract of agency
since Sevilla had conceded certain rights in favor of TWS
(TWS claims it was an employer-employee relationship
while Sevilla claims that it was of a joint venture or
partnership). A joint venture presupposes an equal
standing between the joint partners, in which each party
has an equal proprietary interest in the capital or property
contributed and where each party exercises equal rights
in the conduct of the business. Furthermore, both parties
never held themselves as partners for the branch was
embellished with the sign of TWS instead of a distinct
partner name. In a contract of agency, the essence of the
contract that the agent renders services "in representation
or on behalf of another” In the case at bar, Sevilla solicited
airline fares, but she did so for and on behalf of her
principal, Tourist World Service, Inc. But unlike simple
grants of a power of attorney, the agency that we hereby
declare to be compatible with the intent of the parties,
cannot be revoked at will. The reason is that it is one
coupled with an interest, the agency having been created
for mutual interest, of the agent and the principal
*remember that she had a solidary obligation for the
payment of rentals.
In this same vein the lower court must likewise be held to
be in error with respect to the padlocking incident. For the
fact that
Tourist World Service, Inc. was the lessee named in the
lease contract did not accord it any authority to terminate
that contract without notice to its actual occupant, and to
padlock the premises in such fashion. As this Court has
ruled, the petitioner, Lina Sevilla, had acquired a personal
stake in the business itself, and necessarily, in the
equipment pertaining thereto. Furthermore, Sevilla was
not a stranger to that contract having been explicitly
named therein as a third party in charge of rental
payments (solidarily with Tourist World, Inc.). She could
not be ousted from possession as summarily as one
would eject an interloper.
Petition Granted, Respondents, with the exception of
Noguera, were ordered to pay jointly and severally sum of
25,00.00 as and for moral damages, the sum of
P10,000.00, as and for exemplary damages, and the sum
of P5,000.00, as and for nominal and/ or temperate
damages.
 3. *GREGORIO V. TONGKO, vs. THE
MANUFACTURERS LIFE INSURANCE CO.
(PHILS.), INC. and RENATO A. VERGEL DE
DIOS
Facts:
The contractual relationship between Gregorio Tongko
and The Manufacturers Life Insurance Co. (Manulife) had
two basic phases. The first or initial phase began on July
1, 1977, under a Career Agent's Agreement (Agreement)
which provided that the Agent is an independent
contractor.
The second phase started in 1983 when Tongko was
named Unit Manager in Manulife's Sales Agency
Organization. In 1990, he became a Branch Manager. In
1996, Tongko became a Regional Sales Manager.
Tongko's gross earnings consisted of commissions,
persistency income, and management overrides. Since
the beginning, Tongko consistently declared himself
self-employed in his income tax returns. Manulife
withheld the corresponding 10% tax on Tongko's
earnings.
In a letter dated November 6, 2001, Renato Vergel de
Dios, in behalf of Manulife, wrote to Tongko on concerns
that were brought up during the October 18, 2001 Metro
North Sales Managers Meeting, pointing to his region's
lackluster sales performance and his overall poor attitude.
Subsequently, de Dios wrote Tongko another letter, dated
December 18, 2001, notifying Tongko of the “termination
of your Agency Agreement” pursuant to the prerogative of
Manulife under Section 14 of the Agents Contract.
Tongko responded by filing an illegal dismissal complaint.
The labor arbiter decreed that no employer-employee
relationship existed between the parties. However, the
NLRC reversed the labor arbiter's decision. The Court of
Appeals (CA) everted to the labor arbiter's decision.
The case eventually reached the Supreme Court where,
in its Decision of November 7, 2008, the Court found that
an employer-employee relationship existed between
Manulife and Gregorio Tongko and ordered Manulife to
pay Tongko backwages and separation pay for illegal
dismissal. The Court ruled that Manulife had the power of
control over Tongko, sufficient to characterize him as an
employee.
Hence, the present Motion for Reconsideration.
Held:
Agency vis-a-vis Employment relationship
1. The factual antecedents were set in the insurance
industry so that the Insurance Code primarily governs.
Moreover, “agency” is a civil law matter governed by the
Civil Code. At the very least, three sets of laws - namely,
the Insurance Code, the Labor Code and the Civil
Code - have to be considered in looking at the present
case.
2. The main issue of whether an agency or an
employment relationship exists depends on the incidents
of the relationship. The Labor Code concept of
"control" has to be compared and distinguished with
the "control" that must necessarily exist in a
principal-agent relationship. The principal cannot but
also have his or her say in directing the course of the
principal-agent relationship, especially in cases where the
company-representative relationship in the insurance
industry is an agency.
3. The Civil Code defines an agent as a "person [who]
binds himself to render some service or to do something
in representation or on behalf of another, with the consent
or authority of the latter." While this is a very broad
definition that on its face may even encompass an
employment relationship, the distinctions between agency
and employment are sufficiently established by law and
jurisprudence. Generally, the determinative element is
the control exercised over the one rendering service.
The employer controls the employee both in the results
and in the means and manner of achieving this result. The
principal in an agency relationship, on the other hand, also
has the prerogative to exercise control over the agent in
undertaking the assigned task based on the parameters
outlined in the pertinent laws.
Insurance agency (element of control)

4. Under the Insurance Code, the agent must, as a matter
of qualification, be licensed and must also act within the
parameters of the authority granted under the license and
under the contract with the principal. Other than the need
for a license, the agent is limited in the way he offers and
negotiates for the sale of the company's insurance
products, in his collection activities, and in the delivery of
the insurance contract or policy. Rules regarding the
desired results (e.g., the required volume to continue to
qualify as a company agent, rules to check on the
parameters on the authority given to the agent, and rules
to ensure that industry, legal and ethical rules are
followed) are built-in elements of control specific to an
insurance agency and should not and cannot be read as
elements of control that attend an employment
relationship governed by the Labor Code.
5. Under the general law on agency as applied to
insurance, an agency must be express in light of the need
for a license and for the designation by the insurance
company. In the present case, the Agreement fully serves
as grant of authority to Tongko as Manulife's insurance
agent. This agreement is supplemented by the company's
agency practices and usages, duly accepted by the agent
in carrying out the agency. By authority of the Insurance
Code, an insurance agency is for compensation, a matter
the Civil Code Rules on Agency presumes in the absence
of proof to the contrary. Other than the compensation, the
principal is bound to advance to, or to reimburse, the
agent the agreed sums necessary for the execution of the
agency.
6. With particular relevance to the present case is the
provision that "In the execution of the agency, the agent
shall act in accordance with the instructions of the
principal." This provision is pertinent for purposes of the
necessary control that the principal exercises over the
agent in undertaking the assigned task, and is an area
where the instructions can intrude into the labor law
concept of control so that minute consideration of the facts
is necessary. A related article is Article 1891 of the Civil
Code which binds the agent to render an account of his
transactions to the principal.
The Cited Cases are not squarely applicable
7. The November 7, 2008 Decision refers to the first
Insular and Grepalife cases to establish that the company
rules and regulations that an agent has to comply with are
indicative of an employer-employee relationship. The
Dissenting Opinions of Justice Velasco, Jr. and Justice
Carpio Morales also cite Insular Life Assurance Co. vs.
NLRC (second Insular case) to support the view that
Tongko is Manulife's employee. On the other hand,
Manulife cites the Carungcong case and AFP Mutual
Benefit Association, Inc. v. National Labor Relations
Commission (AFPMBAI case) to support its allegation
that Tongko was not its employee.
8. The present case at first glance appears aligned with
the facts in the Carungcong, the Grepalife, and the
second Insular Life cases. A critical difference, however,
exists as these cited cases dealt with the proper legal
characterization of a subsequent management contract
that superseded the original agency contract between
the insurance company and its agent. In all these cited
cases, a determination of the presence of the Labor Code
element of control was made on the basis of the
stipulations of the subsequent contracts.
9. In contrast, the only contract submitted as evidence in
the present case is the Career Agent's Agreement - a pure
agency agreement in the Civil Code context similar to the
original contract in the first Insular Life case and the
contract in the AFPMBAI case. And while Tongko was
later on designated unit manager in 1983, Branch
Manager in 1990, and Regional Sales Manager in 1996,
no formal contract regarding these undertakings
appears in the records of the case. Any such contract
or agreement, had there been any, could have at the very
least provided the bases for properly ascertaining the
juridical relationship established between the parties.
Intent of the governing Agreement between the
parties was to create an Agency relationship
10. The July 1, 1977 Career Agent's Agreement (the
Agreement) governed and defined the parties' relations
until the its termination in 2001. It assumes primacy
because it directly dealt with the nature of the parties'
relationship up to the very end; moreover, both parties
never disputed its authenticity or the accuracy of its terms.
11. By the Agreement's express terms, Tongko served as
an "insurance agent" for Manulife, not as an employee. To
be sure, the Agreement's legal characterization of the
nature of the relationship cannot be conclusive and
binding on the courts. The characterization of the juridical
relationship the Agreement embodied is a matter of law
that is for the courts to determine.
12. At the same time, though, the parties' legal
characterization of their intent, although not conclusive, is
critical in this case because this intent is not illegal or
outside the contemplation of law, particularly of the
Insurance and the Civil Codes. We can take judicial notice
that as a matter of Insurance Code-based business
practice, an agency relationship prevails in the insurance
industry for the purpose of selling insurance. The
Agreement, by its express terms, is in accordance with
the Insurance Code model when it provided for a
principal-agent relationship, and thus cannot lightly be set
aside nor simply be considered as an agreement that
does not reflect the parties' true intent. This intent,
incidentally, is reinforced by the system of compensation
the Agreement provides, which likewise is in accordance
with the production-based sales commissions the
Insurance Code provides.
Tongko remained an independent agent of Manulife
despite his increased managerial role
13. Evidence shows that Tongko's role as an insurance
agent never changed during his relationship with
Manulife. If changes occurred at all, it was that Tongko
moved up in this role through Manulife's recognition that
he could use other agents approved by Manulife, but
operating under his guidance and in whose
commissions he had a share. For want of a better term,
Tongko perhaps could be labeled as a "lead agent" who
guided under his wing other Manulife agents similarly
tasked with the selling of Manulife insurance.
14. That Tongko assumed a leadership role but
nevertheless wholly remained an agent is the inevitable
conclusion that results from the reading of the Agreement
and his continuing role thereunder as sales agent. To the
dissent, Tongko's administrative functions as recruiter,
trainer, or supervisor of other sales agents constituted a
substantive alteration of Manulife's authority over Tongko
and the performance of his end of the relationship with
Manulife. We could not deny though that Tongko
remained, first and foremost, an insurance agent, and that
his additional role as Branch Manager did not lessen his
main and dominant role as insurance agent; this role
continued to dominate the relations between Tongko and
Manulife even after Tongko assumed his leadership role
among agents. This conclusion cannot be denied
because it proceeds from the undisputed fact that Tongko
and Manulife never altered their July 1, 1977
Agreement, a distinction the present case has with the
contractual changes made in the second Insular Life
case. Tongko's results-based commissions, too, attest to
the primacy he gave to his role as insurance sales agent.
Tongko's consistent declaration of being self-
employed in his income tax returns is an admission
against his interest
15. Evidence indicates that Tongko consistently clung to
the view that he was an independent agent selling
Manulife insurance products since he invariably declared
himself a business or self-employed person in his income
tax returns. This consistency with, and action made
pursuant to the Agreement were pieces of evidence that
were never mentioned nor considered in our Decision of
November 7, 2008. Had they been considered, they
could, at the very least, serve as Tongko's admissions
against his interest. Strictly speaking, Tongko's tax
returns cannot but be legally significant because he
certified under oath the amount he earned as gross
business income, claimed business deductions, leading
to his net taxable income. This should be evidence of the
first order that cannot be brushed aside by a mere denial.
16. Hand in hand with the concept of admission against
interest in considering the tax returns, the concept of
estoppel - a legal and equitable concept- necessarily
must come into play. Tongko's previous admissions in
several years of tax returns as an independent agent, as
against his belated claim that he was all along an
employee, are too diametrically opposed to be simply
dismissed or ignored.
Lack of evidence showing that Manulife exercised
means-and-manner control
17. There is lack of evidence on record showing that
Manulife ever exercised means-and-manner control, even
to a limited extent, over Tongko during his ascent in
Manulife's sales ladder. The best evidence of control - the
agreement or directive relating to Tongko's duties and
responsibilities - was never introduced as part of the
records of the case. The alleged directives covered by de
Dios' letter were policy directions and targeted results that
the company wanted Tongko and the other sales groups
to realign with in their own selling activities.
18. What, to Tongko, serve as evidence of labor law
control are the codes of conduct that Manulife imposes on
its agents in the sale of insurance. The mere presentation
of codes or of rules and regulations, however, is not per
se indicative of labor law control as the law and
jurisprudence teach us.
19. The Insurance Code imposes obligations on both the
insurance company and its agents in the performance of
their respective obligations under the Code, particularly
on licenses and their renewals, on the representations to
be made to potential customers, the collection of
premiums, on the delivery of insurance policies, on the
matter of compensation, and on measures to ensure
ethical business practice in the industry. The general law
on agency expressly allows the principal an element of
control over the agent in a manner consistent with an
agency relationship. In this sense, these control
measures cannot be read as indicative of labor law
control. Foremost among these are the directives that the
principal may impose on the agent to achieve the
assigned tasks, to the extent that they do not involve the
means and manner of undertaking these tasks. The law
likewise obligates the agent to render an account; in this
sense, the principal may impose on the agent specific
instructions on how an account shall be made, particularly
on the matter of expenses and reimbursements. To these
extents, control can be imposed through rules and
regulations without intruding into the labor law
concept of control for purposes of employment.
20. An important lesson that the first Insular Life case
teaches us is that a commitment to abide by the rules
and regulations of an insurance company does not
ipso facto make the insurance agent an employee.
Neither do guidelines somehow restrictive of the
insurance agent's conduct necessarily indicate "control"
as this term is defined in jurisprudence. Guidelines
indicative of labor law "control," as the first Insular Life
case tells us, should not merely relate to the mutually
desirable result intended by the contractual relationship;
they must have the nature of dictating the means or
methods to be employed in attaining the result, or of fixing
the methodology and of binding or restricting the party
hired to the use of these means. In fact, results-wise, the
principal can impose production quotas and can
determine how many agents, with specific territories,
ought to be employed to achieve the company's
objectives. These are management policy decisions that
the labor law element of control cannot reach.
21. Manulife's codes of conduct, all of which do not
intrude into the insurance agents' means and manner of
conducting their sales and only control them as to the
desired results and Insurance Code norms, cannot be
used as basis for a finding that the labor law concept of
control existed between Manulife and Tongko.
22. Even de Dios' letter is not determinative of control as
it indicates the least amount of intrusion into Tongko's
exercise of his role as manager in guiding the sales
agents. Strictly viewed, de Dios' directives are merely
operational guidelines on how Tongko could align his
operations with Manulife's re-directed goal of being a "big
league player." The method is to expand coverage
through the use of more agents. This requirement for the
recruitment of more agents is not a means-and-method
control as it relates,to Manulife's objective of expanded
business operations through the use of a bigger sales
force whose members are all on a principal-agent
relationship. An important point to note here is that
Tongko was not supervising regular full-time
employees of Manulife engaged in the running of the
insurance business; Tongko was effectively guiding
his corps of sales agents, who are bound to Manulife
through the same Agreement that he had with Manulife,
all the while sharing in these agents' commissions through
his overrides. The title of Branch Manager used by the
parties is really a misnomer given that what is involved is
not a specific regular branch of the company but a corps
of non-employed agents. Still another point to consider is
that Tongko was not even setting policies in the way a
regular company manager does; company aims and
objectives were simply relayed to him with suggestions on
how these objectives can be reached through the
expansion of a non-employee sales force.
Distinguished from other cases
23. In Grepalife, the details of how to do the job are
specified and pre-determined; in the present case, the
operative words are the "sales target," the methodology
being left undefined except to the extent of being
"coordinative." To be sure, a "coordinative" standard for a
manager cannot be indicative of control; the standard only
essentially describes what a Branch Manager is - the
person in the lead who orchestrates activities within the
group. To "coordinate," and thereby to lead and to
orchestrate, is not so much a matter of control by
Manulife; it is simply a statement of a branch manager's
role in relation with his agents from the point of view of
Manulife whose business Tongko's sales group carries.
24. The present case must be distinguished from the
second Insular Life case that showed the hallmarks of an
employer-employee relationship in the management
system established. These were: exclusivity of service,
control of assignments and removal of agents under the
private respondent's unit, and furnishing of company
facilities and materials as well as capital described as Unit
Development Fund. All these are obviously absent in the
present case. If there is a commonality in these cases, it
is in the collection of premiums which is a basic authority
that can be delegated to agents under the Insurance
Code.
Article 4 of the Labor Code only applies when there is
clearly an employment relationship
25. The dissent pointed out that any doubt in the
existence of an employer-employee relationship should
be resolved in favor of the existence of the relationship.
This observation, apparently drawn from Article 4 of the
Labor Code, is misplaced, as Article 4 applies only when
a doubt exists in the "implementation and application" of
the Labor Code and its implementing rules; it does not
apply where no doubt exists as in a situation where the
claimant clearly failed to substantiate his claim of
employment relationship by the quantum of evidence the
Labor Code requires.
4. MANILA GOLF & COUNTRY CLUB, INC. vs.
INTERMEDIATE APPELLATE COURT and
FERMIN LLAMAR
G.R. No. 64948 September 27, 1994
Facts:
Respondent Fermin Llamar and his fellow caddies filed
with the Social Security Commission for coverage and
availment of benefits under the Social Security Act.
Subsequently, all but 2 of the original 17 petitioners
withdrew their claim for social security coverage. The
case continued and was adjudicated by the SSC only as
regards the 2 holdouts dismissing their petition and
stating that the caddies were never employees of
petitioner. An appeal was taken to the IAC but the other
caddy’s appeal was dismissed at his instance, leaving
respondent Llamar the lone appellant. The IAC found for
Llamar finding employer-employee relationship between
him and petitioner.
Issue:
Whether or not respondent Llamar is an employee of
petitioner.
Ruling:
NO.
The various matters of conduct, dress, language, etc.
covered by the petitioner’s regulations, does not, in the
mind of the Court, so circumscribe the actions or judgment
of the caddies concerned as to leave them little or no
freedom of choice whatsoever in the manner of carrying
out their services.
The Court agrees with petitioner that the group rotation
system so-called, is less a measure of employer control
than an assurance that the work is fairly distributed, a
caddy who is absent when his turn number is called
simply losing his turn to serve and being assigned instead
the last number for the day.
In the final analysis, petitioner has no way of compelling
the presence of the caddies as they are not required to
render a definite number of hours of work on a single day.
Even the group rotation of caddies is not absolute
because a player is at liberty to choose a caddy of his
preference regardless of the caddy’s order in the rotation.
It can happen that a caddy who has rendered services to
a player on one day may still find sufficient time to work
elsewhere. Under such circumstances, he may then leave
the premises of petitioner and go to such other place of
work that he wishes. Or a caddy who is on call for a
particular day may deliberately absent himself if he has
more profitable caddying, or another, engagement in
some other place. These are things beyond petitioner’s
control and for which it imposes no direct sanctions on the
caddies.
Court drew basis for the reversal from this Court's ruling
in Investment Planning Corporation of the Philippines
vs. Social Security System, supra and declared that upon
the evidence, the questioned employer-employee
relationship between the Club and Fermin Llamar passed
the so-called "control test," establishment in the case
— i.e., "whether the employer controls or has reserved
the right to control the employee not only as to the result
of the work to be done but also as to the means and
methods by which the same is to be accomplished," —
the Club's control over the caddies encompassing:
(a) the promulgation of no less than twenty-four (24) rules
and regulations just about every aspect of the conduct
that the caddy must observe, or avoid, when serving as
such, any violation of any which could subject him to
disciplinary action, which may include suspending or
cutting off his access to the club premises;
(b) the devising and enforcement of a group rotation
system whereby a caddy is assigned a number which
designates his turn to serve a player;
(c) the club's "suggesting" the rate of fees payable to the
caddies.
Deemed of title or no moment by the Appellate Court was
the fact that the caddies were paid by the players, not by
the Club, that they observed no definite working hours and
earned no fixed income. It quoted with approval from an
American decision 10 to the effect that: "whether the club
paid the caddies and afterward collected in the first
instance, the caddies were still employees of the club."
This, no matter that the case which produced this ruling
had a slightly different factual cast, apparently having
involved a claim for workmen's compensation made by a
caddy who, about to leave the premises of the club where
he worked, was hit and injured by an automobile then
negotiating the club's private driveway.
That same issue of res adjudicata, ignored by the IAC
beyond bare mention thereof, as already pointed out, is
now among the mainways of the private respondent's
defenses to the petition for review. Considered in the
perspective of the incidents just recounted, it illustrates as
well as anything can, why the practice of forum-shopping
justly merits censure and punitive sanction. Because the
same question of employer-employee relationship has
been dragged into three different fora, willy-nilly and in
quick succession, it has birthed controversy as to which
of the resulting adjudications must now be recognized as
decisive. On the one hand, there is the certification case
[R4-LRDX-M-10-504-78), where the decision of the Med-
Arbiter found for the existence of employer-employee
relationship between the parties, was affirmed by Director
Carmelo S. Noriel, who ordered a certification election
held, a disposition never thereafter appealed according to
the private respondent; on the other, the compulsory
arbitration case (NCR Case No. AB-4-1771-79), instituted
by or for the same respondent at about the same time,
which was dismissed for lack of merit by the Labor Arbiter,
which was afterwards affirmed by the NLRC itself on the
ground that there existed no such relationship between
the Club and the private respondent. And, as if matters
were not already complicated enough, the same
respondent, with the support and assistance of the
PTCCEA, saw fit, also contemporaneously, to initiate still
a third proceeding for compulsory social security
coverage with the Social Security Commission (SSC
Case No. 5443), with the result already mentioned.
Before this Court, the petitioner Club now contends that
the decision of the Med-Arbiter in the certification case
had never become final, being in fact the subject of three
pending and unresolved motions for reconsideration, as
well as of a later motion for early
resolution. 11 Unfortunately, none of these motions is
incorporated or reproduced in the record before the Court.
And, for his part, the private respondent contends, not
only that said decision had been appealed to and been
affirmed by the Director of the BLR, but that a certification
election had in fact been held, which resulted in the
PTCCEA being recognized as the sole bargaining agent
of the caddies of the Manila Golf and Country Club with
respect to wages, hours of work, terms of employment,
etc. 12 Whatever the truth about these opposing
contentions, which the record before the Court does not
adequately disclose, the more controlling consideration
would seem to be that, however, final it may become, the
decision in a certification case, by the
very nature of that proceedings, is not such as to foreclose
all further dispute between the parties as to the existence,
or non-existence, of employer-employee relationship
between them.
It is well settled that for res adjudicata, or the principle of
bar by prior judgment, to apply, the following essential
requisites must concur: (1) there must be a final judgment
or order; (2) said judgment or order must be on the merits;
(3) the court rendering the same must have jurisdiction
over the subject matter and the parties; and (4) there must
be between the two cases identity of parties, identity of
subject matter and identity of cause of action. 13
Clearly implicit in these requisites is that the action or
proceedings in which is issued the "prior Judgment" that
would operate in bar of a subsequent action between the
same parties for the same cause, be adversarial, or
contentious, "one having opposing parties; (is) contested,
as distinguished from an ex parte hearing or proceeding.
. . . of which the party seeking relief has given legal notice
to the other party and afforded the latter an opportunity to
contest it" 14 and a certification case is not such a
proceeding, as this Court already ruled:
A certification proceedings is not a
"litigation" in the sense in which the term
is commonly understood, but mere
investigation of a non-adversary, fact-
finding character, in which the
investigating agency plays the part of a
disinterested investigator seeking merely
to ascertain the desires of the employees
as to the matter of their representation.
The court enjoys a wide discretion in
determining the procedure necessary to
insure the fair and free choice of
bargaining representatives by the
employees.15
Indeed, if any ruling or judgment can be said to operate
as res adjudicata on the contested issue of employer-
employee relationship between present petitioner and the
private respondent, it would logically be that rendered in
the compulsory arbitration case (NCR Case No. AB-4-
771-79, supra), petitioner having asserted, without
dispute from the private respondent, that said issue was
there squarely raised and litigated, resulting in a ruling of
the Arbitration Branch (of the same Ministry of Labor) that
such relationship did not exist, and which ruling was
thereafter affirmed by the National Labor Relations
Commission in an appeal taken by said respondent. 16
In any case, this Court is not inclined to allow private
respondent the benefit of any doubt as to which of the
conflicting ruling just adverted to should be accorded
primacy, given the fact that it was he who actively sought
them simultaneously, as it were, from separate fora, and
even if the graver sanctions more lately imposed by the
Court for forum-shopping may not be applied to him
retroactively.
Accordingly, the IAC is not to be faulted for ignoring
private respondent's invocation of res adjudicata; on
contrary, it acted correctly in doing so.
Said Court’s holding that upon the facts, there exists (or
existed) a relationship of employer and employee
between petitioner and private respondent is, however,
another matter. The Court does not agree that said facts
necessarily or logically point to such a relationship, and to
the exclusion of any form of arrangements, other than of
employment, that would make the respondent's services
available to the members and guest of the petitioner.
As long as it is, the list made in the appealed decision
detailing the various matters of conduct, dress, language,
etc. covered by the petitioner's regulations, does not, in
the mind of the Court, so circumscribe the actions or
judgment of the caddies concerned as to leave them little
or no freedom of choice whatsoever in the manner of
carrying out their services. In the very nature of things,
caddies must submit to some supervision of their conduct
while enjoying the privilege of pursuing their occupation
within the premises and grounds of whatever club they do
their work in. For all that is made to appear, they work for
the club to which they attach themselves on sufference
but, on the other hand, also without having to observe any
working hours, free to leave anytime they please, to stay
away for as long they like. It is not pretended that if found
remiss in the observance of said rules, any discipline may
be meted them beyond barring them from the premises
which, it may be supposed, the Club may do in any case
even absent any breach of the rules, and without violating
any right to work on their part. All these considerations
clash frontally with the concept of employment.
The IAC would point to the fact that the Club suggests the
rate of fees payable by the players to the caddies as still
another indication of the latter's status as employees. It
seems to the Court, however, that the intendment of such
fact is to the contrary, showing that the Club has not the
measure of control over the incidents of the caddies' work
and compensation that an employer would possess.
The Court agrees with petitioner that the group rotation
system so-called, is less a measure of employer control
than an assurance that the work is fairly distributed, a
caddy who is absent when his turn number is called
simply losing his turn to serve and being assigned instead
the last number for the day. 17
By and large, there appears nothing in the record to refute
the petitioner's claim that:
(Petitioner) has no means of compelling
the presence of a caddy. A caddy is not
required to exercise his occupation in the
premises of petitioner. He may work with
any other golf club or he may seek
employment a caddy or otherwise with
any entity or individual without restriction
by petitioner. . . .
. . . In the final analysis, petitioner has no
was of compelling the presence of the
caddies as they are not required to
render a definite number of hours of work
on a single day. Even the group rotation
of caddies is not absolute because a
player is at liberty to choose a caddy of
his preference regardless of the caddy's
order in the rotation.
It can happen that a caddy who has
rendered services to a player on one day
may still find sufficient time to work
elsewhere. Under such circumstances,
he may then leave the premises of
petitioner and go to such other place of
work that he wishes (sic). Or a caddy who
is on call for a particular day may
deliberately absent himself if he has
more profitable caddying, or another,
engagement in some other place. These
are things beyond petitioner's control and
for which it imposes no direct sanctions
on the caddies. . . . 18
G.R. No. 96189 July 14, 1992
5. *UNIVERSITY OF THE PHILIPPINES
HON. PURA FERRER-CALLEJA,
Director of the Bureau of Labor
Relations, Department of Labor and
Employment, and THE ALL U.P.
WORKERS' UNION, represented by
its President, Rosario del Rosario
In this special civil action of certiorari the University of the
Philippines seeks the nullification of the Order dated
October 30, 1990 of Director Pura Ferrer-Calleja of the
Bureau of Labor Relations holding that "professors, Sec. 9. The appropriate organizational
associate professors and assistant professors (of the unit shall be the employer unit consisting
University of the Philippines) are . . rank-and-file of rank-and-file employees, unless
employees . . ;" consequently, they should, together with circumstances otherwise require.
the so-called non-academic, non-teaching, and all other
employees of the University, be represented by only one and Section 1, Rule IV of the Rules Implementing
labor organization. 1 The University is joined in this said EO 180 (as amended by SEC. 2, Resolution
undertaking by the Solicitor General who "has taken a of Public Sector Labor Management Council
position not contrary to that of petitioner and, in fact, has dated May 14, 1989, viz.:
manifested . . that he is not opposing the petition . . ." 2
xxx xxx xxx
3
The case was initiated in the Bureau of Labor Relations
by a petition filed on March 2, 1990 by a registered labor For purposes of registration, an
union, the "Organization of Non-Academic Personnel of appropriate organizational unit may refer
UP" (ONAPUP). 4 Claiming to have a membership of to:
3,236 members — comprising more than 33% of the
9,617 persons constituting the non-academic personnel xxx xxx xxx
of UP-Diliman, Los Baños, Manila, and Visayas, it sought
the holding of a certification election among all said non- d. State universities or colleges,
academic employees of the University of the Philippines. government-owned or controlled
At a conference thereafter held on March 22, 1990 in the corporations with original charters.
Bureau, the University stated that it had no objection to
She went on to say that the general intent of EO
the election.
180 was "not to fragmentize the employer unit, as
On April 18, 1990, another registered labor union, the "All "can be gleaned from the definition of the term
UP Workers' Union," 5 filed a comment, as intervenor in "accredited employees' organization," which
the certification election proceeding. Alleging that its refers to:
membership covers both academic and non-academic
. . a registered organization of the rank-
personnel, and that it aims to unite all UP rank-and-file
and-file employees as defined in these
employees in one union, it declared its assent to the
rules recognized to negotiate for the
holding of the election provided the appropriate
employees in an organizational unit
organizational unit was first clearly defined. It observed in
headed by an officer with sufficient
this connection that the Research, Extension and
authority to bind the agency, such as . . .
Professional Staff (REPS), who are academic non-
. . . state colleges and universities.
teaching personnel, should not be deemed part of the
organizational unit.
The Director thus commanded that a certification election
be "conducted among rank-and-file employees, teaching
For its part, the University, through its General
and non-teaching" in all four autonomous campuses of
Counsel, 6 made of record its view that there should be
the UP, and that management appear and bring copies of
two (2) unions: one for academic, the other for non-
the corresponding payrolls for January, June, and July,
academic or administrative, personnel considering the
1990 at the "usual pre-election conference . . ."
dichotomy of interests, conditions and rules governing
these employee groups.
At the pre-election conference held on March 22, 1990 at
the Labor Organizational Division of the DOLE, 8 the
Director Calleja ruled on the matter on August 7,
University sought further clarification of the coverage of
1990. 7 She declared that "the appropriate organizational
the term, "rank-and-file" personnel, asserting that not
unit . . should embrace all the regular rank-and-file
every employee could properly be embraced within both
employees, teaching and non-teaching, of the University
teaching and non-teaching categories since there are
of the Philippines, including all its branches" and that
those whose positions are in truth managerial and policy-
there was no sufficient evidence "to justify the grouping of
determining, and hence, excluded by law.
the non-academic or administrative personnel into an
organization unit apart and distinct from that of the
At a subsequent hearing (on October 4, 1990), the
academic or teaching personnel." Director Calleja
University filed a Manifestation seeking the exclusion from
adverted to Section 9 of Executive Order No. 180, viz.:
the organizational unit of those employees holding
supervisory positions among non-academic personnel,
and those in teaching staff with the rank of Assistant
Professor or higher, submitting the following as grounds
therefor:
1) Certain "high-level employees" with policy-making,
managerial, or confidential functions, are ineligible to join
rank-and-file employee organizations under Section 3,
EO 180:
Sec. 3. High-level employees whose
functions are normally considered as
policy-making or managerial or whose
duties are of a highly confidential nature
shall not be eligible to join the
organization of rank-and file government
employees;
2) In the University hierarchy, not all teaching and non-
teaching personnel belong the rank-and file: just as there
are those occupying managerial positions within the non-
teaching roster, there is also a dichotomy between
various levels of the teaching or academic staff;
3) Among the non-teaching employees composed of
Administrative Staff and Research personnel, only those
holding positions below Grade 18 should be regarded as
rank-and-file, considering that those holding higher grade
positions, like Chiefs of Sections, perform supervisory
functions including that of effectively recommending
termination of appointments or initiating appointments
and promotions; and
4) Not all teaching personnel may be deemed included in
the term, "rank-and-file;" only those holding appointments
at the instructor level may be so considered, because
those holding appointments from Assistant Professor to
Associate Professor to full Professor take part, as
members of the University Council, a policy-making body,
in the initiation of policies and rules with respect to faculty
tenure and promotion. 9
The ONAPUP quite categorically made of record its
position; that it was not opposing the University's
proferred classification of rank-and file employees. On the
other hand, the "All UP Workers' Union" opposed the
University's view, in a Position Paper presented by it
under date of October 18, 1990.
Director Calleja subsequently promulgated an Order
dated October 30, 1990, resolving the "sole issue" of
"whether or not professors, associate professors and
assistant professors are included in the definition of high-
level employee(s)" in light of Rule I, Section (1) of the
Implementing Guidelines of Executive Order No. 180,
defining "high level employee" as follows:
1. High Level Employee — is one whose
functions are normally considered policy
determining, managerial or one whose
duties are highly confidential in nature. A
managerial function refers to the exercise
of powers such as:
1. To effectively
recommend such
managerial actions;
2. To formulate or
execute management
policies and decisions;
or
3. To hire, transfer,
suspend, lay-off, recall,
dismiss, assign or
discipline employees.
The Director adjudged that said teachers are rank-and-file
employees "qualified to join unions and vote in
certification elections." According to her —
A careful perusal of the University Code .
. shows that the policy-making powers of
the Council are limited to academic
matters, namely, prescribing courses of
study and rules of discipline, fixing
student admission and graduation
requirements, recommending to the
Board of Regents the conferment of
degrees, and disciplinary power over
students. The policy-determining
functions contemplated in the definition
of a high-level employee pertain to
managerial, executive, or organization
policies, such as hiring, firing, and
disciplining of employees, salaries,
teaching/working hours, other monetary
and non-monetary benefits, and other
terms and conditions of employment.
They are the usual issues in collective
bargaining negotiations so that whoever
wields these powers would be placed in
a situation of conflicting interests if he
were allowed to join the union of rank-
and-file employees.
The University seasonably moved for reconsideration,
seeking to make the following points, to wit:
1) UP professors do "wield the most potent managerial
powers: the power to rule on tenure, on the creation of
new programs and new jobs, and conversely, the abolition
of old programs and the attendant re-assignment of
employees.
2) To say that the Council is "limited to (acting on)
academic matters" is error, since academic decisions "are
the most important decisions made in a University . .
(being, as it were) the heart, the core of the University as
a workplace.
3) Considering that the law regards as a "high level"
employee, one who performs either policy-determining,
managerial, or confidential functions, the Director erred in
applying only the "managerial functions" test, ignoring the
"policy-determining functions" test.
4) The Director's interpretation of the law would lead to
absurd results, e.g.: "an administrative officer of the
College of Law is a high level employee, while a full
Professor who has published several treatises and who
has distinguished himself in argument before the
Supreme Court is a mere rank-and-file employee. A
dormitory manager is classified as a high level employee,
while a full Professor or Political Science with a Ph. D. and
several Honorary doctorates is classified as rank-and-
file." 10
The motion for reconsideration was denied by Director
Calleja, by Order dated November 20, 1990.
The University would now have this Court declare void the
Director's Order of October 30, 1990 as well as that of
November 20, 1990. 11 A temporary restraining order was
issued by the Court, by Resolution dated December 5,
1990 conformably to the University's application therefor.
Two issues arise from these undisputed facts. One is
whether or not professors, associate professors and
assistant professors are "high-level employees" "whose
functions are normally considered policy determining,
managerial or . . highly confidential in nature." The other
is whether or not, they, and other employees performing
academic functions, 12 should comprise a collective
bargaining unit distinct and different from that consisting
of the non-academic employees of the
University, 13 considering the dichotomy of interests,
conditions and rules existing between them.
As regards the first issue, the Court is satisfied that it has
been correctly resolved by the respondent Director of
Bureau Relations. In light of Executive Order No. 180 and
its implementing rules, as well as the University's charter
and relevant regulations, the professors, associate
professors and assistant professors (hereafter simply
referred to as professors) cannot be considered as
exercising such managerial or highly confidential
functions as would justify their being categorized as "high-
level employees" of the institution.
The Academic Personnel Committees, through which the
professors supposedly exercise managerial functions,
were constituted "in order to foster greater involvement of
the faculty and other academic personnel in
appointments, promotions, and other personnel matters
that directly affect them." 14 Academic Personnel
Committees at the departmental and college levels were
organized "consistent with, and demonstrative of the very
idea of consulting the faculty and other academic
personnel on matters directly affecting them" and to allow
"flexibility in the determination of guidelines peculiar to a
particular department or college." 15
Personnel actions affecting the faculty and other
academic personnel should, however, "be considered
under uniform guidelines and consistent with the
Resolution of the Board (of Regents) adopted during its
789th Meeting (11-26-69) creating the University
Academic Personnel Board." 16 Thus, the Departmental
Academic Personnel Committee is given the function of
"assist(ing) in the review of the recommendations initiated
by the Department Chairman with regard to recruitment,
selection, performance evaluation, tenure and staff
development, in accordance with the general guidelines
formulated by the University Academic Personnel Board
and the implementing details laid down by the College
Academic Personnel Committee;" 17 while the College
Academic Personnel Committee is entrusted with the
following functions: 18
1. Assist the Dean in setting up the
details for the implementation of policies,
rules, standards or general guidelines as
formulated by the University Academic
Personnel Board;
2. Review the recommendation
submitted by the DAPCs with regard to
recruitment, selection, performance
evaluation, tenure, staff development,
and promotion of the faculty and other
academic personnel of the College;
3. Establish departmental priorities in the
allocation of available funds for
promotion;
4. Act on cases of disagreement between
the Chairman and the members of the
 DAPC particularly on personnel matters
covered by this Order;
5. Act on complaints and/or protests
against personnel actions made by the
Department Chairman and/or the DAPC.
The University Academic Personnel Board, on the other
hand, performs the following functions: 19
1. Assist the Chancellor in the review of
the recommendations of the CAPC'S.
2. Act on cases of disagreement between
the Dean and the CAPC.
3. Formulate policies, rules, and
standards with respect to the selection,
compensation, and promotion of
members of the academic staff.
4. Assist the Chancellor in the review of
recommendations on academic
promotions and on other matters
affecting faculty status and welfare.
From the foregoing, it is evident that it is the University
Academic Personnel Committee, composed of deans, the
assistant for academic affairs and the chief of personnel,
which formulates the policies, rules and standards
respecting selection, compensation and promotion of
members of the academic staff. The departmental and
college academic personnel committees' functions are
purely recommendatory in nature, subject to review and
evaluation by the University Academic Personnel Board.
In Franklin Baker Company of the Philippines vs.
Trajano, 20 this Court reiterated the principle laid down
in National Merchandising Corp. vs. Court of Industrial
Relations, 21 that the power to recommend, in order to
qualify an employee as a supervisor or managerial
employee "must not only be effective but the exercise of
such authority should not be merely of a routinary or
clerical nature but should require the use of independent
judgment." Where such recommendatory powers, as in
the case at bar, are subject to evaluation, review and final
action by the department heads and other higher
executives of the company, the same, although present,
are not effective and not an exercise of independent
judgment as required by law.
Significantly, the personnel actions that may be
recommended by the departmental and college academic
personnel committees must conform with the general
guidelines drawn up by the university personnel academic
committee. This being the case, the members of the
departmental and college academic personnel
committees are not unlike the chiefs of divisions and
sections of the National Waterworks and Sewerage
Authority whom this Court considered as rank-and-file
employees in National Waterworks & Sewerage Authority
vs. NWSA Consolidated Unions, 22because "given ready
policies to execute and standard practices to observe for
their execution, . . . they have little freedom of action, as
their main function is merely to carry out the company's
orders, plans and policies."
The power or prerogative pertaining to a high-level
employee "to effectively recommend such managerial
actions, to formulate or execute management policies or
decisions and/or to hire, transfer, suspend, lay-off, recall,
dismiss, assign or discipline employees" 23 is exercised to
a certain degree by the university academic personnel
board/committees and ultimately by the Board of Regents
in accordance with Section 6 of the University
Charter, 24 thus:
(e) To appoint, on the recommendation of
the President of the University,
professors, instructors, lecturers and
other employees of the University; to fix
their compensation, hours of service, and
such other duties and conditions as it
may deem proper; to grant them in its
discretion leave of absence under such
regulations as it may promulgate, any
other provision of law to the contrary
notwithstanding, and to remove them for
cause after investigation and hearing
shall have been had.
Another factor that militates against petitioner's espousal
of managerial employment status for all its professors
through membership in the departmental and college
academic personnel committees is that not all professors
are members thereof. Membership and the number of
members in the committees are provided as follows: 25
Sec. 2. Membership in Committees. —
Membership in committees may be made
either through appointment, election, or
by some other means as may be
determined by the faculty and other
academic personnel of a particular
department or college.
Sec. 3. Number of Members. — In
addition to the Chairman, in the case of a
department, and the Dean in the case of
a college, there shall be such number of
members representing the faculty and
 academic personnel as will afford a fairly
representative, deliberative and
manageable group that can handle
evaluation of personnel actions.
Neither can membership in the University Council elevate
the professors to the status of high-level employees.
Section 6 (f) and 9 of the UP Charter respectively
provide: 26
Sec. 6. The Board of Regents shall have
the following powers and duties . . . ;
xxx xxx xxx
(f) To approve the courses of study and
rules of discipline drawn up by the
University Council as hereinafter
provided; . . .
Sec. 9. There shall be a University
Council consisting of the President of the
University and of all instructors in the
university holding the rank of professor,
associate professor, or assistant
professor. The Council shall have the
power to prescribe the courses of study
and rules of discipline, subject to the
approval of the Board of Regents. It shall
fix the requirements for admission to any
college of the university, as well as for
graduation and the receiving of a degree.
The Council alone shall have the power
to recommend students or others to be
recipients of degrees. Through its
president or committees, it shall have
disciplinary power over the
students within the limits prescribed by
the rules of discipline approved by the
Board of Regents. The powers and
duties of the President of the University,
in addition to those specifically provided
in this Act shall be those usually
pertaining to the office of president of a
university.
It is readily apparent that the policy-determining functions
of the University Council are subject to review, evaluation
and final approval by the Board of Regents. The Council's
power of discipline is likewise circumscribed by the limits
imposed by the Board of Regents. What has been said
about the recommendatory powers of the departmental
and college academic personnel committees applies with
equal force to the alleged policy-determining functions of
the University Council.
Even assuming arguendo that UP professors discharge
policy-determining functions through the University
Council, still such exercise would not qualify them as high-
level employees within the context of E.O. 180. As
correctly observed by private respondent, "Executive
Order No. 180 is a law concerning public sector unionism.
It must therefore be construed within that context. Within
that context, the University of the Philippines represents
the government as an employer. 'Policy-determining'
refers to policy-determination in university mattes that
affect those same matters that may be the subject of
negotiation between public sector management and
labor. The reason why 'policy-determining' has been laid
down as a test in segregating rank-and-file from
management is to ensure that those who lay down
policies in areas that are still negotiable in public sector
collective bargaining do not themselves become part of
those employees who seek to change these policies for
their collective welfare." 27
The policy-determining functions of the University Council
refer to academic matters, i.e. those governing the
relationship between the University and its students, and
not the University as an employer and the professors as
employees. It is thus evident that no conflict of interest
results in the professors being members of the University
Council and being classified as rank-and-file employees.
Be that as it may, does it follow, as public respondent
would propose, that all rank-and-file employees of the
university are to be organized into a single collective
bargaining unit?
A "bargaining unit" has been defined as a group of
employees of a given employer, comprised of all or less
than all of the entire body of employees, which the
collective interest of all the employees, consistent with
equity to the employer, indicate to be the best suited to
serve the reciprocal rights and duties of the parties under
the collective bargaining provisions of the law. 28
Our labor laws do not however provide the criteria for
determining the proper collective bargaining unit. Section
12 of the old law, Republic Act No. 875 otherwise known
as the Industrial Peace Act, simply reads as follows: 29
Sec. 12. Exclusive Collective Bargaining
Representation for Labor Organizations.
— The labor organization designated or
selected for the purpose of collective
bargaining by the majority of the
employees in an appropriate collective
bargaining unit shall be the exclusive
representative of all the employees in
such unit for the purpose of collective
 bargaining in respect to rates of pay,
wages, hours of employment, or other
conditions of employment; Provided,
That any individual employee or group of
employees shall have the right at any
time to present grievances to their
employer.
Although said Section 12 of the Industrial Peace Act was
subsequently incorporated into the Labor Code with minor
changes, no guidelines were included in said Code for
determination of an appropriate bargaining unit in a given
case. 30 Thus, apart from the single descriptive word
"appropriate," no specific guide for determining the proper
collective bargaining unit can be found in the statutes.
Even Executive Order No. 180 already adverted to is not
much help. All it says, in its Section 9, is that "(t)he
appropriate organizational unit shall be the employer unit
consisting of rank-and-file employees, unless
circumstances otherwise require." Case law fortunately
furnishes some guidelines.
When first confronted with the task of determining the
proper collective bargaining unit in a particular
controversy, the Court had perforce to rely on American
jurisprudence. In Democratic Labor Association vs. Cebu
Stevedoring Company, Inc., decided on February 28,
1958, 31 the Court observed that "the issue of how to
determine the proper collective bargaining unit and what
unit would be appropriate to be the collective bargaining
agency" . . . "is novel in this jurisdiction; however,
American precedents on the matter abound . . (to which
resort may be had) considering that our present Magna
Carta has been patterned after the American law on the
subject." Said the Court:
. . . Under these precedents, there are
various factors which must be satisfied
and considered in determining the proper
constituency of a bargaining unit. No one
particular factor is itself decisive of the
determination. The weight accorded to
any particular factor varies in accordance
with the particular question or questions
that may arise in a given case. What are
these factors? Rothenberg mentions a
good number, but the most pertinent to
our case are: (1) will of the employees
(Globe Doctrine); (2) affinity and unit of
employees' interest, such as substantial
similarity of work and duties, or similarity
of compensation and working conditions;
(3) prior collective bargaining history; and
(4) employment status, such as
temporary, seasonal probationary
employees. . . .
An enlightening appraisal of the problem
of defining an appropriate bargaining unit
is given in the 10th Annual Report of the
National Labor Relations Board wherein
it is emphasized that the factors which
said board may consider and weigh in
fixing appropriate units are: the history,
extent and type of organization of
employees; the history of their collective
bargaining; the history, extent and type of
organization of employees in other plants
of the same employer, or other
employers in the same industry; the skill,
wages, work, and working conditions of
the employees; the desires of the
employees; the eligibility of the
employees for membership in the union
or unions involved; and the relationship
between the unit or units proposed and
the employer's organization,
management, and operation. . . .
. . In said report, it is likewise emphasized
that the basic test in determining the
appropriate bargaining unit is that a unit,
to be appropriate, must affect a grouping
of employees who have substantial,
mutual interests in wages, hours, working
conditions and other subjects of
collective bargaining (citing Smith on
Labor Laws, 316-317; Francisco, Labor
Laws, 162). . . .
The Court further explained that "(t)he test of the grouping
is community or mutuality of interests. And this is so
because 'the basic test of an asserted bargaining unit's
acceptability is whether or not it is fundamentally the
combination which will best assure to all employees the
exercise of their collective bargaining rights' (Rothenberg
on Labor Relations, 490)." Hence, in that case, the Court
upheld the trial court's conclusion that two separate
bargaining units should be formed, one consisting of
regular and permanent employees and another consisting
of casual laborers or stevedores.
Since then, the "community or mutuality of interests"
test has provided the standard in determining the proper
constituency of a collective bargaining unit. In Alhambra
Cigar & Cigarette Manufacturing Company, et al. vs.
Alhambra Employees' Association (PAFLU), 107 Phil. 23,
the Court, noting that the employees in the administrative,
sales and dispensary departments of a cigar and cigarette
manufacturing firm perform work which have nothing to do
with production and maintenance, unlike those in the raw
lead (malalasi), cigar, cigarette, packing (precintera) and
engineering and garage departments, authorized the
formation of the former set of employees into a separate
collective bargaining unit. The ruling in the Democratic
Labor Association case, supra, was reiterated
in Philippine Land-Air-Sea Labor Unit vs. Court of
Industrial Relations, 110 Phil. 176, where casual
employees were barred from joining the union of the
permanent and regular employees.
Applying the same "community or mutuality of interests"
test, but resulting in the formation of only one collective
bargaining units is the case of National Association of
Free Trade Unions vs. Mainit Lumber Development
Company Workers Union-United Lumber and General
Workers of the Phils., G.R. No. 79526, December 21,
1990, 192 SCRA 598. In said case, the Court ordered the
formation of a single bargaining unit consisting of the
Sawmill Division in Butuan City and the Logging Division
in Zapanta Valley, Kitcharao, Agusan Norte of the Mainit
Lumber Development Company. The Court reasoned:
Certainly, there is a mutuality of interest
among the employees of the Sawmill
Division and the Logging Division. Their
functions mesh with one another. One
group needs the other in the same way
that the company needs them both.
There may be difference as to the nature
of their individual assignments but the
distinctions are not enough to warrant the
formation of a separate bargaining unit.
In the case at bar, the University employees may, as
already suggested, quite easily be categorized into two
general classes: one, the group composed of employees
whose functions are non-academic, i.e., janitors,
messengers, typists, clerks, receptionists, carpenters,
electricians, grounds-keepers, chauffeurs, mechanics,
plumbers; 32 and two, the group made up of those
performing academic functions, i.e., full professors,
associate professors, assistant professors, instructors —
who may be judges or government executives — and
research, extension and professorial staff. 33 Not much
reflection is needed to perceive that the community or
mutuality of interests which justifies the formation of a
single collective bargaining unit is wanting between the
academic and non-academic personnel of the university.
It would seem obvious that teachers would find very little
in common with the University clerks and other non-
academic employees as regards responsibilities and
functions, working conditions, compensation rates, social
life and interests, skills and intellectual pursuits, cultural
activities, etc. On the contrary, the dichotomy of interests,
the dissimilarity in the nature of the work and duties as
well as in the compensation and working conditions of the
academic and non-academic personnel dictate the
separation of these two categories of employees for
purposes of collective bargaining. The formation of two
separate bargaining units, the first consisting of the rank-
and-file non-academic personnel, and the second, of the
rank-and-file academic employees, is the set-up that will
best assure to all the employees the exercise of their
collective bargaining rights. These special
circumstances, i.e., the dichotomy of interests and
concerns as well as the dissimilarity in the nature and
conditions of work, wages and compensation between the
academic and non-academic personnel, bring the case at
bar within the exception contemplated in Section 9 of
Executive Order No. 180. It was grave abuse of discretion
on the part of the Labor Relations Director to have ruled
otherwise, ignoring plain and patent realities.
WHEREFORE, the assailed Order of October 30, 1990 is
hereby AFFIRMED in so far as it declares the professors,
associate professors and assistant professors of the
University of the Philippines as rank-and-file employees.
The Order of August 7, 1990 is MODIFIED in the sense
that the non-academic rank-and-file employees of the
University of the Philippines shall constitute a bargaining
unit to the exclusion of the academic employees of the
institution — i.e., full professors, associate professors,
assistant professors, instructors, and the research,
extension and professorial staff, who may, if so minded,
organize themselves into a separate collective bargaining
unit; and that, therefore, only said non-academic rank-
and-file personnel of the University of the Philippines in
Diliman, Manila, Los Baños and the Visayas are to
participate in the certification election.
G.R. No. 109002 April 12, 2000
6. *DELA SALLE UNIVERSITY
vs.
DELA SALLE UNIVERSITY EMPLOYEES
ASSOCIATION (DLSUEA) and
BUENAVENTURA MAGSALIN
Filed with this Court are two petitions for certiorari,1 the
first petition with preliminary injunction and/or temporary
restraining order,2 assailing the decision of voluntary
arbitrator Buenaventura Magsalin, dated January 19,
1993, as having been rendered with grave abuse of
discretion amounting to lack or excess of jurisdiction.
These two petitions have been consolidated inasmuch as
the factual antecedents, parties involved and issues
raised therein are interrelated.3
The facts are not disputed and, as summarized by the
voluntary arbitrator, are as follows. On December 1986,
Dela Salle University (hereinafter referred to as
UNIVERSITY) and Dela Salle University Employees
Association — National Federation of Teachers and
Employees Union (DLSUEA-NAFTEU), which is
composed of regular non-academic rank and file
employees,4 (hereinafter referred to as UNION) entered
into a collective bargaining agreement with a life span of
three (3) years, that is, from December 23, 1986 to
December 22, 1989.5 During the freedom period, or 60
days before the expiration of the said collective bargaining
agreement, the Union initiated negotiations with the
University for a new collective bargaining
agreement6 which, however, turned out to be
unsuccessful, hence, the Union filed a Notice of Strike
with the National Conciliation and Mediation Board,
National Capital Region.7 After several conciliation-
mediation meetings, five (5) out of the eleven (11) issues
raised in the Notice of Strike were resolved by the parties.
A partial collective bargaining agreement was thereafter
executed by the parties.8 On March 18, 1991, the parties
entered into a Submission Agreement, identifying the
remaining six (6) unresolved issues for arbitration,
namely: "(1) scope of the bargaining unit, (2) union
security clause, (3) security of tenure, (4) salary increases
for the third and fourth years [this should properly read
second and third years]9 of the collective bargaining
agreement, (5) indefinite union leave, reduction of the
union president's workload, special leave, and finally, (6)
duration of the agreement." 10 The parties appointed
Buenaventura Magsalin as voluntary arbitrator. 11 On
January 19, 1993, the voluntary arbitrator rendered the
assailed decision. 12
In the said decision, the voluntary arbitrator, on the first
issue involving the scope of the bargaining unit, ruled that
". . . the Computer Operators assigned at the CSC
[Computer Services Center], just like any other Computer
Operators in other units, [should be] included as members
of the bargaining unit," 13 after finding that "[e]vidently, the
Computer Operators are presently doing clerical and
routinary work and had nothing to do with [the] setting of
management policies for the University, as [may be]
gleaned from the duties and responsibilities attached to
the position and embodied in the CSC [Computer
Services Center] brochure. They may have, as argued by
the University, access to vital information regarding the
University's operations but they are not necessarily
confidential." 14 Regarding the discipline officers, the
voluntary arbitrator ". . . believes that this type of
employees belong (sic) to the rank-and-file on the basis
of the nature of their job." 15 With respect to the employees
of the College of St. Benilde, the voluntary arbitrator found
that the College of St. Benilde has a personality separate
and distinct from the University and thus, held ". . . that
the employees therein are outside the bargaining unit of
the University's rank-and-file employees." 16
On the second issue regarding the propriety of the
inclusion of a union shop clause in the collective
bargaining agreement, in addition to the existing
maintenance of membership clause, the voluntary
arbitrator opined that a union shop clause ". . . is not a
restriction on the employee's right of (sic) freedom of
association but rather a valid form of union security while
the CBA is in force and in accordance with the
Constitutional policy to promote unionism and collective
bargaining and negotiations. The parties therefore should
incorporate such union shop clause in their CBA." 17
On the third issue with respect to the use of the "last-in-
first-out" method in case of retrenchment and transfer to
other schools or units, the voluntary arbitrator upheld the
". . . elementary right and prerogative of the management
of the University to select and/or choose its employees, a
right equally recognized by the Constitution and the law.
The employer, in the exercise of this right, can adopt valid
and equitable grounds as basis for lay-off or separation,
like performance, qualifications, competence, etc.
Similarly, the right to transfer or reassign an employee is
an employer's exclusive right and prerogative." 18
Regarding the fourth issue concerning salary increases
for the second and third years of the collective bargaining
agreement, the voluntary arbitrator opined that the ". .
.proposed budget of the University for SY 1992-93 could
not sufficiently cope up with the demand for increases by
the Union. . . . . . . . With the present financial condition of
the University, it cannot now be required to grant another
round of increases through collective bargaining without
exhausting its coffers for other legitimate needs of the
University as an institution," 19 thus, he ruled that ". . . the
University can no longer be required to grant a second
round of increase for the school years under
consideration and charge the same to the incremental
proceeds." 20
On the fifth issue as to the Union's demand for a reduction
of the workload of the union president, special leave
benefits and indefinite union leave with pay, the voluntary
arbitrator rejected the same, ruling that unionism ". . . is
no valid reason for the reduction of the workload of its
President," 21 and that there is ". . . no sufficient
justification to grant an indefinite leave." 22 Finding that the
Union and the Faculty Association are not similarly
situated, technically and professionally, 23 and that
"[w]hile professional growth is highly encouraged on the
part of the rank-and-file employees, this educational
advancement would not serve in the same degree as
demanded of the faculty members," 24 the voluntary
arbitrator denied the Union's demand for special leave
benefits.
On the last issue regarding the duration of the collective
bargaining agreement, the voluntary arbitrator ruled that
". . . when the parties forged their CBA and signed it on
19 November 1990, where a provision on duration was
explicitly included, the same became a binding agreement
between them. Notwithstanding the Submission
Agreement, thereby reopening this issue for resolution,
this Voluntary Arbitrator is constrained to respect the
original intention of the parties, the same being not
contrary to law, morals or public policy." 25 As to the
economic aspect of the collective bargaining agreement,
the voluntary arbitrator opined that the ". . . economic
provisions of the CBA shall be re-opened after the third
year in compliance with the mandate of the Labor Code,
as amended." 26
Subsequently, both parties filed their respective motions
for reconsideration which, however, were not entertained
by the voluntary arbitrator "pursuant to existing rules and
jurisprudence governing voluntary arbitration cases." 27
On March 5, 1993, the University filed with the Second
Division of this Court, a petition for certiorari with
temporary restraining order and/or preliminary injunction
assailing the decision of the voluntary arbitrator, as having
been rendered "in excess of jurisdiction and/or with grave
abuse of discretion." 28 Subsequently, on May 24, 1993,
the Union also filed a petition for certiorari with the First
Division. 29 Without giving due course to the petition
pending before each division, the First and Second
Divisions separately resolved to require the respondents
in each petition, including the Solicitor General on behalf
of the voluntary arbitrator, to file their respective
Comments. 30 Upon motion by the Solicitor General dated
July 29, 1993, both petitions were consolidated and
transferred to the Second Division. 31
In his consolidated Comment 32 filed on September 9,
1993 on behalf of voluntary arbitrator Buenaventura C.
Magsalin, the Solicitor General agreed with the voluntary
arbitrator's assailed decision on all points except that
involving the employees of the College of St. Benilde.
According to the Solicitor General, the employees of the
College of St. Benilde should have been included in the
bargaining unit of the rank-and-file employees of the
University. 33 The Solicitor General came to this
conclusion after finding ". . . sufficient evidence to justify
the Union's proposal to consider the University and the
CSB [College of St. Benilde] as only one entity because
the latter is but a mere integral part of the University," to
wit: 34
1. One of the duties and responsibilities of the
CSB's Director of Academic Services is to
coordinate with the University's Director of
Admissions regarding the admission of freshmen,
shiftees and transferees (Annex "3" of the
University's Reply);
2. Some of the duties and responsibilities of the
CSB's Administrative Officer are as follows:
A. xxx xxx xxx
4. Recommends and implements personnel
policies and guidelines (in accordance with the
Staff Manual) as well as pertinent existing general
policies of the university as a whole. . . . .
12. Conducts and establishes liaison with all the
offices concerned at the Main Campus as well
(sic) with other government agencies on all
administrative-related matters. . . .
B. xxx xxx xxx
7. Handles processing, canvassing and direct
purchasing of all requisitions worth more than
P10,000 or less. Coordinates and canvasses with
the Main Campus all requisitions worth more than
P10,000. . . .
C. xxx xxx xxx
7. Plans and coordinates with the Security and
Safety Committee at the Main Campus the
development of a security and safety program
during times of emergency or occurrence of fire
or other natural calamities. . . . (Annex "4" of the
University's Reply).
3. The significant role which the University
assumes in the admission of students at the CSB
is revealed in the following provisions of the
CSB's Bulletin for Arts and Business Studies
Department for the schoolyear 1992-1993, thus:
Considered in the process of admission for a (sic)
high school graduate applicants are the following
criteria: results of DLSU College Entrance
Examination . . . .
Admission requirements for transferees are: . . .
and an acceptable score in the DLSU admission
test. . . .
Shiftees from DLSU who are still eligible to enroll
may be admitted in accordance with the DLSU
policy on shifting. Considering that there
sometimes exist exceptional cases where a very
difficult but temporary situation renders a DLSU
student falling under this category a last chance
to be re-admitted provided he meets the cut-off
scores required in the qualifying examination
administered by the university. . . .
He may not be remiss in his study obligations nor
incur any violation whatsoever, as such will be
taken by the University to be an indication of his
loss of initiative to pursue further studies at DLSU.
In sch (sic) a case, he renders himself ineligible
to continue studying at DLSU. DLSU thus
reserves the right to the discontinuance of the
studies of any enrolee whose presence is inimical
to the objectives of the CSB/DLSU. . . .
As a college within the university, the College of
St. Benilde subscribes to the De La Salle
Mission." (Annexes "C-1," "C-2," and "C-3" of the
Union's Consolidated Reply and Rejoinder)
4. The academic programs offered at the CSB are
likewise presented in the University's
Undergraduate Prospectus for schoolyear 1992-
1993 (Annex "D" of the Union's Consolidated
Reply and Rejoinder).
5. The Leave Form Request (Annex "F" of the
Union's Position Paper) at the CSB requires prior
permission from the University anent leaves of
CSB employees, to wit:
AN EMPLOYEE WHO GOES ON LEAVE
WITHOUT PRIOR PERMISSION FROM THE
UNIVERSITY OR WHO OVEREXTENDS THE
PERIOD OF HIS APPROVED LEAVE WITHOUT
SECURING AUTHORITY FROM THE
UNIVERSITY, OR WHO REFUSE TO BE
RECALLED FROM AN APPROVED LEAVE
SHALL BE CONSIDERED ABSENT WITHOUT
LEAVE AND SHALL BE SUBJECT TO
DISCIPLINARY ACTION.
6. The University officials themselves claimed
during the 1990 University Athletic Association of
the Philippines (UAAP) meet that the CSB
athletes represented the University since the
latter and the CSB comprise only one entity.
On February 9, 1994, this Court resolved to give due
course to these consolidated petitions and to require the
parties to submit their respective memoranda. 35
In its memorandum filed on April 28, 1994, 36 pursuant to
the above-stated Resolution, 37 the University raised the
following issues for the consideration of the Court: 38
I.
WHETHER OR NOT GRAVE ABUSE OF
DISCRETION WAS COMMITTED BY THE
VOLUNTARY ARBITRATOR WHEN HE
INCLUDED, WITHIN THE BARGAINING UNIT
COMPRISING THE UNIVERSITY'S RANK-AND-
FILE EMPLOYEES, THE COMPUTER
OPERATORS ASSIGNED AT THE
UNIVERSITY'S COMPUTER SERVICES
CENTER AND THE UNIVERSITY'S DISCIPLINE
OFFICERS, AND WHEN HE EXCLUDED THE
COLLEGE OF SAINT BENILDE EMPLOYEES
FROM THE SAID BARGAINING UNIT.
II.
WHETHER OR NOT GRAVE ABUSE OF
DISCRETION WAS COMMITTED BY THE
VOLUNTARY ARBITRATOR WHEN HE
UPHELD THE UNION'S DEMAND FOR THE
INCLUSION OF A UNION SHOP CLAUSE IN
THE PARTIES' COLLECTIVE BARGAINING
AGREEMENT.
III.
WHETHER OR NOT GRAVE ABUSE OF
DISCRETION WAS COMMITTED BY THE
VOLUNTARY ARBITRATOR WHEN HE DENIED
THE UNION'S PROPOSAL FOR THE "LAST-IN-
FIRST-OUT" METHOD OF LAY-OFF IN CASES
OF RETRENCHMENT.
IV.
WHETHER OR NOT GRAVE ABUSE OF
DISCRETION WAS COMMITTED BY THE
VOLUNTARY ARBITRATOR WHEN HE RULED
THAT THE UNIVERSITY CAN NO LONGER BE
REQUIRED TO GRANT A SECOND ROUND OF
 WAGE INCREASES FOR THE SCHOOL YEARS
1991-92 AND 1992-93 AND CHARGE THE
SAME TO THE INCREMENTAL PROCEEDS.
V.
WHETHER OR NOT GRAVE ABUSE OF
DISCRETION WAS COMMITTED BY THE
VOLUNTARY ARBITRATOR WHEN HE DENIED
THE UNION'S PROPOSALS ON THE
DELOADING OF THE UNION PRESIDENT,
IMPROVED LEAVE BENEFITS AND
INDEFINITE UNION LEAVE WITH PAY.
The Union, on the other hand, raised the following issues,
in its memorandum, 39 filed pursuant to Supreme Court
Resolution dated February 9, 1994, 40 to wit; that the
voluntary arbitrator committed grave abuse of discretion
in:
(1) FAILING AND/OR REFUSING TO PIERCE
THE VEIL OF CORPORATE FICTION OF THE
COLLEGE OF ST. BENILDE-DLSU DESPITE
THE PRESENCE OF SUFFICIENT BASIS TO
DO SO AND IN FINDING THAT THE
EMPLOYEES THEREAT ARE OUTSIDE OF
THE BARGAINING UNIT OF THE DLSU'S
RANK-AND-FILE EMPLOYEES. HE ALSO
ERRED IN HIS INTERPRETATION OF THE
APPLICATION OF THE DOCTRINE;
(2) DENYING THE PETITIONER'S PROPOSAL
FOR THE "LAST-IN FIRST-OUT" METHOD OF
LAY-OFF IN CASE OF RETRENCHMENT AND
IN UPHOLDING THE ALLEGED MANAGEMENT
PREROGATIVE TO SELECT AND CHOOSE ITS
EMPLOYEES DISREGARDING THE BASIC
TENETS OF SOCIAL JUSTICE AND EQUITY
UPON WHICH THIS PROPOSAL WAS
FOUNDED;
(3) FINDING THAT THE MULTISECTORAL
COMMITTEE IN THE RESPONDENT
UNIVERSITY IS THE LEGITIMATE GROUP
WHICH DETERMINES AND SCRUTINIZES
ANNUAL SALARY INCREASES AND FRINGE
BENEFITS OF THE EMPLOYEES;
(4) HOLDING THAT THE 70% SHARE IN THE
INCREMENTAL TUITION PROCEEDS IS THE
ONLY SOURCE OF SALARY INCREASES AND
FRINGE BENEFITS OF THE EMPLOYEES;
(5) FAILING/REFUSING/DISREGARDING TO
CONSIDER THE RESPONDENT
UNIVERSITY'S FINANCIAL STATEMENTS
FACTUALLY TO DETERMINE THE FORMER'S
CAPABILITY TO GRANT THE PROPOSED
SALARY INCREASES OVER AND ABOVE THE
70% SHARE IN THE INCREMENTAL TUITION
PROCEEDS AND IN GIVING WEIGHT AND
CONSIDERATION TO THE RESPONDENT
UNIVERSITY'S PROPOSED BUDGET WHICH
IS MERELY AN ESTIMATE.
(6) FAILING TO EQUATE THE POSITION AND
RESPONSIBILITIES OF THE UNION
PRESIDENT WITH THOSE OF THE
PRESIDENT OF THE FACULTY ASSOCIATION
WHICH IS NOT EVEN A LEGITIMATE LABOR
ORGANIZATION AND IN SPECULATING THAT
THE PRESIDENT OF THE FACULTY
ASSOCIATION SUFFERS A
CORRESPONDING REDUCTION IN SALARY
ON THE ACCOUNT OF THE REDUCTION OF
HIS WORKLOAD; IN FAILING TO APPRECIATE
THE EQUAL RIGHTS OF THE MEMBERS OF
THE UNION AND OF THE FACULTY FOR
PROFESSIONAL ADVANCEMENT AS WELL
AS THE DESIRABLE EFFECTS OF THE
INSTITUTIONALIZATION OF THE SPECIAL
LEAVE AND WORKLOAD REDUCTION
BENEFITS. 41
The question which now confronts us is whether or not the
voluntary arbitrator committed grave abuse of discretion
in rendering the assailed decision, particularly, in
resolving the following issues: (1) whether the computer
operators assigned at the University's Computer Services
Center and the University's discipline officers may be
considered as confidential employees and should
therefore be excluded from the bargaining unit which is
composed of rank and file employees of the University,
and whether the employees of the College of St. Benilde
should also be included in the same bargaining unit; (2)
whether a union shop clause should be included in the
parties' collective bargaining agreement, in addition to the
existing maintenance of membership clause; (3) whether
the denial of the Union's proposed "last-in-first-out"
method of laying-off employees, is proper; (4) whether the
ruling that on the basis of the University's proposed
budget, the University can no longer be required to grant
a second round of wage increases for the school years
1991-92 and 1992-93 and charge the same to the
incremental proceeds, is correct; (5) whether the denial of
the Union's proposals on the deloading of the union
president, improved leave benefits and indefinite union
leave with pay, is proper; (6) whether the finding that the
multi-sectoral committee in the University is the legitimate
group which determines and scrutinizes the annual salary
increases and fringe benefits of the employees of the
University, is correct; and (7) whether the ruling that the
70% share in the incremental tuition proceeds is the only
source of salary increases and fringe benefits of the
employees, is proper.
Now, before proceeding to the discussion and resolution
of the issues raised in the pending petitions, certain
preliminary matters call for disposition. As we reiterated in
the case of Caltex Refinery Employees
Association (CREA) vs. Jose S. Brillantes, 42 the
following are the well-settled rules in a petition
for certiorari involving labor cases. "First, the factual
findings of quasi-judicial agencies (such as the
Department of Labor and Employment), when supported
by substantial evidence, are binding on this Court and
entitled to great respect, considering the expertise of
these agencies in their respective fields. It is well-
established that findings of these administrative agencies
are generally accorded not only respect but even
finality. 43
Second, substantial evidence in labor cases is such
amount of relevant evidence which a reasonable mind will
accept as adequate to justify a conclusion. 44
Third, in Flores vs. National Labor Relations
Commission, 45 we explained the role and function of Rule
65 as an extraordinary remedy:
It should be noted, in the first place, that the
instant petition is a special civil action
for certiorari under Rule 65 of the Revised Rules
of Court. An extraordinary remedy, its use is
available only and restrictively in truly exceptional
cases — those wherein the action of an inferior
court, board or officer performing judicial or quasi-
judicial acts is challenged for being wholly void on
grounds of jurisdiction. The sole office of the writ
of certiorari is the correction of errors of
jurisdiction including the commission of grave
abuse of discretion amounting to lack or excess
of jurisdiction. It does not include correction of
public respondent NLRC's evaluation of the
evidence and factual findings based thereon,
which are generally accorded not only great
respect but even finality.
No question of jurisdiction whatsoever is being
raised and/or pleaded in the case at bench.
Instead, what is being sought is a judicial re-
evaluation of the adequacy or inadequacy of the
evidence on record, which is certainly beyond the
province of the extraordinary writ of certiorari.
Such demand is impermissible for it would involve
this Court in determining what evidence is entitled
to belief and the weight to be assigned it. As we
have reiterated countless times, judicial review by
this Court in labor cases does not go so far as to
evaluate the sufficiency of the evidence upon
which the proper labor officer or office based his
or its determination but is limited only to issues of
jurisdiction or grave abuse of discretion
amounting to lack of jurisdiction. (emphasis
supplied).
With the foregoing rules in mind, we shall now proceed to
discuss the merit of these consolidated petitions.
We affirm in part and modify in part.
On the first issue involving the classification of the
computer operators assigned at the University's
Computer Services Center and discipline officers, the
University argues that they are confidential employees
and that the Union has already recognized the
confidential nature of their functions when the latter
agreed in the parties' 1986 collective bargaining
agreement to exclude the said employees from the
bargaining unit of rank-and-file employees. As far as the
said computer operators are concerned, the University
contends that ". . . the parties have already previously
agreed to exclude all positions in the University's
Computer Services Center (CSC), which include the
positions of computer operators, from the collective
bargaining unit. . . . . . . . " 46 The University further
contends that ". . . the nature of the work done by these
Computer Operators is enough justification for their
exclusion from the coverage of the bargaining unit of the
University's rank-and-file employees. . . . . . .
." 47 According to the University, the Computer Services
Center, where these computer operators work, ". . .
processes data that are needed by management for
strategic planning and evaluation of systems. It also
houses the University's confidential records and
information [e.g. student records, faculty records, faculty
and staff payroll data, and budget allocation and
expenditure related data] which are contained in
computer files and computer-generated reports. . . . . . . .
Moreover, the Computer Operators are in fact the
repository of the University's confidential information and
data, including those involving and/or pertinent to labor
relations. . . . . . . ." 48
As to the discipline officers, the University maintains that
" . . . they are likewise excluded from the bargaining unit
of the rank-and-file employees under the parties' 1986
CBA. The Discipline Officers are clearly alter egos of
management as they perform tasks which are inherent in
management [e.g. enforce discipline, act as peace
officers, secure peace and safety of the students inside
the campus, conduct investigations on violations of
University regulations, or of existing criminal laws,
committed within the University or by University
employees] . . . . . . . " 49 The University also alleges that
"the Discipline Officers are privy to highly confidential
information ordinarily accessible only to management." 50
With regard to the employees of the College of St.
Benilde, the Union, supported by the Solicitor General at
this point, asserts that the veil of corporate fiction should
be pierced, thus, according to the Union, the University
and the College of St. Benilde should be considered as
only one entity because the latter is but a mere integral
part of the University. 51
The University's arguments on the first issue fail to
impress us. The Court agrees with the Solicitor General
that the express exclusion of the computer operators and
discipline officers from the bargaining unit of rank-and-file
employees in the 1986 collective bargaining agreement
does not bar any re-negotiation for the future inclusion of
the said employees in the bargaining unit. During the
freedom period, the parties may not only renew the
existing collective bargaining agreement but may also
propose and discuss modifications or amendments
thereto. With regard to the alleged confidential nature of
the said employees' functions, after a careful
consideration of the pleadings filed before this Court, we
rule that the said computer operators and discipline
officers are not confidential employees. As carefully
examined by the Solicitor General, the service record of a
computer operator reveals that his duties are basically
clerical and non-confidential in nature. 52 As to the
discipline officers, we agree with the voluntary arbitrator
that based on the nature of their duties, they are not
confidential employees and should therefore be included
in the bargaining unit of rank-and-file employees.
The Court also affirms the findings of the voluntary
arbitrator that the employees of the College of St. Benilde
should be excluded from the bargaining unit of the rank-
and-file employees of Dela Salle University, because the
two educational institutions have their own separate
juridical personality and no sufficient evidence was shown
to justify the piercing of the veil of corporate fiction. 53
On the second issue involving the inclusion of a union
shop clause in addition to the existing maintenance of
membership clause in the collective bargaining
agreement, the University avers that ". . . it is in the spirit
of the exercise of the constitutional right to self-
organization that every individual should be able to freely
choose whether to become a member of the Union or not.
The right to join a labor organization should carry with it
the corollary right not to join the same. This position of the
University is but in due recognition of the individual's free
will and capability for judgment." 54 The University assails
the Union's demand for a union shop clause as ". . .
definitely unjust and amounts to oppression. Moreover,
such a demand is repugnant to democratic principles and
the constitutionally guaranteed freedom of individuals to
join or not to join an association as well as their right to
security of tenure, particularly, on the part of present
employees." 55
The Union, on the other hand, counters that the Labor
Code, as amended, recognizes the validity of a union
shop agreement in Article 248 thereof which reads:
Art. 248. Unfair labor practices of employers. —
xxx xxx xxx
(e) To discriminate in regard to hire or
tenure of employment or any term or
condition of employment in order to
encourage or discourage membership in
any labor organization. Nothing in this
Code or in any other law shall prevent the
parties from requiring membership in a
recognized collective bargaining agent
as a condition for employment, except of
those employees who are already
members of another union at the time of
the signing of the collective bargaining
agreement. . . . . . . ." (emphasis supplied)
We affirm the ruling of the voluntary arbitrator for
the inclusion of a union shop provision in addition
to the existing maintenance of membership
clause in the collective bargaining agreement. As
the Solicitor General asserted in his consolidated
Comment, the University's reliance on the case
of Victoriano vs. Elizalde Rope
Workers' Union 56 is clearly misplaced. In that
case, we ruled that ". . . the right to join a union
includes the right to abstain from joining any
union. . . . . . . . The right to refrain from joining
labor organizations recognized by Section 3 of
the Industrial Peace Act is, however, limited. The
legal protection granted to such right to refrain
from joining is withdrawn by operation of law,
where a labor union and an employer have
agreed on a closed shop, by virtue of which the
employer may employ only members of the
collective bargaining union, and the employees
must continue to be members of the union for the
duration of the contract in order to keep their jobs.
. . . . . . ." 57
On the third issue regarding the Union's proposal
for the use of the "last-in-first-out" method in case
of lay-off, termination due to retrenchment and
transfer of employees, the Union relies on social
justice and equity to support its proposition, and
submits that the University's prerogative to select
and/or choose the employees it will hire is limited,
either by law or agreement, especially where the
exercise of this prerogative might result in the loss
of employment. 58 The Union further insists that
its proposal is ". . . in keeping with the avowed
State policy '(q) To ensure the participation of
workers in decision and policy-making processes
affecting their rights, duties and welfare' (Art. 211,
Labor Code, as amended)." 59
On the other hand, the University asserts its
management prerogative and counters that
"[w]hile it is recognized that this right of
employees and workers to 'participate in policy
and decision-making processes affecting their
rights and benefits as may be provided by law'
has been enshrined in the Constitution (Article III,
[should be Article XIII], Section 3, par. 2), said
participation, however, does not automatically
entitle the Union to dictate as to how an employer
should choose the employees to be affected by a
retrenchment program. The employer still retains
the prerogative to determine the reasonable basis
for selecting such employees." 60
We agree with the voluntary arbitrator that as an
exercise of management prerogative, the
University has the right to adopt valid and
equitable grounds as basis for terminating or
transferring employees. As we ruled in the case
of Autobus Workers' Union (AWU) and Ricardo
Escanlar vs. National Labor Relations
61
Commission, "[a] valid exercise of
management prerogative is one which, among
others, covers: work assignment, working
methods, time, supervision of workers, transfer of
employees, work supervision, and the discipline,
dismissal and recall of workers. Except as
provided for, or limited by special laws, an
employer is free to regulate, according to his own
discretion and judgment, all aspects of
employment." (emphasis supplied)
On the fourth issue involving the voluntary
arbitrator's ruling that on the basis of the
University's proposed budget, the University can
no longer be required to grant a second round of
wage increases for the school years 1991-92 and
1992-93 and charge the same to the incremental
proceeds, we find that the voluntary arbitrator
committed grave abuse of discretion amounting
to lack or excess of jurisdiction. As we ruled in the
case of Caltex Refinery Employees Association
(CREA) vs. Jose S. Brillantes, 62 ". . . . . . . [w]e
believe that the standard proof of a company's
financial standing is its financial statements duly
audited by independent and credible external
auditors." 63 Financial statements audited by
independent external auditors constitute the
normal method of proof of profit and loss
performance of a company. 64 The financial
capability of a company cannot be based on its
proposed budget because a proposed budget
does not reflect the true financial condition of a
company, unlike audited financial statements,
and more importantly, the use of a proposed
budget as proof of a company's financial
condition would be susceptible to abuse by
scheming employers who might be merely
feigning dire financial condition in their business
ventures in order to avoid granting salary
increases and fringe benefits to their employees.
On the fifth issue involving the Union's proposals
on the deloading of the union president, improved
leave benefits and indefinite union leave with pay,
we agree with the voluntary arbitrator's rejection
of the said demands, there being no justifiable
reason for the granting of the same.
On the sixth issue regarding the finding that the
multi-sectoral committee in the University is the
legitimate group which determines and
scrutinizes the annual salary increases and fringe
benefits of the employees of the University, the
Court finds that the voluntary arbitrator did not
gravely abuse his discretion on this matter. From
our reading of the assailed decision, it appears
that during the parties' negotiations for a new
collective bargaining agreement, the Union
demanded for a 25% and 40% salary increase for
the second and third years, respectively, of the
collective bargaining agreement. 65 The
University's counter-proposal was for a 10%
increase for the third year. 66 After the meeting of
the multi-sectoral committee on budget, which is
composed of students, parents, faculty,
 administration and union, the University granted
across-the-board salary increases of 11.3% and
19% for the second and third years,
respectively. 67 While the voluntary arbitrator
found that the said committee ". . . decided to
grant the said increases based on the University's
viability which were exclusively sourced from the
tuition fees. . . . . . . .," no finding was made as to
the basis of the committee's decision. Be that as
it may, assuming for the sake of argument that
the said committee is the group responsible for
determining wage increases and fringe benefits,
as ruled by the voluntary arbitrator, the
committee's determination must still be based on
duly audited financial statements following our
ruling on the fourth issue.1âwphi1
On the seventh and last issue involving the ruling
that the 70% share in the incremental tuition
proceeds is the only source of salary increases
and fringe benefits of the employees, the Court
deems that any determination of this alleged error
is unnecessary and irrelevant, in view of our
rulings on the fourth and preceding issues and
there being no evidence presented before the
voluntary arbitrator that the University held
incremental tuition fee proceeds from which any
wage increase or fringe benefit may be satisfied.
WHEREFORE, premises considered, the
petitions in these consolidated cases, G.R. No.
109002 and G.R. No. 110072 are partially
GRANTED. The assailed decision dated January
19, 1993 of voluntary arbitrator Buenaventura
Magsalin is hereby AFFIRMED with the
modification that the issue on salary increases for
the second and third years of the collective
bargaining agreement be REMANDED to the
voluntary arbitrator for definite resolution within
one month from the finality of this Decision, on the
basis of the externally audited financial
statements of the University already submitted by
the Union before the voluntary arbitrator and
forming part of the records.1â
G.R. No. 73887 December 21, 1989
7. GREAT PACIFIC LIFE ASSURANCE
CORPORATION
vs.
HONORATO JUDICO and NATIONAL
LABOR RELATIONS COMMISSION
Facts:
Private respondent Judico entered into an agreement of
agency with petitioner Grepalife to become a debit agent
attached to the industrial life agency in Cebu City.
Sometime in September 1981, complainant was
promoted to the position of Zone Supervisor and was
given additional (supervisor's) allowance fixed at P110.00
per week.
During the third week of November 1981, he was reverted
to his former position as debit agent but, for unknown
reasons, not paid so called weekly sales reserve of at
least P200.00. Finally on June 28, 1982, complainant was
dismissed by way of termination of his agency contract.
Honorato Judico filed a complaint for illegal dismissal
against Grepalife, a duly organized insurance firm,
beforethe NLRC Regional Arbitration Branch No. VII,
Cebu City on August 27, 1982 NLRC ruled that there was
no employer-employee
relationship but ordered Grepalife to pay the complainant
with P1,000.00 by reason of Christian Charity.
Issue:
Was there an employer-employee relationship between
Grepalife and Judico?
Held:
Yes. We can readily see that the element of control by the
petitioner on Judico was very much present. The record
shows that
petitioner Judico received a definite minimum amount per
week as his wage known as "sales reserve" wherein the
failure to maintain the same would bring him back to a
beginner's employment with a fixed weekly wage of
P200.00 for thirteen weeks regardless of production. He
was assigned a definite place in the office to work on
when he is not in the field; and in addition to his
canvassing work he was burdened with the job of
collection. In both cases he was required to make regular
report to the company regarding this duties, and for which
an anemic performance would mean a dismissal.
Conversely faithful and productive service earned him a
promotion to Zone Supervisor with additional supervisor's
allowance, a definite amount of P110.00 aside from the
regular P200.00 weekly "allowance". Furthermore, his
contract of services with petitioner is not for a piece of
work nor for a definite period.
Petition denied.
 8. THELMA DUMPIT-MURILLO v. THE COURT
OF APPEALS
G.R. No. 164652, 8 June 2007, SECOND DIVISION
(Quisimbing, J.)
DOCTRINE OF THE CASE
There are two kinds of regular employee: (1)
those who are engaged in a performance which are
usually necessary and desirable in the usual business or
trade of employer, and (2) those who have rendered at
least one year of service, whether continuous or broken,
with respect to activity in which they are employed. Private
respondent’s practice of repeatedly extending petitioner’s
3-month contract for 4 years is a circumvention of the
acquisition of regular status.
FACTS
ABC hired Thelma as a newscaster and a co-
anchor for an early evening news program. It was agreed
that her contract will last for 3 months. After 4 years of
repeated renewals, petitioner’s talent contract expired.
Thelma wrote to Javier, Vice President for News and
Public Affairs of ABC, informing him her desire to renew
her contract subject to salary increase. A month later,
petitioner send a demand letter requesting that (1) she be
reinstated to her former position, (2) payment of unpaid
wages, and (3) payment of benefits.
However, because of non-compliance, petitioner
filed a case against ABC at NLRC-NCR for illegal
constructive dismissal. The Labor Arbiter dismissed the
complaint. However, the NLRC reversed the ruling of the
LA, stating that there was an employee-employer
relationship involved. Thus, ordered Thelma to be
reinstated without loss to seniority rights.
ABC elevated the case to the Court of Appeals
under Rule 65. CA reversed the ruling of NLRC stating
that petitioner is a fixed-term employee and not a regular
employee because her job was only for a specified period
of time.
ISSUE
Is Thelma an employee of ABC company?
RULING
YES. Thelma is an employee of ABC, and a
regular employee (not a fixed-term employee) under the
contemplation of law. The assertion that talent contract
exist, does not necessary prevent regular employment
status.
Sonza case is not applicable in this case because
element of control is present in this case. In Sonza, the
television station did not instruct Sonza how to perform
his job. How Sonza delivered his lines, appeared on
television, and sounded on radio were outside the
television station’s control. Clearly the television station
did not exercise control over the means and methods of
the performance of Sonza’s work. In this case, ABC had
control over the performance of Thelma’s work.
Noteworthy too, is the comparatively low P28,000 monthly
pay of petitioner vis the P300,000 a month salary of Sonza
that all the more bolsters the conclusion that petitioner
was not in the same situation as Sonza.
There are two kinds of regular employee: (1)
those who are engaged in a performance which are
usually necessary and desirable in the usual business or
trade of employer, and (2) those who have rendered at
least one year of service, whether continuous or broken,
with respect to activity in which they are employed.
Private respondent’s practice of repeatedly
extending petitioner’s 3-month contract for 4 years is a
circumvention of the acquisition of regular status. As a
regular employee, petitioner is entitled to security of
tenure and can be dismissed only for just cause and after
due compliance with procedural due process.
9. FUJI TELEVISION NETWORK, INC. vs.
ARLENE S. ESPIRITU
G.R. Nos. 204944-45. December 3, 2014; LEONEN, J
Principle: It is the burden of the employer to prove that a
person whose services it pays for is an independent
contractor rather than a regular employee with or without
a fixed term. That a person has a disease does not per se
entitle the employer to terminate his or her services.
Termination is the last resort. At the very least, a
competent public health authority must certify that the
disease cannot be cured within six (6) months, even with
appropriate treatment.
FACTS
1. In 2005, Arlene S. Espiritu ("Arlene") was
engaged by Fuji Television Network, Inc. ("Fuji")
as a news correspondent/producer 4 "tasked to
report Philippine news to Fuji through its Manila
Bureau field office." Arlene's employment
contract initially provided for a term of one (1)
 year but was successively renewed on a yearly
basis with salary adjustment upon every renewal.
2. Sometime in January 2009, Arlene was
diagnosed with lung cancer. She informed Fuji
about her condition. In turn, the Chief of News
Agency of Fuji, Yoshiki Aoki, informed Arlene
"that the company will have a problem renewing
her contract" since it would be difficult for her to
perform her job. She "insisted that she was still fit
to work as certified by her attending physician."
3. After several verbal and written communications,
Arlene and Fuji signed a nonrenewal contract on
May 5, 2009 where it was stipulated that her
contract would no longer be renewed after its
expiration on May 31, 2009. The contract also
provided that the parties release each other from
liabilities and responsibilities under the
employment contract.
4. In consideration of the non-renewal contract,
Arlene "acknowledged receipt of the total amount
of US$18,050.00 representing her monthly salary
from March 2009 to May 2009, year-end bonus,
mid-year bonus, and separation pay." 13
However, Arlene affixed her signature on the non-
renewal contract with the initials "U.P." for "under
protest."
5. On May 6, 2009, the day after Arlene signed the
non-renewal contract, she filed a complaint for
illegal dismissal and attorney's fees with the
National Capital Region Arbitration Branch of the
National Labor Relations Commission. She
alleged that she was forced to sign the non-
renewal contract when Fuji came to know of her
illness and that Fuji withheld her salaries and
other bene7ts for March and April 2009 when she
refused to sign
6. Labor Arbiter: Dismissed
Corazon C. Borbolla dismissed Arlene's
complaint. Citing Sonza v. ABS-CBN and
applying the four-fold test, the Labor
Arbiter held that Arlene was not Fuji's
employee but an independent contractor.
7. NLRC: Reversed
The National Labor Relations
Commission reversed the Labor Arbiter's
decision. It held that Arlene was a regular
employee with respect to the activities for
which she was employed since she
continuously rendered services that were
deemed necessary and desirable to
Fuji's business.
8. Court of Appeals affirmed the National Labor
Relations ( based on Dumpit-Murillo Case)
a. The Court of Appeals held that Arlene was a
regular employee because she was engaged to
perform work that was necessary or desirable in
the business of Fuji, and the successive renewals
of her fixed-term contract resulted in regular
employment.
b. According to the Court of Appeals, Sonza does
not apply in order to establish that Arlene was an
independent contractor because she was not
contracted on account of any peculiar ability,
special talent, or skill. The fact that everything
used by Arlene in her work was owned by Fuji
negated the idea of job contracting.
c. The Court of Appeals also held that Arlene was
illegally dismissed because Fuji failed to comply
with the requirements of substantive and
procedural due process necessary for her
dismissal since she was a regular employee.
d. The Court of Appeals found that Arlene did not
sign the non-renewal contract voluntarily and that
the contract was a mere subterfuge by Fuji to
secure its position that it was her choice not to
renew her contract. She was left with no choice
since Fuji was decided on severing her
employment.
ISSUES:
(1) Whether or not Espiritu is a regular employee or a
fixed-term contractual employee;
(2) Whether or not Espiritu was illegally dismissed; and
PRELIMINARIES
ON BURDEN OF PROOF
1. In this case, there is no question that Arlene
rendered services to Fuji. However, Fuji alleges
that Arlene was an independent contractor, while
Arlene alleges that she was a regular employee.
To resolve this issue, we ascertain whether an
employer-employee relationship existed between
Fuji and Arlene. This court has often used the
four-fold test to determine the existence of an
employer-employee relationship. Under the four-
fold test, the "control test" is the most important.
2. If the circumstances show that Arlene's work was
necessary and desirable to Fuji, then she is
presumed to be a regular employee. The burden
of proving that she was an independent
contractor lies with Fuji.
3. In labor cases, the quantum of proof required is
substantial evidence. "Substantial evidence" has
 been defined as "such amount of relevant
evidence which a reasonable mind might accept
as adequate to justify a conclusion."
4. If Arlene was a regular employee, we then
determine whether she was illegally dismissed. In
complaints for illegal dismissal, the burden of
proof is on the employee to prove the fact of
dismissal. Once the employee establishes the
fact of dismissal, supported by substantial
evidence, the burden of proof shifts to the
employer to show that there was a just or
authorized cause for the dismissal and that due
process was observed.
ON REGULAR EMPLOYMENT
1. Art. 280. Regular and casual employment. —
The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement
of the parties, an employment shall be deemed to be
regular where the employee has been engaged to
perform activities which are usually necessary or
desirable in the usual business or trade of the
employer, except where the employment has been
fixed for a specific project or undertaking the
completion or termination of which has been
determined at the time of the engagement of the
employee or where the work or services to be
performed is seasonal in nature and the employment
is for the duration of the season.
2. This provision classifies employees into regular,
project, seasonal, and casual. It further classifies
regular employees into two kinds: (1) those "engaged
to perform activities which are usually necessary or
desirable in the usual business or trade of the
employer"; and (2) casual employees who have
"rendered at least one year of service, whether such
service is continuous or broken."
ON FIXED TERM CONTRACTUAL EMPLOYEE
1. GMA Network, Inc. v. Pabriga : Logically, the
decisive determinant in the term employment
should not be the activities that the employee is
called upon to perform, but the day certain
agreed upon by the parties for the
commencement and termination of their
employment relationship, a day certain being
understood to be "that which must necessarily
come, although it may not be known when."
2. The validity of the fixed-term contract (Brent
Doctrine)
a. The fixed period of employment was
knowingly and voluntarily agreed upon by
the parties without any force, duress, or
improper pressure being brought to bear
upon the employee and absent any other
circumstances vitiating his consent; or
b. It satisfactorily appears that the employer
and the employee dealt with each other
on more or less equal terms with no
moral dominance exercised by the
former or the latter.
3. Labayog v. M.Y. San Biscuits, Inc: Contracts of
employment for a fixed period are not unlawful.
What is objectionable is the practice of some
scrupulous employers who try to circumvent the
law protecting workers from the capricious
termination of employment.
ON INDEPENDENT CONTRACTOR
1. Independent contractor is defined as: . . . one who
carries on a distinct and independent business
and undertakes to perform the job, work, or
service on its own account and under one's own
responsibility according to one's own manner and
method, free from the control and direction of the
principal in all matters connected with the
performance of the work except as to the results
thereof
2. Art. 106. Contractor or subcontractor. —
Whenever an employer enters into a contract with
another person for the performance of the
former's work, the employees of the contractor
and of the latter's subcontractor, if any, shall be
paid in accordance with the provisions of this
Code
The Secretary of Labor and Employment may, by
appropriate regulations, restrict or prohibit the
contracting-out of labor to protect the rights of
workers established under this Code. In so
prohibiting or restricting, he may make
appropriate distinctions between labor-only
contracting and job contracting as well as
differentiations within these types of contracting
and determine who among the parties involved
shall be considered the employer for purposes of
this Code, to prevent any violation or
circumvention of any provision of this Code.
There is "labor-only" contracting where the
person supplying workers to an employer does
not have substantial capital or investment in the
form of tools, equipment, machineries, work
 premises, among others, and the workers
recruited and placed by such person are
performing activities which are directly related to
the principal business of such employer. In such
cases, the person or intermediary shall be
considered merely as an agent of the employer
who shall be responsible to the workers in the
same manner and extent as if the latter were
directly employed by him
3. Department Order No. 18-A: Section 3. . . . (c) . .
. an arrangement whereby a principal agrees to
put out or farm out with a contractor the
performance or completion of a specific job, work
or service within a definite or predetermined
period, regardless of whether such job, work or
service is to be performed or completed within or
outside the premises of the principal.
4. This department order also states that there is a
trilateral relationship in legitimate job contracting
and subcontracting arrangements among the
principal, contractor, and employees of the
contractor. There is no employer-employee
relationship between the contractor and principal
who engages the contractor's services, but there
is an employer-employee relationship between
the contractor and workers hired to accomplish
the work for the principal.
5. Cases:
- Orozco v. Court of Appeals, Wilhelmina Orozco
was a columnist for the Philippine Daily Inquirer.
This court ruled that she was an independent
contractor because of her "talent, skill,
experience, and her unique viewpoint as a
feminist advocate." In addition, the Philippine
Daily Inquirer did not have the power of control
over Orozco, and she worked at her own
pleasure.
- Semblante v. Court of Appeals involved a
masiador and a sentenciador. This court ruled
that "petitioners performed their functions as
masiador and sentenciador free from the
direction and control of respondents" and that the
masiador and sentenciador "relied mainly on their
'expertise that is characteristic of the cockfight
gambling.'" Hence, no employer-employee
relationship existed.
- Bernarte v. Philippine Basketball Association
involved a basketball referee. This court ruled
that "a referee is an independent contractor,
whose special skills and independent judgment
are required speci7cally for such position and
cannot possibly be controlled by the hiring party.
6. In other words, there are different kinds of
independent contractors: those engaged in
legitimate job contracting and those who have
unique skills and talents that set them apart from
ordinary employees. Since no employer-
employee relationship exists between
independent contractors and their principals, their
contracts are governed by the Civil Code
provisions on contracts and other applicable
laws.
RULING:
YES. Espiritu is a regular employee
1. Fuji's argument that Arlene was an independent
contractor under a fixed-term contract is
contradictory. Employees under fixed-term
contracts cannot be independent contractors
because in fixed-term contracts, an employer-
employee relationship exists. The test in this kind
of contract is not the necessity grid desirability of
the employee's activities, "but the day certain
agreed upon by the parties for the
commencement and termination of the
employment relationship." For regular
employees, the necessity and desirability of their
work in the usual course of the employer's
business are the determining factors. On the
other hand, independent contractors do not have
employer-employee relationships with their
principals.
2. Here, the Court of Appeals applied Sonza v. ABS-
CBN and Dumpit-Murillo v. Court of Appeals in
determining whether Arlene was an independent
contractor or a regular employee.
3. In deciding Sonza and Dumpit-Murillo, this court
used the four-fold test. Both cases involved
newscasters and anchors. However, Sonza was
held to be an independent contractor, while
Dumpit-Murillo was held to be a regular employee
SONZA and DUMPIT-MURILLO Case distinguished
1. Sonza was engaged by ABS-CBN in view of his
"unique skills, talent and celebrity status not
possessed by ordinary employees." His work was
for radio and television programs. On the other
hand, Dumpit-Murillo was hired by ABC as a
newscaster and co-anchor.
2. Sonza's talent fee amounted to P317,000.00 per
month, which this court found to be a substantial
amount that indicated he was an independent
contractor rather than a regular employee.
Meanwhile, Dumpit-Murillo's monthly salary was
P28,000.00, a very low amount compared to what
Sonza received.
3. Sonza was unable to prove that ABS-CBN could
terminate his services apart from breach of
contract. There was no indication that he could be
terminated based on just or authorized causes
under the Labor Code. In addition, ABS-CBN
continued to pay his talent fee under their
agreement, even though his programs were no
longer broadcasted. Dumpit-Murillo was found to
have been illegally dismissed by her employer
when they did not renew her contract on her
fourth year with ABC.
4. In Sonza, this court ruled that ABS-CBN did not
control how Sonza delivered his lines, how he
appeared on television, or how he sounded on
radio. All that Sonza needed was his talent.
Further, "ABS-CBN could not terminate or
discipline SONZA even if the means and methods
of performance of his work . . . did not meet ABS-
CBN's approval." In Dumpit-Murillo, the duties
and responsibilities enumerated in her contract
was a clear indication that ABC had control over
her work.
The Control Test
1. Her contract also indicated that Fuji had control
over her work because she was required to work
for eight (8) hours from Monday to Friday,
although on flexible time.
2. Arlene alleged that Fuji gave her instructions on
what to report. Even the mode of transportation in
carrying out her functions was controlled by Fuji.
Paragraph 6 of her contract states: During the
travel to carry out work, if there is change of place
or change of place of work, the train, bus, or
public transport shall be used for the trip. If the
Employee uses the private car during the work
and there is an accident the Employer shall not
be responsible for the damage, which may be
caused to the Employee.
- The Court of Appeals affirmed the finding of the
National Labor Relations Commission that the
successive renewals of Arlene's contract
indicated the necessity and desirability of her
work in the usual course of Fuji's business.
Because of this, Arlene had become a regular
employee with the right to security of tenure.
YES. Espiritu was illegally dismissed
1. As a regular employee, Arlene was entitled to
security of tenure and could be dismissed only for
just or authorized causes and after the
observance of due process.
2. Art. 279. Security of tenure. — In cases of
regular employment, the employer shall not
terminate the services of an employee except for
a just cause of when authorized by this Title. An
employee who is unjustly dismissed from work
shall be entitled to reinstatement without loss of
seniority rights and other privileges and to his full
backwages, inclusive of allowances, and to his
other benefits or their monetary equivalent
computed from the time his compensation was
withheld from him up to the time of his actual
reinstatement
3. The expiration of Arlene's contract does not
negate the finding of illegal dismissal by Fuji. The
manner by which Fuji informed Arlene that her
contract would no longer be renewed is
tantamount to constructive dismissal. To make
matters worse, Arlene was asked to sign a letter
of resignation prepared by Fuji. The existence of
a fixed-term contract should not mean that there
can be no illegal dismissal. Due process must still
be observed in the pre-termination of fixed-term
contracts of employment.
4. Disease as a ground for termination is recognized
under Article 284
5. For dismissal under Article 284 to be valid, two
requirements must be complied with:
(1) The employee's disease cannot be cured
within six (6) months and his "continued
employment is prohibited by law or prejudicial
to his health as well as to the health of his co-
employees"; and
(2) Certification issued by a competent public
health authority that even with proper medical
treatment, the disease cannot be cured within
six (6) months.
6. The burden of proving compliance with these
requisites is on the employer. Noncompliance
 leads to the conclusion that the dismissal was
illegal
7. There is no evidence showing that Arlene was
accorded due process. After informing her
employer of her lung cancer, she was not given
the chance to present medical certificates. Fuji
immediately concluded that Arlene could no
longer perform her duties because of
chemotherapy. It did not ask her how her
condition would affect her work. Neither did it
suggest for her to take a leave, even though she
was entitled to sick leaves. Worse, it did not
present any certificate from a competent public
health authority. What Fuji did was to inform her
that her contract would no longer be renewed,
and when she did not agree, her salary was
withheld
The Labor Arbiter rendered his Decision dated 8 July
1997 dismissing the complaint for lack of jurisdiction.
SONZA contends that the Labor Arbiter has jurisdiction
over the case because he was an employee of ABS-CBN.
On the other hand, ABS-CBN insists that the Labor Arbiter
has no jurisdiction because SONZA was an independent
contractor.
ISSUE:
Whether or not SONZA was an employee of ABSCBN
entitling him the benefits granted under the Labor Code.
HELD:
No. Sonza was not an employee of ABSCBN. He
was an independent contractor.

Case law has consistently held that the elements of

10. Sonza vs. ABSCBN Broadcasting
an employer-employee relationship are: (a) the selection
Corporation
and engagement of the employee; (b) the payment of
wages; (c) the power of dismissal; and (d) the employer’s
G.R. No. 138051 | June 10, 2014 | Carpio, J.:
power to control the employee on the means and methods
by which the work is accomplished. The last element, the
FACTS:
so-called “control test”, is the most important element.
In May 1994, respondent ABS-CBN Broadcasting
A. Selection and Engagement of Employee
Corporation (“ABS-CBN”) signed an Agreement
(“Agreement”) with the Mel and Jay Management and
Development Corporation (“MJMDC”). ABS-CBN was
ABS-CBN engaged SONZA’s services to co-host its
represented by its corporate officers while MJMDC was
television and radio programs because of SONZA’s
represented by SONZA, as President and General
peculiar skills, talent and celebrity status. Independent
Manager, and Carmela Tiangco (“TIANGCO”), as EVP
contractors often present themselves to possess unique
and Treasurer. Referred to in the Agreement as “AGENT,”
skills, expertise or talent to distinguish them from ordinary
MJMDC agreed to provide SONZA’s services exclusively
employees. The specific selection and hiring of SONZA,
to ABS-CBN as talent for radio and television.
because of his unique skills, talent and celebrity
status not possessed by ordinary employees, is a
ABS-CBN agreed to pay for SONZA’s services a
circumstance indicative, but not conclusive, of an
monthly talent fee of P310,000 for the first year and
independent contractual relationship. If SONZA did not
P317,000 for the second and third year of the Agreement.
possess such unique skills, talent and celebrity status,
ABS-CBN would pay the talent fees on the 10th and 25th
ABS-CBN would not have entered into the Agreement
days of the month.
with SONZA but would have hired him through its
On 30 April 1996, SONZA filed a complaint against personnel department just like any other employee. In any
ABS-CBN before the Department of Labor and event, the method of selecting and engaging SONZA
Employment, National Capital Region in Quezon City. does not conclusively determine his status. We must
SONZA complained that ABS-CBN did not pay his consider all the circumstances of the relationship, with the
salaries, separation pay, service incentive leave pay, 13th control test being the most important element.
month pay, signing bonus, travel allowance and amounts
B. Payment of Wages
due under the Employees Stock Option Plan (“ESOP”).
On 10 July 1996, ABS-CBN filed a Motion to Dismiss on
All the talent fees and benefits paid to SONZA were
the ground that no employer-employee relationship
the result of negotiations that led to the Agreement. If
existed between the parties. SONZA filed an Opposition
SONZA were ABS-CBN’s employee, there would be no
to the motion on 19 July 1996.
need for the parties to stipulate on benefits such as “SSS,
Medicare, x x x and 13th month pay” which the law
automatically incorporates into every employer-employee
contract. Whatever benefits SONZA enjoyed arose from
contract and not because of an employer-employee
relationship.
B. Power of Dismissal
During the life of the Agreement, ABS-CBN agreed to
pay SONZA’s talent fees as long as “AGENT and Jay
Sonza shall faithfully and completely perform each
condition of this Agreement.”[24] Even if it suffered severe
business losses, ABS-CBN could not retrench SONZA
because ABS-CBN remained obligated to pay SONZA’s
talent fees during the life of the Agreement. This
circumstance indicates an independent contractual
relationship between SONZA and ABS-CBN.
C. Power of Control
The United States Court of Appeals, First Circuit,
recently held in Alberty-Vélez v. Corporación De Puerto
Rico Para La Difusión Pública (“WIPR”) that a
television program host is an independent contractor.
First, a television actress is a skilled position requiring
talent and training not available on-the-job. Second,
Alberty provided the “tools and instrumentalities”
necessary for her to perform. Third, WIPR could not
assign Alberty work in addition to filming “Desde Mi
Pueblo.”
Applying the control test to the present case, we find
that SONZA is not an employee but an independent
contractor. The control test is the most important test our
courts apply in distinguishing an employee from an
independent contractor.[29] This test is based on the extent
of control the hirer exercises over a worker. The greater
the supervision and control the hirer exercises, the more
likely the worker is deemed an employee. The converse
holds true as well – the less control the hirer exercises,
the more likely the worker is considered an independent
contractor
Firstly, ABS-CBN engaged SONZA’s services
specifically to co-host the “Mel & Jay” programs. ABS-
CBN did not assign any other work to SONZA. To perform
his work, SONZA only needed his skills and talent. How
SONZA delivered his lines, appeared on television, and
sounded on radio were outside ABS-CBN’s control.
SONZA did not have to render eight hours of work per
day. The Agreement required SONZA to attend only
rehearsals and tapings of the shows, as well as pre- and
post-production staff meetings.[31] ABS-CBN could not
dictate the contents of SONZA’s script. However, the
Agreement prohibited SONZA from criticizing in his shows
ABS-CBN or its interests.[32] The clear implication is that
SONZA had a free hand on what to say or discuss in his
shows provided he did not attack ABS-CBN or its
interests.
We find that ABS-CBN was not involved in the actual
performance that produced the finished product of
SONZA’s work.[33] ABS-CBN did not instruct SONZA how
to perform his job. ABS-CBN merely reserved the right to
modify the program format and airtime schedule “for more
effective programming.”[34] ABS-CBN’s sole concern was
the quality of the shows and their standing in the ratings.
Clearly, ABS-CBN did not exercise control over the
means and methods of performance of SONZA’s work.
In Vaughan, et al. v. Warner, et al., the United States
Circuit Court of Appeals ruled that vaudeville performers
were independent contractors although the management
reserved the right to delete objectionable features in their
shows. Since the management did not have control over
the manner of performance of the skills of the artists, it
could only control the result of the work by deleting
objectionable features.
No doubt, ABS-CBN supplied the equipment, crew
and airtime needed to broadcast the “Mel & Jay”
programs. However, the equipment, crew and airtime are
not the “tools and instrumentalities” SONZA needed to
perform his job. What SONZA principally needed were his
talent or skills and the costumes necessary for his
appearance. [38] Even though ABS-CBN provided SONZA
with the place of work and the necessary equipment,
SONZA was still an independent contractor since ABS-
CBN did not supervise and control his work. ABS-CBN’s
sole concern was for SONZA to display his talent during
the airing of the programs. A radio broadcast specialist
who works under minimal supervision is an independent
contractor.[40] SONZA’s work as television and radio
program host required special skills and talent, which
SONZA admittedly possesses. The records do not show
that ABS-CBN exercised any supervision and control over
how SONZA utilized his skills and talent in his shows.
Secondly, SONZA urges us to rule that he was ABS-
CBN’s employee because ABS-CBN subjected him to its
rules and standards of performance. We find that these
general rules are merely guidelines towards the
achievement of the mutually desired result, which are top-
rating television and radio programs that comply with
standards of the industry. Logically, the line should be
drawn between rules that merely serve as guidelines
towards the achievement of the mutually desired result
without dictating the means or methods to be employed in
attaining it, and those that control or fix the methodology
and bind or restrict the party hired to the use of such
means. The first, which aim only to promote the result,
create no employer-employee relationship unlike the
second, which address both the result and the means
used to achieve it. The Vaughan case also held that one
could still be an independent contractor although the hirer
reserved certain supervision to insure the attainment of
the desired result. The hirer, however, must not deprive
the one hired from performing his services according to
his own initiative.
Lastly, SONZA insists that the “exclusivity clause” in
the Agreement is the most extreme form of control which
ABS-CBN exercised over him. This argument is futile.
Being an exclusive talent does not by itself mean that
SONZA is an employee of ABS-CBN. Even an
independent contractor can validly provide his services
exclusively to the hiring party. In the broadcast industry,
exclusivity is not necessarily the same as control. The
hiring of exclusive talents is a widespread and accepted
practice in the entertainment industry. This practice is not
designed to control the means and methods of work of the
talent, but simply to protect the investment of the
broadcast station. The broadcast station normally spends
substantial amounts of money, time and effort “in building
up its talents as well as the programs they appear in and
thus expects that said talents remain exclusive with the
station for a commensurate period of time.
MJMDC as Agent of SONZA
SONZA protests the Labor Arbiter’s finding that he is
a talent of MJMDC, which contracted out his services to
ABS-CBN. The Labor Arbiter ruled that as a talent of
MJMDC, SONZA is not an employee of ABS-CBN.
SONZA insists that MJMDC is a “labor-only” contractor
and ABS-CBN is his employer.
In a labor-only contract, there are three parties
involved: (1) the “labor-only” contractor; (2) the employee
who is ostensibly under the employ of the “labor-only”
contractor; and (3) the principal who is deemed the real
employer. Under this scheme, the “labor-only”
contractor is the agent of the principal. The law makes
the principal responsible to the employees of the “labor-
only contractor” as if the principal itself directly hired or
employed the employees.[48] These circumstances are not
present in this case.
There are essentially only two parties involved under
the Agreement, namely, SONZA and ABS-CBN. MJMDC
merely acted as SONZA’s agent. The Agreement
expressly states that MJMDC acted as the “AGENT” of
SONZA. The records do not show that MJMDC acted as
ABS-CBN’s agent. MJMDC, which stands for Mel and Jay
Management and Development Corporation, is a
corporation organized and owned by SONZA and
TIANGCO. The President and General Manager of
MJMDC is SONZA himself. It is absurd to hold that
MJMDC, which is owned, controlled, headed and
managed by SONZA, acted as agent of ABS-CBN in
entering into the Agreement with SONZA, who himself is
represented by MJMDC. That would make MJMDC the
agent of both ABS-CBN and SONZA.
As SONZA admits, MJMDC is a management
company devoted exclusively to managing the careers
of SONZA and his broadcast partner, TIANGCO. MJMDC
is not engaged in any other business, not even job
contracting. MJMDC does not have any other function
apart from acting as agent of SONZA or TIANGCO to
promote their careers in the broadcast and television
industry.
Nature of SONZA’s Claims
SONZA seeks the recovery of allegedly unpaid talent
fees, 13th month pay, separation pay, service incentive
leave, signing bonus, travel allowance, and amounts due
under the Employee Stock Option Plan. We agree with
the findings of the Labor Arbiter and the Court of Appeals
that SONZA’s claims are all based on the May 1994
Agreement and stock option plan, and not on the
Labor Code. Clearly, the present case does not call for
an application of the Labor Code provisions but an
interpretation and implementation of the May 1994
Agreement. In effect, SONZA’s cause of action is for
breach of contract which is intrinsically a civil dispute
cognizable by the regular courts.
[G.R. No. 120969. January 22, 1998]
11. ALEJANDRO MARAGUINOT, JR. and
PAULINO ENERO, petitioners, vs. NATIONAL
LABOR RELATIONS COMMISSION (SECOND
DIVISION) composed of Presiding
Commissioner RAUL T. AQUINO,
Commissioner ROGELIO I. RAYALA and
Commissioner VICTORIANO R. CALAYCAY
(Ponente), VIC DEL ROSARIO and VIVA
FILMS
Facts
Petitioners Maraguinot and Enero maintains that they
were employed as a members of the filming crew. Their
tasks consisted of loading, unloading and arranging
movie equipment in the shooting area as instructed by the
cameraman, returning the equipment to Viva Films’
warehouse, assisting in the “fixing” of the lighting system,
and performing other tasks that the cameraman and/ or
director may assign.
In May 1992, petitioners sought the assistance of their
supervisor, Mrs. Alejandria Cesario, to facilitate their
request that private respondents adjust their salary in
accordance with the minimum wage law. On June 1992,
Mrs. Cesario informed petitioners that Mr. Vic del Rosario
would agree to increase their salary only if they signed a
blank employment contract. Both petitioners refused to
sign, respondents forced Enero to go on leave. However,
when here ported to work, respondent refused
to take him back. Maraguinot was dropped from the
company payroll but when his name was again included
in such, he was again asked to sign a blank employment
contract, and when he still refused, respondent’s
terminated his services. Petitioners thus sued for illegal
dismissal.
Private respondents claim that Viva Films is primarily
engaged in the distribution and exhibition of movies -- but
not in the business of making movies; in the same vein,
private respondent Vic Del Rosario is merely an executive
producer, i.e., the financier who invests a certain sum of
money for the production of movies distributed and
exhibited by VIVA. Private respondents assert that they
contract persons called “producers” --also referred to as
“associate producers”-- to “produce” or make movies for
private respondents. Petitioners are project employees of
the associate producers who, in turn, act as independent
contractors. As such, there is no employer-employee
relationship. The labor arbiter ruled in favor of the
petitioners. On appeal, the NLRC reversed the decision
hence, this appeal.
Issues
WON there is an employer - employee relationship
between petitioners and private respondents
Decision
Yes. Petitioners cannot be considered as project
employees of associate producers who, in turn, act as
independent contractors. It is settled that the contracting
out of labor is allowed only in case of job contracting.
According to Sec. 8 rule 8 book 3 of the Omnibus Rules
Implementing the Labor Code such is only permissible
when (1) The contractor carries on an independent
business and undertakes the contract work on his own
account under his own responsibility according to his own
manner and method free from the control and direction of
his employer or principal in all matters connected with the
performance of the work except as to the results thereof
and (2) The contractor has substantial capital or
investment in the form of tools, equipment, machineries,
work premises, and other materials which are necessary
in the conduct of his business. In the case associate
producers do not have the equipment; in fact, it is VIVA
itself who supplies the movie-making equipment. The
associate producers of VIVA cannot be considered labor-
only contractors as they did not supply, recruit nor hire the
workers. It was Cesario, the Shooting Supervisor of VIVA,
who recruited crew members. Thus, the relationship
between VIVA and its producers or associate producers
seems to be that of agency. The latter make movies on
behalf of VIVA, whose business is to “make” movies. As
such, the employment relationship between petitioners
and producers is actually one between petitioners and
VIVA, with the latter being the direct employer.
The employer-employee relationship between petitioners
and VIVA can further be established by the “control test.”
While four elements are usually considered in determining
the existence of an employment relationship, namely: (a)
the selection and engagement of the employee; (b) the
payment of wages; (c) the power of dismissal; and (d) the
employer’s power to control the employee’s conduct, the
most important element is the employer’s control of the
employee’s conduct, not only as to the result of the work
to be done but also as to the means and methods to
accomplish the same. All of which are present in the case.
The movie project must be finished within schedule
without exceeding the budget, and additional expenses
must be justified; certain scenes are subject to change to
suit the taste of the company; and the Supervising
Producer, the “eyes and ears” of VIVA and del Rosario,
intervenes in the movie-making process by assisting the
associate producer in solving problems encountered in
making the film.
Regarding the Illegal Dismissal, petitioners although
admitted that they were hired as project employees, they
had attained the status of regular employees in view of
VIVA’s conduct. A project employee or a member of a
work pool may acquire the status of a regular employee
when the following concur: (1) There is a continuous
rehiring of project employees even after cessation of a
project; and (2) The tasks performed by the alleged
“project employee” are vital, necessary and indispensable
to the usual business or trade of the employer.
The evidence on record shows that petitioner Enero was
employed for a total of two (2) years and engaged in at
least eighteen (18) projects, while petitioner Maraguinot
was employed for some three (3) years and worked on at
least twenty-three (23) projects. Moreover, as petitioners’
tasks involved, among other chores, the loading,
unloading and arranging of movie equipment in the
shooting area as instructed by the cameramen, returning
the equipment to the Viva Films’ warehouse, and
assisting in the “fixing” of the lighting system, it may not
be gainsaid that these tasks were vital, necessary and
indispensable to the usual business or trade of the
employer.
As petitioners had already gained the status of regular
employees, their dismissal was unwarranted, for the
cause invoked by private respondents for petitioners’
dismissal, viz., completion of project, was not, as to them,
a valid cause for dismissal under Article 282 of the Labor
Code. As such, petitioners are now entitled to back wages
and reinstatement, without loss of seniority rights and
other benefits that may have accrued.
PETITION GRANTED
NOTE:
A work pool may exist although the workers in the pool do
not receive salaries and are free to seek other
employment during temporary breaks in the business,
provided that the worker shall be available when called to
report for a project.
Although primarily applicable to regular seasonal workers,
this set-up can likewise be applied to project workers
insofar as the effect of temporary cessation of work is
concerned.
This is beneficial to both the employer and employee for
it prevents the unjust situation of “coddling labor at the
expense of capital” and at the same time enables the
workers to attain the status of regular employees.
Truly, the cessation of construction activities at the end of
every project is a foreseeable suspension of work. Of
course, no compensation can be demanded from the
employer because the stoppage of operations at the end
of a project and before the start of a new one is regular
and expected by both parties to the labor relations. Similar
to the case of regular seasonal employees, the
employment relation is not severed by merely being
suspended. [citing Manila Hotel Co. v. CIR, 9 SCRA 186
(1963)] The employees are, strictly speaking, not
separated from services but merely on leave of absence
without pay until they are reemployed. Thus we cannot
affirm the argument that non-payment of salary or non-
inclusion in the payroll and the opportunity to seek other
employment denote project employment.
12. *BITOY JAVIER (DANILO P. JAVIER) v. FLY
ACE CORPORATION/FLORDELYN CASTILLO
G.R. No. 192558
This is a petition under Rule 45 of the Rules of
Civil Procedure assailing the March 18, 2010
Decision[1] of the Court of Appeals (CA) and its June 7,
2010 Resolution,[2]in CA-G.R. SP No. 109975, which
reversed the May 28, 2009 Decision[3] of the National
Labor Relations Commission (NLRC) in the case
entitled Bitoy Javier v. Fly Ace/Flordelyn
Castillo,[4] holding that petitioner Bitoy Javier (Javier) was
illegally dismissed from employment and ordering Fly Ace
Corporation (Fly Ace) to pay backwages and separation
pay in lieu of reinstatement.
Antecedent Facts
On May 23, 2008, Javier filed a complaint before the
NLRC for underpayment of salaries and other labor
standard benefits. He alleged that he was an employee of
Fly Ace since September 2007, performing various tasks
at the respondents warehouse such as cleaning and
arranging the canned items before their delivery to certain
locations, except in instances when he would be ordered
to accompany the companys delivery vehicles,
as pahinante; that he reported for work from Monday to
Saturday from 7:00 oclock in the morning to 5:00 oclock
in the afternoon; that during his employment, he was not
issued an identification card and payslips by the
company; that on May 6, 2008, he reported for work but
he was no longer allowed to enter the company premises
by the security guard upon the instruction of Ruben
Ong (Mr. Ong), his superior;[5] that after several minutes
of begging to the guard to allow him to enter, he saw Ong
whom he approached and asked why he was being
barred from entering the premises; that Ong replied by
saying, Tanungin mo anak mo; [6] that he then went home
and discussed the matter with his family; that he
discovered that Ong had been courting his daughter
Annalyn after the two met at a fiesta celebration in
Malabon City; that Annalyn tried to talk to Ong and
convince him to spare her father from trouble but he
refused to accede; that thereafter, Javier was terminated
from his employment without notice; and that he was
neither given the opportunity to refute the cause/s of his
dismissal from work.
 To support his allegations, Javier presented an
affidavit of one Bengie Valenzuela who alleged that Javier
was a stevedore or pahinante of Fly Ace from September
2007 to January 2008. The said affidavit was subscribed
before the Labor Arbiter (LA).[7]
For its part, Fly Ace averred that it was engaged
in the business of importation and sales of groceries.
Sometime in December 2007, Javier was contracted by
its employee, Mr. Ong, as extra helper on a pakyaw basis
at an agreed rate of ₱300.00 per trip, which was later
increased to ₱325.00 in January 2008. Mr. Ong
contracted Javier roughly 5 to 6 times only in a month
whenever the vehicle of its contracted hauler, Milmar
Hauling Services, was not available. On April 30, 2008,
Fly Ace no longer needed the services of Javier. Denying
that he was their employee, Fly Ace insisted that there
was no illegal dismissal.[8] Fly Ace submitted a copy of its
agreement with Milmar Hauling Services and copies of
acknowledgment receipts evidencing payment to Javier
for his contracted services bearing the words, daily
manpower (pakyaw/piece rate pay) and the latters
signatures/initials.
Ruling of the Labor Arbiter
On November 28, 2008, the LA dismissed the
complaint for lack of merit on the ground that Javier failed
to present proof that he was a regular employee of Fly
Ace. He wrote:
Complainant has no employee
ID showing his employment with the
Respondent nor any document showing
that he received the benefits accorded to
regular employees of the Respondents.
His contention that Respondent failed to
give him said ID and payslips implies
that indeed he was not a regular
employee of Fly Ace considering that
complainant was a helper and that
Respondent company has contracted a
regular trucking for the delivery of its
products.
Respondent Fly Ace is not
engaged in trucking business but in the
importation and sales of groceries. Since
there is a regular hauler to deliver its
products, we give credence to
Respondents claim that complainant
was contracted on pakiao basis.
As to the claim for underpayment
of salaries, the payroll presented by the
Respondents showing salaries of
workers on pakiao basis has evidentiary
weight because although the signature
of the complainant appearing thereon
are not uniform, they appeared to be his
true signature.
xxxx
Hence, as complainant received
the rightful salary as shown by the above
described payrolls, Respondents are not
liable for salary differentials. [9]
Ruling of the NLRC
On appeal with the NLRC, Javier was favored. It ruled
that the LA skirted the argument of Javier and immediately
concluded that he was not a regular employee simply
because he failed to present proof. It was of the view that
a pakyaw-basis arrangement did not preclude the
existence of employer-employee relationship. Payment
by result x x x is a method of compensation and does not
define the essence of the relation. It is a mere method of
computing compensation, not a basis for determining the
existence or absence of an employer-employee
relationship.[10] The NLRC further averred that it did not
follow that a worker was a job contractor and not an
employee, just because the work he was doing was not
directly related to the employers trade or business or the
work may be considered as extra helper as in this case;
and that the relationship of an employer and an employee
was determined by law and the same would prevail
whatever the parties may call it. In this case, the NLRC
held that substantial evidence was sufficient basis for
judgment on the existence of the employer-employee
relationship. Javier was a regular employee of Fly Ace
because there was reasonable connection between the
particular activity performed by the employee (as a
pahinante) in relation to the usual business or trade of the
employer (importation, sales and delivery of groceries).
He may not be considered as an independent contractor
because he could not exercise any judgment in the
delivery of company products. He was only engaged as a
helper.
Finding Javier to be a regular employee, the
NLRC ruled that he was entitled to a security of tenure.
For failing to present proof of a valid cause for his
termination, Fly Ace was found to be liable for illegal
dismissal of Javier who was likewise entitled to
backwages and separation pay in lieu of reinstatement.
The NLRC thus ordered:
WHEREFORE, premises
considered, complainants appeal is
partially GRANTED. The assailed
Decision of the labor arbiter is
VACATED and a new one is hereby
entered holding respondent FLY ACE
CORPORATION guilty of illegal
dismissal and non-payment of
th
13 month pay. Consequently, it is
hereby ordered to pay complainant
DANILO Bitoy JAVIER the following:
1. Backwages -₱45,770.83
2. Separation pay, in lieu of
reinstatement - 8,450.00
3. Unpaid 13th month pay
(proportionate) - 5,633.33
TOTAL -₱59,854.16
All other claims are dismissed for
lack of merit.
SO ORDERED.[11]
Ruling of the Court of Appeals
On March 18, 2010, the CA annulled the NLRC
findings that Javier was indeed a former employee of Fly
Ace and reinstated the dismissal of Javiers complaint as
ordered by the LA. The CA exercised its authority to make
its own factual determination anent the issue of the
existence of an employer-employee relationship between
the parties.According to the CA:
xxx
In an illegal dismissal case
the onus probandi rests on the employer
to prove that its dismissal was for a valid
cause. However, before a case for illegal
dismissal can prosper, an employer-
employee relationship must first be
established. x x x it is incumbent upon
private respondent to prove the
employee-employer relationship by
substantial evidence.
xxx
It is incumbent upon private
respondent to prove, by substantial
evidence, that he is an employee of
petitioners, but he failed to discharge his
burden. The non-issuance of a
company-issued identification card to
private respondent supports petitioners
contention that private respondent was
not its employee.[12]
The CA likewise added that Javiers failure to present
salary vouchers, payslips, or other pieces of evidence to
bolster his contention, pointed to the inescapable
conclusion that he was not an employee of Fly
Ace. Further, it found that Javiers work was not
necessary and desirable to the business or trade of the
company, as it was only when there were scheduled
deliveries, which a regular hauling service could not
deliver, that Fly Ace would contract the services of Javier
as an extra helper. Lastly, the CA declared that the facts
alleged by Javier did not pass the control test.
He contracted work outside the company premises; he
was not required to observe definite hours of work; he
was not required to report daily; and he was free to
accept other work elsewhere as there was no exclusivity
of his contracted service to the company, the same being
co-terminous with the trip only.[13] Since no substantial
evidence was presented to establish an employer-
employee relationship, the case for illegal dismissal could to compliance with company rules and regulations as
not prosper. regards working hours, delivery schedule and output, and
his other duties in the warehouse.[16]

The petitioners moved for reconsideration, but to

no avail. The petitioner chiefly relied on Chavez v.
NLRC,[17] where the Court ruled that payment to a worker
on a per trip basis is not significant because this is merely
a method of computing compensation and not a basis for
Hence, this appeal anchored on the following determining the existence of employer-employee
grounds: relationship. Javier likewise invokes the rule that, in
controversies between a laborer and his master, x x x
doubts reasonably arising from the evidence should be
resolved in the formers favour. The policy is reflected is
I.
no less than the Constitution, Labor Code and Civil
Code.[18]
WHETHER THE HONORABLE COURT
OF APPEALS ERRED IN HOLDING
THAT THE PETITIONER WAS NOT A
REGULAR EMPLOYEE OF FLY ACE. Claiming to be an employee of Fly Ace, petitioner
asserts that he was illegally dismissed by the latters
II.
failure to observe substantive and procedural due
process. Since his dismissal was not based on any of the
WHETHER THE HONORABLE COURT
causes recognized by law, and was implemented without
OF APPEALS ERRED IN HOLDING
notice, Javier is entitled to separation pay and
THAT THE PETITIONER IS NOT
backwages.
ENTITLED TO HIS MONETARY
CLAIMS.[14]

In its Comment,[19] Fly Ace insists that there was

no substantial evidence to prove employer-employee
The petitioner contends that other than its bare
relationship. Having a service contract with Milmar
allegations and self-serving affidavits of the other
Hauling Services for the purpose of transporting and
employees, Fly Ace has nothing to substantiate its claim
delivering company products to customers, Fly Ace
that Javier was engaged on a pakyaw basis. Assuming
contracted Javier as an extra helper or pahinante on a
that Javier was indeed hired on a pakyaw basis, it does
mere per trip basis. Javier, who was actually a loiterer in
not preclude his regular employment with the company.
the area, only accompanied and assisted the company
Even the acknowledgment receipts bearing his signature
driver when Milmar could not deliver or when the exigency
and the confirming receipt of his salaries will not show the
of extra deliveries arises for roughly five to six times a
true nature of his employment as they do not reflect the
month. Before making a delivery, Fly Ace would turn over
necessary details of the commissioned task. Besides,
to the driver and Javier the delivery vehicle with its loaded
Javiers tasks as pahinante are related, necessary and
company products. With the vehicle and products in their
desirable to the line of business by Fly Ace which is
custody, the driver and Javier would leave the company
engaged in the importation and sale of grocery items. On
premises using their own means, method, best judgment
days when there were no scheduled deliveries, he worked
and discretion on how to deliver, time to deliver, where
in petitioners warehouse, arranging and cleaning the
and [when] to start, and manner of delivering the
stored cans for delivery to clients.[15] More importantly,
products.[20]
Javier was subject to the control and supervision of the
company, as he was made to report to the office from
Monday to Saturday, from 7:00 oclock in the morning
until 5:00 oclock in the afternoon. The list of deliverable Fly Ace dismisses Javiers claims of employment
goods, together with the corresponding clients and their as baseless assertions. Aside from his bare allegations,
respective purchases and addresses, would necessarily he presented nothing to substantiate his status as an
have been prepared by Fly Ace. Clearly, he was subjected employee. It is a basic rule of evidence that each party
must prove his affirmative allegation. If he claims a right
granted by law, he must prove his claim by competent
evidence, relying on the strength of his own evidence and
not upon the weakness of his opponent.[21] Invoking the
case of Lopez v. Bodega City,[22] Fly Ace insists that in an
illegal dismissal case, the burden of proof is upon the
complainant who claims to be an employee. It is essential
that an employer-employee relationship be proved by
substantial evidence. Thus, it cites:
In an illegal dismissal case,
the onus probandi rests on the employer
to prove that its dismissal of an
employee was for a valid cause.
However, before a case for illegal
dismissal can prosper, an employer-
employee relationship must first be
established.
Fly Ace points out that Javier merely offers factual
assertions that he was an employee of Fly Ace, which are
unfortunately not supported by proof, documentary or
otherwise.[23] Javier simply assumed that he was an
employee of Fly Ace, absent any competent or relevant
evidence to support it. He performed his contracted work
outside the premises of the respondent; he was not even
required to report to work at regular hours; he was not
made to register his time in and time out every time he was
contracted to work; he was not subjected to any
disciplinary sanction imposed to other employees for
company violations; he was not issued a company I.D.; he
was not accorded the same benefits given to other
employees; he was not registered with the Social Security
System (SSS) as petitioners employee; and, he was free
to leave, accept and engage in other means of livelihood
as there is no exclusivity of his contracted services with
the petitioner, his services being co-terminus with the trip
only. All these lead to the conclusion that petitioner is not
an employee of the respondents.[24]
Moreover, Fly Ace claims that it had no right to
control the result, means, manner and methods by which
Javier would perform his work or by which the same is to
be accomplished.[25] In other words, Javier and the
company driver were given a free hand as to how they
would perform their contracted services and neither were
they subjected to definite hours or condition of work.
Fly Ace likewise claims that Javiers function as
a pahinante was not directly related or necessary to its
principal business of importation and sales of groceries.
Even without Javier, the business could operate its usual
course as it did not involve the business of inland
transportation. Lastly, the acknowledgment receipts
bearing Javiers signature and words pakiao rate, referring
to his earned salaries on a per trip basis, have evidentiary
weight that the LA correctly considered in arriving at the
conclusion that Javier was not an employee of the
company.
The Court affirms the assailed CA decision.
It must be noted that the issue of Javiers alleged
illegal dismissal is anchored on the existence of an
employer-employee relationship between him and Fly
Ace. This is essentially a question of fact. Generally, the
Court does not review errors that raise factual questions.
However, when there is conflict among the factual
findings of the antecedent deciding bodies like the LA, the
NLRC and the CA, it is proper, in the exercise of Our
equity jurisdiction, to review and re-evaluate the factual
issues and to look into the records of the case and re-
examine the questioned findings.[26] In dealing with factual
issues in labor cases, substantial evidence that amount of
relevant evidence which a reasonable mind might accept
as adequate to justify a conclusion is sufficient.[27]
As the records bear out, the LA and the CA found
Javiers claim of employment with Fly Ace as wanting and
deficient. The Court is constrained to agree. Although
Section 10, Rule VII of the New Rules of Procedure of the
NLRC[28] allows a relaxation of the rules of procedure and
evidence in labor cases, this rule of liberality does not
mean a complete dispensation of proof. Labor officials are
enjoined to use reasonable means to ascertain the facts
speedily and objectively with little regard to technicalities
or formalities but nowhere in the rules are they provided a
license to completely discount evidence, or the lack of it.
The quantum of proof required, however, must still be
satisfied. Hence, when confronted with conflicting
versions on factual matters, it is for them in the exercise
of discretion to determine which party deserves credence
on the basis of evidence received, subject only to the
requirement that their decision must be supported by
substantial evidence.[29] Accordingly, the petitioner needs
to show by substantial evidence that he was indeed an
employee of the company against which he claims illegal
dismissal.
Expectedly, opposing parties would stand poles
apart and proffer allegations as different as chalk and
cheese. It is, therefore, incumbent upon the Court to
determine whether the party on whom the burden to prove
lies was able to hurdle the same. No particular form of
evidence is required to prove the existence of such
employer-employee relationship. Any competent and
relevant evidence to prove the relationship may be
admitted. Hence, while no particular form of evidence is
required, a finding that such relationship exists must still
rest on some substantial evidence. Moreover, the
substantiality of the evidence depends on its quantitative
as well as its qualitative aspects.[30]Although substantial
evidence is not a function of quantity but rather of quality,
the x x x circumstances of the instant case demand that
something more should have been proffered. Had there
been other proofs of employment, such as x x x inclusion
in petitioners payroll, or a clear exercise of control, the
Court would have affirmed the finding of employer-
employee relationship.[31]
In sum, the rule of thumb remains: the onus
probandi falls on petitioner to establish or substantiate
such claim by the requisite quantum of
evidence.[32] Whoever claims entitlement to the benefits
provided by law should establish his or her right thereto x
x x.[33] Sadly, Javier failed to adduce substantial evidence
as basis for the grant of relief.
In this case, the LA and the CA both concluded
that Javier failed to establish his employment with Fly Ace.
By way of evidence on this point, all that Javier presented
were his self-serving statements purportedly showing his
activities as an employee of Fly Ace. Clearly, Javier failed
to pass the substantiality requirement to support his
claim. Hence, the Court sees no reason to depart from the
findings of the CA.
While Javier remains firm in his position that as
an employed stevedore of Fly Ace, he was made to work
in the company premises during weekdays arranging and
cleaning grocery items for delivery to clients, no other
proof was submitted to fortify his claim. The lone affidavit
executed by one Bengie Valenzuela was unsuccessful in
strengthening Javiers cause. In said document, all
Valenzuela attested to was that he would frequently see
Javier at the workplace where the latter was also hired as
stevedore.[34]Certainly, in gauging the evidence presented
by Javier, the Court cannot ignore the inescapable
conclusion that his mere presence at the workplace falls
short in proving employment therein. The supporting
affidavit could have, to an extent, bolstered Javiers claim
of being tasked to clean grocery items when there were
no scheduled delivery trips, but no information was
offered in this subject simply because the witness had no
personal knowledge of Javiers employment status in the
company. Verily, the Court cannot accept Javiers
statements, hook, line and sinker.
The Court is of the considerable view that on
Javier lies the burden to pass the well-settled tests to
determine the existence of an employer-employee
relationship, viz: (1) the selection and engagement of the
employee; (2) the payment of wages; (3) the power of
dismissal; and (4) the power to control the employees
conduct. Of these elements, the most important criterion
is whether the employer controls or has reserved the right
to control the employee not only as to the result of the
work but also as to the means and methods by which the
result is to be accomplished.[35]
In this case, Javier was not able to persuade the
Court that the above elements exist in his case. He could
not submit competent proof that Fly Ace engaged his
services as a regular employee; that Fly Ace paid his
wages as an employee, or that Fly Ace could dictate what
his conduct should be while at work. In other words,
Javiers allegations did not establish that his relationship
with Fly Ace had the attributes of an employer-employee
relationship on the basis of the above-mentioned four-fold
test. Worse, Javier was not able to refute Fly Aces
assertion that it had an agreement with a hauling
company to undertake the delivery of its goods. It was
also baffling to realize that Javier did not dispute Fly Aces
denial of his services exclusivity to the company. In short,
all that Javier laid down were bare allegations without
corroborative proof.
 favoritism, however, has not blinded the Court to the rule
that justice is in every case for the deserving, to be
Fly Ace does not dispute having contracted Javier dispensed in the light of the established facts and the
and paid him on a per trip rate as a stevedore, albeit on applicable law and doctrine.[39]
a pakyaw basis. The Court cannot fail to note that Fly Ace
presented documentary proof that Javier was indeed paid
on a pakyaw basis per the acknowledgment receipts
admitted as competent evidence by the LA. Unfortunately WHEREFORE, the petition is DENIED.
for Javier, his mere denial of the signatures affixed therein The March 18, 2010 Decision of the Court of Appeals and
cannot automatically sway us to ignore the documents its June 7, 2010 Resolution, in CA-G.R. SP No. 109975,
because forgery cannot be presumed and must be proved are hereby AFFIRMED.
by clear, positive and convincing evidence and the burden
of proof lies on the party alleging forgery. [36] SO ORDERED.

Considering the above findings, the Court does

not see the necessity to resolve the second issue
presented.

One final note. The Courts decision does not

contradict the settled rule that payment by the piece is just
a method of compensation and does not define the
essence of the relation.[37] Payment on a piece-rate basis
does not negate regular employment. The term wage is
broadly defined in Article 97 of the Labor Code as
remuneration or earnings, capable of being expressed in
terms of money whether fixed or ascertained on a time,
task, piece or commission basis. Payment by the piece is
just a method of compensation and does not define the
essence of the relations. Nor does the fact that the
petitioner is not covered by the SSS affect the employer-
employee relationship. However, in determining whether
the relationship is that of employer and employee or one
of an independent contractor, each case must be
determined on its own facts and all the features of the
relationship are to be considered.[38] Unfortunately for
Javier, the attendant facts and circumstances of the
instant case do not provide the Court with sufficient
reason to uphold his claimed status as employee of Fly
Ace.

While the Constitution is committed to the policy

of social justice and the protection of the working class, it
should not be supposed that every labor dispute will be
automatically decided in favor of labor. Management also
has its rights which are entitled to respect and
enforcement in the interest of simple fair play. Out of its
concern for the less privileged in life, the Court has
inclined, more often than not, toward the worker and
upheld his cause in his conflicts with the employer. Such
 13. *OSCAR VILLAMARIA, JR. V. COURT OF
APPEALS
G.R. No. 165881
Before us is a Petition for Review on Certiorari under Rule
65 of the Revised Rules of Court assailing the
Decision[1] and Resolution[2] of the Court of Appeals (CA)
in CA-G.R. SP No. 78720 which set aside the
Resolution[3] of the National Labor Relations Commission
(NLRC) in NCR-30-08-03247-00, which in turn affirmed
the Decision[4] of the Labor Arbiter dismissing the
complaint filed by respondent Jerry V. Bustamante.
Petitioner Oscar Villamaria, Jr. was the owner of
Villamaria Motors, a sole proprietorship engaged in
assembling passenger jeepneys with a public utility
franchise to operate along the Baclaran-Sucat route. By
1995, Villamaria stopped assembling jeepneys and
retained only nine, four of which he operated by
employing drivers on a boundary basis. One of those
drivers was respondent Bustamante who drove the
jeepney with Plate No. PVU-660. Bustamante
remitted P450.00 a day to Villamaria as boundary and
kept the residue of his daily earnings as compensation for
driving the vehicle. In August 1997, Villamaria verbally
agreed to sell the jeepney to Bustamante under the
boundary-hulog scheme, where Bustamante would remit
to Villarama P550.00 a day for a period of four years;
Bustamante would then become the owner of the vehicle
and continue to drive the same under Villamarias
franchise. It was also agreed that Bustamante would
make a downpayment of P10,000.00.
On August 7, 1997, Villamaria executed a contract
entitled Kasunduan ng Bilihan ng Sasakyan sa
Pamamagitan ng Boundary-Hulog[5] over the passenger
jeepney with Plate No. PVU-660, Chassis No. EVER95-
38168-C and Motor No. SL-26647. The parties agreed
that if Bustamante failed to pay the boundary-hulog for
three days, Villamaria Motors would hold on to the vehicle
until Bustamante paid his arrears, including a penalty
of P50.00 a day; in case Bustamante failed to remit the
daily boundary-hulog for a period of one week,
the Kasunduan would cease to have legal effect and
Bustamante would have to return the vehicle to Villamaria
Motors.
Under the Kasunduan, Bustamante was prohibited from
driving the vehicle without prior authority from Villamaria
Motors. Thus, Bustamante was authorized to operate the
vehicle to transport passengers only and not for other
purposes. He was also required to display an
identification card in front of the windshield of the vehicle;
in case of failure to do so, any fine that may be imposed
by government authorities would be charged against his
account. Bustamante further obliged himself to pay for the
cost of replacing any parts of the vehicle that would be
lost or damaged due to his negligence. In case the vehicle
sustained serious damage, Bustamante was obliged to
notify Villamaria Motors before commencing
repairs. Bustamante was not allowed to wear slippers,
short pants or undershirts while driving. He was required
to be polite and respectful towards the passengers. He
was also obliged to notify Villamaria Motors in case the
vehicle was leased for two or more days and was required
to attend any meetings which may be called from time to
time. Aside from the boundary-hulog, Bustamante was
also obliged to pay for the annual registration fees of the
vehicle and the premium for the vehicles comprehensive
insurance. Bustamante promised to strictly comply with
the rules and regulations imposed by Villamaria for the
upkeep and maintenance of the jeepney.
Bustamante continued driving the jeepney under the
supervision and control of Villamaria. As agreed upon, he
made daily remittances of P550.00 in payment of the
purchase price of the vehicle. Bustamante failed to pay for
the annual registration fees of the vehicle, but Villamaria
allowed him to continue driving the jeepney.
In 1999, Bustamante and other drivers who also had the
same arrangement with Villamaria Motors failed to pay
their respective boundary-hulog. This prompted
Villamaria to serve a Paalala,[6] reminding them that under
the Kasunduan, failure to pay the daily boundary-
hulog for one week, would mean their respective
jeepneys would be returned to him without any
complaints. He warned the drivers that
the Kasunduan would henceforth be strictly enforced and
urged them to comply with their obligation to avoid
litigation.
On July 24, 2000, Villamaria took back the jeepney
driven by Bustamante and barred the latter from driving
the vehicle.
On August 15, 2000, Bustamante filed a Complaint[7] for
Illegal Dismissal against Villamaria and his wife
Teresita. In his Position Paper,[8] Bustamante alleged that
he was employed by Villamaria in July 1996 under the
boundary system, where he was required to
remit P450.00 a day. After one year of continuously
working for them, the spouses Villamaria presented
the Kasunduan for his signature, with the assurance that
he (Bustamante) would own the jeepney by March 2001
after paying P550.00 in daily installments and that he
would thereafter continue driving the vehicle along the
same route under the same franchise. He further narrated
that in July 2000, he informed the Villamaria spouses that
the surplus engine of the jeepney needed to be replaced,
and was assured that it would be done. However, he was
later arrested and his drivers license was confiscated
because apparently, the replacement engine that was
installed was taken from a stolen vehicle. Due to
negotiations with the apprehending authorities, the
jeepney was not impounded. The Villamaria spouses took
the jeepney from him on July 24, 2000, and he was no
longer allowed to drive the vehicle since then unless he
paid them P70,000.00.
Bustamante prayed that judgment be rendered in his
favor, thus
WHEREFORE, in the light of the foregoing, it is most
respectfully prayed that judgment be rendered ordering
the respondents, jointly and severally, the following:
1. Reinstate complainant to his former position
without loss of seniority rights and execute a
Deed of Sale in favor of the complainant relative
to the PUJ with Plate No. PVU-660;
2. Ordering the respondents to pay backwages in
the amount of P400.00 a day and other benefits
computed from July 24, 2000 up to the time of his
actual reinstatement;
3. Ordering respondents to return the amount
of P10,000.00 and P180,000.00 for the expenses
incurred by the complainant in the repair and
maintenance of the subject jeep;
4. Ordering the respondents to refund the amount
of One Hundred (P100.00) Pesos per day
counted from August 7, 1997 up to June 2000 or
a total of P91,200.00;
5. To pay moral and exemplary damages of not
less than P200,000.00;
6. Attorneys fee[s] of not less than 10% of the
monetary award.
Other just and equitable reliefs under the
premises are also being prayed for.[9]
In their Position Paper,[10] the spouses Villamaria
admitted the existence of the Kasunduan, but alleged that
Bustamante failed to pay the P10,000.00 downpayment
and the vehicles annual registration fees. They further
alleged that Bustamante eventually failed to remit the
requisite boundary-hulog of P550.00 a day, which
prompted them to issue the Paalaala. Instead of
complying with his obligations, Bustamante stopped
making his remittances despite his daily trips and even
brought the jeepney to the province without
permission. Worse, the jeepney figured in an accident
and its license plate was confiscated; Bustamante even
abandoned the vehicle in a gasoline station in
Sucat, Paraaque Cityfor two weeks. When the security
guard at the gasoline station requested that the vehicle
be retrieved and Teresita Villamaria asked Bustamante
for the keys, Bustamante told her: Di kunin ninyo. When
the vehicle was finally retrieved, the tires were worn, the
alternator was gone, and the battery was no longer
working.
Citing the cases of Cathedral School of Technology v.
NLRC[11] and Canlubang Security Agency Corporation v.
NLRC,[12] the spouses Villamaria argued that Bustamante
was not illegally dismissed since
the Kasunduan executed on August 7, 1997 transformed
the employer-employee relationship into that of vendor-
vendee. Hence, the spouses concluded, there was no
legal basis to hold them liable for illegal dismissal. They
prayed that the case be dismissed for lack of jurisdiction
and patent lack of merit.
In his Reply,[13] Bustamante claimed that Villamaria
exercised control and supervision over the conduct of his
employment. He maintained that the rulings of the Court
in National Labor Union v. Dinglasan,[14] Magboo v.
Bernardo,[15] and Citizen's League of Free Workers v.
Abbas[16] are germane to the issue as they define the
nature of the owner/operator-driver relationship under the
boundary system. He further reiterated that it was the
Villamaria spouses who presented the Kasunduan to him
and that he conformed thereto only upon their
representation that he would own the vehicle after four
years. Moreover, it appeared that the Paalala was duly
received by him, as he, together with other drivers, was
made to affix his signature on a blank piece of paper
purporting to be an attendance sheet.
On March 15, 2002, the Labor Arbiter rendered
judgment[17] in favor of the spouses Villamaria and
ordered the complaint dismissed on the following
ratiocination:
Respondents presented the
contract of Boundary-Hulog, as well as
the PAALALA, to prove their claim that
complainant violated the terms of their
 contract and afterwards abandoned the
vehicle assigned to him. As against the
foregoing, [the] complaints (sic) mere
allegations to the contrary cannot prevail.
Not having been illegally dismissed,
complainant is not entitled to damages
and attorney's fees.[18]
Bustamante appealed the decision to the
NLRC,[19] insisting that the Kasunduan did not extinguish
the employer-employee relationship between him and
Villamaria.While he did not receive fixed wages, he kept
only the excess of the boundary-hulog which he was
required to remit daily to Villamaria under the
agreement. Bustamante maintained that he remained an
employee because he was engaged to perform activities
which were necessary or desirable to Villamarias trade or
business.
The NLRC rendered judgment[20] dismissing the
appeal for lack of merit, thus:
WHEREFORE, premises
considered, complainant's appeal is
hereby DISMISSED for reasons not
stated in the Labor Arbiter's decision but
mainly on a jurisdictional issue, there
being none over the subject matter of the
controversy.[21]
The NLRC ruled that under the Kasunduan, the
juridical relationship between Bustamante and Villamaria
was that of vendor and vendee, hence, the Labor Arbiter
had no jurisdiction over the complaint. Bustamante filed a
Motion for Reconsideration, which the NLRC resolved to
deny on May 30, 2003.[22]
Bustamante elevated the matter to the CA via
Petition for Certiorari, alleging that the NLRC erred
I from the purchase price of the unit sold. Villamaria further
IN DISMISSING PETITIONERS
APPEAL FOR REASON NOT STATED
IN THE LABOR ARBITERS DECISION,
BUT MAINLY ON JURISDICTIONAL
ISSUE;
II
IN DISREGARDING THE LAW AND
PREVAILING JURISPRUDENCE WHEN
IT DECLARED THAT THE
RELATIONSHIP WHICH WAS
ESTABLISHED BETWEEN
PETITIONER AND THE PRIVATE
RESPONDENT WAS DEFINITELY A
MATTER WHICH IS BEYOND THE
PROTECTIVE MANTLE OF OUR
LABOR LAWS.[23]
Bustamante insisted that despite the Kasunduan, the
relationship between him and Villamaria continued to be
that of employer-employee and as such, the Labor Arbiter
had jurisdiction over his complaint. He further alleged that
it is common knowledge that operators of passenger
jeepneys (including taxis) pay their drivers not on a
regular monthly basis but on commission or boundary
basis, or even the boundary-hulog system. Bustamante
asserted that he was dismissed from employment without
any lawful or just cause and without due notice.
For his part, Villamaria averred that Bustamante
failed to adduce proof of their employer-employee
relationship. He further pointed out that
the Dinglasan case pertains to the boundary system and
not the boundary-hulog system, hence inapplicable in the
instant case. He argued that upon the execution of
the Kasunduan, the juridical tie between him and
Bustamante was transformed into a vendor-vendee
relationship. Noting that he was engaged in the
manufacture and sale of jeepneys and not in the business
of transporting passengers for consideration, Villamaria
contended that the daily fees which Bustmante paid were
actually periodic installments for the the vehicle and were
not the same fees as understood in the boundary
system. He added that the boundary-hulog plan was
basically a scheme to help the driver-buyer earn money
and eventually pay for the unit in full, and for the owner to
profit not from the daily earnings of the driver-buyer but
asserted that the apparently restrictive conditions in
the Kasunduan did not mean that the means and method
of driver-buyers conduct was controlled, but were mere the prevailing minimum
ways to preserve the vehicle for the benefit of both parties: wage at the time of his
Villamaria would be able to collect the agreed purchase dismissal.
price, while Bustamante would be assured that the vehicle
would still be in good running condition even after four
years. Moreover, the right of vendor to impose certain
conditions on the buyer should be respected until full Without Costs.
ownership of the property is vested on the latter.Villamaria
insisted that the parallel circumstances obtaining
in Singer Sewing Machine Company v. Drilon[24] has
analogous application to the instant issue. SO ORDERED.[26]

In its Decision[25] dated August 30, 2004, the CA
reversed and set aside the NLRC decision. The fallo of
the decision reads:
UPON THE VIEW WE TAKE IN
THIS CASE, THUS, the impugned
resolutions of the NLRC must be, as they
are hereby are, REVERSED AND SET
ASIDE, and judgment entered in favor of
petitioner:
The appellate court ruled that the Labor Arbiter
had jurisdiction over Bustamantes complaint. Under
the Kasunduan, the relationship between him and
Villamaria was dual: that of vendor-vendee and employer-
employee. The CA ratiocinated that Villamarias exercise
of control over Bustamantes conduct in operating the
jeepney is inconsistent with the formers claim that he was
not engaged in the transportation business. There was no
evidence that petitioner was allowed to let some other
person drive the jeepney.

The CA further held that, while the power to

dismiss was not mentioned in the Kasunduan, it did not
mean that Villamaria could not exercise it. It explained
that the existence of an employment relationship did not
depend on how the worker was paid but on the presence
1. Sentencing or absence of control over the means and method of the
private respondent employees work. In this case, Villamarias directives (to
Oscar Villamaria, Jr. to drive carefully, wear an identification card, don decent
pay petitioner Jerry attire, park the vehicle in his garage, and to inform him
Bustamante separation about provincial trips, etc.) was a means to control the
pay computed from the way in which Bustamante was to go about his work. In
time of his employment view of Villamarias supervision and control as employer,
up to the time of the fact that the boundary represented installment
termination based on the payments of the purchase price on the jeepney did not
prevailing minimum remove the parties employer-employee relationship.
wage at the time of
termination; and,

While the appellate court recognized that a weeks

default in paying the boundary-hulog constituted an
2. Condemning additional cause for terminating Bustamantes
private respondent employment, it held that the latter was illegally
Oscar Villamaria, Jr. to dismissed. According to the CA, assuming that
pay petitioner Jerry Bustamante failed to make the required payments as
Bustamante back wages claimed by Villamaria, the latter nevertheless failed to
computed from the time take steps to recover the unit and waited for Bustamante
of his dismissal up to to abandon it. It also pointed out that Villamaria neither
March 2001 based on submitted any police report to support his claim that the
vehicle figured in a mishap nor presented the affidavit of
the gas station guard to substantiate the claim that
Bustamante abandoned the unit.
Villamaria received a copy of the decision
on September 8, 2004, and filed, on September 17, 2004,
a motion for reconsideration thereof. The CA denied the
motion in a Resolution[27] dated November 2, 2004, and
Villamaria received a copy thereof on November 8, 2004.
Villamaria, now petitioner, seeks relief from this Court via
petition for review on certiorari under Rule 65 of the Rules
of Court, alleging that the CA committed grave abuse of
its discretion amounting to excess or lack of jurisdiction in
reversing the decision of the Labor Arbiter and the
NLRC. He claims that the CA erred in ruling that the
juridical relationship between him and respondent under
the Kasunduan was a combination of employer-employee
and vendor-vendee relationships. The terms and
conditions of the Kasunduan clearly state that he and
respondent Bustamante had entered into a conditional
deed of sale over the jeepney; as such, their employer-
employee relationship had been transformed into that of
vendor-vendee. Petitioner insists that he had the right to
reserve his title on the jeepney until after the purchase
price thereof had been paid in full.
In his Comment on the petition, respondent avers that the
appropriate remedy of petitioner was an appeal via a
petition for review on certiorari under Rule 45 of the Rules
of Court and not a special civil action of certiorari under
Rule 65. He argues that petitioner failed to establish that
the CA committed grave abuse of its discretion amounting
to excess or lack of jurisdiction in its decision, as the said
ruling is in accord with law and the evidence on record.
Respondent further asserts that
the Kasunduan presented to him by petitioner which
provides for a boundary-hulog scheme was a devious
circumvention of the Labor Code of
the Philippines. Respondent insists that his juridical
relationship with petitioner is that of employer-employee
because he was engaged to perform activities which were
necessary or desirable in the usual business of petitioner,
his employer.
In his Reply, petitioner avers that the Rules of Procedure
should be liberally construed in his favor; hence, it
behooves the Court to resolve the merits of his petition.
We agree with respondents contention that the remedy of
petitioner from the CA decision was to file a petition for
review on certiorari under Rule 45 of the Rules of Court
and not the independent action of certiorari under Rule
65. Petitioner had 15 days from receipt of the CA
resolution denying his motion for the reconsideration
within which to file the petition under Rule 45.[28] But
instead of doing so, he filed a petition
for certiorari under Rule 65 on November 22, 2004,
which did not, however, suspend the running of the 15-
day reglementary period; consequently, the CA decision
became final and executory upon the lapse of the
reglementary period for appeal. Thus, on this procedural
lapse, the instant petition stands to be dismissed.[29]
It must be stressed that the recourse to a special civil
action under Rule 65 of the Rules of Court is proscribed
by the remedy of appeal under Rule 45. As the Court
elaborated in Tomas Claudio Memorial College, Inc. v.
Court of Appeals:[30]
We agree that the remedy of the
aggrieved party from a decision or final
resolution of the CA is to file a petition for
review on certiorari under Rule 45 of the
Rules of Court, as amended, on
questions of facts or issues of law within
fifteen days from notice of the said
resolution. Otherwise, the decision of the
CA shall become final and executory.
The remedy under Rule 45 of the Rules
of Court is a mode of appeal to this Court
from the decision of the CA. It is a
continuation of the appellate process
over the original case. A review is not a
matter of right but is a matter of judicial
discretion. The aggrieved party may,
however, assail the decision of the
CA via a petition for certiorari under Rule
65 of the Rules of Court within sixty days
from notice of the decision of the CA or
its resolution denying the motion for
reconsideration of the same. This is
based on the premise that in issuing the
assailed decision and resolution, the CA
 acted with grave abuse of discretion,
amounting to excess or lack of
jurisdiction and there is no plain, speedy
and adequate remedy in the ordinary
course of law. A remedy is considered
plain, speedy and adequate if it will
promptly relieve the petitioner from the
injurious effect of the judgment and the
acts of the lower court.
The aggrieved party is proscribed from
filing a petition for certiorari if appeal is
available, for the remedies of appeal
and certiorari are mutually exclusive and
not alternative or successive.The
aggrieved party is, likewise, barred from
filing a petition for certiorari if the remedy
of appeal is lost through his negligence.
A petition for certiorari is an original
action and does not interrupt the course
of the principal case unless a temporary
restraining order or a writ of preliminary
injunction has been issued against the
public respondent from further
proceeding. A petition for certiorari must
be based on jurisdictional grounds
because, as long as the respondent court
acted within its jurisdiction, any error
committed by it will amount to nothing
more than an error of judgment which
may be corrected or reviewed only by
appeal.[31]
However, we have also ruled that a petition
for certiorari under Rule 65 may be considered as filed
under Rule 45, conformably with the principle that rules of
procedure are to be construed liberally, provided that the
petition is filed within the reglementary period under
Section 2, Rule 45 of the Rules of Court, and where valid
and compelling circumstances warrant that the petition be
resolved on its merits.[32] In this case, the petition was filed
within the reglementary period and petitioner has raised
an issue of substance: whether the existence of a
boundary-hulog agreement negates the employer-
employee relationship between the vendor and vendee,
and, as a corollary, whether the Labor Arbiter has
jurisdiction over a complaint for illegal dismissal in such
case.
We resolve these issues in the affirmative.
The rule is that, the nature of an action and the
subject matter thereof, as well as, which court or agency
of the government has jurisdiction over the same, are
determined by the material allegations of the complaint in
relation to the law involved and the character of the reliefs
prayed for, whether or not the complainant/plaintiff is
entitled to any or all of such reliefs.[33] A prayer or demand
for relief is not part of the petition of the cause of action;
nor does it enlarge the cause of action stated or change
the legal effect of what is alleged.[34] In determining which
body has jurisdiction over a case, the better policy is to
consider not only the status or relationship of the parties
but also the nature of the action that is the subject of their
controversy.[35]
Article 217 of the Labor Code, as amended, vests
on the Labor Arbiter exclusive original jurisdiction only
over the following:
x x x (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 Arbiter by referring the same to the
actual, moral, grievance machinery and voluntary
exemplary and other arbitration as may be provided in said
forms of damages agreements.
arising from the
employer-employee
relations;
In the foregoing cases, an employer-employee
5. Cases relationship is an indispensable jurisdictional
arising from violation of requisite.[36] The jurisdiction of Labor Arbiters and the
Article 264 of this NLRC under Article 217 of the Labor Code is limited to
Code, including disputes arising from an employer-employee relationship
questions involving the which can only be resolved by reference to the Labor
legality of strikes and Code, other labor statutes or their collective bargaining
lockouts; and agreement.[37] Not every dispute between an employer
and employee involves matters that only the Labor Arbiter
and the NLRC can resolve in the exercise of their
adjudicatory or quasi-judicial powers. Actions between
employers and employees where the employer-employee
relationship is merely incidental is within the exclusive
original jurisdiction of the regular courts.[38] When the
6. Except principal relief is to be granted under labor legislation or a
claims for Employees collective bargaining agreement, the case falls within the
Compensation, Social exclusive jurisdiction of the Labor Arbiter and the NLRC
Security, Medicare even though a claim for damages might be asserted as
and maternity benefits, an incident to such claim.[39]
all other claims, arising
from employer-
employee relationship,
including those of We agree with the ruling of the CA that, under the
persons in domestic or boundary-hulog scheme incorporated in
household service, the Kasunduan, a dual juridical relationship was created
involving an amount between petitioner and respondent: that of employer-
exceeding five employee and vendor-vendee. The Kasunduan did not
thousand pesos extinguish the employer-employee relationship of the
(P5,000.00) parties extant before the execution of said deed.
regardless of whether
accompanied with a As early as 1956, the Court ruled in National
claim for Labor Union v. Dinglasan[40] that the jeepney
reinstatement. owner/operator-driver relationship under the boundary
system is that of employer-employee and not lessor-
lessee. This doctrine was affirmed, under similar factual
settings, in Magboo v. Bernardo[41] and Lantaco, Sr. v.
(b) The Commission shall have Llamas,[42] and was analogously applied to govern the
exclusive appellate jurisdiction over all relationships between auto-calesa owner/operator and
cases decided by Labor Arbiters. driver,[43] bus owner/operator and conductor,[44] and taxi
owner/operator and driver.[45]

(c) Cases arising from the

interpretation or implementation of
collective bargaining agreements, and
those arising from the interpretation or
enforcement of company personnel
policies shall be disposed of by the Labor
The boundary system is a scheme by an
owner/operator engaged in transporting passengers as a
common carrier to primarily govern the compensation of
the driver, that is, the latters daily earnings are remitted to
the owner/operator less the excess of the boundary which
represents the drivers compensation. Under this system, legal effect of a contract is to be determined from the
the owner/operator exercises control and supervision whole read together.[50]
over the driver. It is unlike in lease of chattels where the
lessor loses complete control over the chattel leased but
the lessee is still ultimately responsible for the
consequences of its use. The management of the Under the Kasunduan, petitioner retained
business is still in the hands of the owner/operator, who, supervision and control over the conduct of the
being the holder of the certificate of public convenience, respondent as driver of the jeepney, thus:
must see to it that the driver follows the route prescribed
by the franchising and regulatory authority, and the rules
promulgated with regard to the business operations. The
Ang mga patakaran, kaugnay
fact that the driver does not receive fixed wages but only
the excess of the boundary given to the owner/operator is ng bilihang ito sa pamamagitan ng
boundary hulog ay ang mga
not sufficient to change the relationship between
sumusunod:
them. Indubitably, the driver performs activities which are
usually necessary or desirable in the usual business or
trade of the owner/operator.[46]

Under the Kasunduan, respondent was required

1. Pangangalagaan at pag-
to remit P550.00 daily to petitioner, an amount which
iingatan ng TAUHAN NG IKALAWANG
represented the boundary of petitioner as well as
PANIG ang sasakyan ipinagkatiwala sa
respondents partial payment (hulog) of the purchase price
kanya ng TAUHAN NG UNANG PANIG.
of the jeepney.
Respondent was entitled to keep the excess of his daily
earnings as his daily wage. Thus, the daily remittances
also had a dual purpose: that of petitioners boundary and 2. Na ang sasakyan nabanggit
respondents partial payment (hulog) for the vehicle. This ay gagamitin lamang ng TAUHAN NG
dual purpose was expressly stated in IKALAWANG PANIG sa
the Kasunduan. The well-settled rule is that an obligation paghahanapbuhay bilang pampasada o
is not novated by an instrument that expressly recognizes pangangalakal sa malinis at maayos na
the old one, changes only the terms of payment, and adds pamamaraan.
other obligations not incompatible with the old provisions
or where the new contract merely supplements the
previous one. [47] The two obligations of the respondent to
remit to petitioner the boundary-hulog can stand together. 3. Na ang sasakyan nabanggit
ay hindi gagamitin ng TAUHAN NG
IKALAWANG PANIG sa mga bagay na
makapagdudulot ng kahihiyan, kasiraan
In resolving an issue based on contract, this Court o pananagutan sa TAUHAN NG
must first examine the contract itself, keeping in mind that UNANG PANIG.
when the terms of the agreement are clear and leave no
doubt as to the intention of the contracting parties, the
literal meaning of its stipulations shall prevail.[48] The
intention of the contracting parties should be ascertained 4. Na hindi ito mamanehohin ng
by looking at the words used to project their intention, that hindi awtorisado ng opisina ng UNANG
is, all the words, not just a particular word or two or more PANIG.
words standing alone. The various stipulations of a
contract shall be interpreted together, attributing to the
doubtful ones that sense which may result from all of them
taken jointly.[49] The parts and clauses must be interpreted 5. Na ang TAUHAN NG
in relation to one another to give effect to the whole. The IKALAWANG PANIG ay kinakailangang
maglagay ng ID Card sa harap ng
windshield upang sa pamamagitan nito
ay madaliang malaman kung ang
nagmamaneho ay awtorisado ng
VILLAMARIA MOTORS o hindi.
6. Na sasagutin ng TAUHAN
NG IKALAWANG PANIG ang [halaga
ng] multa kung sakaling mahuli ang
sasakyang ito na hindi nakakabit ang ID
card sa wastong lugar o anuman
kasalanan o kapabayaan.
7. Na sasagutin din ng
TAUHAN NG IKALAWANG PANIG ang
materyales o piyesa na papalitan ng
nasira o nawala ito dahil sa kanyang
kapabayaan.
8. Kailangan sa VILLAMARIA
MOTORS pa rin ang garahe habang
hinuhulugan pa rin ng TAUHAN NG
IKALAWANG PANIG ang nasabing
sasakyan.
9. Na kung magkaroon ng
mabigat na kasiraan ang sasakyang
ipinagkaloob ng TAUHAN NG UNANG
PANIG, ang TAUHAN NG IKALAWANG
PANIG ay obligadong itawag ito muna
sa VILLAMARIA MOTORS bago
ipagawa sa alin mang Motor Shop na
awtorisado ng VILLAMARIA MOTORS.
10. Na hindi pahihintulutan ng
TAUHAN NG IKALAWANG PANIG sa
panahon ng pamamasada na ang
nagmamaneho ay naka-tsinelas, naka
short pants at nakasando
lamang. Dapat ang nagmamaneho ay
laging nasa maayos ang kasuotan
upang igalang ng mga pasahero.
11. Na ang TAUHAN NG
IKALAWANG PANIG o ang awtorisado
niyang driver ay magpapakita ng
magandang asal sa mga pasaheros at
hindi dapat magsasalita ng masama
kung sakali man may pasaherong
pilosopo upang maiwasan ang
anumang kaguluhan na maaaring
kasangkutan.
12. Na kung sakaling hindi
makapagbigay ng BOUNDARY HULOG
ang TAUHAN NG IKALAWANG
PANIG sa loob ng tatlong (3) araw ay
ang opisina ng VILLAMARIA MOTORS
ang may karapatang mangasiwa ng
nasabing sasakyan hanggang
matugunan ang lahat ng
responsibilidad. Ang halagang dapat
bayaran sa opisina ay may
karagdagang multa ng P50.00 sa araw-
araw na ito ay nasa pangangasiwa ng
VILLAMARIA MOTORS.
13. Na kung ang TAUHAN NG
IKALAWANG PANIG ay hindi
makapagbigay ng BOUNDARY HULOG
sa loob ng isang linggo ay
nangangahulugan na ang kasunduang
ito ay wala ng bisa at kusang ibabalik ng
TAUHAN NG IKALAWANG PANIG ang
nasabing sasakyan sa TAUHAN NG
UNANG PANIG.
14. Sasagutin ng TAUHAN NG
IKALAWANG PANIG ang bayad sa
rehistro, comprehensive insurance
taon-taon at kahit anong uri ng
aksidente habang ito ay hinuhulugan pa
sa TAUHAN NG UNANG PANIG.
15. Na ang TAUHAN NG
IKALAWANG PANIG ay obligadong
dumalo sa pangkalahatang
pagpupulong ng VILLAMARIA
MOTORS sa tuwing tatawag ang mga
tagapangasiwa nito upang maipaabot
ang anumang mungkahi sa ikasusulong
ng samahan.
16. Na ang TAUHAN NG
IKALAWANG PANIG ay makikiisa sa
lahat ng mga patakaran na
magkakaroon ng pagbabago o
karagdagan sa mga darating na
panahon at hindi magiging hadlang sa
lahat ng mga balakin ng VILLAMARIA
MOTORS sa lalo pang ipagtatagumpay
at ikakatibay ng Samahan.
17. Na ang TAUHAN NG
IKALAWANG PANIG ay hindi magiging
buwaya sa pasahero upang hindi
kainisan ng kapwa driver at maiwasan
ang pagkakasangkot sa anumang gulo.
18. Ang nasabing sasakyan ay
hindi kalilimutang siyasatin ang
kalagayan lalo na sa umaga bago
pumasada, at sa hapon o gabi naman
ay sisikapin mapanatili ang kalinisan
nito.
19. Na kung sakaling ang
nasabing sasakyan ay maaarkila at
aabutin ng dalawa o higit pang araw sa
lalawigan ay dapat lamang na ipagbigay
alam muna ito sa VILLAMARIA
MOTORS upang maiwasan ang mga
anumang suliranin.
20. Na ang TAUHAN NG
IKALAWANG PANIG ay iiwasan ang
pakikipag-unahan sa kaninumang
sasakyan upang maiwasan ang
aksidente.
21. Na kung ang TAUHAN NG
IKALAWANG PANIG ay mayroon
sasabihin sa VILLAMARIA MOTORS
mabuti man or masama ay iparating
agad ito sa kinauukulan at iwasan na
iparating ito kung [kani-kanino] lamang
upang maiwasan ang anumang usapin.
Magsadya agad sa opisina ng
VILLAMARIA MOTORS.
22. Ang mga nasasaad sa
KASUNDUAN ito ay buong galang at
puso kong sinasang-ayunan at buong
sikap na pangangalagaan ng TAUHAN
NG IKALAWANG PANIG ang nasabing
sasakyan at gagamitin lamang ito sa
paghahanapbuhay at wala nang iba
pa.[51]
The parties expressly agreed that petitioner, as
vendor, and respondent, as vendee, entered into a
contract to sell the jeepney on a daily installment basis
of P550.00 payable in four years and that petitioner would
thereafter become its owner. A contract is one of
conditional sale, oftentimes referred to as contract to sell,
if the ownership or title over the
property sold is retained by the vendor, and is not passed
to the vendee unless and until there is full payment of the
purchase price and/or upon faithful compliance with the
other terms and conditions that may lawfully be
stipulated.[52] Such payment or satisfaction of other
preconditions, as the case may be, is a positive
suspensive condition, the failure of which is not a breach
of contract, casual or serious, but simply an event that
would prevent the obligation of the vendor to convey title
from acquiring binding force.[53] Stated differently, the
efficacy or obligatory force of the vendor's obligation to
transfer title is subordinated to the happening of a future
and uncertain event so that if the suspensive condition
does not take place, the parties would stand as if the
conditional obligation had never existed.[54] The vendor
may extrajudicially terminate the operation of the contract,
refuse conveyance, and retain the sums or installments
already received, where such rights are expressly
provided for.[55]
Under the boundary-hulog scheme, petitioner
retained ownership of the jeepney although its material
possession was vested in respondent as its driver. In
case respondent failed to make his P550.00 daily
installment payment for a week, the agreement would be
of no force and effect and respondent would have to
return the jeepney to petitioner; the employer-employee
relationship would likewise be terminated unless
petitioner would allow respondent to continue driving the
jeepney on a boundary basis of P550.00 daily despite the
termination of their vendor-vendee relationship.
The juridical relationship of employer-employee
between petitioner and respondent was not negated by
the foregoing stipulation in the Kasunduan, considering
that petitioner retained control of respondents conduct as
driver of the vehicle. As correctly ruled by the CA:
The exercise of control by private
respondent over petitioners conduct in
operating the jeepney he was driving is
inconsistent with private respondents
claim that he is, or was, not engaged in
the transportation business; that, even if
petitioner was allowed to let some other
person drive the unit, it was not shown
that he did so; that the existence of an
employment relation is not dependent on
how the worker is paid but on the
presence or absence of control over the
means and method of the work; that the
amount earned in excess of the
boundary hulog is equivalent to wages;
and that the fact that the power of
dismissal was not mentioned in
the Kasunduan did not mean that private
respondent never exercised such power,
or could not exercise such power.
Moreover, requiring petitioner to
drive the unit for commercial use, or to
wear an identification card, or to don a
decent attire, or to park the vehicle in
Villamaria Motors garage, or to inform
Villamaria Motors about the fact that the
unit would be going out to the province
for two days of more, or to drive the unit
carefully, etc. necessarily related to
control over the means by which the
petitioner was to go about his work; that
the ruling applicable here is not Singer
Sewing Machine but National Labor
Union since the latter case involved
jeepney owners/operators and jeepney
drivers, and that the fact that the
boundary here represented installment
payment of the purchase price on the
jeepney did not withdraw the relationship
from that of employer-employee, in view
of the overt presence of supervision and
control by the employer.[56]
Neither is such juridical relationship negated by
petitioners claim that the terms and conditions in
the Kasunduan relative to respondents behavior and
deportment as driver was for his and respondents benefit:
to insure that respondent would be able to pay the
requisite daily installment of P550.00, and that the vehicle
would still be in good condition despite the lapse of four
years. What is primordial is that petitioner retained control
over the conduct of the respondent as driver of the
jeepney.
Indeed, petitioner, as the owner of the vehicle and
the holder of the franchise, is entitled to exercise
supervision and control over the respondent, by seeing to
it that the route provided in his franchise, and the rules
and regulations of the Land Transportation Regulatory
Board are duly complied with. Moreover, in a business
establishment, an identification card is usually provided
not just as a security measure but to mainly identify the
holder thereof as a bona fide employee of the firm who
issues it.[57]
As respondents employer, it was the burden of
petitioner to prove that respondents termination from
employment was for a lawful or just cause, or, at the very
least, that respondent failed to make his daily remittances
of P550.00 as boundary. However, petitioner failed to do
so. As correctly ruled by the appellate court:
It is basic of course that
termination of employment must be
effected in accordance with law. The just
and authorized causes for termination of
employment are enumerated under
Articles 282, 283 and 284 of the Labor
Code.
 Parenthetically, given the
peculiarity of the situation of the parties
here, the default in the remittance of the
boundary hulog for one week or longer
may be considered an additional cause
for termination of employment. The
reason is because the Kasunduan would
be of no force and effect in the event that
the purchaser failed to remit the
boundary hulog for one
week. The Kasunduan in this case
pertinently stipulates:
13. Na kung ang
TAUHAN NG IKALAWANG
PANIG ay hindi makapagbigay
ng BOUNDARY HULOG sa
loob ng isang linggo ay
NANGANGAHULUGAN na
ang kasunduang ito ay wala ng
bisa at kusang ibabalik ng
TAUHAN NG IKALAWANG
PANIG ang nasabing
sasakyan sa TAUHAN NG
UNANG PANIG na wala ng
paghahabol pa.
Moreover, well-settled is the rule that, the
employer has the burden of proving that
the dismissal of an employee is for a just
cause. The failure of the employer to
discharge this burden means that the
dismissal is not justified and that the
employee is entitled to reinstatement and
back wages.
In the case at bench, private
respondent in his position paper before
the Labor Arbiter, alleged that petitioner
failed to pay the miscellaneous fee
of P10,000.00 and the yearly registration
of the unit; that petitioner also stopped
remitting the boundary hulog, prompting
him (private respondent) to issue
a Paalala, which petitioner however
ignored; that petitioner even brought the
unit to his (petitioners) province without
informing him (private respondent) about
it; and that petitioner eventually
abandoned the vehicle at a gasoline
station after figuring in an accident. But
private respondent failed to substantiate
these allegations with solid, sufficient
proof. Notably, private respondents
allegation viz, that he retrieved the
vehicle from the gas station, where
petitioner abandoned it, contradicted his
statement in the Paalala that he would
enforce the provision (in the Kasunduan)
to the effect that default in the remittance
of the boundary hulog for one week
would result in the forfeiture of the
unit. The Paalala reads as follows:
Sa lahat ng mga kumukuha ng sasakyan
Sa pamamagitan ng BOUNDARY
HULOG
Nais ko pong ipaalala sa inyo ang
Kasunduan na inyong pinirmahan
particular na ang paragrapo 13 na
nagsasaad na kung hindi kayo
makapagbigay ng Boundary Hulog sa
loob ng isang linggo ay kusa ninyong
ibabalik and nasabing sasakyan na
inyong hinuhulugan ng wala ng
paghahabol pa.
Mula po sa araw ng inyong
pagkatanggap ng Paalala na ito ay akin
na pong ipatutupad ang nasabing
Kasunduan kayat aking pinaaalala sa
inyong lahat na tuparin natin ang
nakalagay sa kasunduan upang
maiwasan natin ito.
Hinihiling ko na sumunod kayo sa
hinihingi ng paalalang ito upang hindi na
tayo makaabot pa sa korte kung sakaling
hindi ninyo isasauli ang inyong sasakyan
na hinuhulugan na ang mga magagastos
ay kayo pa ang magbabayad sapagkat
ang hindi ninyo pagtupad sa kasunduan
ang naging dahilan ng pagsampa ng
kaso.
 Sumasainyo

Attendance: 8/27/99

(The Signatures appearing herein

include (sic) that of petitioners) (Sgd.)

OSCAR VILLAMARIA, JR.

If it were true that petitioner did not remit

the boundary hulog for one week or
more, why did private respondent not
forthwith take steps to recover the unit,
and why did he have to wait for petitioner
to abandon it?

On another point, private respondent did

not submit any police report to support
his claim that petitioner really figured in a
vehicular mishap. Neither did he present
the affidavit of the guard from the gas
station to substantiate his claim that
petitioner abandoned the unit there.[58]

Petitioners claim that he opted not to terminate

the employment of respondent because of magnanimity
is negated by his (petitioners) own evidence that he took
the jeepney from the respondent only on July 24, 2000.

IN LIGHT OF ALL THE FOREGOING, the

petition is DENIED. The decision of the Court of Appeals
in CA-G.R. SP No. 78720 is AFFIRMED. Costs against
petitioner.

SO ORDERED.
 G.R. No. L-80680 January 26, 1989
14. DANILO B. TABAS vs.
CALIFORNIA MANUFACTURING COMPANY
FACTS
Petitioners were employees of Livi, who assigned them to
work as “promotional merchandisers” for California
pursuant to a manpower supply agreement. Among other
things, the agreement provided that California “has no
control or supervision whatsoever over Livi's workers with
respect to how they accomplish their work or perform
California's obligation”; that Livi "is an independent
contractor and nothing herein contained shall be
construed as creating between them… the relationship of
principal-agent or employer-employee"; that "it is hereby
agreed that it is the sole responsibility of Livi to comply
with all existing as well as future laws, rules and
regulations pertinent to employment of labor"; and that
"California is free and harmless from any liability arising
from such labor laws or from any accident that may befall
workers and employees of [Livi] while in the performance
of their duties for [California]." It was further expressly
stipulated that the assignment of workers to California
shall be on a "seasonal and contractual basis.”
The petitioners were then made to sign employment
contracts with durations of six months, upon the expiration
of which they signed new agreements with the same
period, and so on. Unlike regular California employees,
who received not less than P2,823.00 a month in addition
to a host of fringe benefits and bonuses, they received
P38.56 plus P15.00 in allowance daily.
The petitioners now allege that they had become regular
California employees and demand, as a consequence
whereof, similar benefits. They likewise claim that
pending further proceedings below, they were notified by
California that they would not be rehired. As a result, they
filed an amended complaint charging California with
illegal dismissal.
California admits having refused to accept Tabas et al.,
back to work but deny liability therefor for the reason that
it is not, to begin with, the petitioners' employer and that
the "retrenchment" had been forced by business losses
as well as expiration of contracts. It appears that
thereafter, Livi reabsorbed them into its labor pool on a
"wait-in or standby" status.
ISSUE
WON the contractual agreement was binding insofar as
California is free from any liability
RULING
NO. ART. 106. Contractor or subcontractor. - Whenever
an employer enters into a contract with another person for
the performance of the former's work, the employees of
the contractor and of the latter's subcontractor, if any,
shall be paid in accordance with the provisions of this
Code.
In the event that the contractor or subcontractor fails to
pay the wages of his employees in accordance with this
Code, the employer shall be jointly and severally liable
with his contractor or subcontractor to such employees.
The Secretary of Labor may, by appropriate regulations,
restrict or prohibit the contracting out of labor to protect
the rights of workers.
There is "labor-only" contracting where the person
supplying workers to an employer does not have
substantial capital or investment and the workers
recruited and placed by such person are performing
activities which are directly related to the principal
business of such employer. In such cases, the person or
intermediary shall be considered merely as an agent of
the employer who shall be responsible to the workers in
the same manner and extent as if the latter were directly
employed by him.
In the case at bar, Livi is admittedly an "independent
contractor providing temporary services of manpower to
its clients."
When it thus provided California with manpower, it
supplied California with personnel, as if such personnel
had been directly hired by California, charged with
"merchandising [sic] promotion or sale of the products of
[California] in the different sales outlets in Metro Manila
including task and occasional price tagging," an activity
that is doubtless, an integral part of the manufacturing
business. Relations of parties must be judged from case
to case and the decree of law, and not by declarations of
parties. Hence, Article 106 of the Code applies.
The fact that the petitioners have been hired on a
"temporary or seasonal" basis merely is no argument
either. As we held in Philippine Bank of Communications
v. NLRC, a temporary or casual employee, under Article
281 of the Labor Code, becomes regular after service of
one year, unless he has been contracted for a specific
project. And we cannot say that merchandising is a
specific project for the obvious reason that it is an activity
related to the day-to-day operations of California.
Accordingly, under Article 281 of the Code, they had
become regular employees of California and had acquired
a secure tenure.
Hence, they cannot be separated without due process of
law. It is not that by dismissing the terms and conditions
of the manpower supply agreement, we have, hence,
considered it illegal. Under the Labor Code, genuine job
contracts are permissible, provided they are genuine job
contracts. But, as we held in Philippine Bank of
Communications, supra, when such arrangements are
resorted to "in anticipation of, and for the very purpose of
making possible, the secondment of the employees from
the true employer, the Court will be justified in expressing
its concern. For then that would compromise the rights of
the workers, especially their right to security of tenure.
Petition granted. California is hereby ordered to reinstate
petitioners and to jointly and severally pay with Livi, the
latter their money claims.
15. EMMANUEL D. QUINTANAR vs. COCA-COLA
BOTTLERS, PHILIPPINES, INC.
G.R. No. 210565. June 28, 2016; MENDOZA, J
Topic: LOC and LJC
FACTS
1. Complainants allege that they are former
employees directly hired by respondent Coca-
Cola on different dates from 1984 up to 2000,
assigned as regular Route Helpers under the
direct supervision of the Route Sales
Supervisors. Their duties consist of distributing
bottled Coca-Cola products to the stores and
customers in their assigned areas/routes, and
they were paid salaries and commissions at the
average of P3,000.00 per month. After working
for quite sometime as directly-hired employees of
Coca-Cola, complainants were allegedly
transferred successively as agency workers to
the following manpower agencies, namely,
Lipercon Services, Inc., People's Services, Inc.,
ROMAC, and the latest being respondent
Interserve Management and Manpower
Resources, Inc.
2. Further, complainants allege that the Department
of Labor and Employment (DOLE) conducted an
inspection of Coca-Cola to determine whether it
is complying with the various mandated labor
standards, and relative thereto, they were
declared to be regular employees of Coca-Cola,
which was held liable to pay complainants the
underpayment of their 13th month pay,
emergency cost of living allowance (ECOLA), and
other claims.
3. As soon as respondents learned of the filing of
the claims with DOLE, they were dismissed on
various dates in January 2004. Their claims were
later settled by the respondent company, but the
settlement allegedly did not include the issues on
reinstatement and payment of CBA benefits.
Thus, on November 10, 2006, they filed their
complaint for illegal dismissal.
4. Respondent Coca-Cola denies employer-
employee relationship with the complainants
pointing to respondent Interserve with whom it
has a service agreement as the complainants'
employer. As alleged independent service
contractor of respondent Coca-Cola, respondent
Interserve "is engaged in the business of
rendering substitute or reliever delivery services
to its own clients and for CCBPI in particular, the
delivery of CCBPI's softdrinks and beverage
products." It is allegedly free from the control and
direction of CCBPI in all matters connected with
the performance of the work, except as to the
results thereof, pursuant to the service
agreement.
ISSUE: Whether the petitioners were illegally dismissed
from their employment with Coca-Cola
RULING:
1. The petitioners insist that ISI, Lipercon, PSI,
ROMAC, and Interserve are labor-only
contractors, making Coca-Cola still liable for their
claims. The latter, on the other hand, asserts that
the said agencies are independent job
contractors and, thus, liable to the petitioners on
their own.
2. See Art. 280. Regular and Casual Employment –
3. The standard, supplied by the law itself, is
whether the work undertaken is necessary or
desirable in the usual business or trade of the
employer, a fact that can be assessed by looking
into the nature of the services rendered and its
relation to the general scheme under which the
business or trade is pursued in the usual
course… But, although the work to be performed
is only for a specific project or seasonal, where a
person thus engaged has been performing the
job for at least one year, even if the performance
is not continuous or is merely intermittent, the law
deems the repeated and continuing need for its
performance as being sufficient to indicate the
necessity or desirability of that activity to the
business or trade of the employer. The
employment of such person is also then deemed
 to be regular with respect to such activity and
while such activity exists.
4. SC claimed that the route-helpers therein were
not simply employees of Lipercon, Peoples
Specialist Services, Inc. or ISI, which, as Coca-
Cola claimed were independent job contractors,
but rather, those of Coca-Cola itself
5. The Court found that the work of the respondent
salesmen therein, constituting distribution and
6. sale of Coca-Cola products, was clearly
indispensable to the principal business of
petitioner Coca-Cola.
7. As to the supposed substantial capital and
investment required of an independent job
contractor, the Court stated that it "does not set
an absolute figure for what it considers
substantial capital for an independent job
contractor, but it measures the same against the
type of work which the contractor is obligated to
perform for the principal." The Court reiterated
that the contractor, not the employee, had the
burden of proof that it has the substantial capital,
investment and tool to engage in job contracting.
8. Thus, performing activities directly related to the
principal business of the employer is only one of
the two indicators that "labor-only" contracting
exists; the other is lack of substantial capital or
investment.
9. Finally, the Court determined the existence of an
employer-employee relationship between the
parties therein considering that the contract of
service between Coca-Cola and Interserve
showed that the former indeed exercised the
power of control over the complainants therein.
16. ROSEWOOD PROCESSING, INC. V. NLRC
[G.R. Nos. 116476-84. May 21, 1998.] (PANGANIBAN,
J)
Doctrine of the Case
Under the Labor Code, an employer is solidarily
liable for legal wages due security guards for the period of
time they were assigned to it by its contracted security
agency. However, in the absence of proof that the
employer itself committed the acts constitutive of illegal
dismissal or conspired with the security agency in the
performance of such acts, the employer shall not be liable
for back wages and/or separation pay arising as a
consequence of such unlawful termination.
FACTS
All the complainants were employed by the
[security agency] as security guards: Napoleon Mamon
on October 7, 1989; Arsenio Gazzingan on September
25, 1988; Rodolfo C. Velasco on January 5, 1987;
Armando Ballon on June 28, 1990; Victor Aldeza on
March 21, 1990; and Jose L. Cabrera [in] January 1988.
[Short version of the story: The Security guards were
being paid less than minimum wage. When they
complained to the NLRC, Mamon, was offered to just sign
a quit claim, and the failure to do so the agency would no
longer give him assignments. Gazzingan on the other
hand, requested for a transfer to be better nearer to his
home, to lessen transportation expense, but was
transferred elsewhere. When he applied for another
transfer he was not given another assignment, and was
simply told to wait and come back another time. Ballon,
on the other hand, filed for a sick leave, which was only
crumpled by the HRM, when he returned after 15 days,
he was told he was terminated. Cabrera got hospitalized
because of a stab wound by his detachment commander.
When he returned to the agency, after getting a fit for work
declaration by the doctor, they told him to come back
another day. He was not given another assignment.
Aldeza filed a complaint for underpayment, but instead of
adjusting the wage, the agency left him floating. He was
told to just resign if he does not like how the agency treats
him]
Napoleon Mamon was assigned as office guard for three
(3) days without any pay nor allowance as it was allegedly
an OJT so there was no pay. On October 10, 1989, he
was transferred to the residence of Mr. Benito Ong with
12 hours duty a day receiving a salary very much less
than the minimum wage for eight (8) hours work until
February 3, 1990 when he received an order transferring
him to Rosewood Processing, Inc. effective that date. At
Rosewood Processing, Inc., he was required to render
also 12 hours duty every day with a salary of
P2,600.00/month. He was not given his pay for February
1 and 2 by the paymaster of [the security agency]
allegedly because the payroll could not be located so after
3 to 4 times of going back and forth to [the security
agencys] office to get his salary[;] [after] xxx two (2) days
he gave up because he was already spending more than
what he could get thru transportation alone. On May 16,
1991, Rosewood Processing, Inc. asked for the relief of
Mamon and other guards at Rosewood because they
came to know that complainants filed a complaint for
underpayment on May 13, 1991 with the NLRC. On May
18 to 19, 1991, the security agency assigned him to their
main office. After that, complainant was floated until May
29, 1991 when he was assigned to Mead Johnson
Philippines Corporation. [A]t about a week later, [the
security agency] received summons on complainants
complaint for underpayment and he was called to [the
security agencys] office. When he reported, he was told
to sign a Quitclaim and Waiver by Lt. R. Rodriguez
because according to the latter, he [could] only get a
measly sum from his complaint with the NLRC and if he
signed the quitclaim and waiver he would be retained at
his present assignment which was giving quite a good
salary and other benefits but if he did not sign the
quitclaim and waiver, he would be relieved from his post
and would no longer be given any assignment. He was
given up to the end of July 1991 to think it over. At the end
of July 1991, he was approached by the Security in
Charge A. Azuela and asked him to sign the quitclaim and
waiver and when he refused to sign, he was told that the
following day August 1, 1991, he would have no more
assignment and should report to their office. Thinking that
it was only a joke, he reported the following day to the
detachment commander Mr. A. Yadao and he was told
that the main office relieved him because he did not sign
the quitclaim and waiver. He reported to their office asking
for an assignment but he was told by R. Rodriguez that I
no longer can be given an assignment so I had better
resign. He went back several times to the office of the
[security agency] but every time the answer was the same
[:] that he better tender his resignation because he cannot
be given any assignment although respondent was
recruiting new guards and posting them.
Arsenio Gazzingan was assigned to Purefoods Breeding
Farm at Calauan, Laguna and given a salary of P54.00 a
day working eight (8) hours. After three (3) months, he
was given an examination and passed the same. On
December 26, 1988, he was given an increase and was
paid P64.00/day working eight (8) hours; [h]e remained at
the same post for 8 months and transferred to Purefoods
Feed Mill at Sta. Rosa, Laguna, with the same salary and
the same tour of duty, 8 hours[.] After four (4) months, he
was transferred to Purefoods Grand Perry at Sta. Rosa,
Laguna, and after eleven (11) days on June 1989, he was
transferred to Rosewood Processing, Inc. at
Meycauayan, Bulacan and required to work for 12 hours
at a salary of P94.00/day for one year. [In] June 1990, he
was assigned at Purefoods DELPAN [to] guard x x x a
barge loaded with corn and rendered 12 hours work/day
with a salary of only P148.00/day and after 24 days, he
was floated for one month. He reported to [the security
agencys] office and was assigned to Purefoods Breeder
Farm in Canlubang rendering 8 hours work per day
receiving only P78.00/day. After 11 days, he asked to be
transferred to Manila[.] [B]ecause of the distance from his
home the transfer was approved but instead of being
transferred to Manila, he was assigned to Purefoods B-F-
4 in Batangas rendering 12 hours duty/day and receiving
only P148.00 per day until January 28, 1991[;] and again
he requested for transfer which was also approved by the
[security agencys] office[,] but since then he was told to
come back again and again. [U]p to the present he has
not been given any assignment. Because of the fact that
his family [was] in danger of going hungry, he sought relief
from the NLRC-NCR-Arbitration Branch.
Rodolfo Velasco was assigned to PCI Bank Elcano,
Tondo Branch, as probationary, and [for] working 8 hours
a day for 9 days he received only P400.00. On January
16, 1987, he was assigned to [the security agencys]
headquarters up to January 31, 1987, working 12 hours a
day[; he] received only P650.00 for the 16 days. On
September 1, 1988, he was assigned to Imperial
Synthetic Rubber Products rendering 12 hours duty per
day until December 31, 1988 and was given a salary of
P1,600.00/month. He was later transferred to various
posts like Polypaper Products working 12 hours a day
given a salary of P1,800.00 a month; Paramount
Electrical, Inc. working 12 hours a day given P1,100.00
for 15 days; Rosewood Processing, Inc., rendering 12
hours duty per day receiving P2,200.00/month until May
16, 1991[;] Alen Engineering rendering 12 hours duty/day
receiving P1,100/month; Purefoods Corporation on Delta
II rendering 12 hours duty per day received P4,200.00 a
month. He was relieved on August 24 and his salary for
the period August 20 to 23 has not been paid by [the
security agency.] He was suspended for no cause at all.
Armando Ballon started as security guard with [the
security agency] July 1990 [Note: the introductory
paragraph stated June 28, 1990] and was assigned to
Purefoods Corporation in Marikina for five (5) months and
received a salary of P50.00 per day for 8 hours. He was
transferred to Rosewood Processing, Inc. on November
6, 1990 rendering 12 hours duty as [d]etachment
[c]ommander and a salary of P2,700.00/month including
P200.00 officers allowance until May 15, 1991. On May
16, 1991, he applied for sick leave on orders of his doctor
for 15 days but the HRM, Miss M. Andres[,] got angry and
crumpled his application for sick leave, that [was] why he
was not able to forward it to the SSS. After 15 days, he
came back to the office of [the security agency] asking for
an assignment and he was told that he [was] already
terminated. Complainant found out that the reason why
Miss Andres crumpled his application for sick leave was
because of the complaint he previously filed and was
dismissed for failure to appear. He then refiled this case
to seek redress from this Office.
Jose L. Cabrera was assigned to Alencor Residence
rendering 12 hours duty per day and received a salary of
P2,400.00 a month for 3 months[.] [I]n May, 1988, he was
transferred to E & L Restaurant rendering 12 hours duty
per day and receiv[ing] a salary of P1,500.00 per month
for 6 months[.] [I]n January, 1989, he was transferred to
Paramount rendering 12 hours duty per day receiving only
P1,800.00 per month for 6 months[.] [I]n July 1989, he
was transferred to Benito Ong[s] residence rendering 12
hours duty per day and receiving a salary of P1,400.00
per month for 4 months[.] [I]n December, 1989, he was
transferred to Sea Trade International rendering xxx 12
hours duty per day and receiving a salary of P1,900 per
month for 6 months[.] [I]n July, 1990, he was transferred
to Holland Pacific & Paper Mills rendering 8 hours duty
per day and receiving a salary of P2,400.00 per month
until September 1990[.] [In] October 1990, he was
transferred to RMG residence rendering 12 hours duty per
day receiving a salary of P2,200.00 per month for 3
months[.] [In] February 1991, he was transferred to
Purefoods Corporation at Mabini, Batangas rendering 12
hours duty per day with a salary of P3,600.00 per month
for only one month because he was hospitalized due to a
stab wound inflicted by his [d]etachment [c]ommander.
When he was discharged from the hospital and after he
was examined and declared fit to work by the doctor, he
reported back to [the security agencys] office but was
given the run-around [and was told to] come back
tomorrow[.] [H]e [could] see that [the agency was] posting
new recruits. He then complained to this Honorable Office
to seek redress, hiring the services of a counsel.
Victor Aldeza was assigned to Meridian Condominium,
rendering 12 hours work per day and receiving a salary of
P1,500.00 per month. Although he knew that the salary
was below minimum yet he persevered because he had
spent much to get this job and stayed on until October 15,
1990[.] On October 16, 1990, he was transferred to
Rosewood Processing, Inc., rendering 12 hours duty per
day and receiving a salary of P2,600.00 per month up to
May 15, 1991[.] On the later part of May 1991, he was
assigned to UPSSA (Sandoval Shipyard) rendering 12
hours duty per day receiving a salary of P3,200.00 per
month. [Aldeza] complained to [the security agency] about
the salary but [the agency] did not heed him; thus, he filed
his complaint for underpayment[.] [The agency] upon
complainants complaint for underpayment xxx, instead of
adjusting his salary to meet the minimum prescribed by
law[,] relieved him and left him floating[.] When he
complained of the treatment, he was told to resign
because he could no longer be given any assignment.
Because of this, complainant was forced to file another
complaint for illegal dismissal.
On May 13, 1991, a complaint for illegal
dismissal; underpayment of wages; and for nonpayment
of overtime pay, legal holiday pay, premium pay for
holiday and rest day, thirteenth month pay, cash bond
deposit, unpaid wages and damages was filed against
Veterans Philippine Scout Security Agency and/or Sergio
Jamila IV. Thereafter, petitioner was impleaded as a
third-party respondent by the security agency. The LA
ruled in favor of the complainant, holding Rosewood
Processing and the Agency, jointly and severally liable for
the underpayment of wages.
Although the security agency could lawfully place the
complainants on floating status for a period not exceeding
six months, the act was illegal because the former had
issued a newspaper advertisement for new security
guards. Since the relation between the complainants and
the agency was already strained, the labor arbiter ordered
the payment of separation pay in lieu of reinstatement.
On appeal, the petition was dismissed for failure
of the petitioner to file the required appeal bond within the
reglementary period. It appears on record that [petitioner]
received their copy of the [labor arbiters] decision on April
2, 1993 and subsequently filed a Notice of Appeal with
Memorandum of Appeal on April 26, 1993, in violation of
Rule VI, Section 1, 3, and 6 of the 1990 New Rules of
Procedure of the NLRC. Clearly, the appeal filed by the
[petitioners] on April 12, 1993 was not perfected within the
reglementary period, and the decision dated March 26,
1993 became final and executory as of April 23, 1993.
In its motion for reconsideration, petitioner
contended that it received a copy of the labor arbiters
Decision only on April 6, 1993, and that it filed on April 16,
1993 within the prescribed time, a Notice of Appeal with a
Memorandum on Appeal, a Motion to Reduce Appeal
Bond and a surety bond issued by Prudential Guarantee
and Assurance, Inc. in the amount of P50,000.
Section 14, Rule VII of the NLRC New Rules of Procedure
allows [u]s to entertain a motion for reconsideration only
on palpable or patent errors [w]e may have committed in
[o]ur disputed April 28, 1994 resolution.Since, there was
none, the MR was denied.
ISSUES:
 1. Whether there was substantial compliance with
the appeal bond requirement.
2. Whether Rosewood Processing is solitarily liable
being an indirect employer.
RULING
Yes. In case of a judgment involving a monetary
award, an appeal by the employer may be perfected only
upon the posting of a cash or surety bond issued by a
reputable bonding company duly accredited by the
Commission in the amount equivalent to the monetary
award in the judgment appealed from. However, in a
number of cases, this Court has relaxed this requirement
in order to bring about the immediate and appropriate
resolution of controversies on the merits.[12] Some of
these cases include: (a) counsels reliance on the footnote
of the notice of the decision of the labor arbiter that the
aggrieved party may appeal xxx within ten (10) working
days; (b) fundamental consideration of substantial justice;
(c) prevention of miscarriage of justice or of unjust
enrichment, as where the tardy appeal is from a decision
granting separation pay which was already granted in an
earlier final decision; and (d) special circumstances of the
case combined with its legal merits or the amount and the
issue involved. We hold that petitioners’ motion to reduce
the bond is a substantial compliance with the Labor
Code. This holding is consistent with the norm that letter-
perfect rules must yield to the broader interest of
substantial justice.
project has been performed for petitioners benefit or on its
behalf, the liability accrues for such period even if, later
on, the employees are eventually transferred or
reassigned elsewhere. The solidary liability for payment
of back wages and separation pay is limited, under Article
106, to the extent of the work performed under the
contract; under Article 107, to the performance of any
work, task, job or project; and under Article 109, to the
extent of their civil liability under this Chapter [on payment
of wages]. The liability arising from an illegal dismissal is
unlike an order to pay the statutory minimum wage,
because the workers right to such wage is derived from
law. The proposition that payment of back wages and
separation pay should be covered by Article 109, which
holds an indirect employer solidarily responsible with his
contractor or subcontractor for any violation of any
provision of this Code, would have been tenable if there
were proof -- there was none in this case -- that the
principal/employer had conspired with the contractor in
the acts giving rise to the illegal dismissal.
Rosewood Processing is not liable, because the guards
were not assigned to them anymore, as well as they did
not conspire for the illegal dismissal of said guards by the
agency. They are only liable to the wage differential during
the period that the complainants were actually under its
employ, and were exonerated from payment of
backwages and separation pay.

No. The indirect employers liability to the

contractors employees extends only to the period during
which they were working for the petitioner, and the fact
that they were reassigned to another principal necessarily
ends such responsibility. The principal is made liable to
his indirect employees, because it can protect itself from
irresponsible contractors by withholding such sums and
paying them directly to the employees or by requiring a
bond from the contractor or subcontractor for this
purpose. Withal, fairness likewise dictates that the
petitioner should not, however, be held liable for wage
differentials incurred while the complainants were
assigned to other companies. Under these cited
provisions of the Labor Code, should the contractor fail to
pay the wages of its employees in accordance with law,
the indirect employer (the petitioner in this case), is jointly
and severally liable with the contractor, but such
responsibility should be understood to be limited to the
extent of the work performed under the contract, in the
same manner and extent that he is liable to the employees
directly employed by him. This liability of petitioner covers
the payment of the workers performance of any work,
task, job or project. So long as the work, task, job or
 17. INTERNATIONAL SCHOOL ALLIANCE OF
EDUCATORS (ISAE) v. HON . LEON ARDO A.
QUISUMBIN G ET AL.
G.R. N o. 128845, June 01, 2000, FIRST DIVISION
(KAPUNAN , J.)
Facts:
International School, Inc. (the School, for short), pursuant
to Presidential Decree 732, is a domestic educational
institution established primarily for dependents of foreign
diplomatic personnel and other temporary residents. The
School hires both foreign and local teachers as members
of its faculty, classifying the same into two: (1) foreign-
hires and (2) local-hires. The School grants foreign-hires
certain benefits not accorded local-hires. These include
housing, transportation, shipping costs, taxes, and home
leave travel allowance. Foreign-hires are also paid a
salary rate twenty-five percent (25%) more than local-
hires. The School justifies the difference on two
"significant economic disadvantages" foreign-hires have
to endure, namely: (a) the "dislocation factor" and (b)
limited tenure.
International School Alliance of Educators (ISAE), "a
legitimate labor union and the collective bargaining
representative of all faculty members" of the School,
contested the difference in salary rates between foreign
and local-hires in a CBA negotiation. They failed to come
to an agreement and ISAE filed a notice of strike. DOLE
Acting Secretary ruled in favor of the school while DOLE
Secretary denied their MR. Hence, this petition.
ISSUE:
Is the point-of-hire classification employed by the School
is discriminatory to Filipinos and that the grant of higher
salaries to foreign-hires constitutes racial discrimination?
HELD:
YES.
The Constitution also directs the State to promote
"equality of employment opportunities for all." Similarly,
the Labor Code provides that the State shall "ensure
equal work opportunities regardless of sex, race or
creed." It would be an affront to both the spirit and letter
of these provisions if the State, in spite of its primordial
obligation to promote and ensure equal employment
opportunities, closes its eyes to unequal and
discriminatory terms and conditions of employment.
Discrimination, particularly in terms of wages, is frowned
upon by the Labor Code. Article 135, for example,
prohibits and penalizes the payment of lesser
compensation to a female employee as against a male
employee for work of equal value. Article 248 declares it
an unfair labor practice for an employer to discriminate in
regard to wages in order to encourage or discourage
membership in any labor organization.
Notably, the International Covenant on Economic, Social,
and Cultural
Rights, supra, in Article 7 thereof, provides:
Remuneration which provides all workers, as a minimum,
with:
Fair wages and equal remuneration for work of equal
value without distinction of any kind, in particular women
being guaranteed conditions of work not inferior to those
enjoyed by men, with equal pay for equal work;
The foregoing provisions impregnably institutionalize in
this jurisdiction the long honored legal truism of "equal pay
for equal work."
Persons who work with substantially equal qualifications,
skill, effort and responsibility, under similar conditions,
should be paid similar salaries. This rule applies to the
School, its "international character" notwithstanding.
While we recognize the need of the School to attract
foreign hires, salaries should not be used as an
enticement to the prejudice of local-hires. The local-hires
perform the same services as foreign-hires and they
ought to be paid the same salaries as the latter. For the
same reason, the "dislocation factor" and the foreign-
hires' limited tenure also cannot serve as valid bases for
the distinction in salary rates. The dislocation factor and
limited tenure affecting foreign-hires are adequately
compensated by certain benefits accorded them which
are not enjoyed by local-hires, such as housing,
transportation, shipping costs, taxes and home leave
travel allowances.
The Constitution enjoins the State to "protect the rights
ofworkers and promote their welfare," "to afford labor full
protection." The State, therefore, has the right and duty to
regulate the relations between labor and capital. These
relations are not merely contractual but are so impressed
with public interest that labor contracts, collective
bargaining agreements included, must yield to the
common good. Should such contracts contain stipulations
that are contrary to public policy, courts will not hesitate to
strike down these stipulations. In this case, we find the
point-of-hire classification employed by respondent
School to justify the distinction in the salary rates of
foreign-hires and local hires to be an invalid classification.
There is no reasonable distinction between the services
rendered by foreign-hires and local hires.
The practice of the School of according higher salaries to
foreign hires contravenes public policy and, certainly,
does not deserve the sympathy of this court.
18. SSS EMPLOYEES ASSOCIATION v. CA
G.R. NO. 85279, JULY 28, 1989, THIRD DIVISION,
(CORTES, J.)
Facts:
The officers and members of Social Security System
Employees Association (SSSEA) staged a strike and
barricaded the entrances to the SSS Building that
hampered the regular course of business. This was after
the SSS failed to act on the union’s demands regarding
salaries and benefits. The strike was reported to the
Public Sector Labor-Management Council, which ordered
the strikers to return to work but the strikers refused to
return to work. SSS filed a complaint to the RTC for
complaint of damages with a prayer for a writ of
preliminary injunction. The court issued a Temporary
restraining Order (TRO) and thereafter issued an
injunction after finding that the strike was illegal. SSEA
filed a motion for reconsideration but was denied. Hence,
they filed the petition on certiorari but the case was
referred to the CA. But during the pendency of the case in
CA, the moved to recall the decision but was denied.
Hence, the instant petition before the SC.
ISSUES:
1) Do the employees of the SSS have the right to strike?
2) Does the RTC have jurisdiction to try the case?
HELD:
NO. Considering that under the 1987 Constitution "[t]he
civil service embraces all branches, subdivisions,
instrumentalities, and agencies of the Government,
including government-owned or controlled corporations
with original charters" [Art.IX(B), Sec. 2(1); see also Sec.
1 of E.O. No. 180 where the employees in the civil service
are denominated as "government employees"] and that
the SSS is one such government-controlled corporation
with an original charter, having been created under R.A.
No. 1161, its employees are part of the civil service
[NASECO v. NLRC, G.R. Nos. 69870 & 70295, November
24, 1988] and are covered by the Civil Service
Commission's memorandum prohibiting strikes. This
being the case, the strike staged by the employees of the
SSS was illegal. The statement of the Court in Alliance of
Government Workers v. Minister of Labor and
Employment [G.R. No. 60403, August 3, 1983, 124 SCRA
1] is relevant as it furnishes the rationale for distinguishing
between workers in the private sector and government
employees with regard to the right to strike: The general
rule in the past and up to the present is that "the terms
and conditions of employment in the Government,
including any political subdivision or instrumentality
thereof are governed by law" (Section 11, the Industrial
Peace Act, R.A. No. 875, as amended and Article 277, the
Labor Code, P.D. No. 442, as amended). Since the terms
and conditions of government employment are fixed by
law, government workers cannot use the same weapons
employed by workers in the private sector to secure
concessions from their employers. The principle behind
labor unionism in private industry is that industrial peace
cannot be secured through compulsion by law. Relations
between private employers and their employees rest on
an essentially voluntary basis. Subject to the minimum
requirements of wage laws and other labor and welfare
legislation, the terms and conditions of employment in the
unionized private sector are settled through the process
of collective bargaining. In government employment,
however, it is the legislature and, where properly given
delegated power, the administrative heads of government
which fix the terms and conditions of employment. And
this is effected through statutes or administrative
circulars, rules, and regulations, not through collective
bargaining agreements. [At p. 13; underscoring supplied.]
Government employees may, therefore, through their
unions or associations, either petition the Congress for
the betterment of the terms and conditions of employment
which are within the ambit of legislation or negotiate with
the appropriate government agencies for the
improvement of those which are not fixed by law. If there
be any unresolved grievances, the dispute may be
referred to the Public Sector Labor-Management Council
for appropriate action. But employees in the civil service
may not resort to strikes, walkouts and other temporary
work stoppages, like workers in the private sector, to
pressure the Government to accede to their demands. As
now provided under Sec. 4, Rule III of the Rules and
Regulations to Govern the Exercise of the Right of
Government-Employees to Self-Organization, which took
effect after the instant dispute arose, "[t]he terms and
conditions of employment in the government, including
any political subdivision or instrumentality thereof and
government-owned and controlled corporations with
original charters are governed by law and employees
therein shall not strike for the purpose of securing
changes thereof." YES. The Labor Code itself provides
that terms and conditions of employment of government
employees shall be governed by the Civil Service Law,
rules and regulations [Art. 276.] More importantly, E.O.
No. 180 vests the Public Sector Labor-Management
Council with jurisdiction over unresolved labor disputes
involving government employees [Sec. 16.] Clearly, the
NLRC has no jurisdiction over the dispute. This being the
case, the Regional Trial Court was not precluded, in the
exercise of its general jurisdiction under B.P. Blg. 129, as
amended, from assuming jurisdiction over the SSS’s
complaint for damages and issuing the injunctive writ
prayed for therein. Unlike the NLRC, the Public Sector
Labor-Management Council has not been granted by law
authority to issue writs of injunction in labor disputes
within its jurisdiction. Thus, since it is the Council, and not
the NLRC, that has jurisdiction over the instant labor
dispute, resort to the general courts of law for the
issuance of a writ of injunction to enjoin the strike is
appropriate.
 19. *SAN MIGUEL CORPORATION
SUPERVISORS AND EXEMPT UNION
vs. HONARABLE BIENVENIDO E.
LAGUESMA
This is a Petition for Certiorari with Prayer for the
Issuance of Preliminary Injunction seeking to reverse and
set aside the Order of public respondent, Undersecretary
of the Department of Labor and Employment, Bienvenido
E. Laguesma, dated March 11, 1993, in Case No. OS MA
A-2-70-91[1] entitled In Re: Petition for Certification
Election Among the Supervisory and Exempt Employees
of the San Miguel Corporation Magnolia Poultry Plants of
Cabuyao, San Fernando and Otis, San Miguel
Corporation Supervisors and Exempt Union,
Petitioner. The Order excluded the employees under
supervisory levels 3 and 4 and the so-called exempt
employees from the proposed bargaining unit and ruled
out their participation in the certification election.
The antecedent facts are undisputed:
On October 5, 1990, petitioner union filed before the
Department of Labor and Employment (DOLE) a Petition
for District Certification or Certification Election among the
supervisors and exempt employees of the SMC Magnolia
Poultry Products Plants of Cabuyao, San Fernando and
Otis.
On December 19, 1990, Med-Arbiter Danilo L.
Reynante issued an Order ordering the conduct of
certification among the supervisors and exempt
employees of the SMC Magnolia Poultry Products Plants
of Cabuyao, San Fernando and Otis as one bargaining
unit.
On January 18, 1991, respondent San Miguel
Corporation filed a Notice of Appeal with Memorandum on
Appeal, pointing out, among others, the Med-Arbiters
error in grouping together all three (3) separate plants,
Otis, Cabuyao and San Fernando, into one bargaining
unit, and in including supervisory levels 3 and above
whose positions are confidential in nature.
On July 23, 1991, the public respondent,
Undersecretary Laguesma, granted respondent
companys Appeal and ordered the remand of the case to
the Med-Arbiter of origin for determination of the true
classification of each of the employees sought to be
included in the appropriate bargaining unit.
Upon petitioner-unions motion dated August 7, 1991,
Undersecretary Laguesma granted the reconsideration
prayed for on September 3, 1991 and directed the
conduct of separate certification elections among the
supervisors ranked as supervisory levels 1 to 4 (S1 to S4)
and the exempt employees in each of the three plants at
Cabuyao, San Fernando and Otis.
On September 21, 1991, respondent company, San
Miguel Corporation filed a Motion for Reconsideration with
Motion to suspend proceedings.
On March 11, 1993, an Order was issued by the
public respondent granting the Motion, citing the doctrine
enunciated in Philips Industrial Development, Inc. v.
NLRC[2] case. Said Order reads in part:
x x x Confidential employees, like managerial employees,
are not allowed to form, join or assist a labor union for
purposes of collective bargaining.
In this case, S3 and S4 and the so-called exempt
employees are admittedly confidential employees and
therefore, they are not allowed to form, join or assist a
labor union for purposes of collective bargaining following
the above courts ruling. Consequently, they are not
allowed to participate in the certification election.
WHEREFORE, the motion is hereby granted and the
Decision of this Office dated 03 September 1991 is hereby
modified to the extent that employees under supervisory
levels 3 and 4 (S3 and S4) and the so-called exempt
employees are not allowed to join the proposed
bargaining unit and are therefore excluded from those
who could participate in the certification election.[3]
Hence this petition.
For resolution in this case are the following issues:
1. Whether Supervisory employees 3 and 4 and
the exempt employees of the company are
considered confidential employees, hence
ineligible from joining a union.
2. If they are not confidential employees, do the
employees of the three plants constitute an
appropriate single bargaining unit.
On the first issue, this Court rules that said
employees do not fall within the term confidential
employees who may be prohibited from joining a union.
There is no question that the said employees,
supervisors and the exempt employees, are not vested
with the powers and prerogatives to lay down and execute
management policies and/or to hire, transfer, suspend,
layoff, recall, discharge or dismiss employees. They are,
therefore, not qualified to be classified as managerial
employees who, under Article 245[4] of the Labor Code,
are not eligible to join, assist or form any labor
organization. In the very same provision, they are not
allowed membership in a labor organization of the rank-
and-file employees but may join, assist or form separate
labor organizations of their own. The only question that
need be addressed is whether these employees are
properly classified as confidential employees or not.
Confidential employees are those who (1) assist or
act in a confidential capacity, (2) to persons who
formulate, determine, and effectuate management
policies in the field of labor relations.[5] The two criteria are
cumulative, and both must be met if an employee is to be
considered a confidential employee that is, the
confidential relationship must exist between the
employees and his supervisor, and the supervisor must
handle the prescribed responsibilities relating to labor
relations.[6]
The exclusion from bargaining units of employees
who, in the normal course of their duties, become aware
of management policies relating to labor relations is a
principal objective sought to be accomplished by the
confidential employee rule. The broad rationale behind
this rule is that employees should not be placed in a
position involving a potential conflict of
interests.[7] Management should not be required to handle
labor relations matters through employees who are
represented by the union with the company is required to
deal and who in the normal performance of their duties
may obtain advance information of the companys position
with regard to contract negotiations, the disposition of
grievances, or other labor relations matters.[8]
There have been ample precedents in this regard,
thus in Bulletin Publishing Company v. Hon. Augusto
Sanchez,[9] the Court held that if these managerial
employees would belong to or be affiliated with a Union,
the latter might not be assured of their loyalty to the Union
in view of evident conflict of interest. The Union can also
become company-dominated with the presence of
managerial employees in Union membership. The same
rationale was applied to confidential employees in Golden
Farms, Inc. v. Ferrer-Calleja[10] and in the more recent
case of Philips Industrial Development, Inc. v.
NLRC[11] which held that confidential employees, by the
very nature of their functions, assist and act in a
confidential capacity to, or have access to confidential
matters of, persons who exercise managerial functions in
the field of labor relations. Therefore, the rationale behind
the ineligibility of managerial employees to form, assist or
join a labor union was held equally applicable to them.[12]
An important element of the confidential employee
rule is the employees need to use labor relations
information. Thus, in determining the confidentiality of
certain employees, a key questions frequently considered
is the employees necessary access to confidential labor
relations information.[13]
It is the contention of respondent corporation that
Supervisory employees 3 and 4 and the exempt
employees come within the meaning of the term
confidential employees primarily because they answered
in the affirmative when asked Do you handle confidential
data or documents? in the Position Questionnaires
submitted by the Union.[14] In the same questionnaire,
however, it was also stated that the confidential
information handled by questioned employees relate to
product formulation, product standards and product
specification which by no means relate to labor
relations.[15]
Granting arguendo that an employee has access to
confidential labor relations information but such is merely
incidental to his duties and knowledge thereof is not
necessary in the performance of such duties, said access
does not render the employee a confidential
employee.[16] If access to confidential labor relations
information is to be a factor in the determination of an
employees confidential status, such information must
relate to the employers labor relations policies. Thus, an
employee of a labor union, or of a management
association, must have access to confidential labor
information with respect to his employer, the union, or the
association, to be regarded a confidential employee, and
knowledge of labor relations information pertaining to the
companies with which the union deals, or which the
association represents, will not clause an employee to be
excluded from the bargaining unit representing
employees of the union or association.[17] Access to
information which is regarded by the employer to be
confidential from the business standpoint, such as
financial information[18] or technical trade secrets, will not
render an employee a confidential employee.[19]
Herein listed are the functions of supervisors 3 and
higher:
1. To undertake decisions to
discontinue/temporarily stop shift operations
when situations require.
 2. To effectively oversee the quality control
function at the processing lines in the
storage of chicken and other products.
3. To administer efficient system of evaluation
of products in the outlets.
4. To be directly responsible for the recall,
holding and rejection of direct manufacturing
materials.
5. To recommend and initiate actions in the
maintenance of sanitation and hygiene
throughout the plant.[20]
It is evident that whatever confidential data the
questioned employees may handle will have to relate to
their functions. From the foregoing functions, it can be
gleaned that the confidential information said employees
have access to concern the employers internal business
operations. As held in Westinghouse Electric
Corporation v. National Labor Relations Board,[21] an
employee may not be excluded from appropriate
bargaining unit merely because he has access to
confidential information concerning employers internal
business operations and which is not related to the field
of labor relations.
It must be borne in mind that Section 3 of Article XIII
of the 1987 Constitution mandates the State to guarantee
to all workers the right to self-organization. Hence,
confidential employees who may be excluded from
bargaining unit must be strictly defined so as not to
needlessly deprive many employees of their right bargain
collectively through representatives of their choosing.[22]
In the case at bar, supervisors 3 and above may not
be considered confidential employees merely because
they handle confidential data as such must first be strictly
classified as pertaining to labor relations for them to fall
under said restrictions. The information they handle are
properly classifiable as technical and internal business
operations data which, to our mind, has no relevance to
negotiations and settlement of grievances wherein the
interests of a union and the management are invariably
adversarial. Since the employees are not classifiable
under the confidential type, this Court rules that they may
appropriately form a bargaining unit for purposes of
collective bargaining. Furthermore, even assuming that
they are confidential employees, jurisprudence has
established that there is no legal prohibition against
confidential employees who are not performing
managerial functions to form and join a union.[23]
In this connection, the issue of whether the
employees of San Miguel Corporation Magnolia Poultry
Products Plants of Cabuyao, San Fernando, and Otis
constitute a single bargaining unit needs to be threshed
out.
It is the contention of the petitioner union that the
creation of three (3) separate bargaining units, one each
for Cabuyao Otis and San Fernando as ruled by the
respondent Undersecretary, is contrary to the one-
company, one-union policy. It adds that Supervisors level
1 to 4 and exempt employees of the three plants have a
similarity or a community of interests.
This Court finds the contention of the petitioner
meritorious.
An appropriate bargaining unit may be defined as a
group of employees of a given employer, comprised of all
or less than all of the entire body of employees, which the
collective interest of all the employees, consistent with
equity to the employer, indicate to be best suited to serve
the reciprocal rights and duties of the parties under the
collective bargaining provisions of the law.[24]
A unit to be appropriate must effect a grouping of
employees who have substantial, mutual interests in
wages, hours, working conditions and other subjects of
collective bargaining.[25]
It is readily seen that the employees in the instant
case have community or mutuality of interest, which is the
standard in determining the proper constituency of a
collective bargaining unit.[26] It is undisputed that they all
belong to the Magnolia Poultry Division of San Miguel
Corporation. This means that, although they belong to
three different plants, they perform work of the same
nature, receive the same wages and compensation, and
most importantly, share a common stake in concerted
activities.
In light of these considerations, the Solicitor General
has opined that separate bargaining units in the three
different plants of the division will fragmentize the
employees of the said division, thus greatly diminishing
their bargaining leverage. Any concerted activity held
against the private respondent for a labor grievance in one
bargaining unit will, in all probability, not create much
impact on the operations of the private respondent. The
two other plants still in operation can well step up their
production and make up for the slack caused by the
bargaining unit engaged in the concerted activity. This
situation will clearly frustrate the provisions of the Labor
Code and the Mandate of the Constitution.[27]
 The fact that the three plants are located in three
different places, namely, in Cabuyao, Laguna, in Otis,
Pandacan, Metro Manila, and in San Fernando,
Pampanga is immaterial.Geographical location can be
completely disregarded if the communal or mutual
interests of the employees are not sacrificed as
demonstrated in UP v. Calleja-Ferrer where all non-
academic rank and file employees of the University of the
Philippines inDiliman, Quezon City, Padre Faura, Manila,
Los Baos, Laguna and the Visayas were allowed to
participate in a certification election. We rule that the
distance among the three plants is not productive of
insurmountable difficulties in the administration of union
affairs. Neither are there regional differences that are
likely to impede the operations of a single bargaining
representative.

WHEREFORE, the assailed Order of March 11,

1993 is hereby SET ASIDE and the Order of the Med-
Arbiter on December 19, 1990 is REINSTATED under
which a certification election among the supervisors (level
1 to 4) and exempt employees of the San Miguel
Corporation Magnolia Poultry Products Plants of
Cabuyao, San Fernando, and Otis as one bargaining unit
is ordered conducted.

SO ORDERED.
 [G.R. No. 122226. March 25, 1998]
20. *UNITED PEPSI-COLA SUPERVISORY UNION
(UPSU), petitioner, vs. HON. BIENVENIDO E.
LAGUESMA and PEPSI-COLA PRODUCTS,
PHILIPPINES, INC. respondents.
Petitioner is a union of supervisory employees. It
appears that on March 20, 1995 the union filed a petition
for certification election on behalf of the route managers
at Pepsi-Cola Products Philippines, Inc. However, its
petition was denied by the med-arbiter and, on appeal, by
the Secretary of Labor and Employment, on the ground
that the route managers are managerial employees and,
therefore, ineligible for union membership under the first
sentence of Art. 245 of the Labor Code, which provides:
Ineligibility of managerial employees to join any labor
organization; right of supervisory employees. Managerial
employees are not eligible to join, assist or form any labor
organization.Supervisory employees shall not be eligible
for membership in a labor organization of the rank-and-
file employees but may join, assist or form separate labor
organizations of their own.
Petitioner brought this suit challenging the validity of
the order dated August 31, 1995, as reiterated in the order
dated September 22, 1995, of the Secretary of Labor and
Employment.Its petition was dismissed by the Third
Division for lack of showing that respondent committed
grave abuse of discretion. But petitioner filed a motion for
reconsideration, pressing for resolution its contention that
the first sentence of Art. 245 of the Labor Code, so far as
it declares managerial employees to be ineligible to form,
assist or join unions, contravenes Art. III 8 of the
Constitution which provides:
The right of the people, including those employed in the
public and private sectors, to form unions, associations,
or societies for the purposes not contrary to law shall not
be abridged.
For this reason, the petition was referred to the Court en
banc.
The Issues in this Case
Two question are presented by the petition: (1)
whether the route managers at Pepsi-Cola Products
Philippines, Inc. are managerial employees and (2)
whether Art. 245, insofar as it prohibits managerial
employees from forming, joining or assisting labor unions,
violates Art. III, 8 of the Constitution.
In resolving these issues it would be useful to begin
by defining who are managerial employees and
considering the types of managerial employees.
Types of Managerial Employees
The term manager generally refers to anyone who is
responsible for subordinates and other organization
resources.[1] As a class, managers constitute three levels
of a pyramid:
Top Management
_________________
Middle Management
_________________
First Line
Management
(also called Supervisor)
____________________
____________________
Operatives
Or Operating Employees
FIRST-LINE MANAGERS The lowest level in an
organization at which individuals are responsible for the
work of others is called first-line or first-level
management. First-line managers direct operating
employees only; they do not supervise other
managers. Example of first-line managers are the
foreman or production supervisor in a manufacturing
plant, the technical supervisor in a research department,
and the clerical supervisor in a large office. First-level
managers are often called supervisors.
MIDDLE MANAGERS The term middle management can
refer to more than one level in an organization. Middle
managers direct the activities of other managers and
sometimes also those of operating employees. Middle
managers principal responsibilities are to direct the
activities that implement their organizations policies and
to balance the demands of their superiors with the
capacities of their subordinates. A plant manager in an
electronics firm is an example of a middle manager.
TOP MANAGERS Composed of a comparatively small
group of executives, top management is responsible for
the overall management of the organization. It establishes
operating policies and guides the organizations
interactions with its environment. Typical titles of top
managers are chief executive officer, president, and
senior vice-president. Actual titles vary from one
organization to another and are not always a reliable
guide to membership in the highest management
classification.[2]
As can be seen from this description, a distinction
exist between those who have the authority to devise,
implement and control strategic and operational policies
(top and middle managers) and those whose task is
simply to ensure that such polices are carried out by the
rank-and-file employees of an organization (first-level
managers/supervisors). What distinguishes them from
the rank-and file employees is that they act in the interest
of the employer in supervising such rank-and-file
employees.
Managerial employees may therefore be said to fall
into two distinct categories: the managers per se, who
compose the former group described above, and the
supervisors who form the latter group. Whether they
belong to the first or second category, managers, vis--vis
employers, are, likewise, employees.[3]
The first question is whether route managers are
managers are managerial employees or supervisors.
Previous Administrative Determinations of the Question Whether Route Managers
are Managerial Employees
It appears that this question was the subject of two
previous determinations by the Secretary of Labor and
Employment, in accordance with which this case was
decided by the med-arbiter.
In Case No. OS-MA-10318-91, entitled Workerss
Alliance Trade Union (WATU) v. Pepsi-Cola Products
Philippines, Inc., decided on November 13, 1991, the
Secretary of Labor found:
We examined carefully the pertinent job description of the
subject employees and other documentary evidence on
record vis--vis paragraph (m), Article 212 of the Labor
Code, as amended, and we find that only those
employees occupying the position of route manager and
accounting manager are managerial employees. The rest
i.e. quality control manager, yard/transport manager and
warehouse operations manager are supervisory
employees.
To qualify as managerial employee, there must be a clear
showing of the exercise of managerial attributes under
paragraph (m), Article 212 of the Labor Code as
amended. Designations or titles of positions are not
controlling. In the instant case, nothing on record will
support the claim that the quality control manager,
yard/transport manager and warehouse operations
manager are vested with said attributes. The warehouse
operations manager, for example, merely assists the plant
finance manager in planning, organizing, directing and
controlling all activities relative to development and
implementation of an effective management control
information system at the sale offices. The exercise of
authority of the quality control manager, on the other
hand, needs the concurrence of the manufacturing
manager
As to the route managers and accounting manager, we
are convinced that they are managerial employees. Their
job descriptions clearly reveal so.
On July 6, 1992, this finding was reiterated in Case
No. OS-A-3-71-92, entitled In Re: Petition for Direct
Certification and/or Certification Election-Route
Managers/Supervisory Employees of Pepsi-Cola
Products Phils. Inc., as follows:
The issue brought before us is not of first impression. At
one time, we had the occasion to rule upon the status of
route manager in the same company vis a vis the issue
as to whether or not it is supervisory employee or a
managerial employee. In the case of Workers Alliance
Trade Unions (NATU) vs. Pepsi Cola Products, Phils.,
Inc. (OS-MA-A-10-318-91), 15 November 1991, we ruled
that a route manager is a managerial employee within the
context of the definition of the law, and hence, ineligible
to join, form or assist a union. We have once more passed
upon the logic of our Decision aforecited in the light of the
issues raised in the instant appeal, as well as the available
documentary evidence on hand, and have come to the
view that there is no cogent reason to depart from our
earlier holding. Route Managers are, by the very nature of
their functions and the authority they wield over their
subordinates, managerial employees.The prescription
found in Art. 245 of the Labor Code, as amended
therefore, clearly applies to them.[4]4
Citing our ruling in Nasipit Lumber Co. v. National
Labor Relations Commission,[5]5 however, petitioner
argues that these previous administrative determinations
do not have the effect of res judicata in this case, because
"labor relations proceedings" are "non-litigious and
summary in nature without regard to legal
technicalities."[6] Nasipit Lumber Co. involved a clearance
to dismiss an employee issued by the Department of
Labor. The question was whether in a subsequent
proceeding for illegal dismissal, the clearance was res
judicata. In holding it was not, this Court made it clear that
it was referring to labor relations proceedings of a non-
adversary character, thus:
The requirement of a clearance to terminate employment
was a creation of the Department of labor to carry out the
Labor Code provisions on security of tenure and
termination of employment. The proceeding subsequent
to the filing of an application for clearance to terminate
employment was outlined in Book V, Rule XIV of the
Rules and Regulations Implementing the Labor
Code. The fact that said rule allowed a procedure for the
approval of the clearance with or without the opposition of
the employee concerned (Secs. 7 & 8), demonstrates the
non-litigious and summary nature of the proceeding. The
clearance requirement was therefore necessary only as
an expeditious shield against arbitrary dismissal without
the knowledge and supervision of the Department of
Labor. Hence, a duly approved clearance implied that the
dismissal was legal or for cause (Sec. 2).[7]v. National
Labor Relations Commission, 177 SCRA 93, 100 (1989).7
But the doctrine of res judicata certainly applies to
adversary administrative proceedings. As early as 1956,
in Brillantes v. Castro,[8]8 we sustained the dismissal of an
action by a trial court on the basis of a prior administrative
determination of the same case by the Wage
Administration Service, applying the principle of res
judicata. Recently, in Abad v. NLRC[9]9 we applied the
related doctrine of stare decisis in holding that the prior
determination that certain jobs at the Atlantic Gulf and
Pacific Co. were project employments was binding in
another case involving another group of employees of the
same company. Indeed, in Nasipit Lumber Co., this Court
clarified toward the end of its opinion that "the doctrine
of res judicata applies . . . to judicial or quasi judicial
proceedings and not to the exercise of administrative
powers."[10]v. National Labor Relations
Commission, supra note 7.10 Now proceedings for
certification election, such as those involved in Case No.
OS-M-A-10-318-91 and Case No. OS-A-3-71-92, are
quasi judicial in nature and, therefore, decisions rendered
in such proceedings can attain finality.[11]v. B.F. Goodrich
(Marikina Factory) Confidential and Salaries Employees
Union-NATU, 49 SCRA 532 (1973).11
Thus, we have in this case an expert's view that the
employees concerned are managerial employees within
the purview of Art. 212 which provides:
(m) "managerial employee" is one who is vested with
powers or prerogatives to lay down and execute
management policies and/or to hire, transfer, suspend,
lay off, recall, discharge, assign or discipline
employees. Supervisory employees are those who, in the
interest of the employer, effectively recommend such
managerial actions if the exercise of such authority is not
merely routinary or clerical in nature but requires the use
of independent judgment. All employees not falling within
any of the above definitions are considered rank-and-file
employees for purposes of this Book.
At the very least, the principle of finality of administrative
determination compels respect for the finding of the
Secretary of Labor that route managers are managerial
employees as defined by law in the absence of anything
to show that such determination is without substantial
evidence to support it. Nonetheless, the Court, concerned
that employees who are otherwise supervisors may
wittingly or unwittingly be classified as managerial
personnel and thus denied the right of self- organization,
has decided to review the record of this case.
DOLE's Finding that Route Managers are Managerial Employees Supported by
Substantial Evidence in the Record
The Court now finds that the job evaluation made by
the Secretary of Labor is indeed supported by substantial
evidence. The nature of the job of route managers is given
in a four-page pamphlet, prepared by the company, called
"Route Manager Position Description," the pertinent parts
of which read:
A. BASIC PURPOSE
A Manager achieves objectives through others.
As a Route Manager, your purpose is to meet
the sales plan; and you achieve this objective
through the skillful MANAGEMENT OF YOUR
JOB AND THE MANAGEMENT OF YOUR
PEOPLE.
These then are your functions as Pepsi-Cola
Route Manager. Within these functions -
managing your job and managing your people
- you are accountable to your District Manager
for the execution and completion of various
tasks and activities which will make it possible
for you to achieve your sales objectives.
B. PRINCIPAL ACCOUNTABILITIES
1.0 MANAGING YOUR JOB
The Route Manager is accountable for the following:
1.1 SALES DEVELOPMENT
 1.1.1 Achieve the sales plan.
1.1.2 Achieve all distribution and new
account objectives.
1.1.3 Develop new business opportunities
thru personal contacts with
dealers.
1.1.4 Inspect and ensure that all
merchandizing [sic] objectives
are achieved in all outlets.
1.1.5 maintain and improve productivity of
all cooling equipment and kiosks.
1.1.6 Execute and control all authorized
promotions.
1.1.7 Develop and maintain dealer
goodwill.
1.1.8 Ensure all accounts comply with
company suggested retail
pricing.
1.1.9 Study from time to time individual
route coverage and productivity
for possible adjustments to
maximize utilization of
resources.
1.2 Administration
1.2.1 Ensure the proper loading of route
trucks before check-out and the
proper sorting of bottles before
check-in.
1.2.2 Ensure the upkeep of all route sales
reports and all other related
reports and forms required on an
accurate and timely basis.
1.2.3 Ensure proper implementation of the
various company policies and
procedures incl. but not limited to
shakedown; route shortage;
progressive discipline; sorting;
spoilages; credit/collection;
accident; attendance.
1.2.4 Ensure collection of receivables and
delinquent accounts.
2.0 MANAGING YOUR PEOPLE
The Route Manager is accountable for the following:
2.1 Route Sales Team Development
2.1.1 Conduct route rides to train, evaluate
and develop all assigned route
salesmen and helpers at least 3
days a week, to be supported by
required route ride
documents/reports & back
check/spot check at least 2 days
a week to be supported by
required documents/reports.
2.1.2 Conduct sales meetings and morning
huddles. Training should focus
on the enhancement of effective
sales and merchandizing [sic]
techniques of the salesmen and
helpers. Conduct group training
at least 1 hour each week on a
designated day and of specific
topic.
2.2 Code of Conduct
2.2.1 Maintain the company's reputation
through strict adherence to
PCPPI's code of conduct and the
universal standards of
unquestioned business
ethics.[12]12
Earlier in this opinion, reference was made to the
distinction between managers per se (top managers and
middle managers) and supervisors (first-line
managers). That distinction is evident in the work of the
route managers which sets them apart from supervisors
in general. Unlike supervisors who basically merely direct
operating employees in line with set tasks assigned to
them, route managers are responsible for the success of
the company's main line of business through
management of their respective sales teams. Such
management necessarily involves the planning, direction,
operation and evaluation of their individual teams and
areas which the work of supervisors does not entail.
The route managers cannot thus possibly be
classified as mere supervisors because their work does
not only involve, but goes far beyond, the simple direction
or supervision of operating employees to accomplish
objectives set by those above them. They are not mere
functionaries with simple oversight functions but business
administrators in their own right. An idea of the role of
route managers as managers per se can be gotten from
a memo sent by the director of metro sales operations of
respondent company to one of the route managers. It
reads:[13]
03 April 1995
To : CESAR T. REOLADA
From : REGGIE M. SANTOS
Subj : SALARY INCREASE
Effective 01 April 1995, your basic monthly salary
of P11,710 will be increased to P12,881 or an
increase of 10%. This represents the added
managerial responsibilities you will assume due to
the recent restructuring and streamlining of Metro
Sales Operations brought about by the continuous
losses for the last nine (9) months.
Let me remind you that for our operations to be
profitable, we have to sustain the intensity and
momentum that your group and yourself have shown
last March. You just have to deliver the desired
volume targets, better negotiated concessions,
rationalized sustaining deals, eliminate or
reduced overdues, improved collections, more
cash accounts, controlled operating
expenses, etc. Also, based on the agreed set
targets, your monthly performance will be closely
monitored.
You have proven in the past that your capable of
achieving your targets thru better planning,
managing your group as a fighting team, and
thru aggressive selling. I am looking forward to
your success and I expect that you just have to
exert your doubly best in turning around our
operations from a losing to a profitable one!
Happy Selling!!
(Sgd.) R.M. SANTOS
The plasticized card given to route managers,
quoted in the separate opinion of Justice Vitug, although
entitled "RM's Job Description," is only a summary of
performance standards. It does not show whether route
managers are managers per se or supervisors.
Obviously, these performance standards have to be
related to the specific tasks given to route managers in
the four-page "Route Manager Position Description," and,
when this is done, the managerial nature of their jobs is
fully revealed. Indeed, if any, the card indicates the great
latitude and discretion given to route managers - from
servicing and enhancing company goodwill to supervising
and auditing accounts, from trade (new business)
development to the discipline, training and monitoring of
performance of their respective sales teams, and so forth,
- if they are to fulfill the company's expectations in the "key
result areas."
Article 212(m) says that "supervisory employees are
those who, in the interest of the employer, effectively
recommend such managerial actions if the exercise of
such authority is not merely routinary or clerical in nature
but requires the use of independent judgment." Thus,
their only power is to recommend. Certainly, the route
managers in this case more than merely recommend
effective management action. They perform operational,
human resource, financial and marketing functions for the
company, all of which involve the laying down of operating
policies for themselves and their teams. For example, with
respect to marketing, route managers, in accordance with
B.1.1.1 to B.1.1.9 of the Route Managers Job Description,
are charged, among other things, with expanding the
dealership base of their respective sales areas,
maintaining the goodwill of current dealers, and
distributing the company's various promotional items as
they see fit. It is difficult to see how supervisors can be
given such responsibility when this involves not just the
routine supervision of operating employees but the
protection and expansion of the company's business vis-
a-vis its competitors.
While route managers do not appear to have the
power to hire and fire people (the evidence shows that
they only "recommended" or "endorsed" the taking of
disciplinary action against certain employees), this is
because this is a function of the Human Resources or
Personnel Department of the company.[14]14 And neither
should it be presumed that just because they are given
set benchmarks to observe, they are ipso
facto supervisors. Adequate control methods (as
embodied in such concepts as "Management by
Objectives [MBO]" and "performance appraisals") which
require a delineation of the functions and responsibilities
of managers by means of ready reference cards as here,
have long been recognized in management as effective
tools for keeping businesses competitive.
This brings us to the second question, whether the
first sentence of Art. 245 of the Labor Code, prohibiting
managerial employees from forming, assisting or joining
any labor organization, is constitutional in light of Art. III,
8 of the Constitution which provides:
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.
As already stated, whether they belong to the first
category (managers per se) or the second category
(supervisors), managers are employees. Nonetheless, in
the United States, as Justice Puno's separate opinion
notes, supervisors have no right to form unions. They are
excluded from the definition of the term "employee" in 2(3)
of the Labor-Management Relations Act of 1947.[15]v. Bell
Aerospace Co., 416 U.S. 281, n 11, 40 L.Ed.2d 134, 147,
n. 11 (1974), thus:
Supervisors are management people. They have
distinguished themselves in their work. They have
demonstrated their ability to take care of themselves
without depending upon the pressure of collective
action. No one forced them to become supervisors. They
abandoned the "collective security" of the rank and file
voluntarily, because they believed the opportunities thus
opened to them to be more valuable to them than such
"security". It seems wrong, and it is wrong, to subject
people of this kind, who have demonstrated their initiative,
their ambition and their ability to get ahead, to the leveling
processes of seniority, uniformity and standardization that
the Supreme Court recognizes as being fundamental
principles of unionism. (J.I. Case Co. v. National Labor
Relations Board, 321 U.S. 332, 88 L.Ed. 762, 64 S. Ct.
576 (1994). It is wrong for the foremen, for it discourages
the things in them that made them foremen in the first
place. For the same reason, that it discourages those best
qualified to get ahead, it is wrong for industry, and
particularly for the future strength and productivity of our
country.15 In the Philippines, the question whether
managerial employees have a right of self-organization
has arisen with respect to first-level managers or
supervisors, as shown by a review of the course of labor
legislation in this country.
Right of Self-Organization of Managerial Employees under Pre-Labor Code Laws
Before the promulgation of the Labor Code in 1974,
the field of labor relations was governed by the Industrial
Peace Act (R.A. No. 875).
In accordance with the general definition above, this
law defined "supervisor" as follows:
SECTION 2. . . .
(k) "Supervisor" means any person having authority in the
interest of an employer, to hire, transfer, suspend, lay-off,
recall, discharge, assign, recommend, or discipline other
employees, or responsibly to direct them, and to adjust
their grievances, or effectively to recommend such acts,
if, in connection with the foregoing, the exercise of such
authority is not of a merely routinary or clerical nature but
requires the use of independent judgment.[16]16
The right of supervisors to form their own
organizations was affirmed:
SEC. 3. Employees' Right to Self-Organization. --
Employees shall have the right to self-organization and to
form, join or assist labor organizations of their own
choosing for the purpose of collective bargaining through
representatives of their own choosing and to engage in
concerted activities for the purpose of collective
bargaining and other mutual aid and protection.
Individuals employed as supervisors shall not be eligible
for membership in a labor organization of employees
under their supervision but may form separate
organizations of their own.[17]
For its part, the Supreme Court upheld in several of its
decisions the right of supervisors to organize for purposes
of labor relations.[18]v. Filoil Supervisory and Confidential
Employees Association, 6 SCRA 522 (1972); Kapisanan
ng mga Manggagawa sa Manila Railroad Co. v. CIR, 106
Phil 607 (1959).18
Although it had a definition of the term "supervisor,"
the Industrial Peace Act did not define the term
"manager." But, using the commonly-understood concept
of "manager," as above stated, it is apparent that the law
used the term "supervisors" to refer to the sub-group of
"managerial employees" known as front-line managers.
The other sub-group of "managerial employees," known
as managers per se, was not covered.
However, in Caltex Filipino Managers and
Supervisors Association v. Court of Industrial
Relations,[19]J.)19 the right of all managerial employees to
self-organization was upheld as a general proposition,
thus:
It would be going too far to dismiss summarily the point
raised by respondent Company - that of the alleged
identity of interest between the managerial staff and the
employing firm. That should ordinarily be the case,
especially so where the dispute is between management
and the rank and file. It does not necessarily follow though
that what binds the managerial staff to the corporation
forecloses the possibility of conflict between them. There
could be a real difference between what the welfare of
such group requires and the concessions the firm is willing
to grant. Their needs might not be attended to then in the
absence of any organization of their own. Nor is this to
indulge in empty theorizing. The record of respondent Lab. Supvr. - Pandacan
Company, even the very case cited by it, is proof enough
of their uneasy and troubled relationship. Certainly the Jr. Sales Engineer B
impression is difficult to erase that an alien firm failed to
manifest sympathy for the claims of its Filipino Operations Assistant B
executives. To predicate under such circumstances that
agreement inevitably marks their relationship, ignoring Field Engineer
that discord would not be unusual, is to fly in the face of
reality. Sr. Opers. Supvr. - MIA A/S

. . . The basic question is whether the managerial Purchasing Assistant

personnel can organize. What respondent Company
Jr. Construction Engineer
failed to take into account is that the right to self-
organization is not merely a statutory creation. It is
St. Sales Supervisor
fortified by our Constitution. All are free to exercise such
right unless their purpose is contrary to law. Certainly it Deport Supervisor A
would be to attach unorthodoxy to, not to say an
emasculation of, the concept of law if managers as such Terminal Accountant B
were precluded from organizing. Having done so and
having been duly registered, as did occur in this case, Merchandiser
their union is entitled to all the rights under Republic Act
No. 875. Considering what is denominated as unfair labor Dist. Sales Prom. Supvr.
practice under Section 4 of such Act and the facts set forth
in our decision, there can be only one answer to the Instr. - Merchandising
objection raised that no unfair labor practice could be
committed by respondent Company insofar as managerial Asst. Dist. Accountant B
personnel is concerned. It is, as is quite obvious, in the
negative.[20]20 Sr. Opers. Supervisor

Actually, the case involved front-line managers or Jr. Sales Engineer A

supervisors only, as the plantilla of employees, quoted in
the main opinion,[21]J.) (emphasis added).21 clearly Asst. Bulk Ter. Supt.
indicates:
Sr. Opers. Supvr.
CAFIMSA members holding the following
Credit Supervisor A
Supervisory Payroll Position Title are Recognized by
the Company
Asst. Stores Supvr. A
Payroll Position Title
Ref. Supervisory Draftsman
Assistant to Mgr. - National Acct. Sales
Refinery Shift Supvr. B
Jr. Sales Engineer
Asst. Supvr. A - Operations (Refinery)
Retail Development Asst.
Refinery Shift Supvr. B
Staff Asst. - 0 Marketing
Asst. Lab. Supvr. A (Refinery)
Sales Supervisor
St. Process Engineer B (Refinery)
Supervisory Assistant
Asst. Supvr. A - Maintenance (Refinery)
Jr. Supervisory Assistant
Asst. Supvr. B - Maintenance (Refinery)
Credit Assistant
Supervisory Accountant (Refinery)
Communications Supervisor (Refinery)
Finally, also deemed included are all other
employees excluded from the rank and file unions
but not classified as managerial or otherwise
excludable by law or applicable judicial precedents.
Right of Self-Organization of Managerial Employees under the Labor Code
Thus, the dictum in the Caltex case which allowed at
least for the theoretical unionization of top and middle
managers by assimilating them with the supervisory
group under the broad phrase "managerial personnel,"
provided the lynchpin for later laws denying the right of
self-organization not only to top and middle management
employees but to front line managers or supervisors as
well. Following the Caltex case, the Labor Code,
promulgated in 1974 under martial law, dropped the
distinction between the first and second sub-groups of
managerial employees. Instead of treating the terms
"supervisor" and "manager" separately, the law lumped
them together and called them "managerial employees,"
as follows:
ART. 212. Definitions . . . .
(k) "Managerial Employee" is one who is vested with
powers or prerogatives to lay down and execute
management policies and/or to hire, transfer, suspend,
lay off, recall, discharge, assign or discipline employees,
or to effectively recommend such managerial actions. All
employees not falling within this definition are considered
rank and file employees for purposes of this Book.[22]22
The definition shows that it is actually a combination of the
commonly understood definitions of both groups of
managerial employees, grammatically joined by the
phrase "and/or."
This general definition was perhaps legally
necessary at that time for two reasons. First, the 1974
Code denied supervisors their right to self-organize as
theretofore guaranteed to them by the Industrial Peace
Act. Second, it stood the dictum in the Caltex case on its
head by prohibiting all types of managers from forming
unions. The explicit general prohibition was contained in
the then Art. 246 of the Labor Code.
The practical effect of this synthesis of legal concepts
was made apparent in the Omnibus Rules Implementing
the Labor Code which the Department of Labor
promulgated on January 19, 1975. Book V, Rule II, 11 of
the Rules provided:
Supervisory unions and unions of security guards to
cease operation. - All existing supervisory unions and
unions of security guards shall, upon the effectivity of the
Code, cease to operate as such and their registration
certificates shall be deemed automatically
cancelled. However, existing collective agreements with
such unions, the life of which extends beyond the date of
effectivity of the Code, shall be respected until their expiry
date insofar as the economic benefits granted therein are
concerned.
Members of supervisory unions who do not fall within the
definition of managerial employees shall become eligible
to join or assist the rank and file labor organization, and if
none exists, to form or assist in the forming of such rank
and file organization. The determination of who are
managerial employees and who are not shall be the
subject of negotiation between representatives of the
supervisory union and the employer. If no agreement is
reached between the parties, either or both of them may
bring the issue to the nearest Regional Office for
determination.
The Department of Labor continued to use the term
"supervisory unions" despite the demise of the legal
definition of "supervisor" apparently because these were
the unions of front line managers which were then allowed
as a result of the statutory grant of the right of self-
organization under the Industrial Peace Act. Had the
Department of Labor seen fit to similarly ban unions of top
and middle managers which may have been formed
following the dictum in Caltex, it obviously would have
done so. Yet it did not, apparently because no such
unions of top and middle managers really then existed.
Real Intent of the 1986 Constitutional Commission
This was the law as it stood at the time the
Constitutional Commission considered the draft of Art. III,
8. Commissioner Lerum sought to amend the draft of
what was later to become Art. III, 8 of the present
Constitution:
MR. LERUM. My amendment is on Section 7, page 2, line
19, which is to insert between the words "people" and "to"
the following: WHETHER EMPLOYED BY THE STATE
OR PRIVATE ESTABLISHMENTS. In other words, the
section will now read as follows: "The right of the people
WHETHER EMPLOYED BY THE STATE OR PRIVATE
ESTABLISHMENTS to form associations, unions, or
societies for purposes not contrary to law shall not be
abridged."[23]23
Explaining his proposed amendment, he stated:
MR. LERUM. Under the 1935 Bill of Rights, the right to
form associations is granted to all persons whether or not
they are employed in the government. Under that
provision, we allow unions in the government, in
government-owned and controlled corporations and in
other industries in the private sector, such as the
Philippine Government Employees' Association, unions in
the GSIS, the SSS, the DBP and other government-
owned and controlled corporations. Also, we have unions
of supervisory employees and of security guards. But
what is tragic about this is that after the 1973 Constitution
was approved and in spite of an express recognition of
the right to organize in P.D. No. 442, known as the Labor
Code, the right of government workers, supervisory
employees and security guards to form unions was
abolished.
And we have been fighting against this abolition. In every
tripartite conference attended by the government,
management and workers, we have always been insisting
on the return of these rights. However, both the
government and employers opposed our proposal, so
nothing came out of this until this week when we approved
a provision which states:
Notwithstanding any provision of this article, the right to
self-organization shall not be denied to government
employees.
We are afraid that without any corresponding provision
covering the private sector, the security guards, the
supervisory employees or majority employees [sic] will
still be excluded, and that is the purpose of this
amendment.
I will be very glad to accept any kind of wording as long
as it will amount to absolute recognition of private sector
employees, without exception, to organize.
THE PRESIDENT. What does the Committee say?
FR. BERNAS. Certainly, the sense is very acceptable, but
the point raised by Commissioner Rodrigo is well-
taken. Perhaps, we can lengthen this a little bit more to
read: "The right of the people WHETHER UNEMPLOYED
OR EMPLOYED BY STATE OR PRIVATE
ESTABLISHMENTS."
I want to avoid also the possibility of having this
interpreted as applicable only to the employed.
MR. DE LOS REYES. Will the proponent accept an
amendment to the amendment, Madam President?
MR. LERUM. Yes, as long as it will carry the idea that the
right of the employees in the private sector is
recognized.[24]
Lerum thus anchored his proposal on the fact that (1)
government employees, supervisory employees, and
security guards, who had the right to organize under the
Industrial Peace Act, had been denied this right by the
Labor Code, and (2) there was a need to reinstate the
right of these employees. In consonance with his
objective to reinstate the right of government, security,
and supervisory employees to organize, Lerum then
made his proposal:
MR. LERUM. Mr. Presiding Officer, after a consultation
with several Members of this Commission, my
amendment will now read as follows: "The right of the
people INCLUDING THOSE EMPLOYED IN THE
PUBLIC AND PRIVATE SECTORS to form associations,
unions, or societies for purposes not contrary to law shall
not be abridged. In proposing that amendment I ask to
make of record that I want the following provisions of the
Labor Code to be automatically abolished, which read:
ART. 245. Security guards and other personnel employed
for the protection and security of the person, properties
and premises of the employers shall not be eligible for
membership in a labor organization.
ART. 246. Managerial employees are not eligible to join,
assist, and form any labor organization.
THE PRESIDING OFFICER (Mr. Bengzon). What does
the Committee say?
FR. BERNAS. The Committee accepts.
THE PRESIDING OFFICER. (Mr. Bengzon) The
Committee has accepted the amendment, as amended.
Is there any objection? (Silence) The Chair hears none;
the amendment, as amended, is approved.[25]
The question is what Commissioner Lerum meant in
seeking to "automatically abolish" the then Art. 246 of the
Labor Code. Did he simply want "any kind of wording as
long as it will amount to absolute recognition of private
sector employees, without exception, to organize"?[26] Or,
did he instead intend to have his words taken in the
context of the cause which moved him to propose the
amendment in the first place, namely, the denial of the
right of supervisory employees to organize, because he
said, "We are afraid that without any corresponding
provision covering the private sector, security guards,
supervisory employees or majority [of] employees will still
be excluded, and that is the purpose of this
amendment"?[27]
It would seem that Commissioner Lerum simply
meant to restore the right of supervisory employees to
organize. For even though he spoke of the need to
"abolish" Art. 246 of the Labor Code which, as already
stated, prohibited "managerial employees" in general
from forming unions, the fact was that in explaining his
proposal, he repeatedly referred to "supervisory
employees" whose right under the Industrial Peace Act to
organize had been taken away by Art. 246. It is
noteworthy that Commissioner Lerum never referred to
the then definition of "managerial employees" in Art.
212(m) of the Labor Code which put together, under the
broad phrase "managerial employees," top and middle
managers and supervisors. Instead, his repeated use of
the term "supervisory employees," when such term then
was no longer in the statute books, suggests a frame of
mind that remained grounded in the language of the
Industrial Peace Act.
Nor did Lerum ever refer to the dictum in Caltex
recognizing the right of all managerial employees to
organize, despite the fact that the Industrial Peace Act did
not expressly provide for the right of top and middle
managers to organize. If Lerum was aware of the Caltex
dictum, then his insistence on the use of the term
"supervisory employees" could only mean that he was
excluding other managerial employees from his
proposal. If, on the other hand, he was not aware of the
Caltex statement sustaining the right to organize to top
and middle managers, then the more should his repeated
use of the term "supervisory employees" be taken at face
value, as it had been defined in the then Industrial Peace
Act.
At all events, that the rest of the Commissioners
understood his proposal to refer solely to supervisors and
not to other managerial employees is clear from the
following account of Commissioner Joaquin G. Bernas,
who writes:
In presenting the modification on the 1935 and 1973 texts,
Commissioner Eulogio R. Lerum explained that the
modification included three categories of workers: (1)
government employees, (2) supervisory employees, and
(3) security guards. Lerum made of record the explicit
intent to repeal provisions of P.D. 442, the Labor Code.
The provisions referred to were:
ART. 245. Security guards and other personnel employed
for the protection and security of the person, properties
and premises of the employers shall not be eligible for
membership in a labor organization.
ART. 246. Managerial employees are not eligible to join,
assist, and form any labor organization.[28]28
Implications of the Lerum Proposal
In sum, Lerum's proposal to amend Art. III, 8 of the
draft Constitution by including labor unions in the
guarantee of organizational right should be taken in the
context of statements that his aim was the removal of the
statutory ban against security guards and supervisory
employees joining labor organizations. The approval by
the Constitutional Commission of his proposal can only
mean, therefore, that the Commission intended the
absolute right to organize of government workers,
supervisory employees, and security guards to be
constitutionally guaranteed. By implication, no similar
absolute constitutional right to organize for labor purposes
should be deemed to have been granted to top-level and
middle managers. As to them the right of self-organization
may be regulated and even abridged conformably to Art.
III, 8.
Constitutionality of Art. 245
Finally, the question is whether the present ban
against managerial employees, as embodied in Art.
245 (which superseded Art. 246) of the Labor Code, is
valid. This provision reads:
ART. 245. Ineligibility of managerial employees to join
any labor organization; right of supervisory employees. -
Managerial employees are not eligible to join, assist or
form any labor organization. Supervisory employees shall
not be eligible for membership in a labor organization of
the rank-and-file employees but may join, assist or form
separate labor organizations of their own.[29]29
This provision is the result of the amendment of the
Labor Code in 1989 by R.A. No. 6715, otherwise known
as the Herrera-Veloso Law. Unlike the Industrial Peace
Act or the provisions of the Labor Code which it
superseded, R.A. No. 6715 provides separate definitions
of the terms "managerial" and "supervisory employees,"
as follows:
ART. 212. Definitions. . . .
(m) "managerial employee" is one who is vested with
powers or prerogatives to lay down and execute
management policies and/or to hire transfer, suspend, lay
off, recall, discharge, assign or discipline
employees. Supervisory employees are those who, in the
interest of the employer, effectively recommend such
managerial actions if the exercise of such authority is not
merely routinary or clerical in nature but requires the use
of independent judgment. All employees not falling within
any of the above definitions are considered rank-and-file
employees for purposes of this Book.
Although the definition of "supervisory employees"
seems to have been unduly restricted to the last phrase
of the definition in the Industrial Peace Act, the legal
significance given to the phrase "effectively recommends"
remains the same. In fact, the distinction between top and
middle managers, who set management policy, and front-
line supervisors, who are merely responsible for ensuring
that such policies are carried out by the rank and file, is
articulated in the present definition.[30]30 When read in
relation to this definition in Art. 212(m), it will be seen that
Art. 245 faithfully carries out the intent of the
Constitutional Commission in framing Art. III, 8 of the
fundamental law.
the same reason for denying them the right to organize
justifies even more the ban on managerial employees
from forming unions. After all, those who qualify as top or
middle managers are executives who receive from their
employers information that not only is confidential but also
is not generally available to the public, or to their
competitors, or to other employees. It is hardly necessary
to point out that to say that the first sentence of Art. 245 is
unconstitutional would be to contradict the decision in that
case.
WHEREFORE, the petition is DISMISSED.

Nor is the guarantee of organizational right in Art. III,

8 infringed by a ban against managerial employees
forming a union. The right guaranteed in Art. III, 8 is
subject to the condition that its exercise should be for
purposes "not contrary to law." In the case of Art. 245,
there is a rational basis for prohibiting managerial
employees from forming or joining labor organizations. As
Justice Davide, Jr., himself a constitutional commissioner,
said in his ponencia in Philips Industrial Development,
Inc. v. NLRC:[31]31

In the first place, all these employees, with the exception

of the service engineers and the sales force personnel,
are confidential employees. Their classification as such is
not seriously disputed by PEO-FFW; the five (5) previous
CBAs between PIDI and PEO-FFW explicitly considered
them as confidential employees. By the very nature of
their functions, they assist and act in a confidential
capacity to, or have access to confidential matters of,
persons who exercise managerial functions in the field of
labor relations. As such, the rationale behind the
ineligibility of managerial employees to form, assist or
joint a labor union equally applies to them.

In Bulletin Publishing Co., Inc. v. Hon. Augusto Sanchez,

this Court elaborated on this rationale, thus:

". . . The rationale for this inhibition has been stated to be,
because if these managerial employees would belong to
or be affiliated with a Union, the latter might not be
assured of their loyalty to the Union in view of evident
conflict of interests. The Union can also become
company-dominated with the presence of managerial
employees in Union membership."[32]

To be sure, the Court in Philips Industrial was dealing

with the right of confidential employees to organize. But
 [G.R. No. 141717. April 14, 2004]
21. *PHILIPS SEMICONDUCTORS (PHILS.),
INC., petitioner, vs. ELOISA
FADRIQUELA, respondent.
Before us is a petition for review of the Decision[1] of the
Court of Appeals (CA) in CA-G.R. SP No. 52149 and its
Resolution dated January 26, 2000 denying the motion
for reconsideration therefrom.
The Case for the Petitioner
The petitioner Philips Semiconductors (Phils.), Inc. is
a domestic corporation engaged in the production and
assembly of semiconductors such as power devices, RF
modules, CATV modules, RF and metal transistors and
glass diods. It caters to domestic and foreign corporations
that manufacture computers, telecommunications
equipment and cars.
Aside from contractual employees, the petitioner
employed 1,029 regular workers. The employees were
subjected to periodic performance appraisal based on
output, quality, attendance and work attitude.[2] One was
required to obtain a performance rating of at least 3.0 for
the period covered by the performance appraisal to
maintain good standing as an employee.
On May 8, 1992, respondent Eloisa Fadriquela
executed a Contract of Employment with the petitioner in
which she was hired as a production operator with a daily
salary of P118. Her initial contract was for a period of
three months up to August 8, 1992,[3] but was extended
for two months when she garnered a performance rating
of 3.15.[4] Her contract was again renewed for two months
or up to December 16, 1992,[5] when she received a
performance rating of 3.8.[6] After the expiration of her
third contract, it was extended anew, for three
months,[7]that is, from January 4, 1993 to April 4, 1993.
After garnering a performance rating of 3.4,[8]the
respondents contract was extended for another three
months, that is, from April 5, 1993 to June 4, 1993.[9] She,
however, incurred five absences in the month of April,
three absences in the month of May and four absences in
the month of June.[10] Line supervisor Shirley F. Velayo
asked the respondent why she incurred the said
absences, but the latter failed to explain her side. The
respondent was warned that if she offered no valid
justification for her absences, Velayo would have no other
recourse but to recommend the non-renewal of her
contract. The respondent still failed to respond, as a
consequence of which her performance rating declined to
2.8. Velayo recommended to the petitioner that the
respondents employment be terminated due to habitual
absenteeism,[11] in accordance with the Company Rules
and Regulations.[12] Thus, the respondents contract of
employment was no longer renewed.
The Complaint of the Respondent
The respondent filed a complaint before the National
Capital Region Arbitration Branch of the National Labor
Relations Commission (NLRC) for illegal dismissal
against the petitioner, docketed as NLRC Case No. NCR-
07-04263-93. She alleged, inter alia, that she was illegally
dismissed, as there was no valid cause for the termination
of her employment. She was not notified of any infractions
she allegedly committed; neither was she accorded a
chance to be heard. According to the respondent, the
petitioner did not conduct any formal investigation before
her employment was terminated. Furthermore,
considering that she had rendered more than six months
of service to the petitioner, she was already a regular
employee and could not be terminated without any
justifiable cause. Moreover, her absences were covered
by the proper authorizations.[13]
On the other hand, the petitioner contended that the
respondent had not been dismissed, but that her contract
of employment for the period of April 4, 1993 to June 4,
1993 merely expired and was no longer renewed because
of her low performance rating. Hence, there was no need
for a notice or investigation. Furthermore, the respondent
had already accumulated five unauthorized absences
which led to the deterioration of her performance, and
ultimately caused the non-renewal of her contract.[14]
The Ruling of the Labor Arbiter and the NLRC
On June 26, 1997, the Labor Arbiter rendered a
decision dismissing the complaint for lack of merit, thus:
IN THE LIGHT OF ALL THE FOREGOING, the complaint
is hereby dismissed for lack of merit. The respondent is,
however, ordered to extend to the complainant a send off
award or financial assistance in the amount equivalent to
one-month salary on ground of equity.[15]
The Labor Arbiter declared that the respondent, who
had rendered less than seventeen months of service to
the petitioner, cannot be said to have acquired regular
status. The petitioner and the Philips Semiconductor
Phils., Inc., Workers Union had agreed in their Collective
Bargaining Agreement (CBA) that a contractual employee
would acquire a regular employment status only upon
completion of seventeen months of service. This was also
reflected in the minutes of the meeting of April 6,
1993 between the petitioner and the union.Further, a
contractual employee was required to receive a
performance rating of at least 3.0, based on output, quality
of work, attendance and work attitude, to qualify for
contract renewal.In the respondents case, she had
worked for the petitioner for only twelve months. In the last
extension of her employment contract, she garnered only
2.8 points, below the 3.0 required average, which
disqualified her for contract renewal, and regularization of
employment. The Labor Arbiter also ruled that the
respondent cannot justifiably complain that she was
deprived of her right to notice and hearing because her
line supervisor had asked her to explain her unauthorized
absences. Accordingly, these dialogues between the
respondent and her line supervisor can be deemed as
substantial compliance of the required notice and
investigation.
The Labor Arbiter declared, however, that the
respondent had rendered satisfactory service for a period
of one year, and since her infraction did not involve moral
turpitude, she was entitled to one months salary.
Aggrieved, the respondent appealed to the NLRC,
which, on September 16, 1998, issued a Resolution
affirming the decision of the Labor Arbiter and dismissing
the appeal. The NLRC explained that the respondent was
a contractual employee whose period of employment was
fixed in the successive contracts of employment she had
executed with the petitioner. Thus, upon the expiration of
her contract, the respondents employment automatically
ceased. The respondents employment was not
terminated; neither was she dismissed.
The NLRC further ruled that as a contractual
employee, the respondent was bound by the stipulations
in her contract of employment which, among others, was
to maintain a performance rating of at least 3.0 as a
condition for her continued employment. Since she failed
to meet the said requirement, the petitioner was justified
in not renewing her contract.
The respondent filed a motion for reconsideration of
the resolution, but on January 12, 1999, the NLRC
resolved to deny the same.
The Case Before the Court of Appeals
Dissatisfied, the respondent filed a petition
for certiorari under Rule 65 before the Court of Appeals,
docketed as CA-G.R. SP No. 52149, for the reversal of
the resolutions of the NLRC.
On October 11, 1999, the appellate court rendered a
decision reversing the decisions of the NLRC and the
Labor Arbiter and granting the respondents petition. The
CA ratiocinated that the bases upon which the NLRC and
the Labor Arbiter founded their decisions were
inappropriate because the CBA and the Minutes of the
Meeting between the union and the management showed
that the CBA did not cover contractual employees like the
respondent. Thus, the seventeenth-month probationary
period under the CBA did not apply to her. The CA ruled
that under Article 280 of the Labor Code, regardless of the
written and oral agreements between an employee and
her employer, an employee shall be deemed to have
attained regular status when engaged to perform activities
which are necessary and desirable in the usual trade or
business of the employer. Even casual employees shall
be deemed regular employees if they had rendered at
least one year of service to the employer, whether broken
or continuous.
The CA noted that the respondent had been
performing activities that were usually necessary and
desirable to the petitioners business, and that she had
rendered thirteen months of service. It concluded that the
respondent had attained regular status and cannot, thus,
be dismissed except for just cause and only after due
hearing. The appellate court further declared that the task
of the respondent was hardly specific or seasonal. The
periods fixed in the contracts of employment executed by
the respondent were designed by the petitioner to
preclude the respondent from acquiring regular
employment status. The strict application of the contract
of employment against the respondent placed her at the
mercy of the petitioner, whose employees crafted the said
contract.
According to the appellate court, the petitioners
contention that the respondents employment on as the
need arises basis was illogical. If such stance were
sustained, the court ruled, then no employee would attain
regular status even if employed by the petitioner for
seventeen months or more. The CA held that the
respondents sporadic absences upon which her dismissal
was premised did not constitute valid justifiable grounds
for the termination of her employment. The tribunal also
ruled that a less punitive penalty would suffice for
missteps such as absenteeism, especially considering
that the respondent had performed satisfactorily for the
past twelve months.
The CA further held that, contrary to the ruling of the
Labor Arbiter, the dialogues between the respondent and
the line supervisor cannot be considered substantial
compliance with the requirement of notice and
investigation. Thus, the respondent was not only
dismissed without justifiable cause; she was also
deprived of her right to due process.
The petitioner filed a motion for reconsideration of
the decision but on January 26, 2000, the CA issued a
resolution denying the same.
The Case Before the Court
The petitioner filed the instant petition and raised the
following issues for the courts resolution: (a) whether or
not the respondent was still a contractual employee of the
petitioner as of June 4, 1993; (b) whether or not the
petitioner dismissed the respondent from her
employment; (c) if so, whether or not she was accorded
the requisite notice and investigation prior to her
dismissal; and, (d) whether or not the respondent is
entitled to reinstatement and full payment of backwages
as well as attorneys fees.
On the first issue, the petitioner contends that the
policy of hiring workers for a specific and limited period on
an as needed basis, as adopted by the petitioner, is not
new; neither is it prohibited. In fact, according to the
petitioner, the hiring of workers for a specific and limited
period is a valid exercise of management prerogative. It
does not necessarily follow that where the duties of the
employee consist of activities usually necessary or
desirable in the usual course of business of the employer,
the parties are forbidden from agreeing on a period of time
for the performance of such activities. Hence, there is
nothing essentially contradictory between a definite
period of employment and the nature of the employees
duties.
According to the petitioner, it had to resort to hiring
contractual employees for definite periods because it is a
semiconductor company and its business is cyclical in
nature. Its operation, production rate and manpower
requirements are dictated by the volume of business from
its clients and the availability of the basic materials. It
produces the products upon order of its clients and does
not allow such products to be stockpiled. Peak loads due
to cyclical demands increase the need for additional
manpower for short duration. Thus, the petitioner often
experiences short-term surges in labor requirements. The
hiring of workers for a definite period to supplement the
regular work force during the unpredictable peak loads
was the most efficient, just and practical solution to the
petitioners operating needs.
The petitioner contends that the CA misapplied the
law when it insisted that the respondent should be
deemed a regular employee for having been employed for
more than one year.The CA ignored the exception to this
rule, that the parties to an employment contract may
agree otherwise, particularly when the same is
established by company policy or required by the nature
of work to be performed. The employer has the
prerogative to set reasonable standards to qualify for
regular employment, as well as to set a reasonable period
within which to determine such fitness for the job.
According to the petitioner, the conclusion of the CA
that the policy adopted by it was intended to circumvent
the respondents security of tenure is without basis. The
petitioner merely exercised a right granted to it by law and,
in the absence of any evidence of a wrongful act or
omission, no wrongful intent may be attributed to
it. Neither may the petitioner be penalized for agreeing to
consider workers who have rendered more than
seventeen months of service as regular employees,
notwithstanding the fact that by the nature of its business,
the petitioner may enter into specific limited contracts only
for the duration of its clients peak demands. After all, the
petitioner asserts, the union recognized the need to
establish such training and probationary period for at least
six months for a worker to qualify as a regular
employee. Thus, under their CBA, the petitioner and the
union agreed that contractual workers be hired as
of December 31, 1992.
The petitioner stresses that the operation of its
business as a semiconductor company requires the use
of highly technical equipment which, in turn, calls for
certain special skills for their use. Consequently, the
petitioner, in the exercise of its best technical and
business judgment, has set a standard of performance for
workers as well as the level of skill, efficiency,
competence and production which the workers must pass
to qualify as a regular employee. In rating the
performance of the worker, the following appraisal factors
are considered by the respondent company as essential:
(1) output (40%), (2) quality (30%), (3) attendance (15%),
and (4) work attitude (15%). The rate of 3.0 was set as the
passing grade. As testified to by the petitioners Head of
Personnel Services, Ms. Cecilia C. Mallari:
A workers efficiency and productivity can be established
only after he has rendered service using Philips
equipment over a period of time. A worker has to undergo
training, during which time the worker is taught the
manufacturing process and quality control. After
instructions, the worker is subjected to written and oral
examinations to determine his fitness to continue with the
training. The orientation and initial training lasts from
three to four weeks before the worker is assigned to a
specific work station. Thereafter, the workers efficiency
and skill are monitored.
Among the factors considered (before a contractual
employee becomes a regular employee) are output,
quality, attendance, and work attitude, which includes
cooperation, discipline, housekeeping and inter-office
employee relationship. These factors determine the
workers efficiency and productivity.[16]
The Courts Ruling
In ruling for the respondent, the appellate court
applied Article 280 of the Labor Code of the Philippines,
as amended, which reads:
Art. 280. Regular and Casual Employment. The
provisions of written agreement to the contrary
notwithstanding and regardless of the oral argument of
the parties, an employment shall be deemed to be regular
where the employee has been engaged to perform
activities which are usually necessary or desirable in the
usual business or trade of the employer, except where the
employment has been fixed for a specific project or
undertaking the completion or termination of which has
been determined at the time of the engagement of the
employee or where the work or services to be performed
is seasonal in nature and the employment is for the
duration of the season.
An employment shall be deemed to be casual if it is not
covered by the preceding paragraph; Provided, That, any
employee who has rendered at least one year of service,
whether such service is continuous or broken, shall be
considered a regular employee with respect to the activity
in which he is employed and his employment shall
continue while such activity exists.
The appellate court held that, in light of the factual
milieu, the respondent was already a regular employee
on June 4, 1993. Thus:
It is apparent from the factual circumstances of this case
that the period of employment has been imposed to
preclude acquisition of tenurial security by petitioner. It
bears stressing that petitioners original contract of
employment, dated May 8, 1992 to August 8, 1992, had
been extended through several contracts one from
October 13, 1992 to December 16, 1992, another from
January 7, 1993 to April 4, 1993, and, lastly, from April 5,
1993 to June 4, 1993.
The fact that the petitioner had rendered more than one
year of service at the time of his (sic) dismissal only shows
that she is performing an activity which is usually
necessary and desirable in private respondents business
or trade. The work of petitioner is hardly specific or
seasonal. The petitioner is, therefore, a regular employee
of private respondent, the provisions of their contract of
employment notwithstanding. The private respondents
prepared employment contracts placed petitioner at the
mercy of those who crafted the said contract.[17]
We agree with the appellate court.
Article 280 of the Labor Code of the Philippines was
emplaced in our statute books to prevent the
circumvention by unscrupulous employers of the
employees right to be secure in his tenure by
indiscriminately and completely ruling out all written and
oral agreements inconsistent with the concept of regular
employment defined therein. The language of the law
manifests the intent to protect the tenurial interest of the
worker who may be denied the rights and benefits due a
regular employee because of lopsided agreements with
the economically powerful employer who can maneuver
to keep an employee on a casual or temporary status for
as long as it is convenient to it.[18] In tandem with Article
281 of the Labor Code, Article 280 was designed to put
an end to the pernicious practice of making permanent
casuals of our lowly employees by the simple expedient
of extending to them temporary or probationary
appointments, ad infinitum.[19]
The two kinds of regular employees under the law
are (1) those engaged to perform activities which are
necessary or desirable in the usual business or trade of
the employer; and (2) those casual employees who have
rendered at least one year of service, whether continuous
or broken, with respect to the activities in which they are
employed.[20] The primary standard to determine a regular
employment is the reasonable connection between the
particular activity performed by the employee in relation to
the business or trade of the employer. The test is whether
the former is usually necessary or desirable in the usual
business or trade of the employer.[21] If the employee has
been performing the job for at least one year, even if the
performance is not continuous or merely intermittent, the
law deems the repeated and continuing need for its
performance as sufficient evidence of the necessity, if not
indispensability of that activity to the business of the
employer. Hence, the employment is also considered
regular, but only with respect to such activity and while
such activity exists.[22] The law does not provide the
qualification that the employee must first be issued a
regular appointment or must be declared as such before
he can acquire a regular employee status.[23]
In this case, the respondent was employed by the
petitioner on May 8, 1992 as production operator. She
was assigned to wirebuilding at the transistor
division. There is no dispute that the work of the
respondent was necessary or desirable in the business or
trade of the petitioner.[24] She remained under the employ
of the petitioner without any interruption since May 8,
1992 to June 4, 1993 or for one (1) year and twenty-eight
(28) days. The original contract of employment had been
extended or renewed for four times, to the same position,
with the same chores. Such a continuing need for the
services of the respondent is sufficient evidence of the
necessity and indispensability of her services to the
petitioners business.[25] By operation of law, then, the
respondent had attained the regular status of her
employment with the petitioner, and is thus entitled to
security of tenure as provided for in Article 279 of the
Labor Code which reads:
Art. 279. Security of Tenure. In cases of regular
employment, the employer shall not terminate the
services of an employee except for a just cause or when
authorized by this Title. An employee who is unjustly
dismissed from work shall be entitled to reinstatement
without loss of seniority rights and other privileges and to
his full backwages, inclusive of 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.
The respondents re-employment under contracts
ranging from two to three months over a period of one
year and twenty-eight days, with an express statement
that she may be reassigned at the discretion of the
petitioner and that her employment may be terminated at
any time upon notice, was but a catch-all excuse to
prevent her regularization. Such statement is contrary to
the letter and spirit of Articles 279 and 280 of the Labor
Code. We reiterate our ruling in Romares v. NLRC:[26]
Succinctly put, in rehiring petitioner, employment
contracts ranging from two (2) to three (3) months with an
express statement that his temporary job/service as
mason shall be terminated at the end of the said period or
upon completion of the project was obtrusively a
convenient subterfuge utilized to prevent his
regularization. It was a clear circumvention of the
employees right to security of tenure and to other
benefits. It, likewise, evidenced bad faith on the part of
PILMICO.
The limited period specified in petitioners employment
contract having been imposed precisely to circumvent the
constitutional guarantee on security of tenure should,
therefore, be struck down or disregarded as contrary to
public policy or morals. To uphold the contractual
arrangement between PILMICO and petitioner would, in
effect, permit the former to avoid hiring permanent or
regular employees by simply hiring them on a temporary
or casual basis, thereby violating the employees security
of tenure in their jobs.[27]
Under Section 3, Article XVI of the Constitution, it is
the policy of the State to assure the workers of security of
tenure and free them from the bondage of uncertainty of
tenure woven by some employers into their contracts of
employment. The guarantee is an act of social
justice. When a person has no property, his job may
possibly be his only possession or means of livelihood
and those of his dependents. When a person loses his
job, his dependents suffer as well. The worker should
therefor be protected and insulated against any arbitrary
deprivation of his job.[28]
We reject the petitioners general and catch-all
submission that its policy for a specific and limited period
on an as the need arises basis is not prohibited by law or
abhorred by the Constitution; and that there is nothing
essentially contradictory between a definite period of
employment and the nature of the employees duties.
The petitioners reliance on our ruling in Brent
School, Inc. v. Zamora[29] and reaffirmed in subsequent
rulings is misplaced, precisely in light of the factual milieu
of this case. In the Brent School, Inc. case, we ruled that
the Labor Code does not outlaw employment contracts on
fixed terms or for specific period. We also ruled that the
decisive determinant in term employment should not be
the activity that the employee is called upon to perform
but the day certain agreed upon by the parties for the
commencement and termination of their employment
relationship. However, we also emphasized in the same
case that where from the circumstances it is apparent that
the periods have been imposed to preclude acquisition of
tenurial security by the employee, they should be struck
down or disregarded as contrary to public policy and
morals. In the Romares v. NLRC case, we cited the
criteria under which term employment cannot be said to
be in circumvention of the law on security of tenure,
namely:
1) The fixed period of employment was knowingly and
voluntarily agreed upon by the parties without any force,
duress, or improper pressure being brought to bear upon
the employee and absent any other circumstances
vitiating his consent; or
2) It satisfactorily appears that the employer and the
employee dealt with each other on more or less equal
terms with no moral dominance exercised by the former
or the latter.[30]
 None of these criteria has been met in this
case. Indeed, in Pure Foods Corporation v. NLRC,[31] we
sustained the private respondents averments therein,
thus:
[I]t could not be supposed that private respondents and all
other so-called casual workers of [the petitioner]
KNOWINGLY and VOLUNTARILY agreed to the 5-month
employment contract. Cannery workers are never on
equal terms with their employers. Almost always, they
agree to any terms of an employment contract just to get
employed considering that it is difficult to find work given
their ordinary qualifications. Their freedom to contract is
empty and hollow because theirs is the freedom to starve
if they refuse to work as casual or contractual
workers. Indeed, to the unemployed, security of tenure
has no value. It could not then be said that petitioner and
private respondents dealt with each other on more or less
equal terms with no moral dominance whatever being
exercised by the former over the latter.[32]
We reject the petitioners submission that it resorted
to hiring employees for fixed terms to augment or
supplement its regular employment for the duration of
peak loads during short-term surges to respond to cyclical
demands; hence, it may hire and retire workers on fixed
terms, ad infinitum, depending upon the needs of its
customers, domestic and international.Under the
petitioners submission, any worker hired by it for fixed
terms of months or years can never attain regular
employment status. However, the petitioner, through Ms.
Cecilia C. Mallari, the Head of Personnel Services of the
petitioner, deposed that as agreed upon by the Philips
Semiconductor (Phils.), Inc. Workers Union and the
petitioner in their CBA, contractual employees hired
before December 12, 1993 shall acquire regular
employment status after seventeen (17) months of
satisfactory service, continuous or broken:
5. Q: What was the response of Philips regular employees
to your hiring of contractual workers in the event of peak
loads?
A: Philips regular rank-and-file employees, through their
exclusive bargaining agent, the Philips Semiconductors
(Phils.), Inc. Workers Union (Union), duly recognized the
right of Philips, in its best business judgment, to hire
contractual workers, and excluded these workers from the
bargaining unit of regular rank-and-file employees.
Thus, it is provided under the Collective Bargaining
Agreement, dated May 16, 1993, between Philips and the
Union that:
ARTICLE I
UNION RECOGNITION
Section 1. Employees Covered: The Company hereby
recognizes the Union as the exclusive bargaining
representative of the following regular employees in the
Factory at Las Pias, Metro Manila: Janitors, Material
Handlers, Store helpers, Packers, Operators, QA
Inspectors, Technicians, Storekeepers, Production
Controllers, Inventory Controllers, Draftsmen, Machinists,
Sr. Technician, Sr. QA Inspectors, Controllers, Sr.
Draftsmen, and Servicemen, except probationary and
Casual/Contractual Employees, all of whom do not belong
to the bargaining unit.
A copy of the CBA, dated May 16, 1993, was attached as
Annex 1 to Philips Position Paper, dated August 30, 1993.
6. Q: May a contractual employee become a regular
employee of the Philips?
A: Yes. Under the agreement, dated April 6, 1993,
between the Union and Philips, contractual workers hired
before 12 December 1993, who have rendered seventeen
months of satisfactory service, whether continuous or
broken, shall be given regular status. The service
rendered by a contractual employee may be broken
depending on production needs of Philips as explained
earlier.
A copy of the Minutes of the Meeting (Minutes, for brevity),
dated April 6, 1993, evidencing the agreement between
Philips and the Union has been submitted as Annex 2 of
Philips Position Paper.[33]
In fine, under the CBA, the regularization of a
contractual or even a casual employee is based solely on
a satisfactory service of the employee/worker for
seventeen (17) months and not on an as needed basis on
the fluctuation of the customers demands for its
products. The illogic of the petitioners incongruent
submissions was exposed by the appellate court in its
assailed decision, thus:
The contention of private respondent that petitioner was
employed on as needed basis because its operations and
manpower requirements are dictated by the volume of
business from its client and the availability of the basic
materials, such that when the need ceases, private
respondent, at its option, may terminate the contract, is
certainly untenable. If such is the case, then we see no
reason for private respondent to allow the contractual
employees to attain their regular status after they
rendered service for seventeen months. Indubitably, even
after the lapse of seventeen months, the operation of
private respondent would still be dependent on the
volume of business from its client and the availability of
basic materials. The point is, the operation of every
business establishment naturally depends on the law of
supply and demand. It cannot be invoked as a reason why
a person performing an activity, which is usually desirable
and necessary in the usual business, should be placed in
a wobbly status. In reiteration, the relation between
capital and labor is not merely contractual. It is so
impressed with public interest that labor contracts must
yield to the common good.
While at the start, petitioner was just a mere contractual
employee, she became a regular employee as soon as
she had completed one year of service. It is not difficult to
see that to uphold the contractual arrangement between
private respondent and petitioner would, in effect, be to
permit employers to avoid the necessity of hiring regular
or permanent employees. By hiring employees
indefinitely on a temporary or casual status, employers
deny their right to security of tenure. This is not
sanctioned by law. [34]
Even then, the petitioners reliance on the CBA is
misplaced. For, as ratiocinated by the appellate court in
its assailed decision:
Obviously, it is the express mandate of the CBA not to
include contractual employees within its coverage. Such
being the case, we see no reason why an agreement
between the representative union and private respondent,
delaying the regularization of contractual employees,
should bind petitioner as well as other contractual
employees. Indeed, nothing could be more unjust than to
exclude contractual employees from the benefits of the
CBA on the premise that the same contains an
exclusionary clause while at the same time invoke a
collateral agreement entered into between the parties to
the CBA to prevent a contractual employee from attaining
the status of a regular employee.
This cannot be allowed.
The CBA, during its lifetime, constitutes the law between
the parties. Such being the rule, the aforementioned CB
A should be binding only upon private respondent and its
regular employees who were duly represented by the
bargaining union. The agreement embodied in the
Minutes of Meeting between the representative union and
private respondent, providing that contractual employees
shall become regular employees only after seventeen
months of employment, cannot bind petitioner. Such a
provision runs contrary to law not only because
contractual employees do not form part of the collective
bargaining unit which entered into the CBA with private
respondent but also because of the Labor Code provision
on regularization. The law explicitly states that an
employee who had rendered at least one year of service,
whether such service is continuous or broken, shall be
considered a regular employee. The period set by law is
one year. The seventeen months provided by the Minutes
of Meeting is obviously much
longer.The principle is well settled that the law forms part
of and is read into every contract without the need for th
e parties expressly making reference to it. [35]
On the second and third issues, we agree with the
appellate court that the respondent was dismissed by the
petitioner without the requisite notice and without any
formal investigation.Given the factual milieu in this case,
the respondents dismissal from employment for incurring
five (5) absences in April 1993, three (3) absences in May
1993 and four (4) absences in June 1993, even if true, is
too harsh a penalty. We do agree that an employee may
be dismissed for violation of reasonable regulations/rules
promulgated by the employer. However, we emphasized
in PLDT v. NLRC[36] that:
Dismissal is the ultimate penalty that can be meted to an
employee. Where a penalty less punitive would suffice,
whatever missteps may have been committed by the
worker ought not to be visited with a consequence so
severe such as dismissal from employment. For, the
Constitution guarantees the right of workers to security of
tenure. The misery and pain attendant to the loss of jobs
then could be avoided if there be acceptance of the view
that under certain circumstances of the case the workers
should not be deprived of their means of livelihood.[37]
Neither can the conferences purportedly held
between the respondent and the line supervisor be
deemed substantial compliance with the requirements of
notice and investigation. We are in full accord with the
following ratiocinations of the appellate court in its
assailed decision:
As to the alleged absences, we are convinced that the
same do not constitute sufficient ground for
dismissal. Dismissal is just too stern a penalty. No less
than the Supreme Court mandates that where a penalty
less punitive would suffice, whatever missteps may be
committed by labor ought not to be visited with a
consequence so severe. (Meracap v. International
Ceramics Manufacturing Co., Inc., 92 SCRA 412
[1979]). Besides, the fact that petitioner was repeatedly
given a contract shows that she was an efficient worker
and, therefore, should be retained despite occasional
lapses in attendance. Perfection cannot, after all, be
demanded. (Azucena, The Labor Code, Vol. II, 1996 ed.,
[p.] 680)
Finally, we are convinced that it is erroneous for the is AFFIRMED. The petition at bar is DENIED. Costs
Commission to uphold the following findings of the Labor against the petitioner.
Arbiter, thus:
SO ORDERED.
Those dialogues of the complainant with the Line
Supervisor, substantially, stand for the notice and
investigation required to comply with due process. The
complainant did not avail of the opportunity to explain her
side to justify her shortcomings, especially, on
absences. She cannot now complain about deprivation of
due process.

Of course, the power to dismiss is a formal prerogative of

the employer. However, this is not without limitations. The
employer is bound to exercise caution in terminating the
services of his employees.Dismissals must not be
arbitrary and capricious. Due process must be observed
in dismissing an employee because it affects not only his
position but also his means of livelihood. Employers
should respect and protect the rights of their employees
which include the right to labor. (Liberty Cotton Mills
Workers Union v. Liberty Cotton Mills, Inc., 90 SCRA 391
[1979])

To rule that the mere dialogue between private

respondent and petitioner sufficiently complied with the
demands of due process is to disregard the strict mandate
of the law. A conference is not a substitute for the actual
observance of notice and hearing. (Pepsi Cola Bottling
Co., Inc. v. National Labor Relations Commission, 210
SCRA 277 [1992]) The failure of private respondent to
give petitioner the benefit of a hearing before she was
dismissed constitutes an infringement on her
constitutional right to due process of law and not to be
denied the equal protection of the laws. The right of a
person to his labor is deemed to be his property within the
meaning of the constitutional guarantee. This is his
means of livelihood. He cannot be deprived of his labor or
work without due process of law. (Batangas Laguna
Tayabas Bus Co. v. Court of Appeals, 71 SCRA 470
[1976])

All told, the court concludes that petitioners dismissal is

illegal because, first, she was dismissed in the absence of
a just cause, and second, she was not afforded
procedural due process. In pursuance of Article 279 of the
Labor Code, we deem it proper to order the reinstatement
of petitioner to her former job and the payment of her full
backwages. Also, having been compelled to come to
court to protect her rights, we grant petitioners prayer for
attorneys fees.[38]

IN LIGHT OF ALL THE FOREGOING, the assailed

decision of the appellate court in CA-G.R. SP No. 52149
 [G.R. No. 108855. February 28, 1996]
22. *METROLAB INDUSTRIES, INC.
vs. HONORABLE MA. NIEVES ROLDAN-
CONFESOR
2. LABOR AND SOCIAL LEGISLATION;
TERMINATION OF EMPLOYMENT; EXERCISE OF
MANAGEMENT PREROGATIVES; NOT
ABSOLUTE; SUBJECT TO EXCEPTIONS
IMPOSED BY LAW. - This Court recognizes the
exercise of management prerogatives and often
declines to interfere with the legitimate business
decisions of the employer. However, this privilege is
not absolute but subject to limitations imposed by
law. In PAL vs. NLRC, (225 SCRA 301 [1993]), we
issued this reminder: ... the exercise of management
prerogatives was never considered
boundless. Thus, in Cruz vs. Medina (177
SCRA 565 [1989]), it was held that managements
prerogatives must be without abuse of discretion
...All this points to the conclusion that the exercise of
managerial prerogatives is not unlimited. It is
circumscribed by limi(ations found in law, a collective
bargaining agreement, or the general principles of
fair play and justice (University of Sto. Tomas v.
NLRC, 190 SCRA 758 [1990]).
3. ID.; ID.; ID.; ID.; ID.; CASE AT BAR AN EXCEPTION.
- The case at bench constitutes one of the
exceptions. The Secretary of Labor is expressly
given the power under the Labor Code to assume
jurisdiction and resolve labor disputes involving
industries indispensable to national interest. The
disputed injunction is subsumed under this special
grant of authority. Art. 263 (g) of the Labor Code
specifically provides that: x x x (g) When, in his
opinion, there exists a labor dispute causing or likely
to cause a strike or lockout in an industry
indispensable to the national interest, the Secretary
of Labor and Employment may assume jurisdiction
over the dispute and decide it or certify the same to
the Commission for compulsory arbitration. Such
assumption or certification shall have the effect of
automatically enjoining the intended or impending
strike or lockout as specified in the assumption or
certification order. If one has already taken place at
the time of assumption or certification, all striking or
locked out employees shall immediately return to
work and the employer shall immediately resume
operations and readmit all workers under the same
terms and conditions prevailing before the strike or
lockout. The Secretary of Labor and Employment or
the Commission may seek the assistance of law
enforcement agencies to ensure compliance with
this provision as well as with such orders as he may
issue to enforce the same. . . . That Metrolabs
business is of national interest is not disputed.
Metrolab is one of the leading manufacturers and
suppliers of medical and pharmaceutical products to
the country. Metrolabs management prerogatives,
therefore, are not being unjustly curtailed but duly
balanced with and tempered by the limitations set by
law, taking into account its special character and the
particular circumstances in the case at bench.
4. ID.; LABOR RELATIONS; INELIGIBILITY OF
MANAGERIAL EMPLOYEES TO JOIN, FORM
AND ASSIST ANY LABOR ORGANIZATION;
PROHIBITION EXTENDED TO CONFIDENTIAL
EMPLOYEES. - Although Article 245 of the Labor
Code limits the ineligibility to join, form and assist any
labor organization to managerial employees,
jurisprudence has extended this prohibition to
confidential employees or those who by reason of
their positions or nature of work are required to assist
or act in a fiduciary manner to managerial employees
and hence, are likewise privy to sensitive and highly
confidential records.
5. ID.; ID.; EXCLUSION OF CONFIDENTIAL
EMPLOYEES FROM THE RANK AND FILE
BARGAINING UNIT; NOT TANTAMOUNT TO
DISCRIMINATION. - Confidential employees cannot
be classified as rank and file. As previously
discussed, the nature of employment of confidential
employees is quite distinct from the rank and file,
thus, warranting a separate category. Excluding
confidential employees from the rank and file
bargaining unit, therefore, is not tantamount to
discrimination.
This is a petition for certiorari under Rule 65 of the
Revised Rules of Court seeking the annulment of the
Resolution and Omnibus Resolution of the Secretary of
Labor and Employment dated 14 April 1992 and 25
January 1993, respectively, in OS-AJ-04491-11 (NCMB-
NCR-NS-08-595-9 1; NCMB-NCR-NS-09-678-91) on
grounds that these were issued with grave abuse of
discretion and in excess of jurisdiction.
Private respondent Metro Drug Corporation
Employees Association-Federation of Free Workers
(hereinafter referred to as the Union) is a labor
organization representing the rank and file employees of
petitioner Metrolab Industries, Inc. (hereinafter referred to
as Metrolab/MII) and also of Metro Drug, Inc.
 On 31 December 1990, the Collective Bargaining
Agreement (CBA) between Metrolab and the Union
expired. The negotiations for a new CBA, however, ended
in a deadlock.
Consequently, on 23 August 1991, the Union filed a
notice of strike against Metrolab and Metro Drug Inc. The
parties failed to settle their dispute despite the conciliation
efforts of the National Conciliation and Mediation Board.
To contain the escalating dispute, the then Secretary
of Labor and Employment, Ruben D. Torres, issued an
assumption order dated 20 September 1991, the
dispositive portion of which reads, thus:
WHEREFORE, PREMISES CONSIDERED, and
pursuant to Article 263 (g) of the Labor Code, as
amended, this Office hereby assumes jurisdiction over the
entire labor dispute at Metro Drug, Inc. - Metro Drug
Distribution Division and Metrolab Industries Inc.
Accordingly, any strike or lockout is hereby strictly
enjoined. The Companies and the Metro Drug Corp.
Employees Association - FFW are likewise directed to
cease and desist from committing any and all acts that
might exacerbate the situation.
Finally, the parties are directed to submit their position
papers and evidence on the aforequoted deadlocked
issues to this office within twenty (20) days from receipt
hereof.
SO ORDERED.[1] (Italics ours.)
On 27 December 1991, then Labor Secretary Torres
issued an order resolving all the disputed items in the CBA
and ordered the parties involved to execute a new CBA.
Thereafter, the Union filed a motion
reconsideration.
On 27 January 1992, during the pendency of the
abovementioned motion for reconsideration, Metrolab laid
off 94 of its rank and file employees.
On the same date, the Union filed a motion for a
cease and desist order to enjoin Metrolab from
implementing the mass layoff, alleging that such act
violated the prohibition against committing acts that would
exacerbate the dispute as specifically directed in the
assumption order.[2]
On the other hand, Metrolab contended that the
layoff was temporary and in the exercise of its
management prerogative. It maintained that the company
would suffer a yearly gross revenue loss of approximately
sixty-six (66) million pesos due to the withdrawal of its
principals in the Toll and Contract Manufacturing
Department. Metrolab further asserted that with the
automation of the manufacture of its product Eskinol, the
number of workers required its production is significantly
reduced.[3]
Thereafter, on various dates, Metrolab recalled some
of the laid off workers on a temporary basis due to
availability of work in the production lines.
On 14 April 1992, Acting Labor Secretary Nieves
Confesor issued a resolution declaring the layoff of
Metrolabs 94 rank and file workers illegal and ordered
their reinstatement with full backwages. The dispositive
portion reads as follows:
WHEREFORE, the Unions motion for reconsideration is
granted in part, and our order of 28 December 1991 is
affirmed subject to the modifications in allowances and in
the close shop provision. The layoff of the 94 employees
at MII is hereby declared illegal for the failure of the latter
to comply with our injunction against committing any act
which may exacerbate the dispute and with the 30-day
notice requirement. Accordingly, MII is hereby ordered to
reinstate the 94 employees, except those who have
already been recalled, to their former positions or
substantially equivalent, positions with full backwages
from the date they were illegally laid off on 27 January
1992 until actually reinstated without loss of seniority
rights and other benefits. Issues relative to the CBA
agreed upon by the parties and not embodied in our
earlier order are hereby ordered adopted for incorporation
in the CBA. Further, the dispositions and directives
contained in all previous orders and resolutions relative to
the instant dispute, insofar as not inconsistent herein, are
reiterated. Finally, the parties are enjoined to cease and
for
desist from committing any act which may tend to
circumvent this resolution.
SO RESOLVED.[4]
On 6 March 1992, Metrolab filed a Partial Motion for
Reconsideration alleging that the layoff did not aggravate
the dispute since no untoward incident occurred as a
result thereof. It, likewise, filed a motion for clarification
regarding the constitution of the bargaining unit covered
by the CBA.
On 29 June 1992, after exhaustive negotiations, the
parties entered into a new CBA. The execution, however,
was without prejudice to the outcome of the issues raised
in the reconsideration and clarification motions submitted
for decision to the Secretary of Labor.[5]
 Pending the resolution of the aforestated motions, on
2 October 1992, Metrolab laid off 73 of its employees on
grounds of redundancy due to lack of work which the
Union again promptly opposed on 5 October 1992.
On 15 October 1992, Labor Secretary Confesor
again issued a cease and desist order. Metrolab moved
for a reconsideration.[6]
On 25 January 1993, Labor Secretary Confesor
issued the assailed Omnibus Resolution containing the
following orders:
xxx xxx xxx.
1. MIIs motion for partial reconsideration of our 14 April
1992 resolution specifically that portion thereof assailing
our ruling that the layoff of the 94 employees is illegal, is
hereby denied. MII is hereby ordered to pay such
employees their full backwages computed from the time
of actual layoff to the time of actual recall;
2. For the parties to incorporate in their respective
collective bargaining agreements the clarifications herein
contained; and
3. MIIs motion for reconsideration with respect to the
consequences of the second wave of layoff affecting 73
employees, to the extent of assailing our ruling that such
layoff tended to exacerbate the dispute, is hereby
denied. But inasmuch as the legality of the layoff was not
submitted for our resolution and no evidence had been
adduced upon which a categorical finding thereon can be
based, the same is hereby referred to the NLRC for its
appropriate action.
Finally, all prohibitory injunctions issued as a result of our
assumption of jurisdiction over this dispute are hereby
lifted.
SO RESOLVED.[7]
Labor Secretary Confesor also ruled that executive
secretaries are excluded from the closed-shop provision
of the CBA, not from the bargaining unit.
On 4 February 1993, the Union filed a motion for
execution. Metrolab opposed. Hence, the present petition
for certiorari with application for issuance of a Temporary
Restraining Order.
On 4 March 1993, we issued a Temporary
Restraining Order enjoining the Secretary of Labor from
enforcing and implementing the assailed Resolution and
Omnibus Resolution dated 14 April 1992 and 25 January
1993, respectively.
In its petition, Metrolab assigns the following errors:
A
THE PUBLIC RESPONDENT HON. SECRETARY OF
LABOR AND EMPLOYMENT COMMITTED GRAVE
ABUSE OF DISCRETION AND EXCEEDED HER
JURISDICTION IN DECLARING THE TEMPORARY
LAYOFF ILLEGAL AND ORDERING THE
REINSTATEMENT AND PAYMENT OF BACKWAGES
TO THE AFFECTED EMPLOYEES.*
B
THE PUBLIC RESPONDENT HON. SECRETARY OF
LABOR AND EMPLOYMENT GRAVELY ABUSED HER
DISCRETION IN INCLUDING EXECUTIVE
SECRETARIES AS PART OF THE BARGAINING UNIT
OF RANK AND FILE EMPLOYEES.[8]
Anent the first issue, we are asked to determine
whether or not public respondent Labor Secretary
committed grave abuse of discretion and exceeded her
jurisdiction in declaring the subject layoffs instituted by
Metrolab illegal on grounds that these unilateral actions
aggravated the conflict between Metrolab and the Union
who were, then, locked in a stalemate in CBA
negotiations.
Metrolab argues that the Labor Secretarys order
enjoining the parties from committing any act that might
exacerbate the dispute is overly broad, sweeping and
vague and should not be used to curtail the employers
right to manage his business and ensure its viability.
We cannot give credence to Metrolabs contention.
This Court recognizes the exercise of management
prerogatives and often declines to interfere with the
legitimate business decisions of the employer. However,
this privilege is not absolute but subject to limitations
imposed by law.[9]
In PAL v. NLRC,[10] we issued this reminder:
xxx xxx xxx
. . .the exercise of management prerogatives was never
considered boundless. Thus, in Cruz vs. Medina ( 177
SCRA 565 [1989]), it was held that managements
prerogatives must be without abuse of discretion....
xxx xxx xxx
All this points to the conclusion that the exercise of
managerial prerogatives is not unlimited. It is
circumscribed by limitations found in law, a collective
bargaining agreement, or the general principles of fair
play and justice (University of Sto. Tomas v. NLRC, 190
SCRA 758 [1990]). . . . (Italics ours.)
xxx xxx xxx.
The case at bench constitutes one of the
exceptions. The Secretary of Labor is expressly given the
power under the Labor Code to assume jurisdiction and
resolve labor disputes involving industries indispensable
to national interest. The disputed injunction is subsumed
under this special grant of authority. Art. 263 (g) of the
Labor Code specifically provides that:
xxx xxx xxx
(g) When, in his opinion, there exists a labor dispute
causing or likely to cause a strike or lockout in an industry
indispensable to the national interest, the Secretary of
Labor and Employment may assume jurisdiction over the
dispute and decide it or certify the same to the
Commission for compulsory arbitration. Such assumption
or certification shall have the effect of automatically
enjoining the intended or impending strike or lockout as
specified in the assumption or certification order. If one
has already taken place at the time of assumption or
certification, all striking or locked out employees shall
immediately return to work and the employer shall
immediately resume operations and readmit all workers
under the same terms and conditions prevailing before
the strike or lockout. The Secretary of Labor and
Employment or the Commission may seek the assistance
of law enforcement agencies to ensure compliance with
this provision as well as with such orders as he may issue
to enforce the same. . . (Italics ours.)
xxx xxx xxx.
That Metrolabs business is of national interest is not
disputed. Metrolab is one of the leading manufacturers
and suppliers of medical and pharmaceutical products to
the country.
Metro labs management prerogatives, therefore, are
not being unjustly curtailed but duly balanced with and
tempered by the limitations set by law, taking into account
its special character and the particular circumstances in
the case at bench.
As aptly declared by public respondent Secretary of
Labor in its assailed resolution:
xxx xxx xxx.
MII is right to the extent that as a rule, we may not interfere
with the legitimate exercise of management prerogatives
such as layoffs. But it may nevertheless be appropriate to
mention here that one of the substantive evils which
Article 263 (g) of the Labor Code seeks to curb is the
exacerbation of a labor dispute to the further detriment of
the national interest. When a labor dispute has in fact
occurred and a general injunction has been issued
restraining the commission of disruptive acts,
management prerogatives must always be exercised
consistently with the statutory objective.[11]
xxx xxx xxx.
Metrolab insists that the subject layoffs did not
exacerbate their dispute with the Union since no untoward
incident occurred after the layoffs were
implemented. There were no work disruptions or
stoppages and no mass actions were threatened or
undertaken. Instead, petitioner asserts, the affected
employees calmly accepted their fate as this was a matter
which they had been previously advised would be
inevitable.[12]
After a judicious review of the record, we find no
compelling reason to overturn the findings of the
Secretary of Labor.
We reaffirm the doctrine that considering their
expertise in their respective fields, factual findings of
administrative agencies supported by substantial
evidence are accorded great respect and binds this
Court.[13]
The Secretary of Labor ruled, thus:
xxx xxx xxx.
Any act committed during the pendency of the dispute that
tends to give rise to further contentious issues or increase
the tensions between the parties should be considered an
act of exacerbation. One must look at the act itself, not on
speculative reactions. A misplaced recourse is not
needed to prove that a dispute has been exacerbated. For
instance, the Union could not be expected to file another
notice of strike. For this would depart from its theory of the
case that the layoff is subsumed under the instant dispute,
for which a notice of strike had already been filed. On the
other hand, to expect violent reactions, unruly behavior,
and any other chaotic or drastic action from the Union is
to expect it to commit acts disruptive of public order or
acts that may be illegal. Under a regime of laws, legal
remedies take the place of violent ones.[14]
xxx xxx xxx.
Protest against the subject layoffs need not be in the form
of violent action or any other drastic measure. In the
instant case the Union registered their dissent by swiftly
filing a motion for a cease and desist order. Contrary to
petitioners allegations, the Union strongly condemned the
layoffs and threatened mass action if the Secretary of
Labor fails to timely intervene:
xxx xxx xxx.
3. This unilateral action of management is a blatant
violation of the injunction of this Office against committing
acts which would exacerbate the dispute. Unless such act
is enjoined the Union will be compelled to resort to its legal
right to mass actions and concerted activities to protest
and stop the said management action. This mass layoff is
clearly one which would result in a very serious labor
dispute unless this Office swiftly intervenes.[15]
xxx xxx xxx.
Metrolab and the Union were still in the process of
resolving their CBA deadlock when petitioner
implemented the subject layoffs. As a result, motions and
oppositions were filed diverting the parties attention,
delaying resolution of the bargaining deadlock and
postponing the signing of their new CBA, thereby
aggravating the whole conflict.
We, likewise, find untenable Metrolabs contention
that the layoff of the 94 rank-and-file employees was
temporary, despite the recall of some of the laid off
workers.
If Metrolab intended the layoff of the 94 workers to
be temporary, it should have plainly stated so in the
notices it sent to the affected employees and the
Department of Labor and Employment. Consider the
tenor of the pertinent portions of the layoff notice to the
affected employees:
xxx xxx xxx.
Dahil sa mga bagay na ito, napilitan ang ating kumpanya
na magsagawa ng lay-off ng mga empleyado sa Rank &
File dahil nabawasan ang trabaho at puwesto para sa
kanila. Marami sa atin ang kasama sa lay-off dahil wala
nang trabaho para sa kanila. Mahirap tanggapin ang mga
bagay na ito subalit kailangan nating gawin dahil hindi
kaya ng kumpanya ang magbayad ng suweldo kung ang
empleyado ay walang trabaho. Kung tayo ay patuloy na
magbabayad ng suweldo, mas hihina ang ating
kumpanya at mas marami ang maaring maapektuhan.
Sa pagpapatupad ng lay-off susundin natin ang LAST IN-
FIRST OUT policy. Ang mga empleyadong may
pinakamaikling serbisyo sa kumpanya ang unang
maaapektuhan. Ito ay batay na rin sa nakasaad sa ating
CBA na ang mga huling pumasok sa kumpanya ang
unang masasama sa lay-off kapag nagkaroon ng
ganitong mga kalagayan.
Ang mga empleyado na kasama sa lay-off ay nakalista sa
sulat na ito. Ang umpisa ng lay-off ay sa Lunes, Enero 27.
Hindi na muna sila papasok sa kumpanya. Makukuha nila
ang suweldo nila sa Enero 30, 1992.
Hindi po natin matitiyak kung gaano katagal ang lay-off
ngunit ang aming tingin ay matatagalan bago magkaroon
ng dagdag na trabaho. Dahil dito, sinimulan na namin ang
isang Redundancy Program sa mga
supervisors. Nabawasan ang mga puwesto para sa
kanila, kaya sila ay mawawalan ng trabaho at bibigyan na
ng redundancy pay.[16] (Italics ours.)
xxx xxx xxx.
We agree with the ruling of the Secretary of Labor,
thus:
xxx xxx xxx.
. . .MII insists that the layoff in question is temporary not
permanent. It then cites International Hardware, Inc. vs.
NLRC, 176 SCRA 256, in which the Supreme Court held
that the 30-day notice required under Article 283 of the
Labor Code need not be complied with if the employer has
no intention to permanently severe (sic) the employment
relationship.
We are not convinced by this argument. International
Hardware involves a case where there had been a
reduction of workload. Precisely to avoid laying off the
employees, the employer therein opted to give them work
on a rotating basis. Though on a limited scale, work was
available. This was the Supreme Courts basis for holding
that there was no intention to permanently severe (sic) the
employment relationship.
Here, there is no circumstance at all from which we can
infer an intention from MII not to sever the employment
relationship permanently. If there was such an intention,
MII could have made it very clear in the notices of layoff.
But as it were, the notices are couched in a language so
uncertain that the only conclusion possible is the
permanent termination, not the continuation, of the
employment relationship.
MII also seeks to excuse itself from compliance with the
30-day notice with a tautology. While insisting that there
is really no best time to announce a bad news, (sic) it also
claims that it broke the bad news only on 27 January 1992
because had it complied with the 30-day notice, it could
have broken the bad news on 02 January 1992, the first
working day of the year. If there is really no best time to
announce a bad news (sic), it wouldnt have mattered if
the same was announced at the first working day of the
year. That way, MII could have at least complied with the
requirement of the law.[17]
The second issue raised by petitioner merits our
consideration.
In the assailed Omnibus Resolution, Labor Secretary
Confesor clarified the CBA provisions on closed-shop and
the scope of the bargaining unit in this wise:
xxx xxx xxx.
Appropriateness of the bargaining unit.
xxx xxx xxx.
Exclusions. In our 14 April 1992 resolution, we ruled
on the issue of exclusion as follows:
These aside, we reconsider our denial of the
modifications which the Union proposes to introduce on
the close shop provision. While we note that the provision
as presently worded has served the relationship of the
parties well under previous CBAs, the shift in
constitutional policy toward expanding the right of all
workers to self-organization should now be formally
recognized by the parties, subject to the following
exclusions only:
1. Managerial employees; and
2. The executive secretaries of the President, Executive
Vice-President, Vice-President, Vice President for Sales,
Personnel Manager, and Director for Corporate Planning
who may have access to vital labor relations information
or who may otherwise act in a confidential capacity to
persons who determine or formulate management
policies.
The provisions of Article I (b) and Attachment I of the
1988-1990 CBA shall thus be modified consistently with
the foregoing.
Article I (b) of the 1988-1990 CBA provides:
b)Close Shop. - All Qualified Employees must join the
Association immediately upon regularization as a
condition for continued employment. This provision shall
not apply to: (i) managerial employees who are excluded
from the scope of the bargaining unit; (ii) the auditors and
executive secretaries of senior executive officers, such
as, the President, Executive Vice-President, Vice-
President for Finance, Head of Legal, Vice-President for
Sales, who are excluded from membership in the
Association; and (iii) those employees who are referred to
in Attachment I hereof, subject, however, to the
application of the provision of Article II, par. (b) hereof.
Consequently, the above-specified employees are not
required to join the Association as a condition for their
continued employment.
On the other hand, Attachment I provides:
Exclusion from the Scope of the Close Shop
Provision
The following positions in the Bargaining Unit are not
covered by the Close Shop provision of the CBA (Article
I, par. b):
1. Executive Secretaries of Vice-Presidents, or equivalent
positions.
2. Executive Secretary of the Personnel Manager, or
equivalent positions.
3. Executive Secretary of the Director for Corporate
Planning, or equivalent positions.
4. Some personnel in the Personnel Department, EDP
Staff at Head Office, Payroll Staff at Head Office,
Accounting Department at Head Office, and Budget Staff,
who because of the nature of their duties and
responsibilities need not join the Association as a
condition for their employment.
5. Newly-hired secretaries of Branch Managers and
Regional Managers.
Both MDD and MII read the exclusion of managerial
employees and executive secretaries in our 14 April 1992
resolution as exclusion from the bargaining unit. They
point out that managerial employees are lumped under
one classification with executive secretaries, so that since
the former are excluded from the bargaining unit, so must
the latter be likewise excluded.
 This reading is obviously contrary to the intent of our
14 April 1992 resolution. By recognizing the expanded
scope of the right to self-organization, our intent was to
delimit the types of employees excluded from the close
shop provision, not from the bargaining unit, to executive
secretaries only. Otherwise, the conversion of the
exclusionary provision to one that refers to the bargaining
unit from one that merely refers to the close shop
provision would effectively curtail all the organizational
rights of executive secretaries.
The exclusion of managerial employees, in
accordance with law, must therefore still carry the
qualifying phrase from the bargaining unit in Article I (b)(i)
of the 1988-1990 CBA. In the same manner, the exclusion
of executive secretaries should be read together with the
qualifying phrase are excluded from membership in the
Association of the same Article and with the heading of
Attachment I. The latter refers to Exclusions from Scope
of Close Shop Provision and provides that [t]he following
positions in Bargaining Unit are not covered by the close
shop provision of the CBA.
The issue of exclusion has different dimension in the
case of MII. In an earlier motion for clarification, MII points
out that it has done away with the positions of Executive
Vice-President, Vice-President for Sales, and Director for
Corporate Planning. Thus, the foregoing group of
exclusions is no longer appropriate in its present
organizational structure. Nevertheless, there remain MII
officer positions for which there may be executive
secretaries. These include the General Manager and
members of the Management Committee, specifically i)
the Quality Assurance Manager; ii) the Product
Development Manager; iii) the Finance Director; iv) the
Management System Manager; v) the Human Resources
Manager; vi) the Marketing Director; vii) the Engineering
Manager; viii) the Materials Manager; and ix) the
Production Manager.
xxx xxx xxx
The basis for the questioned exclusions, it should be
noted, is no other than the previous CBA between MII and
the Union. If MII had undergone an organizational
restructuring since then, this is a fact to which we have
never been made privy. In any event, had this been
otherwise the result would have been the same. To
repeat, we limited the exclusions to recognize the
expanded scope of the right to self-organization as
embodied in the Constitution.[18]
Metrolab, however, maintains that executive
secretaries of the General Manager and the executive
secretaries of the Quality Assurance Manager, Product
Development Manager, Finance Director, Management
System Manager, Human Resources Manager, Marketing
Director, Engineering Manager, Materials Manager and
Production Manager, who are all members of the
companys Management Committee should not only be
exempted from the closed-shop provision but should be
excluded from membership in the bargaining unit of the
rank and file employees as well on grounds that their
executive secretaries are confidential employees, having
access to vital labor information.[19]
We concur with Metrolab.
Although Article 245 of the Labor Code[20] limits the
ineligibility to join, form and assist any labor organization
to managerial employees, jurisprudence has extended
this prohibition to confidential employees or those who by
reason of their positions or nature of work are required to
assist or act in a fiduciary manner to managerial
employees and hence, are likewise privy to sensitive and
highly confidential records.
The rationale behind the exclusion of confidential
employees from the bargaining unit of the rank and file
employees and their disqualification to join any labor
organization was succinctly discussed in Philips Industrial
Development v. NLRC:[21]
xxx xxx xxx.
On the main issue raised before Us, it is quite obvious that
respondent NLRC committed grave abuse of discretion in
reversing the decision of the Executive Labor Arbiter and
in decreeing that PIDIs Service Engineers, Sales Force,
division secretaries, all Staff of General Management,
Personnel and Industrial Relations Department,
Secretaries of Audit, EDP and Financial Systems are
included within the rank and file bargaining unit.
In the first place, all these employees, with the exception
of the service engineers and the sales force personnel,
are confidential employees. Their classification as such is
not seriously disputed by PEO-FFW; the five (5) previous
CBAs between PIDI and PEO-FFW explicitly considered
them as confidential employees. By the very nature of
their functions, they assist and act in a confidential
capacity to, or have access to confidential matters of,
persons who exercise managerial functions in the field of
labor relations. As such, the rationale behind the
ineligibility of managerial employees to form, assist or join
a labor union equally applies to them.
In Bulletin Publishing Co., Inc. vs. Hon. Augusto
Sanchez, this Court elaborated on this rationale, thus:
x x x The rationale for this inhibition has been stated to
be, because if these managerial employees would belong
to or be affiliated with a Union, the latter might not be
assured of their loyalty to the Union in view of evident
conflict of interests. The Union can also become
company-dominated with the presence of managerial
employees in Union membership.
In Golden Farms, Inc. vs. Ferrer-Calleja, this Court
explicitly made this rationale applicable to confidential
employees:
This rationale holds true also for confidential employees
such as accounting personnel, radio and telegraph
operators, who having access to confidential information,
may become the source of undue advantage. Said
employee(s) may act as a spy or spies of either party to a
collective bargaining agreement. This is specially true in
the present case where the petitioning Union is already
the bargaining agent of the rank-and-file employees in the
establishment. To allow the confidential employees to join
the existing Union of the rank-and-file would be in violation
of the terms of the Collective Bargaining Agreement
wherein this kind of employees by the nature of their
functions/positions are expressly excluded.
xxx xxx xxx.
Similarly, in National Association of Trade Union
- Republic Planters Bank Supervisors Chapter v.
Torres[22] we declared:
xxx xxx xxx.
. . . As regards the other claim of respondent Bank that
Branch Managers/OICs, Cashiers and Controllers are
confidential employees, having control, custody and/ or
access to confidential matters, e.g., the branchs cash
position, statements of financial condition, vault
combination, cash codes for telegraphic transfers,
demand drafts and other negotiable instruments,
pursuant to Sec. 1166.4 of the Central Bank Manual
regarding joint custody, this claim is not even disputed by
petitioner. A confidential employee is one entrusted with
confidence on delicate matters, or with the custody,
handling, or care and protection of the employers
property. While Art. 245 of the Labor Code singles out
managerial employees as ineligible to join, assist or form
any labor organization, under the doctrine of necessary,
implication, confidential employees are similarly
disqualified. . . .
xxx xxx xxx.
. . .(I)n the collective bargaining process, managerial
employees are supposed to be on the side of the
employer, to act as its representatives, and to see to it that
its interest are well protected. The employer is not
assured of such protection if these employees themselves
are union members. Collective bargaining in such a
situation can become one-sided. It is the same reason
that impelled this Court to consider the position of
confidential employees as included in the disqualification
found in Art. 245 as if the disqualification of confidential
employees were written in the provision. If confidential
employees could unionize in order to bargain for
advantages for themselves, then they could be governed
by their own motives rather than the interest of the
employers. Moreover, unionization of confidential
employees for the purpose of collective bargaining would
mean the extension of the law to persons or individuals
who are supposed to act in the interest of the
employers. It is not farfetched that in the course of
collective bargaining, they might jeopardize that interest
which they are duty-bound to protect. . . .
xxx xxx xxx.
And in the latest case of Pier 8 Arrastre &
Stevedoring Services, Inc. vs. Roldan-Confesor,[23] we
ruled that:
xxx xxx xxx.
Upon the other hand, legal secretaries are neither
managers nor supervisors. Their work is basically
routinary and clerical. However, they should be
differentiated from rank-and-file employees because they
are tasked with, among others, the typing of legal
documents, memoranda and correspondence, the
keeping of records and files, the giving of and receiving
notices, and such other duties as required by the legal
personnel of the corporation. Legal secretaries therefore
fall under the category of confidential employees. . . .
xxx xxx xxx.
We thus hold that public respondent acted with grave
abuse of discretion in not excluding the four foremen and
legal secretary from the bargaining unit composed of
rank-and-file employees.
xxx xxx xxx.
In the case at bench, the Union does not disagree with
petitioner that the executive secretaries are confidential
employees. It however, makes the following contentions:
xxx xxx xxx.
There would be no danger of company domination of the
Union since the confidential employees would not be
members of and would not participate in the decision
making processes of the Union.

Neither would there be a danger of espionage since the

confidential employees would not have any conflict of
interest, not being members of the Union. In any case,
there is always the danger that any employee would leak
management secrets to the Union out of sympathy for his
fellow rank and filer even if he were not a member of the
union nor the bargaining unit.

Confidential employees are rank and file employees and

they, like all the other rank and file employees, should be
granted the benefits of the Collective Bargaining
Agreement. There is no valid basis for discriminating
against them. The mandate of the Constitution and the
Labor Code, primarily of protection to Labor, compels
such conclusion.[24]

xxx xxx xxx.

The Unions assurances fail to convince. The

dangers sought to be prevented, particularly the threat of
conflict of interest and espionage, are not eliminated by
non-membership of Metrolabs executive secretaries or
confidential employees in the Union. Forming part of the
bargaining unit, the executive secretaries stand to benefit
from any agreement executed between the Union and
Metrolab. Such a scenario, thus, gives rise to a potential
conflict between personal interests and their duty as
confidential employees to act for and in behalf of
Metrolab. They do not have to be union members to affect
or influence either side.

Finally, confidential employees cannot be classified

as rank and file. As previously discussed, the nature of
employment of confidential employees is quite distinct
from the rank and file, thus, warranting a separate
category. Excluding confidential employees from the rank
and file bargaining unit, therefore, is not tantamount to
discrimination.

WHEREFORE, premises considered, the petition is

partially GRANTED. The resolutions of public respondent
Secretary of Labor dated 14 April 1992 and 25 January
1993 are hereby MODIFIED to the extent that executive
secretaries of petitioner Metrolabs General Manager and
the executive secretaries of the members of its
Management Committee are excluded from the
bargaining unit of petitioners rank and file employees.

SO ORDERED.
23. SanMIguel Case
 G.R. No. L-25246 September 12, 1974
24. *BENJAMIN VICTORIANO vs. ELIZALDE
ROPE WORKERS' UNION and ELIZALDE
ROPE FACTORY, INC., defendants,
ELIZALDE ROPE WORKERS' UNION
ZALDIVAR, J.:p
Appeal to this Court on purely questions of law from the
decision of the Court of First Instance of Manila in its Civil
Case No. 58894.
The undisputed facts that spawned the instant case
follow:
Benjamin Victoriano (hereinafter referred to as Appellee),
a member of the religious sect known as the "Iglesia ni
Cristo", had been in the employ of the Elizalde Rope
Factory, Inc. (hereinafter referred to as Company) since
1958. As such employee, he was a member of the
Elizalde Rope Workers' Union (hereinafter referred to as
Union) which had with the Company a collective
bargaining agreement containing a closed shop provision
which reads as follows:
Membership in the Union shall be
required as a condition of employment for
all permanent employees workers
covered by this Agreement.
The collective bargaining agreement expired on March 3,
1964 but was renewed the following day, March 4, 1964.
Under Section 4(a), paragraph 4, of Republic Act No. 875,
prior to its amendment by Republic Act No. 3350, the
employer was not precluded "from making an agreement
with a labor organization to require as a condition of
employment membership therein, if such labor
organization is the representative of the employees." On
June 18, 1961, however, Republic Act No. 3350 was
enacted, introducing an amendment to — paragraph (4)
subsection (a) of section 4 of Republic Act No. 875, as
follows: ... "but such agreement shall not cover members
of any religious sects which prohibit affiliation of their
members in any such labor organization".
Being a member of a religious sect that prohibits the
affiliation of its members with any labor organization,
Appellee presented his resignation to appellant Union in
1962, and when no action was taken thereon, he
reiterated his resignation on September 3, 1974.
Thereupon, the Union wrote a formal letter to the
Company asking the latter to separate Appellee from the
service in view of the fact that he was resigning from the
Union as a member. The management of the Company in
turn notified Appellee and his counsel that unless the
Appellee could achieve a satisfactory arrangement with
the Union, the Company would be constrained to dismiss
him from the service. This prompted Appellee to file an
action for injunction, docketed as Civil Case No. 58894 in
the Court of First Instance of Manila to enjoin the
Company and the Union from dismissing Appellee.1 In its
answer, the Union invoked the "union security clause" of
the collective bargaining agreement; assailed the
constitutionality of Republic Act No. 3350; and contended
that the Court had no jurisdiction over the case, pursuant
to Republic Act No. 875, Sections 24 and 9 (d) and
(e).2 Upon the facts agreed upon by the parties during the
pre-trial conference, the Court a quo rendered its decision
on August 26, 1965, the dispositive portion of which
reads:
IN VIEW OF THE FOREGOING,
judgment is rendered enjoining the
defendant Elizalde Rope Factory, Inc.
from dismissing the plaintiff from his
present employment and sentencing the
defendant Elizalde Rope Workers' Union
to pay the plaintiff P500 for attorney's
fees and the costs of this action.3
From this decision, the Union appealed directly to this
Court on purely questions of law, assigning the following
errors:
I. That the lower court erred when it did
not rule that Republic Act No. 3350 is
unconstitutional.
II. That the lower court erred when it
sentenced appellant herein to pay
plaintiff the sum of P500 as attorney's
fees and the cost thereof.
In support of the alleged unconstitutionality of Republic
Act No. 3350, the Union contented, firstly, that the Act
infringes on the fundamental right to form lawful
associations; that "the very phraseology of said Republic
Act 3350, that membership in a labor organization is
banned to all those belonging to such religious sect
prohibiting affiliation with any labor organization" 4 ,
"prohibits all the members of a given religious sect from
joining any labor union if such sect prohibits affiliations of
their members thereto"5 ; and, consequently, deprives
said members of their constitutional right to form or join
lawful associations or organizations guaranteed by the Bill
of Rights, and thus becomes obnoxious to Article III,
Section 1 (6) of the 1935 Constitution. 6
Secondly, the Union contended that Republic Act No.
3350 is unconstitutional for impairing the obligation of
contracts in that, while the Union is obliged to comply with
its collective bargaining agreement containing a "closed
shop provision," the Act relieves the employer from its
reciprocal obligation of cooperating in the maintenance of
union membership as a condition of employment; and that
said Act, furthermore, impairs the Union's rights as it
deprives the union of dues from members who, under the
Act, are relieved from the obligation to continue as such
members.7
Thirdly, the Union contended that Republic Act No. 3350
discriminatorily favors those religious sects which ban
their members from joining labor unions, in violation of
Article Ill, Section 1 (7) of the 1935 Constitution; and while
said Act unduly protects certain religious sects, it leaves
no rights or protection to labor organizations.8
Fourthly, Republic Act No. 3350, asserted the Union,
violates the constitutional provision that "no religious test
shall be required for the exercise of a civil right," in that
the laborer's exercise of his civil right to join associations
for purposes not contrary to law has to be determined
under the Act by his affiliation with a religious sect; that
conversely, if a worker has to sever his religious
connection with a sect that prohibits membership in a
labor organization in order to be able to join a labor
organization, said Act would violate religious freedom.9
Fifthly, the Union contended that Republic Act No. 3350,
violates the "equal protection of laws" clause of the
Constitution, it being a discriminately legislation,
inasmuch as by exempting from the operation of closed
shop agreement the members of the "Iglesia ni Cristo", it
has granted said members undue advantages over their
fellow workers, for while the Act exempts them from union
obligation and liability, it nevertheless entitles them at the
same time to the enjoyment of all concessions, benefits
and other emoluments that the union might secure from
the employer. 10
Sixthly, the Union contended that Republic Act No. 3350
violates the constitutional provision regarding the
promotion of social justice. 11
Appellant Union, furthermore, asserted that a "closed
shop provision" in a collective bargaining agreement
cannot be considered violative of religious freedom, as to
call for the amendment introduced by Republic Act No.
3350; 12and that unless Republic Act No. 3350 is declared
unconstitutional, trade unionism in this country would be
wiped out as employers would prefer to hire or employ
members of the Iglesia ni Cristo in order to do away with
labor organizations. 13
Appellee, assailing appellant's arguments, contended that
Republic Act No. 3350 does not violate the right to form
lawful associations, for the right to join associations
includes the right not to join or to resign from a labor
organization, if one's conscience does not allow his
membership therein, and the Act has given substance to
such right by prohibiting the compulsion of workers to join
labor organizations; 14 that said Act does not impair the
obligation of contracts for said law formed part of, and was
incorporated into, the terms of the closed shop
agreement; 15 that the Act does not violate the
establishment of religion clause or separation of Church
and State, for Congress, in enacting said law, merely
accommodated the religious needs of those workers
whose religion prohibits its members from joining labor
unions, and balanced the collective rights of organized
labor with the constitutional right of an individual to freely
exercise his chosen religion; that the constitutional right to
the free exercise of one's religion has primacy and
preference over union security measures which are
merely contractual 16; that said Act does not violate the
constitutional provision of equal protection, for the
classification of workers under the Act depending on their
religious tenets is based on substantial distinction, is
germane to the purpose of the law, and applies to all the
members of a given class; 17 that said Act, finally, does
not violate the social justice policy of the Constitution, for
said Act was enacted precisely to equalize employment
opportunities for all citizens in the midst of the diversities
of their religious beliefs." 18
I. Before We proceed to the discussion of the first
assigned error, it is necessary to premise that there are
some thoroughly established principles which must be
followed in all cases where questions of constitutionality
as obtains in the instant case are involved. All
presumptions are indulged in favor of constitutionality;
one who attacks a statute, alleging unconstitutionality
must prove its invalidity beyond a reasonable doubt, that
a law may work hardship does not render it
unconstitutional; that if any reasonable basis may be
conceived which supports the statute, it will be upheld,
and the challenger must negate all possible bases; that
the courts are not concerned with the wisdom, justice,
policy, or expediency of a statute; and that a liberal
interpretation of the constitution in favor of the
constitutionality of legislation should be adopted. 19
1. Appellant Union's contention that Republic Act No.
3350 prohibits and bans the members of such religious
sects that forbid affiliation of their members with labor
unions from joining labor unions appears nowhere in the
wording of Republic Act No. 3350; neither can the same
be deduced by necessary implication therefrom. It is not
surprising, therefore, that appellant, having thus misread
the Act, committed the error of contending that said Act is
obnoxious to the constitutional provision on freedom of
association.
Both the Constitution and Republic Act No. 875 recognize
freedom of association. Section 1 (6) of Article III of the
Constitution of 1935, as well as Section 7 of Article IV of
the Constitution of 1973, provide that the right to form
associations or societies for purposes not contrary to law
shall not be abridged. Section 3 of Republic Act No. 875
provides that employees shall have the right to self-
organization and to form, join of assist labor organizations
of their own choosing for the purpose of collective
bargaining and to engage in concerted activities for the
purpose of collective bargaining and other mutual aid or
protection. What the Constitution and the Industrial Peace
Act recognize and guarantee is the "right" to form or join
associations. Notwithstanding the different theories
propounded by the different schools of jurisprudence
regarding the nature and contents of a "right", it can be
safely said that whatever theory one subscribes to, a right
comprehends at least two broad notions, namely: first,
liberty or freedom, i.e., the absence of legal restraint,
whereby an employee may act for himself without being
prevented by law; and second, power, whereby an
employee may, as he pleases, join or refrain from Joining
an association. It is, therefore, the employee who should
decide for himself whether he should join or not an
association; and should he choose to join, he himself
makes up his mind as to which association he would join;
and even after he has joined, he still retains the liberty and
the power to leave and cancel his membership with said
organization at any time. 20 It is clear, therefore, that the
right to join a union includes the right to abstain from
joining any union. 21 Inasmuch as what both the
Constitution and the Industrial Peace Act have
recognized, and guaranteed to the employee, is the "right"
to join associations of his choice, it would be absurd to
say that the law also imposes, in the same breath, upon
the employee the duty to join associations. The law does
not enjoin an employee to sign up with any association.
The right to refrain from joining labor organizations
recognized by Section 3 of the Industrial Peace Act is,
however, limited. The legal protection granted to such
right to refrain from joining is withdrawn by operation of
law, where a labor union and an employer have agreed
on a closed shop, by virtue of which the employer may
employ only member of the collective bargaining union,
and the employees must continue to be members of the
union for the duration of the contract in order to keep their
jobs. Thus Section 4 (a) (4) of the Industrial Peace Act,
before its amendment by Republic Act No. 3350, provides
that although it would be an unfair labor practice for an
employer "to discriminate in regard to hire or tenure of
employment or any term or condition of employment to
encourage or discourage membership in any labor
organization" the employer is, however, not precluded
"from making an agreement with a labor organization to
require as a condition of employment membership
therein, if such labor organization is the representative of
the employees". By virtue, therefore, of a closed shop
agreement, before the enactment of Republic Act No.
3350, if any person, regardless of his religious beliefs,
wishes to be employed or to keep his employment, he
must become a member of the collective bargaining
union. Hence, the right of said employee not to join the
labor union is curtailed and withdrawn.
To that all-embracing coverage of the closed shop
arrangement, Republic Act No. 3350 introduced an
exception, when it added to Section 4 (a) (4) of the
Industrial Peace Act the following proviso: "but such
agreement shall not cover members of any religious sects
which prohibit affiliation of their members in any such
labor organization". Republic Act No. 3350 merely
excludes ipso jure from the application and coverage of
the closed shop agreement the employees belonging to
any religious sects which prohibit affiliation of their
members with any labor organization. What the exception
provides, therefore, is that members of said religious
sects cannot be compelled or coerced to join labor unions
even when said unions have closed shop agreements
with the employers; that in spite of any closed shop
agreement, members of said religious sects cannot be
refused employment or dismissed from their jobs on the
sole ground that they are not members of the collective
bargaining union. It is clear, therefore, that the assailed
Act, far from infringing the constitutional provision on
freedom of association, upholds and reinforces it. It does
not prohibit the members of said religious sects from
affiliating with labor unions. It still leaves to said members
the liberty and the power to affiliate, or not to affiliate, with
labor unions. If, notwithstanding their religious beliefs, the
members of said religious sects prefer to sign up with the
labor union, they can do so. If in deference and fealty to
their religious faith, they refuse to sign up, they can do so;
the law does not coerce them to join; neither does the law
prohibit them from joining; and neither may the employer
or labor union compel them to join. Republic Act No. 3350,
therefore, does not violate the constitutional provision on
freedom of association.
2. Appellant Union also contends that the Act is
unconstitutional for impairing the obligation of its contract,
specifically, the "union security clause" embodied in its
Collective Bargaining Agreement with the Company, by
virtue of which "membership in the union was required as
a condition for employment for all permanent employees
workers". This agreement was already in existence at the
time Republic Act No. 3350 was enacted on June 18,
1961, and it cannot, therefore, be deemed to have been
incorporated into the agreement. But by reason of this
amendment, Appellee, as well as others similarly situated,
could no longer be dismissed from his job even if he
should cease to be a member, or disaffiliate from the
Union, and the Company could continue employing him
notwithstanding his disaffiliation from the Union. The Act,
therefore, introduced a change into the express terms of
the union security clause; the Company was partly
absolved by law from the contractual obligation it had with
the Union of employing only Union members in
permanent positions, It cannot be denied, therefore, that
there was indeed an impairment of said union security
clause.
According to Black, any statute which introduces a
change into the express terms of the contract, or its legal
construction, or its validity, or its discharge, or the remedy
for its enforcement, impairs the contract. The extent of the
change is not material. It is not a question of degree or
manner or cause, but of encroaching in any respect on its
obligation or dispensing with any part of its force. There is
an impairment of the contract if either party is absolved by
law from its performance. 22 Impairment has also been
predicated on laws which, without destroying contracts,
derogate from substantial contractual rights. 23
It should not be overlooked, however, that the prohibition
to impair the obligation of contracts is not absolute and
unqualified. The prohibition is general, affording a broad
outline and requiring construction to fill in the details. The
prohibition is not to be read with literal exactness like a
mathematical formula, for it prohibits unreasonable
impairment only. 24 In spite of the constitutional
prohibition, the State continues to possess authority to
safeguard the vital interests of its people. Legislation
appropriate to safeguarding said interests may modify or
abrogate contracts already in effect. 25 For not only are
existing laws read into contracts in order to fix the
obligations as between the parties, but the reservation of
essential attributes of sovereign power is also read into
contracts as a postulate of the legal order. All contracts
made with reference to any matter that is subject to
regulation under the police power must be understood as
made in reference to the possible exercise of that
power. 26 Otherwise, important and valuable reforms may
be precluded by the simple device of entering into
contracts for the purpose of doing that which otherwise
may be prohibited. The policy of protecting contracts
against impairment presupposes the maintenance of a
government by virtue of which contractual relations are
worthwhile a government which retains adequate
authority to secure the peace and good order of society.
The contract clause of the Constitution must, therefore,
be not only in harmony with, but also in subordination to,
in appropriate instances, the reserved power of the state
to safeguard the vital interests of the people. It follows that
not all legislations, which have the effect of impairing a
contract, are obnoxious to the constitutional prohibition as
to impairment, and a statute passed in the legitimate
exercise of police power, although it incidentally destroys
existing contract rights, must be upheld by the courts. This
has special application to contracts regulating relations
between capital and labor which are not merely
contractual, and said labor contracts, for being impressed
with public interest, must yield to the common good. 27
In several occasions this Court declared that the
prohibition against impairing the obligations of contracts
has no application to statutes relating to public subjects
within the domain of the general legislative powers of the
state involving public welfare. 28 Thus, this Court also held
that the Blue Sunday Law was not an infringement of the
obligation of a contract that required the employer to
furnish work on Sundays to his employees, the law having
been enacted to secure the well-being and happiness of
the laboring class, and being, furthermore, a legitimate
exercise of the police power. 29
In order to determine whether legislation
unconstitutionally impairs contract obligations, no
unchanging yardstick, applicable at all times and under all
circumstances, by which the validity of each statute may
be measured or determined, has been fashioned, but
every case must be determined upon its own
circumstances. Legislation impairing the obligation of
contracts can be sustained when it is enacted for the
promotion of the general good of the people, and when
the means adopted to secure that end are reasonable.
Both the end sought and the means adopted must be
legitimate, i.e., within the scope of the reserved power of
the state construed in harmony with the constitutional
limitation of that power. 30
What then was the purpose sought to be achieved by
Republic Act No. 3350? Its purpose was to insure freedom
of belief and religion, and to promote the general welfare
by preventing discrimination against those members of
religious sects which prohibit their members from joining
labor unions, confirming thereby their natural, statutory
and constitutional right to work, the fruits of which work
are usually the only means whereby they can maintain
their own life and the life of their dependents. It cannot be
gainsaid that said purpose is legitimate.
The questioned Act also provides protection to members
of said religious sects against two aggregates of group
strength from which the individual needs protection. The
individual employee, at various times in his working life, is
confronted by two aggregates of power — collective labor,
directed by a union, and collective capital, directed by
management. The union, an institution developed to
organize labor into a collective force and thus protect the
individual employee from the power of collective capital,
is, paradoxically, both the champion of employee rights,
and a new source of their frustration. Moreover, when the
Union interacts with management, it produces yet a third
aggregate of group strength from which the individual also
needs protection — the collective bargaining
relationship. 31
The aforementioned purpose of the amendatory law is
clearly seen in the Explanatory Note to House Bill No.
5859, which later became Republic Act No. 3350, as
follows:
It would be unthinkable indeed to refuse
employing a person who, on account of
his religious beliefs and convictions,
cannot accept membership in a labor
organization although he possesses all
the qualifications for the job. This is
tantamount to punishing such person for
believing in a doctrine he has a right
under the law to believe in. The law would
not allow discrimination to flourish to the
detriment of those whose religion
discards membership in any labor
organization. Likewise, the law would not
commend the deprivation of their right to
work and pursue a modest means of
livelihood, without in any manner
violating their religious faith and/or
belief. 32
It cannot be denied, furthermore, that the means adopted
by the Act to achieve that purpose — exempting the
members of said religious sects from coverage of union
security agreements — is reasonable.
It may not be amiss to point out here that the free exercise
of religious profession or belief is superior to contract
rights. In case of conflict, the latter must, therefore, yield
to the former. The Supreme Court of the United States
has also declared on several occasions that the rights in
the First Amendment, which include freedom of religion,
enjoy a preferred position in the constitutional
system. 33 Religious freedom, although not unlimited, is a
fundamental personal right and liberty, 34 and has a
preferred position in the hierarchy of values. Contractual
rights, therefore, must yield to freedom of religion. It is
only where unavoidably necessary to prevent an
immediate and grave danger to the security and welfare
of the community that infringement of religious freedom
may be justified, and only to the smallest extent necessary
to avoid the danger.
3. In further support of its contention that Republic Act No.
3350 is unconstitutional, appellant Union averred that said
Act discriminates in favor of members of said religious
sects in violation of Section 1 (7) of Article Ill of the 1935
Constitution, and which is now Section 8 of Article IV of
the 1973 Constitution, which provides:
No law shall be made respecting an
establishment of religion, or prohibiting
the free exercise thereof, and the free
exercise and enjoyment of religious
profession and worship, without
discrimination and preference, shall
forever be allowed. No religious test shall
be required for the exercise of civil or
political rights.
The constitutional provision into only prohibits legislation
for the support of any religious tenets or the modes of
worship of any sect, thus forestalling compulsion by law
of the acceptance of any creed or the practice of any form
of worship, 35 but also assures the free exercise of one's
chosen form of religion within limits of utmost amplitude.
It has been said that the religion clauses of the
Constitution are all designed to protect the broadest
possible liberty of conscience, to allow each man to
believe as his conscience directs, to profess his beliefs,
and to live as he believes he ought to live, consistent with
the liberty of others and with the common good. 36 Any
legislation whose effect or purpose is to impede the
observance of one or all religions, or to discriminate
invidiously between the religions, is invalid, even though
the burden may be characterized as being only
indirect. 37 But if the stage regulates conduct by enacting,
within its power, a general law which has for its purpose
and effect to advance the state's secular goals, the statute
is valid despite its indirect burden on religious
observance, unless the state can accomplish its purpose
without imposing such burden. 38
In Aglipay v. Ruiz 39 , this Court had occasion to state that
the government should not be precluded from pursuing
valid objectives secular in character even if the incidental
result would be favorable to a religion or sect. It has
likewise been held that the statute, in order to withstand
the strictures of constitutional prohibition, must have a
secular legislative purpose and a primary effect that
neither advances nor inhibits religion. 40 Assessed by
these criteria, Republic Act No. 3350 cannot be said to
violate the constitutional inhibition of the "no-
establishment" (of religion) clause of the Constitution.
The purpose of Republic Act No. 3350 is secular, worldly,
and temporal, not spiritual or religious or holy and eternal.
It was intended to serve the secular purpose of advancing
the constitutional right to the free exercise of religion, by
averting that certain persons be refused work, or be
dismissed from work, or be dispossessed of their right to
work and of being impeded to pursue a modest means of
livelihood, by reason of union security agreements. To
help its citizens to find gainful employment whereby they
can make a living to support themselves and their families
is a valid objective of the state. In fact, the state is
enjoined, in the 1935 Constitution, to afford protection to
labor, and regulate the relations between labor and capital
and industry. 41 More so now in the 1973 Constitution
where it is mandated that "the State shall afford protection
to labor, promote full employment and equality in
employment, ensure equal work opportunities regardless
of sex, race or creed and regulate the relation between
workers and employers. 42
The primary effects of the exemption from closed shop
agreements in favor of members of religious sects that
prohibit their members from affiliating with a labor
organization, is the protection of said employees against
the aggregate force of the collective bargaining
agreement, and relieving certain citizens of a burden on
their religious beliefs; and by eliminating to a certain
extent economic insecurity due to unemployment, which
is a serious menace to the health, morals, and welfare of
the people of the State, the Act also promotes the well-
being of society. It is our view that the exemption from the
effects of closed shop agreement does not directly
advance, or diminish, the interests of any particular
religion. Although the exemption may benefit those who
are members of religious sects that prohibit their
members from joining labor unions, the benefit upon the
religious sects is merely incidental and indirect. The
"establishment clause" (of religion) does not ban
regulation on conduct whose reason or effect merely
happens to coincide or harmonize with the tenets of some
or all religions. 43 The free exercise clause of the
Constitution has been interpreted to require that religious
exercise be preferentially aided. 44
We believe that in enacting Republic Act No. 3350,
Congress acted consistently with the spirit of the
constitutional provision. It acted merely to relieve the
exercise of religion, by certain persons, of a burden that
is imposed by union security agreements. It was
Congress itself that imposed that burden when it enacted
the Industrial Peace Act (Republic Act 875), and,
certainly, Congress, if it so deems advisable, could take
away the same burden. It is certain that not every
conscience can be accommodated by all the laws of the
land; but when general laws conflict with scrupples of
conscience, exemptions ought to be granted unless some
"compelling state interest" intervenes. 45 In the instant
case, We see no such compelling state interest to
withhold exemption.
Appellant bewails that while Republic Act No. 3350
protects members of certain religious sects, it leaves no
right to, and is silent as to the protection of, labor
organizations. The purpose of Republic Act No. 3350 was
not to grant rights to labor unions. The rights of labor
unions are amply provided for in Republic Act No. 875 and
the new Labor Code. As to the lamented silence of the Act
regarding the rights and protection of labor unions, suffice
it to say, first, that the validity of a statute is determined by
its provisions, not by its silence 46 ; and, second, the fact
that the law may work hardship does not render it
unconstitutional. 47
It would not be amiss to state, regarding this matter, that
to compel persons to join and remain members of a union
to keep their jobs in violation of their religious scrupples,
would hurt, rather than help, labor unions, Congress has
seen it fit to exempt religious objectors lest their
resistance spread to other workers, for religious
objections have contagious potentialities more than
political and philosophic objections.
Furthermore, let it be noted that coerced unity and loyalty
even to the country, and a fortiori to a labor — union
assuming that such unity and loyalty can be attained
through coercion — is not a goal that is constitutionally
obtainable at the expense of religious liberty. 48 A
desirable end cannot be promoted by prohibited means.
4. Appellants' fourth contention, that Republic Act No.
3350 violates the constitutional prohibition against
requiring a religious test for the exercise of a civil right or
a political right, is not well taken. The Act does not require
as a qualification, or condition, for joining any lawful
association membership in any particular religion or in any
religious sect; neither does the Act require affiliation with
a religious sect that prohibits its members from joining a
labor union as a condition or qualification for withdrawing
from a labor union. Joining or withdrawing from a labor
union requires a positive act. Republic Act No. 3350 only
exempts members with such religious affiliation from the
coverage of closed shop agreements. So, under this Act,
a religious objector is not required to do a positive act —
to exercise the right to join or to resign from the union. He
is exempted ipso jure without need of any positive act on
his part. A conscientious religious objector need not
perform a positive act or exercise the right of resigning
from the labor union — he is exempted from the coverage
of any closed shop agreement that a labor union may
have entered into. How then can there be a religious test
required for the exercise of a right when no right need be
exercised?
We have said that it was within the police power of the
State to enact Republic Act No. 3350, and that its purpose
was legal and in consonance with the Constitution. It is
never an illegal evasion of a constitutional provision or
prohibition to accomplish a desired result, which is lawful
in itself, by discovering or following a legal way to do it. 49
5. Appellant avers as its fifth ground that Republic Act No.
3350 is a discriminatory legislation, inasmuch as it grants
to the members of certain religious sects undue
advantages over other workers, thus violating Section 1
of Article III of the 1935 Constitution which forbids the
denial to any person of the equal protection of the laws. 50
The guaranty of equal protection of the laws is not a
guaranty of equality in the application of the laws upon all
citizens of the state. It is not, therefore, a requirement, in
order to avoid the constitutional prohibition against
inequality, that every man, woman and child should be
affected alike by a statute. Equality of operation of
statutes does not mean indiscriminate operation on
persons merely as such, but on persons according to the
circumstances surrounding them. It guarantees equality,
not identity of rights. The Constitution does not require
that things which are different in fact be treated in law as
though they were the same. The equal protection clause
does not forbid discrimination as to things that are
different. 51 It does not prohibit legislation which is limited
either in the object to which it is directed or by the territory
within which it is to operate.
The equal protection of the laws clause of the Constitution
allows classification. Classification in law, as in the other
departments of knowledge or practice, is the grouping of
things in speculation or practice because they agree with
one another in certain particulars. A law is not invalid
because of simple inequality. 52 The very idea of
classification is that of inequality, so that it goes without
saying that the mere fact of inequality in no manner
determines the matter of constitutionality. 53 All that is
required of a valid classification is that it be reasonable,
which means that the classification should be based on
substantial distinctions which make for real differences;
that it must be germane to the purpose of the law; that it
must not be limited to existing conditions only; and that it
must apply equally to each member of the class. 54 This
Court has held that the standard is satisfied if the
classification or distinction is based on a reasonable
foundation or rational basis and is not palpably
arbitrary. 55
In the exercise of its power to make classifications for the
purpose of enacting laws over matters within its
jurisdiction, the state is recognized as enjoying a wide
range of discretion. 56 It is not necessary that the
classification be based on scientific or marked differences
of things or in their relation. 57 Neither is it necessary that
the classification be made with mathematical
nicety. 58 Hence legislative classification may in many
cases properly rest on narrow distinctions, 59 for the equal
protection guaranty does not preclude the legislature from
recognizing degrees of evil or harm, and legislation is
addressed to evils as they may appear.
We believe that Republic Act No. 3350 satisfies the
aforementioned requirements. The Act classifies
employees and workers, as to the effect and coverage of
union shop security agreements, into those who by
reason of their religious beliefs and convictions cannot
sign up with a labor union, and those whose religion does
not prohibit membership in labor unions. Tile classification
rests on real or substantial, not merely imaginary or
whimsical, distinctions. There is such real distinction in
the beliefs, feelings and sentiments of employees.
Employees do not believe in the same religious faith and
different religions differ in their dogmas and cannons.
Religious beliefs, manifestations and practices, though
they are found in all places, and in all times, take so many
varied forms as to be almost beyond imagination. There
are many views that comprise the broad spectrum of
religious beliefs among the people. There are diverse
manners in which beliefs, equally paramount in the lives
of their possessors, may be articulated. Today the country
is far more heterogenous in religion than before,
differences in religion do exist, and these differences are
important and should not be ignored.
Even from the phychological point of view, the
classification is based on real and important differences.
Religious beliefs are not mere beliefs, mere ideas existing
only in the mind, for they carry with them practical
consequences and are the motives of certain rules. of
human conduct and the justification of certain
acts. 60 Religious sentiment makes a man view things and
events in their relation to his God. It gives to human life its
distinctive character, its tone, its happiness or
unhappiness its enjoyment or irksomeness. Usually, a
strong and passionate desire is involved in a religious
belief. To certain persons, no single factor of their
experience is more important to them than their religion,
or their not having any religion. Because of differences in
religious belief and sentiments, a very poor person may
consider himself better than the rich, and the man who
even lacks the necessities of life may be more cheerful
than the one who has all possible luxuries. Due to their
religious beliefs people, like the martyrs, became
resigned to the inevitable and accepted cheerfully even
the most painful and excruciating pains. Because of
differences in religious beliefs, the world has witnessed
turmoil, civil strife, persecution, hatred, bloodshed and
war, generated to a large extent by members of sects who
were intolerant of other religious beliefs. The
classification, introduced by Republic Act No. 3350,
therefore, rests on substantial distinctions.
The classification introduced by said Act is also germane
to its purpose. The purpose of the law is precisely to avoid
those who cannot, because of their religious belief, join
labor unions, from being deprived of their right to work and
from being dismissed from their work because of union
shop security agreements.
Republic Act No. 3350, furthermore, is not limited in its
application to conditions existing at the time of its
enactment. The law does not provide that it is to be
effective for a certain period of time only. It is intended to
apply for all times as long as the conditions to which the
law is applicable exist. As long as there are closed shop
agreements between an employer and a labor union, and
there are employees who are prohibited by their religion
from affiliating with labor unions, their exemption from the
coverage of said agreements continues.
Finally, the Act applies equally to all members of said
religious sects; this is evident from its provision. The fact
that the law grants a privilege to members of said religious
sects cannot by itself render the Act unconstitutional, for
as We have adverted to, the Act only restores to them
their freedom of association which closed shop
agreements have taken away, and puts them in the same
plane as the other workers who are not prohibited by their
religion from joining labor unions. The circumstance, that
the other employees, because they are differently
situated, are not granted the same privilege, does not
render the law unconstitutional, for every classification
allowed by the Constitution by its nature involves
inequality.
The mere fact that the legislative classification may result
in actual inequality is not violative of the right to equal
protection, for every classification of persons or things for
regulation by law produces inequality in some degree, but
the law is not thereby rendered invalid. A classification
otherwise reasonable does not offend the constitution
simply because in practice it results in some
inequality. 61 Anent this matter, it has been said that
whenever it is apparent from the scope of the law that its
object is for the benefit of the public and the means by
which the benefit is to be obtained are of public character,
the law will be upheld even though incidental advantage
may occur to individuals beyond those enjoyed by the
general public. 62
6. Appellant's further contention that Republic Act No.
3350 violates the constitutional provision on social justice
is also baseless. Social justice is intended to promote the
welfare of all the people. 63 Republic Act No. 3350
promotes that welfare insofar as it looks after the welfare
of those who, because of their religious belief, cannot join
labor unions; the Act prevents their being deprived of work
and of the means of livelihood. In determining whether
any particular measure is for public advantage, it is not
necessary that the entire state be directly benefited — it
is sufficient that a portion of the state be benefited
thereby.
Social justice also means the adoption by the
Government of measures calculated to insure economic
stability of all component elements of society, through the
maintenance of a proper economic and social equilibrium
in the inter-relations of the members of the
community. 64 Republic Act No. 3350 insures economic
stability to the members of a religious sect, like the Iglesia
ni Cristo, who are also component elements of society, for
it insures security in their employment, notwithstanding
their failure to join a labor union having a closed shop
agreement with the employer. The Act also advances the
proper economic and social equilibrium between labor
unions and employees who cannot join labor unions, for it
exempts the latter from the compelling necessity of joining
labor unions that have closed shop agreements and
equalizes, in so far as opportunity to work is concerned,
those whose religion prohibits membership in labor
unions with those whose religion does not prohibit said
membership. Social justice does not imply social equality,
because social inequality will always exist as long as
social relations depend on personal or subjective
proclivities. Social justice does not require legal equality
because legal equality, being a relative term, is
necessarily premised on differentiations based on
personal or natural conditions. 65 Social justice
guarantees equality of opportunity 66 , and this is precisely
what Republic Act No. 3350 proposes to accomplish — it
gives laborers, irrespective of their religious scrupples,
equal opportunity for work.
7. As its last ground, appellant contends that the
amendment introduced by Republic Act No. 3350 is not
called for — in other words, the Act is not proper,
necessary or desirable. Anent this matter, it has been held
that a statute which is not necessary is not, for that
reason, unconstitutional; that in determining the
constitutional validity of legislation, the courts are
unconcerned with issues as to the necessity for the
enactment of the legislation in question. 67 Courts do
inquire into the wisdom of laws. 68 Moreover, legislatures,
being chosen by the people, are presumed to understand
and correctly appreciate the needs of the people, and it
may change the laws accordingly. 69 The fear is
entertained by appellant that unless the Act is declared
unconstitutional, employers will prefer employing
members of religious sects that prohibit their members
from joining labor unions, and thus be a fatal blow to
unionism. We do not agree. The threat to unionism will
depend on the number of employees who are members
of the religious sects that control the demands of the labor
market. But there is really no occasion now to go further
and anticipate problems We cannot judge with the
material now before Us. At any rate, the validity of a
statute is to be determined from its general purpose and
its efficacy to accomplish the end desired, not from its
effects on a particular case. 70 The essential basis for the
exercise of power, and not a mere incidental result arising
from its exertion, is the criterion by which the validity of a
statute is to be measured. 71
II. We now pass on the second assignment of error, in
support of which the Union argued that the decision of the
trial court ordering the Union to pay P500 for attorney's
fees directly contravenes Section 24 of Republic Act No.
875, for the instant action involves an industrial dispute
wherein the Union was a party, and said Union merely
acted in the exercise of its rights under the union shop
provision of its existing collective bargaining contract with
the Company; that said order also contravenes Article
2208 of the Civil Code; that, furthermore, Appellee was
never actually dismissed by the defendant Company and
did not therefore suffer any damage at all . 72
In refuting appellant Union's arguments, Appellee claimed
that in the instant case there was really no industrial
dispute involved in the attempt to compel Appellee to
maintain its membership in the union under pain of
dismissal, and that the Union, by its act, inflicted
intentional harm on Appellee; that since Appellee was
compelled to institute an action to protect his right to work,
appellant could legally be ordered to pay attorney's fees
under Articles 1704 and 2208 of the Civil Code. 73
The second paragraph of Section 24 of Republic Act No.
875 which is relied upon by appellant provides that:
No suit, action or other proceedings shall
be maintainable in any court against a
labor organization or any officer or
member thereof for any act done by or on
behalf of such organization in
furtherance of an industrial dispute to
which it is a party, on the ground only that
such act induces some other person to
break a contract of employment or that it
is in restraint of trade or interferes with
the trade, business or employment of
some other person or with the right of
some other person to dispose of his
capital or labor. (Emphasis supplied)
That there was a labor dispute in the instant case cannot
be disputed for appellant sought the discharge of
respondent by virtue of the closed shop agreement and
under Section 2 (j) of Republic Act No. 875 a question
involving tenure of employment is included in the term
"labor dispute". 74 The discharge or the act of seeking it is
the labor dispute itself. It being the labor dispute itself, that
very same act of the Union in asking the employer to
dismiss Appellee cannot be "an act done ... in furtherance
of an industrial dispute". The mere fact that appellant is a
labor union does not necessarily mean that all its acts are
in furtherance of an industrial dispute. 75 Appellant Union,
therefore, cannot invoke in its favor Section 24 of Republic
Act No. 875. This case is not intertwined with any unfair
labor practice case existing at the time when Appellee
filed his complaint before the lower court.
Neither does Article 2208 of the Civil Code, invoked by
the Union, serve as its shield. The article provides that
attorney's fees and expenses of litigation may be awarded
"when the defendant's act or omission has compelled the
plaintiff ... to incur expenses to protect his interest"; and
"in any other case where the court deems it just and
equitable that attorney's fees and expenses of litigation
should be recovered". In the instant case, it cannot be
gainsaid that appellant Union's act in demanding
Appellee's dismissal caused Appellee to incur expenses
to prevent his being dismissed from his job. Costs
according to Section 1, Rule 142, of the Rules of Court,
shall be allowed as a matter of course to the prevailing
party.
WHEREFORE, the instant appeal is dismissed, and the
decision, dated August 26, 1965, of the Court of First
Instance of Manila, in its Civil Case No. 58894, appealed
from is affirmed, with costs against appellant Union. It is
so ordered.
 [G.R. No. 115077. April 18, 1997]
25. *PROGRESSIVE DEVELOPMENT
CORPORATION-PIZZA HUT vs. HON.
BIENVENIDO LAGUESMA
On July 9, 1993, Nagkakaisang Lakas ng
Manggagawa (NLM)-Katipunan (respondent Union) filed
a petition for certification election with the Department of
Labor (National Capital Region) in behalf of the rank and
file employees of the Progressive Development
Corporation (Pizza Hut) docketed as NCR Case No.
NCR-OD-M-9307-020.[1]
Petitioner filed on August 20, 1993, a verified Motion
to Dismiss the petition alleging fraud, falsification and
misrepresentation in the respondent Union's registration
making it void and invalid. The motion specifically alleged
that: a) respondent Union's registration was tainted with
false, forged, double or multiple signatures of those who
allegedly took part in the ratification of the respondent
Union's constitution and by-laws and in the election of its
officers that there were two sets of supposed attendees to
the alleged organizational meeting that was alleged to
have taken place on June 26, 1993; that the alleged
chapter is claimed to have been supported by 318
members when in fact the persons who actually signed
their names were much less; and b) while the application
for registration of the charter was supposed to have been
approved in the organizational meeting held on June 27,
1993, the charter certification issued by the federation
KATIPUNAN was dated June 26, 1993 or one (1) day
prior to the formation of the chapter, thus, there were
serious falsities in the dates of the issuance of the charter
certification and the organization meeting of the alleged
chapter.
Citing other instances of misrepresentation and
fraud, petitioner, on August 29, 1993, filed a Supplement
to its Motion to Dismiss,[2] claiming that:
1) Respondent Union alleged that the election
of its officers was held on June 27, 1993;
however, it appears from the documents
submitted by respondent union to the BIR-
DOLE that the Union's constitution and by-
laws were adopted only on July 7, 1993,
hence, there was no bases for the supposed
election of officers on June 27, 1993
because as of this date, there existed no
positions to which the officers could be
validly elected;
2) Voting was not conducted by secret ballot in
violation of Article 241, section (c) of the
Labor Code;
3) The Constitution and by Laws submitted in
support of its petition were not properly
acknowledged and notarized.[3]
On August 30, 1993, petitioner filed a
Petition[4] seeking the cancellation of the Union's
registration on the grounds of fraud and falsification,
docketed as BIR Case No. 8-21-83.[5]Motion was likewise
filed by petitioner with the Med-Arbiter requesting
suspension of proceedings in the certification election
case until after the prejudicial question of the Union's legal
personality is determined in the proceedings for
cancellation of registration.
However, in an Order dated September 29,
1993,[6] Med-Arbiter Rasidali C. Abdullah directed the
holding of a certification election among petitioner's rank
and file employees. The Order explained:
x x x Sumasaklaw sa Manggagawa ng Pizza Hut is a
legitimate labor organization in contemplation of law and
shall remain as such until its very charter certificate is
canceled or otherwise revoked by competent
authority. The alleged misrepresentation, fraud and false
statement in connection with the issuance of the charter
certificate are collateral issues which could be properly
ventilated in the cancellation proceedings.[7]
On appeal to the office of the Secretary of Labor,
Labor Undersecretary Bienvenido E. Laguesma in a
Resolution dated December 29, 1993[8] denied the same.
A motion for reconsideration of the public
respondent's resolution was denied in his Order [9] dated
January 27, 1994, hence, this special civil action for
certiorari under Rule 65 of the Revised Rules of Court
where the principal issue raised is whether or not the
public respondent committed grave abuse of discretion in
affirming the Med-Arbiter's order to conduct a certification
election among petitioner's rank and file employees,
considering that: (1) respondent Union's legal personality
was squarely put in issue; (2) allegations of fraud and
falsification, supported by documentary evidence were
made; and (3) a petition to cancel respondent Union's
registration is pending with the regional office of the
Department of Labor and Employment.[10]
We grant the petition.
In the public respondent's assailed Resolution dated
December 29, 1993, the suggestion is made that once a
labor organization has filed the necessary documents and
papers and the same have been certified under oath and
attested to, said organization necessarily becomes
clothed with the character of a legitimate labor
organization. The resolution declares:
Records show that at the time of the filing of the subject
petition on 9 July 1993 by the petitioner NLM-
KATIPUNAN, for and in behalf of its local affiliate
Sumasaklaw sa Manggagawa ng Pizza Hut, the latter has
been clothed with the status and/or character of a
legitimate labor organization. This is so, because on 8
July 1993, petitioner submitted to the Bureau of Labor
Relations (BLR), this Department, the following
documents: Charter Certificate, Minutes of the
Organizational Meeting, List of Officers, and their
respective addresses, financial statement, Constitution
and By-Laws (CBL, and the minutes of the ratification of
the CBL). Said documents (except the charter certificate)
are certified under oath and attested to by the local
union's Secretary/Treasurer and President, respectively.
As to the contention that the certification election
proceedings should be suspended in view of the pending
case for the cancellation of the petitioner's certificate of
registration, let it be stressed that the pendency of a
cancellation case is not a ground for the dismissal or
suspension of a representation proceedings considering
that a registered labor organization continues to be a
legitimate one entitled to all the rights appurtenant thereto
until a final valid order is issued canceling such
registration.[11]
In essence, therefore, the real controversy in this
case centers on the question of whether or not, after the
necessary papers and documents have been filed by a
labor organization, recognition by the Bureau of Labor
Relations merely becomes a ministerial function.
We do not agree.
In the first place, the public respondent's views as
expressed in his December 29, 1993 Resolution miss the
entire point behind the nature and purpose of proceedings
leading to the recognition of unions as legitimate labor
organizations. Article 234 of the Labor Code provides:
Art. 234. Requirements of registration. - Any applicant
labor organization, association or group of unions or
workers shall acquire legal personality and shall be
entitled to the rights and privileges granted by law to
legitimate labor organizations upon issuance of the
certificate of registration based on the following
requirements:
(a) Fifty pesos (P50.00) registration fee;
(b) The names of its officers, their addresses,
the principal address of the labor
organization, the minutes of the
organizational meetings and the list of the
workers who participated in such meetings;
(c) The names of all its members comprising at
least twenty percent (20%) of all the
employees in the bargaining unit where it
seeks to operate;
(d) If the applicant union has been in existence
for one or more years, copies of its annual
financial reports; and
(e) Four (4) copies of the constitution and by-
laws of the applicant union, minutes of its
adoption or ratification, and the list of the
members who participated in it.
A more than cursory reading of the aforecited
provisions clearly indicates that the requirements
embodied therein are intended as preventive measures
against the commission of fraud.After a labor organization
has filed the necessary papers and documents for
registration, it becomes mandatory for the Bureau of
Labor Relations to check if the requirements under Article
234 have been sedulously complied with. If its application
for registration is vitiated by falsification and serious
irregularities, especially those appearing on the face of
the application and the supporting documents, a labor
organization should be denied recognition as a legitimate
labor organization. And if a certificate of recognition has
been issued, the propriety of the labor organization's
registration could be assailed directly through cancellation
of registration proceedings in accordance with Articles
238 and 239 of the Labor Code, or indirectly, by
challenging its petition for the issuance of an order for
certification election.
These measures are necessary - and may be
undertaken simultaneously - if the spirit behind the Labor
Code's requirements for registration are to be given flesh
and blood. Registration requirements specifically afford a
measure of protection to unsuspecting employees who
may be lured into joining unscrupulous or fly-by-night
unions whose sole purpose is to control union funds or
use the labor organization for illegitimate ends.[12] Such
requirements are a valid exercise of the police power,
because the activities in which labor organizations,
associations and unions of workers are engaged directly
affect the public interest and should be protected.[13]
 Thus, in Progressive Development Corporation vs.
Secretary of Labor and Employment,[14] we held:
The controversy in this case centers on the requirements
before a local or chapter of a federation may file a petition
for certification election and be certified as the sole and
exclusive bargaining agent of the petitioner's employees.
xxx
But while Article 257 cited by the Solicitor General directs
the automatic conduct of a certification election in an
unorganized establishment, it also requires that the
petition for certification election must be filed by a
legitimate labor organization. xxx
xxx
xxx. The employer naturally needs assurance that the
union it is dealing with is a bona-fide organization, one
which has not submitted false statements or
misrepresentations to the Bureau. The inclusion of the
certification and attestation requirements will in a marked
degree allay these apprehensions of management. Not
only is the issuance of any false statement and
misrepresentation or ground for cancellation of
registration (see Article 239 (a), (c) and (d)); it is also a
ground for a criminal charge of perjury.
The certification and attestation requirements are
preventive measures against the commission of fraud.
They likewise afford a measure of protection to
unsuspecting employees who may be lured into joining
unscrupulous or fly-by-night unions whose sole purpose
is to control union funds or to use the union for dubious
ends.
xxx
xxx. It is not this Court's function to augment the
requirements prescribed by law in order to make them
wiser or to allow greater protection to the workers and
even their employer. Our only recourse is, as earlier
discussed, to exact strict compliance with what the law
provides as requisites for local or chapter formation.
xxx
The Court's conclusion should not be misconstrued as
impairing the local union's right to be certified as the
employees' bargaining agent in the petitioner's
establishment. We are merely saying that the local union
must first comply with the statutory requirements in order
to exercise this right. Big federations and national unions
of workers should take the lead in requiring their locals
and chapters to faithfully comply with the law and the rules
instead of merely snapping union after union into their
folds in a furious bid with rival federations to get the most
number of members.
Furthermore, the Labor Code itself grants the Bureau
of Labor Relations a period of thirty (30) days within which
to review all applications for registration. Article 235
provides:
"Art. 235. Action on application. - The Bureau shall act on
all applications for registration within thirty (30) days from
filing.
All requisite documents and papers shall be certified
under oath by the secretary or the treasurer of the
organization, as the case may be, and attested to by its
president."
The thirty-day period in the aforecited provision
ensures that any action taken by the Bureau of Labor
Relations is made in consonance with the mandate of the
Labor Code, which, it bears emphasis, specifically
requires that the basis for the issuance of a certificate of
registration should be compliance with the requirements
for recognition under Article 234. Since, obviously,
recognition of a labor union or labor organization is not
merely a ministerial function, the question now arises as
to whether or not the public respondent committed grave
abuse of discretion in affirming the Med-Arbiter's order in
spite of the fact that the question of the Union's legitimacy
was squarely put in issue and that the allegations of fraud
and falsification were adequately supported by
documentary evidence.
The Labor Code requires that in organized and
unorganized[15] establishments, a petition for certification
election must be filed by a legitimate labor
organization. The acquisition of rights by any union or
labor organization, particularly the right to file a petition for
certification election, first and foremost, depends on
whether or not the labor organization has attained the
status of a legitimate labor organization.
In the case before us, the Med-Arbiter summarily
disregarded the petitioner's prayer that the former look
into the legitimacy of the respondent Union by a sweeping
declaration that the union was in the possession of a
charter certificate so that "for all intents and purposes,
Sumasaklaw sa Manggagawa sa Pizza Hut (was) a
legitimate labor organization."[16] Glossing over the
transcendental issue of fraud and misrepresentation
raised by herein petitioner, Med-Arbiter Rasidali Abdullah
held that:
The alleged misrepresentation, fraud and false statement
in connection with the issuance of the charter certificate
are collateral issues which could be ventilated in the
cancellation proceedings.[17]
It cannot be denied that the grounds invoked by
petitioner for the cancellation of respondent Union's
registration fall under paragraph (a) and (c) of Article 239
of the Labor Code. to wit:
(a) Misrepresentation, false statement or fraud 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, the minutes of ratification, the list of
members who took part in the ratification;
xxx
(c) Misrepresentation, false statements or fraud in
connection with the election of officers, minutes of the
election of officers, the list of voters, or failure to submit
these documents together with the list of the newly
elected-appointed officers and their postal addresses
within thirty (30) days from election
xxx
The grounds ventilated in cancellation proceedings
in accordance with Article 239 of the Labor Code
constitute a grave challenge to the right of respondent
Union to ask for certification election. The Med-Arbiter
should have looked into the merits of the petition for
cancellation before issuing an order calling for certification
election. Registration based on false and fraudulent
statements and documents confer no legitimacy upon a
labor organization irregularly recognized, which, at best,
holds on to a mere scrap of paper. Under such
circumstances, the labor organization, not being a
legitimate labor organization, acquires no rights,
particularly the right to ask for certification election in a
bargaining unit.
As we laid emphasis in Progressive Development
Corporation Labor,[18] "[t]he employer needs the
assurance that the union it is dealing with is a bona fide
organization, one which has not submitted false
statements or misrepresentations to the Bureau." Clearly,
fraud, falsification and misrepresentation in obtaining
recognition as a legitimate labor organization are contrary
to the Med-Arbiter's conclusion not merely collateral
issues. The invalidity of respondent Union's registration
would negate its legal personality to participate in
certification election.
Once a labor organization attains the status of a
legitimate labor organization it begins to possess all of the
rights and privileges granted by law to such
organizations. As such rights and privileges ultimately
affect areas which are constitutionally protected, the
activities in which labor organizations, associations and
unions are engaged directly affect the public interest and
should be zealously protected. A strict enforcement of the
Labor Code's requirements for the acquisition of the
status of a legitimate labor organization is in order.
Inasmuch as the legal personality of respondent
Union had been seriously challenged, it would have been
more prudent for the Med-Arbiter and public respondent
to have granted petitioner's request for the suspension of
proceedings in the certification election case, until the
issue of the legality of the Union's registration shall have
been resolved. Failure of the Med-Arbiter and public
respondent to heed the request constituted a grave abuse
of discretion.
WHEREFORE, PREMISES CONSIDERED, the
instant petition is GRANTED and the Resolution and
Order of the public respondent dated December 29, 1993
and January 24, 1994, respectively, are hereby SET
ASIDE.
The case is REMANDED to the Med-Arbiter to
resolve with reasonable dispatch petitioner's petition for
cancellation of respondent Union's registration
SO ORDERED.
26. INSULAR LIFE ASSURANCE CO.,
LTD. v. NLRC
G.R. N o. 119930, 12 March 1998, FIRST DIVISION ,
(Bellosillo, J.)
Facts
On 1992, Insular Life entered into an agency contract,
which it prepared wholly, with Pantaleon de los Reyes
authorizing him to
solicit within the Philippines applications for life insurance
and annuities for which he would be paid compensation
by commissions. It contained stipulation that no employer-
employee relationship shall be created between the
parties and that the agent shall be free to exercise his own
judgment as to time, place and means of soliciting
insurance. De los Reyes however was prohibited by
Insular Life from working for any other life insurance
company, and violation of which was sufficient ground for
termination. He was required to submit all completed
applications for insurance, deliver policies, receive and
collect initial premiums and balances of first year
premiums, renewal premiums, deposits on applications,
and payments on policy loans. He was also bound to turn
over to the company immediately any and all sums of
money collected by him.
On 1993, Insular Life and De los Reyes entered into
another contract where De los Reyes was appointed as
Acting Unit Manager in its Cebu office. His duties and
responsibilities included the recruitment, training,
organization and development of a sufficient number of
qualified, competent and trustworthy underwriters, and to
supervise and coordinate the sales efforts of the
underwriters in the active solicitation of new business and
in the furtherance of the agency’s assigned goals.
The contract stipulated that De los Reyes is considered
as an independent contractor. De los Reyes together with
his unit force was granted freedom to exercise judgment
as to time, place and means of soliciting insurance. As
acting unit manager, he was given production bonus,
development allowance and “financial assistance”
deemed as an advance against expected commissions
only upon his fulfillment of certain quota requirements. He
was also expressly obliged to participate in the company’s
conservation program, i.e., preservation and maintenance
of existing insurance policies, and to accept moneys duly
receipted on agent’s receipts provided the same were
turned over to the company.
He was notified on 1993 that his services were
terminated. Then he filed a complaint before the Labor
Arbiter for illegal dismissal and non-payment of his
salaries and separation pay. The LA dismissed it saying
that there was no employer-employee relationship for the
element of control was not established. The NLRC
reversed the LA’s decision, saying there was employer-
employee relationship, for Insular Life limited the work of
De los Reyes to selling of a certain insurance policy,
assigned him to a particular place and table, paid him as
Acting Unit Manager, and promised him of promotion
upon meeting of certain
requirements and quotas.
ISSUE:
Is De los Reyes an employee of Insular Life even if the
management contract stipulated him only as an
independent contractor?
RULING:
YES. Parenthetically, both Insular Life and NLRC treated
the agency contract and the management contract
entered into between
Insular Life and De los Reyes as contracts of agency. We
however hold otherwise. Unquestionably there exist major
distinctions between the two agreements. While the first
has the earmarks of an agency contract, the second is far
removed from the concept of agency in that provided
therein are conditionalities that indicate an employer-
employee relationship. The N LRC was correct in finding
that De los Reyes was an employee of Insular Life, but
this holds true only insofar as the management contract is
concerned.
It is axiomatic that the existence of an employer-employee
relationship cannot be negated by expressly repudiating it
in the management contract and providing therein that the
“employee” is an independent contractor when the terms
of agreement clearly show otherwise. For, the
employment status of a person is defined and prescribed
by law and not by what the parties say it should be. In
determining the status of the management contract, the
“fourfold test” on employment earlier mentioned has to be
applied.
The very designation of the appointment of De los Reyes
as “acting” unit manager obviously implies a temporary
employment status which may be made permanent only
upon compliance with company standards under the
management contract.
It cannot be validly claimed that the financial assistance
consisting of the free portion of the UDF was purely
dependent on the
premium production of the agent. Be that as it may, it is
worth considering that the payment of compensation by
way of commission does not militate against the
conclusion that De los Reyes was an employee of Insular
Life. Under Art. 97 of the Labor Code, “wage” shall mean
“however designated, capable of being expressed in
terms of money, whether fixed or ascertained on a time,
task, price or commission basis”
De los Reyes’ duty to collect the company’s premiums
using company receipts under the management contract
is further evidence of Insular Life’s control over De los
Reyes. De los Reyes was appointed Acting Unit Manager,
not agency manager. There is no evidence that to
implement his obligations under the management
contract, De los Reyes had organized an office.
Insular Life in fact has admitted that it provided De los
Reyes a place and a table at its office where he reported
for and worked whenever he was not out in the field.
Under the managership contract, De los Reyes was
obliged to work exclusively for Insular Life in life insurance
solicitation and was imposed premium production quotas.
Of course, the acting unit manager could not underwrite
other lines of insurance because his Permanent
Certificate of Authority was for life insurance only and for
no other. He was proscribed from accepting a managerial
or supervisory position in any other office including the
government without the written consent of Insular Life. As
Acting Unit Manager, De los Reyes performed functions
beyond mere solicitation of insurance business for Insular
Life. As found by the N LRC, he exercised administrative
functions which were necessary and beneficial to the
business of INSULAR LIFE.
Exclusivity of service, control of assignments and removal
of agents under De los Reyes’s unit, collection of
premiums, furnishing of company facilities and materials
as well as capital described as Unit Development Fund
are but hallmarks of the management system in which De
los Reyes worked. This obtaining, there is no escaping
the conclusion that de los Reyes was an employee of
Insular Life.
[G.R. No. 142824. December 19, 2001]
27. *INTERPHIL LABORATORIES EMPLOYEES
UNION-FFW, ENRICO GONZALES and MA.
THERESA MONTEJO vs. INTERPHIL
LABORATORIES, INC., AND HONORABLE
LEONARDO A. QUISUMBING, SECRETARY
OF LABOR AND EMPLOYMENT
Assailed in this petition for review on certiorari are
the decision, promulgated on 29 December 1999, and the
resolution, promulgated on 05 April 2000, of the Court of
Appeals in CA-G.R. SP No. 50978.
Culled from the questioned decision, the facts of the
case are as follows:
Interphil Laboratories Employees Union-FFW is the
sole and exclusive bargaining agent of the rank-and-file
employees of Interphil Laboratories, Inc., a company
engaged in the business of manufacturing and packaging
pharmaceutical products. They had a Collective
Bargaining Agreement (CBA) effective from 01 August
1990 to 31 July 1993.
Prior to the expiration of the CBA or sometime in
February 1993, Allesandro G. Salazar,[1] Vice-President-
Human Resources Department of respondent company,
was approached by Nestor Ocampo, the union president,
and Hernando Clemente, a union director. The two union
officers inquired about the stand of the company
regarding the duration of the CBA which was set to expire
in a few months. Salazar told the union officers that the
matter could be best discussed during the formal
negotiations which would start soon.
In March 1993, Ocampo and Clemente again
approached Salazar. They inquired once more about the
CBA status and received the same reply from Salazar. In
April 1993, Ocampo requested for a meeting to discuss
the duration and effectivity of the CBA. Salazar acceded
and a meeting was held on 15 April 1993 where the union
officers asked whether Salazar would be amenable to
make the new CBA effective for two (2) years, starting 01
August 1993. Salazar, however, declared that it would still
be premature to discuss the matter and that the company
could not make a decision at the moment. The very next
day, or on 16 April 1993, all the rank-and-file employees
of the company refused to follow their regular two-shift
work schedule of from 6:00 a.m. to 6:00 p.m., and from
6:00 p.m. to 6:00 a.m. At 2:00 p.m. and 2:00 a.m.,
respectively, the employees stopped working and left their
workplace without sealing the containers and
securing the raw materials they were working
on. When Salazar inquired about the reason for their
refusal to follow their normal work schedule, the
employees told him to "ask the union officers." To
minimize the damage the overtime boycott was causing
the company, Salazar immediately asked for a meeting
with the union officers. In the meeting, Enrico Gonzales,
a union director, told Salazar that the employees would
only return to their normal work schedule if the company
would agree to their demands as to the effectivity and
duration of the new CBA. Salazar again told the union
officers that the matter could be better discussed during
the formal renegotiations of the CBA.Since the union was
apparently unsatisfied with the answer of the company,
the overtime boycott continued. In addition, the
employees started to engage in a work slowdown
campaign during the time they were working, thus
substantially delaying the production of the company.[2]
On 14 May 1993, petitioner union submitted with
respondent company its CBA proposal, and the latter filed
its counter-proposal.
On 03 September 1993, respondent company filed
with the National Labor Relations Commission (NLRC) a
petition to declare illegal petitioner unions overtime
boycott and work slowdown which, according to
respondent company, amounted to illegal strike. The
case, docketed NLRC-NCR Case No. 00-09-05529-93,
was assigned to Labor Arbiter Manuel R. Caday.
 On 22 October 1993, respondent company filed with
the National Conciliation and Mediation Board (NCMB) an
urgent request for preventive mediation aimed to help the
parties in their CBA negotiations.[3] The parties, however,
failed to arrive at an agreement and on 15 November
1993, respondent company filed with Office of the
Secretary of Labor and Employment a petition for
assumption of jurisdiction.
On 24 January 1994, petitioner union filed with the
NCMB a Notice of Strike citing unfair labor practice
allegedly committed by respondent company. On 12
February 1994, the union staged a strike.
On 14 February 1994, Secretary of Labor Nieves
Confesor issued an assumption order[4] over the labor
dispute. On 02 March 1994, Secretary Confesor issued
an order directing respondent company to immediately
accept all striking workers, including the fifty-three (53)
terminated union officers, shop stewards and union
members back to work under the same terms and
conditions prevailing prior to the strike, and to pay all the
unpaid accrued year end benefits of its employees in
1993.[5] On the other hand, petitioner union was directed
to strictly and immediately comply with the return to work
orders issued by (the) Office x x x.[6] The same order
pronounced that (a)ll pending cases which are direct
offshoots of the instant labor dispute are hereby
subsumed herewith.[7]
In the interim, the case before Labor Arbiter Caday
continued. On 16 March 1994, petitioner union filed an
Urgent Manifestation and Motion to Consolidate the
Instant Case and to Suspend Proceedings seeking the
consolidation of the case with the labor dispute pending
before the Secretary of Labor. Despite objection by
respondent company, Labor Arbiter Caday held in
abeyance the proceedings before him. However, on 06
June 1994, Acting Labor Secretary Jose S. Brillantes,
after finding that the issues raised would require a formal
hearing and the presentation of evidentiary matters,
directed the Labor Arbiters Caday and M. Sol del Rosario
to proceed with the hearing of the cases before them and
to thereafter submit their report and recommendation to
his office.
On 05 September 1995, Labor Arbiter Caday
submitted his recommendation to the then Secretary of
Labor Leonardo A. Quisumbing.[8] Then Secretary
Quisumbing approved and adopted the report in his
Order, dated 13 August 1997, hence:
WHEREFORE, finding the said Report of Labor Arbiter
Manuel R. Caday to be supported by substantial
evidence, this Office hereby RESOLVES to APPROVE
and ADOPT the same as the decision in this case, and
judgment is hereby rendered:
(1) Declaring the overtime boycott and work slowdown as
illegal strike;
(2) Declaring the respondent union officers namely:
Nestor Ocampo - President
Carmelo Santos - Vice-President
Marites Montejo - Treasurer/Board Member
Rico Gonzales - Auditor
Rod Abuan - Director
Segundino Flores - Director
Hernando Clemente - Director
who spearheaded and led the overtime boycott and
work slowdown, to have lost their employment
status; and
(3) Finding the respondents guilty of unfair labor
practice for violating the then existing
CBA which prohibits the union or any
employee during the existence of the
CBA from staging a strike or engaging in
slowdown or interruption of work and
ordering them to cease and desist from
further committing the aforesaid illegal
acts.
Petitioner union moved for the reconsideration of the
order but its motion was denied. The union went to the
Court of Appeals via a petition for certiorari. In the now
questioned decision promulgated on 29 December 1999,
the appellate court dismissed the petition. The unions
motion for reconsideration was likewise denied.
Hence, the present recourse where petitioner
alleged:
THE HONORABLE FIFTH DIVISION OF THE COURT
OF APPEALS, LIKE THE HONORABLE PUBLIC
RESPONDENT IN THE PROCEEDINGS BELOW,
COMMITTED GRAVE ABUSE OF DISCRETION,
AMOUNTING TO LACK AND/OR EXCESS OF
JURISDICTION WHEN IT COMPLETELY
DISREGARDED PAROL EVIDENCE RULE IN THE
EVALUATION AND APPRECIATION OF EVIDENCE
PROFERRED BY THE PARTIES.
THE HONORABLE FIFTH DIVISION OF THE COURT
OF APPEALS COMMITTED GRAVE ABUSE OF
DISCRETION, AMOUNTING TO LACK AND/OR
EXCESS OF JURISDICTION, WHEN IT DID NOT
DECLARE PRIVATE RESPONDENTS ACT OF
EXTENDING SUBSTANTIAL SEPARATION PACKAGE
TO ALMOST ALL INVOLVED OFFICERS OF
PETITIONER UNION, DURING THE PENDENCY OF
THE CASE, AS TANTAMOUNT TO CONDONATION, IF
INDEED, THERE WAS ANY MISDEED COMMITTED.
THE HONORABLE FIFTH DIVISION OF THE COURT
OF APPEALS COMMITTED GRAVE ABUSE OF
DISCRETION, AMOUNTING TO LACK AND/OR
EXCESS OF JURISDICTION WHEN IT HELD THAT THE
SECRETARY OF LABOR AND EMPLOYMENT HAS
JURISDICTION OVER A CASE (A PETITION TO
DECLARE STRIKE ILLEGAL) WHICH HAD LONG BEEN
FILED AND PENDING BEFORE THE LABOR
ARBITER.[9]
We sustain the questioned decision.
On the matter of the authority and jurisdiction of the
Secretary of Labor and Employment to rule on the illegal
strike committed by petitioner union, it is undisputed that
the petition to declare the strike illegal before Labor
Arbiter Caday was filed long before the Secretary of Labor
and Employment issued the assumption order on 14
February 1994. However, it cannot be denied that the
issues of overtime boycott and work slowdown amounting
to illegal strike before Labor Arbiter Caday are intertwined
with the labor dispute before the Labor Secretary. In fact,
on 16 March 1994, petitioner union even asked Labor
Arbiter Caday to suspend the proceedings before him and
consolidate the same with the case before the Secretary
of Labor. When Acting Labor Secretary Brillantes ordered
Labor Arbiter Caday to continue with the hearing of the
illegal strike case, the parties acceded and participated in
the proceedings, knowing fully well that there was also a
directive for Labor Arbiter Caday to thereafter submit his
report and recommendation to the Secretary. As the
appellate court pointed out, the subsequent participation
of petitioner union in the continuation of the hearing was
in effect an affirmation of the jurisdiction of the Secretary
of Labor.
The appellate court also correctly held that the
question of the Secretary of Labor and Employments
jurisdiction over labor-related disputes was already
settled in International Pharmaceutical, Inc. vs. Hon.
Secretary of Labor and Associated Labor Union
(ALU)[10] where the Court declared:
In the present case, the Secretary was explicitly granted
by Article 263(g) of the Labor Code the authority to
assume jurisdiction over a labor dispute causing or likely
to cause a strike or lockout in an industry indispensable to
the national interest, and decide the same
accordingly. Necessarily, this authority to assume
jurisdiction over the said labor dispute must include and
extend to all questions and controversies arising
therefrom, including cases over which the labor
arbiter has exclusive jurisdiction.
Moreover, Article 217 of the Labor Code is not without,
but contemplates, exceptions thereto. This is evident from
the opening proviso therein reading (e)xcept as otherwise
provided under this Code x x x.Plainly, Article 263(g) of
the Labor Code was meant to make both the Secretary
(or the various regional directors) and the labor arbiters
share jurisdiction, subject to certain
conditions. Otherwise, the Secretary would not be able to
effectively and efficiently dispose of the primary
dispute. To hold the contrary may even lead to the absurd
and undesirable result wherein the Secretary and the
labor arbiter concerned may have diametrically opposed
rulings. As we have said, (i)t is fundamental that a statute
is to be read in a manner that would breathe life into it,
rather than defeat it.
In fine, the issuance of the assailed orders is within the
province of the Secretary as authorized by Article 263(g)
of the Labor Code and Article 217(a) and (5) of the same
Code, taken conjointly and rationally construed to
subserve the objective of the jurisdiction vested in the
Secretary.[11]
Anent the alleged misappreciation of the evidence
proffered by the parties, it is axiomatic that the factual
findings of the Labor Arbiter, when sufficiently supported
by the evidence on record, must be accorded due respect
by the Supreme Court.[12] Here, the report and
recommendation of Labor Arbiter Caday was not only
adopted by then Secretary of Labor Quisumbing but it was
likewise affirmed by the Court of Appeals. We see no
reason to depart from their findings.
Petitioner union maintained that the Labor Arbiter
and the appellate court disregarded the parol evidence
rule[13] when they upheld the allegation of respondent
company that the work schedule of its employees was
from 6:00 a.m. to 6:00 p.m. and from 6:00 p.m. to 6:00
a.m. According to petitioner union, the provisions of their
CBA on working hours clearly stated that the normal
working hours were from 7:30 a.m. to 4:30
p.m.[14] Petitioner union underscored that the regular work
hours for the company was only eight (8) hours. It further
contended that the Labor Arbiter as well as the Court of
Appeal should not have admitted any other evidence
contrary to what was stated in the CBA.
The reliance on the parol evidence rule is
misplaced. In labor cases pending before the
Commission or the Labor Arbiter, the rules of evidence
prevailing in courts of law or equity are not
controlling.[15]Rules of procedure and evidence are not
applied in a very rigid and technical sense in labor
cases.[16] Hence, the Labor Arbiter is not precluded from
accepting and evaluating evidence other than, and even
contrary to, what is stated in, the CBA.
In any event, the parties stipulated:
Section 1. Regular Working Hours - A normal workday
shall consist of not more than eight (8) hours. The regular
working hours for the Company shall be from 7:30 A.M. to
4:30 P.M. The schedule of shift work shall be
maintained; however the company may change the
prevailing work time at its discretion, should such change
be necessary in the operations of the Company. All
employees shall observe such rules as have been laid
down by the company for the purpose of effecting control
over working hours.[17]
It is evident from the foregoing provision that the
working hours may be changed, at the discretion of the
company, should such change be necessary for its
operations, and that the employees shall observe such
rules as have been laid down by the company. In the case
before us, Labor Arbiter Caday found that respondent
company had to adopt a continuous 24-hour work daily
schedule by reason of the nature of its business and the
demands of its clients. It was established that the
employees adhered to the said work schedule since
1988. The employees are deemed to have waived the
eight-hour schedule since they followed, without any
question or complaint, the two-shift schedule while their
CBA was still in force and even prior thereto. The two-shift
schedule effectively changed the working hours stipulated
in the CBA. As the employees assented by practice to this
arrangement, they cannot now be heard to claim that the
overtime boycott is justified because they were not
obliged to work beyond eight hours.
As Labor Arbiter Caday elucidated in his report:
Respondents' attempt to deny the existence of such
regular overtime schedule is belied by their own
awareness of the existence of the regular overtime
schedule of 6:00 A.M. to 6:00 P.M. and 6:00 P.M. to 6:00
A.M. of the following day that has been going on since
1988. Proof of this is the case undisputedly filed by the
union for and in behalf of its members, wherein it is
claimed that the company has not been computing
correctly the night premium and overtime pay for work
rendered between 2:00 A.M. and 6:00 A.M. of the 6:00
P.M. to 6:00 A.M. shift. (tsn pp. 9-10, testimony of
Alessandro G. Salazar during hearing on August 9,
1994). In fact, the union Vice-President Carmelo C.
Santos, demanded that the company make a
recomputation of the overtime records of the employees
from 1987 (Exh. "P"). Even their own witness, union
Director Enrico C. Gonzales, testified that when in 1992
he was still a Quality Control Inspector at the Sucat Plant
of the company, his schedule was sometime at 6:00 A.M.
to 6:00 P.M., sometime at 6:00 A.M. to 2:00 P.M., at 2:00
P.M. to 10:00 P.M. and sometime at 6:00 P.M. to 6:00
A.M., and when on the 6 to 6 shifts, he received the
commensurate pay (t.s.n. pp. 7-9, hearing of January 10,
1994). Likewise, while in the overtime permits, dated
March 1, 6, 8, 9 to 12, 1993, which were passed around
daily for the employees to sign, his name appeared but
without his signatures, he however had rendered
overtime during those dates and was paid because unlike
in other departments, it has become a habit to them to
sign the overtime schedule weekly (t.s.n. pp. 26-31,
hearing of January 10, 1994). The awareness of the
respondent union, its officers and members about the
existence of the regular overtime schedule of 6:00 A.M. to
6:00 P.M. and 6:00 P.M. to 6:00 A.M. of the following day
will be further shown in the discussion of the second
issue.
As to the second issue of whether or not the respondents
have engaged in "overtime boycott" and "work slowdown"
from April 16, 1993 up to March 7, 1994, both amounting
to illegal strike, the evidence presented is equally crystal
clear that the "overtime boycott" and "work slowdown"
committed by the respondents amounted to illegal strike.
As undisputably testified to by Mr. Alessandro G. Salazar,
the company's Vice-President-Human Resources
Department, sometime in February, 1993, he was
approached by the union President NestorOcampo and
Union Director Hernando Clemente who asked him as to
what was the stand of the company regarding the duration
of the CBA between the company and which was set to
expire on July 31, 1993. He answered that the matter
could be best discussed during the formal renegotiations
which anyway was to start soon. This query was followed
up sometime in March, 1993, and his answer was the
same. In early April, 1993, the union president requested
for a meeting to discuss the duration and effectivity of the
CBA. Acceding to the request, a meeting was held on
April 15, 1993 wherein the union officers asked him if he
would agree to make the new CBA effective on August 1,
1993 and the term thereof to be valid for only two (2)
years. When he answered that it was still premature to
discuss the matter, the very next day, April 16, 1993, all
the rank and file employees of the company refused to
follow their regular two-shift work schedule of 6:00 A.M. to
6:00 P.M. and 6:00 P.M. to 6:00 A.M., when after the 8-
hours work, they abruptly stopped working at 2:00 P.M.
and 2:00 A.M., respectively, leaving their place of work
without sealing the containers and securing the raw
materials they were working on.When he saw the workers
leaving before the end of their shift, he asked them why
and their reply was "asked (sic) the union
officers." Alarmed by the overtime boycott and the
damage it was causing the company, he requested for a
meeting with the union officers. In the meeting, he asked
them why the regular work schedule was not being
followed by the employees, and union Director Enrico
Gonzales, with the support of the other union officers, told
him that if management would agree to a two-year
duration for the new CBA and an effectivity date of August
1, 1993, all employees will return to the normal work
schedule of two 12-hour shifts. When answered that the
management could not decide on the matter at the
moment and to have it discussed and agreed upon during
the formal renegotiations, the overtime boycott continued
and the employees at the same time employed a work
slowdown campaign during working hours, causing
considerable delay in the production and complaints from
the clients/customers (Exh. "O", Affidavit of Alessandro G.
Salazar which formed part of his direct testimony). This
testimonial narrations of Salazar was, as earlier said,
undisputed because the respondents' counsel waived his
cross examination (t.s.n. p. 15, hearing on August 9,
1994).
Aside from the foregoing undisputed testimonies of
Salazar, the testimonies of other Department Managers
pointing to the union officers as the instigators of the
overtime boycott and work slowdown, the testimony of
Epifanio Salumbides (Exh. "Y") a union member at the
time the concerted activities of the respondents took
place, is quoted hereunder:
2. Noon Pebrero 1993, ipinatawag ng Presidente ng
Unyon na si Nestor Ocampo ang lahat ng taga-
maintenance ng bawat departamento upang dumalo sa
isang miting. Sa miting na iyon, sinabi ni Rod Abuan, na
isang Direktor ng Unyon, na mayroon ilalabas na memo
ang Unyon na nag-uutos sa mga empleyado ng
Kompanya na mag-imbento ng sari-saring dahilan para
lang hindi sila makapagtrabaho ng"overtime". Sinabihan
rin ako ni Tessie Montejo na siya namang Treasurer ng
Unyon na 'Manny, huwag ka na lang pumasok sa
Biyernes para hindi ka masabihan ng magtrabaho ng
Sabado at Linggo' na siya namang araw ng "overtime" ko.
xxx
3. Nakalipas ang dalawaang buwan at noong unang
bahagi ng Abril 1993, miniting kami ng Shop Stewards
namin na sina Ariel Abenoja, Dany Tansiongco at Vicky
Baron. Sinabihan kami na huwag ng mag-ovetime pag
nagbigay ng senyas ang Unyon ng "showtime."
4. Noong umaga ng ika-15 ng Abril 1993, nagsabi na si
Danny Tansiongco ng "showtime". Dahil dito wala ng
empleyadong nag-overtime at sabay-sabay silang umalis,
maliban sa akin. Ako ay pumasok rin noong Abril 17 at 18,
1993 na Sabado at Linggo.
5. Noong ika-19 ng Abril 1993, ako ay ipinatawag ni Ariel
Abenoja Shop Steward, sa opisina ng Unyon. Nadatnan
ko doon ang halos lahat ng opisyales ng Unyon na sina:
Nestor Ocampo ----- Presidente
Carmelo Santos ----- Bise-Presidente
Nanding Clemente -- Director
Tess Montejo------- Chief Steward
Segundo Flores ------ Director
Enrico Gonzales ----- Auditor
Boy Alcantara ------- Shop Steward
Rod Abuan ----------- Director
at marami pang iba na hindi ko na maala-ala. Pagpasok
ko, ako'y pinaligiran ng mga opisyales ng
Unyon. Tinanong ako ni Rod Aguan kung bakit ako "nag-
ovetime" gayong "Binigyan ka na namin ng instruction na
huwag pumasok, pinilit mo pa ring
pumasok." "Management ka ba o Unyonista." Sinagot ko
na ako ay Unyonista. Tinanong niya muli kung bakit ako
pumasok. Sinabi ko na wala akong maibigay na dahilan
para lang hindi pumasok at "mag-overtime." Pagkatapos
nito, ako ay pinagmumura ng mga opisyales ng Unyon
kaya't ako ay madaliang umalis.
x x x"
Likewise, the respondents' denial of having a hand in the
work slowdown since there was no change in the
performance and work efficiency for the year 1993 as
compared to the previous year was even rebuffed by their
witness M. Theresa Montejo, a Quality Control
Analyst. For on cross-examination, she (Montejo)
admitted that she could not answer how she was able to
prepare the productivity reports from May 1993 to
February 1994 because from April 1993 up to April 1994,
she was on union leave. As such, the productivity reports
she had earlier shown was not prepared by her since she
had no personal knowledge of the reports (t.s.n. pp. 32-
35, hearing of February 27, 1995). Aside from this
admission, the comparison made by the respondents was
of no moment, because the higher production for the
years previous to 1993 was reached when the employees
regularly rendered overtime work. But undeniably,
overtime boycott and work slowdown from April 16, 1993
up to March 7, 1994 had resulted not only in financial
losses to the company but also damaged its business
reputation.
Evidently, from all the foregoing, respondents' unjustified
unilateral alteration of the 24-hour work schedule thru
their concerted activities of "overtime boycott" and "work
slowdown" from April 16, 1993 up to March 7, 1994, to
force the petitioner company to accede to their
unreasonable demands, can be classified as a strike on
an installment basis, as correctly called by petitioner
company. xxx[19]
It is thus undisputed that members of the union by
their own volition decided not to render overtime services
in April 1993.[20] Petitioner union even admitted this in its
Memorandum, dated 12 April 1999, filed with the Court of
Appeals, as well as in the petition before this Court, which
both stated that "(s)sometime in April 1993, members of
herein petitioner, on their own volition and in keeping with
the regular working hours in the Company x x x decided
not to render overtime".[21] Such admission confirmed the
allegation of respondent company that petitioner engaged
in overtime boycott and work slowdown which, to use the
words of Labor Arbiter Caday, was taken as a means to
coerce respondent company to yield to its unreasonable
demands.
More importantly, the overtime boycott or work
slowdown by the employees constituted a violation of their
CBA, which prohibits the union or employee, during the
existence of the CBA, to stage a strike or engage in
slowdown or interruption of work.[22] In Ilaw at Buklod ng
Manggagawa vs. NLRC,[23] this Court ruled:
x x x (T)he concerted activity in question would still be
illicit because contrary to the workers explicit contractual
commitment that there shall be no strikes, walkouts,
stoppage or slowdown of work, boycotts, secondary
boycotts, refusal to handle any merchandise, picketing,
sit-down strikes of any kind, sympathetic or general
strikes, or any other interference with any of the
operations of the COMPANY during the term of xxx (their
collective bargaining) agreement.
What has just been said makes unnecessary resolution of
SMCs argument that the workers concerted refusal to
adhere to the work schedule in force for the last several
years, is a slowdown, an inherently illegal activity
essentially illegal even in the absence of a no-strike
clause in a collective bargaining contract, or statute or
rule. The Court is in substantial agreement with the
petitioners concept of a slowdown as a strike on the
installment plan; as a willful reduction in the rate of work
by concerted action of workers for the purpose of
restricting the output of the employer, in relation to a labor
dispute; as an activity by which workers, without a
complete stoppage of work, retard production or their
performance of duties and functions to compel
management to grant their demands. The Court also
agrees that such a slowdown is generally condemned as
inherently illicit and unjustifiable, because while the
employees continue to work and remain at their positions
and accept the wages paid to them, they at the same time
select what part of their allotted tasks they care to perform
of their own volition or refuse openly or secretly, to the
employers damage, to do other work; in other words, they
work on their own terms. x x x.[24]
Finally, the Court cannot agree with the proposition
that respondent company, in extending substantial
separation package to some officers of petitioner union
during the pendency of this case, in effect, condoned the
illegal acts they committed.
Respondent company correctly postured that at the
time these union officers obtained their separation
benefits, they were still considered employees of the
company. Hence, the company was merely complying
with its legal obligations.[25] Respondent company could
have withheld these benefits pending the final resolution
of this case. Yet, considering perhaps the financial
hardships experienced by its employees and the
economic situation prevailing, respondent company
chose to let its employees avail of their separation
benefits. The Court views the gesture of respondent
company as an act of generosity for which it should not
be punished.
WHEREFORE, the petition is DENIED DUE
COURSE and the 29 December 1999 decision of the
Court of Appeals is AFFIRMED.
SO ORDERED.
 28. Nestle Case
G.R. Nos. L-24267-8 May 31, 1966
29. *PERFECTO FERRER, OSCAR FLORES,
JULIAN AGUSTIN, FELICISIMO LICHUCA,
PIO SUMAGIT and INHELDER
LABORATORIES, INC. and SISTER
COMPANIES EMPLOYEES UNION vs. COURT
OF INDUSTRIAL RELATIONS, INHELDER
LABORATORIES, INC., SAN ROQUE
TRADING CORPORATION AND/OR HANS
INHELDER, PRESIDENT AND GENERAL
MANAGER
These are two (2) unfair labor practice cases commenced
in the Court of Industrial Relations. One (L-24268) was
filed by the Management of Inhelder Laboratories, Inc.
and its sister companies (Inhelder, Inc. and San Roque
Trading Corporation) against the Labor Union of
employees thereof and some officers and members of the
Union, and the other (L-24267) by the latter against the
former. Being interrelated, the two cases were jointly
heard. In due course, the trial Judge, Hon. Ansberto P.
Paredes, rendered a decision dismissing the complaints
in both cases. On motion for reconsideration filed by the
Management, the Court of Industrial Relations en banc, in
a resolution penned by Judge Emiliano C. Tabigne, and
concurred "in the result" by Presiding Judge Arsenio I.
Martinez and Associate Judge Amando C. Bugayong, and
with, in effect, the dissent of Judge Paredes, reconsidered
the latter's decision, insofar as it dismissed the complaint
of the Management, and decreed that the officers and
members of the Union who had participated in a peaceful
strike staged by the latter from July 1 to July 15, 1963, "be
considered to have lost their status as employees of the
companies" aforementioned. Hence, this appeal
by certiorari taken by the Union and its members
adversely affected by the said resolution.
The main issue in this appeal is whether said strike was
illegal or not. Respondents herein maintain that it was,
because of petitioners' failure to give a 30-day notice of
their intention to strike and because the strike had
allegedly been called in bad faith. Upon the other hand,
petitioners contend that it was not, for the reason that the
strike was provoked by alleged unfair labor practices on
the part of the respondents and because said petitioners
had acted in good faith in staging said strike.
The records show that, immediately after an election held
on March 27, 1963, which Inhelder Laboratories Inc. and
Sister Companies Employees Union obtained the
requisites majority, the Union submitted to the
Management of said corporations a set of demands for a
collective bargaining agreement (Exhibits A, A-1 and 3).
This led to negotiations, held, sometimes, with the
intervention of the Conciliation Division of the Bureau of
Labor, and, sometimes, directly, between the
representatives of the parties, without said intervention,
and lasting for several weeks. As an agreement was
reached on some points, the same were incorporated into
a draft of agreement, which, in turn, became the basis for,
or was followed by, further negotiations. As additional
points of agreement were reached, another draft of
agreement was prepared.
In a meeting held before said Conciliation Division, in the
morning of May 29, 1963, another such draft (Exhibit C-1)
was drawn, to which the Management refers as "final
draft". However, petitioners' representatives pressed for
the inclusion, in the agreement, of a union clause, an
accumulated sick leave clause, and an accumulated
vacation leave clause, apart from the increase of the high
cost of living monthly allowance from P20.00 to P30.00,
the creation of a grievance committee and a general
salary increase. The negotiations continued in the
afternoon of May 29, 1963, and were resumed in the
morning of May 30 or 31, 1963, in the course of which,
respondents contend, the Management agreed to
increase the high cost of living allowance to P25.00,
provided that the other demands were withdrawn, to
which petitioners allegedly gave their conformity. Another
draft of agreement (Exhibit D) — which the
representatives of Management, again, characterizes as
"final" — was, accordingly, prepared, and the
representatives of both parties initialed it, with the
understanding, according to respondents, that the
agreement would be signed on June 1, 1963. In the
afternoon of May 31, 1963, petitioners' representative
called, however, that of Management and asked for the
inclusion in the agreement a union shop or union security
clause. This request not having been granted, the Union
later refused to sign the agreement.
The Court of Industrial Relations en banc was of the
opinion that, inasmuch as the document last mentioned
(Exhibit D) was a "final draft" of the agreement between
the parties, and petitioners' representatives had initialed
said draft, "the refusal ... of the union to sign the final or
clean form of the contract on June 1, 1963, its refusal to
honor Exhibit D as a perfected contract and its insistence
in negotiating the contract so recently after its perfection
are constitutive of bad faith"; that the strike staged by the
Union from July 1 to July 15, 1963, was not, therefore, one
provoked by unfair labor practices on the part of the
Management; and that, since thirty (30) days had not
elapsed since appellants had given, on June 13, 1963, the
corresponding notice, the strike staged by them from July
1 to July 15, 1963, was illegal and those who took part in
it are deemed separated from the service.
Upon the other hand, His Honor, the trial Judge, held
otherwise, upon the ground that the surrounding
circumstances were such that petitioners were
reasonably justified in believing that the respondents' acts
constituted unfair labor practices and that petitioners had
to strike forthwith in order to arrest the evil effects of said
practices upon the Union and its members.
Upon a review of the record, we are inclined to agree with
the latter view. That of the lower court en banc is mainly
anchored on the fact that the draft of agreement made and
amended in the morning of May 30 or 31, 1963 (Exhibit
D), had been initialed by representatives of both parties
and that the Management refers thereto as a "final draft".
We note, however, that the draft Exhibit C-1, prepared in
the morning of May 29, 1963, is, likewise, called by the
Management as a "final" draft. Yet, admittedly,
negotiations between the parties continued after the
preparation of said "final" draft, thus indicating, not only
that the alleged finality thereof respected, at best, the
unilateral opinion of the Management, but, also, that even
the latter did not consider it as expressive of a complete,
definite and perfected agreement with the petitioners, for
otherwise, the Management would not have participated
in the negotiations that took place or continued after the
preparation of said Exhibit C-1.
These observations apply equally to the "draft" of
agreement Exhibit D, prepared and amended in the
afternoon of May 29 and the morning of May 30 or 31,
1963. Moreover, the fact that both parties affixed their
initials to his "draft" Exhibit D does not necessarily prove
that the same was more "final" than the "final draft"
(Exhibit C-1) made in the morning of May 29, 1963.
Indeed, if the parties had reached, said afternoon and in
the morning of May 30 or 31, 1963, a complete agreement
on the terms and conditions of their proposed collective
bargaining agreement, they could have and would have
signed Exhibit D that same morning, instead of agreeing
that the document be formally signed on June 1, 1963. In
fact, the agreement to this effect suggests that the parties
understood that a contract had not, as yet, been
perfected. As His Honor, the trial Judge, had aptly put it,
Exhibit D was no more than a draft of contract, not a
contract in itself.
At this juncture, it is well to remember that, on March 29,
1963, the petitioners had written to the Management the
letter Exhibit A (also marked as Exhibit 3) enclosing
therewith a draft of the collective bargaining agreement
(Exhibit A-1) they would wish to have with the
Management, as the basis for negotiations between both
parties; that such negotiations lasted from late in March to
early in July, 1963, that, as they threshed out their points
of difference, those that had been settled were
incorporated into another draft of agreement prepared by
the Management; that the latter was followed by further
negotiations on other points; that, when an agreement
was reached thereon, another draft incorporating said
additional points was made; that, when Exhibit D was
prepared, several demands of the Union, contained in
Exhibit A-1, were still pending settlement; that among
these points were the matter of inclusion in the agreement
of a union shop or union security clause, a vacation leave
clause, and a sick leave clause, in addition to the increase
of the high cost of living monthly allowance from P20.00
to P30.00, and the organization of a grievance committee;
that, although in the afternoon of May 29, and the
following morning or that of May 31, 1963, the
Management had agreed on the establishment of said
committee and the increase of the high cost of living
monthly allowance to P25.00, this did not imply that
petitioners had given up their demand for a union shop or
union security clause; and that, in the return-to-work
agreements signed by both parties on July 15, 1963
(Exhibits 1 and 2), said clause was, in fact, included.
In other words, contrary to what is intimidated in the
resolution appealed from, it is not true that petitioners had
made new demands, either on May 29, or on May 30 or
31, 1963. Indeed, the demand for a union shop or union
security clause, which was the main bone of contention,
had been included in the draft of agreement Exhibit A-1
enclosed with petitioners' letter of March 29, 1963. What
happened, merely, was that the demands incorporated in
said draft were discussed by both parties, one after the
other; that an agreement on the former did not connote an
abandonment of the latter; and that, after the settlement
of one issue, it was understood that the others would be
taken up thereafter.
It would appear, also, that, after the meeting with the
representatives of Management, in the morning of May 30
or 31, 1963, petitioners' representatives reported to the
Union the contents of Exhibit D, and that, when the Union
members learned that said document did not include the
union shop or union security clause, they withdrew from
their representatives the authority to sign, on their behalf,
the collective bargaining agreement with the
Management. Under these circumstances, said
representatives could not validly sign said agreement,
and their refusal to do so is not and cannot be an act of
bad faith.
Neither may the Union members be held to have acted in
bad faith in so withdrawing said authority from their
representatives, unless the clause aforementioned were
included in the agreement. That clause was part of their
original demands, as set forth in their draft of agreement
Exhibit A-1, and their representatives could not waive it
without their consent.
As a matter of fact, there is reason to believe that when
petitioners' representatives did not sign on June 1, 1963
and subsequently thereto the draft of agreement Exhibit
D, as amended and initialed on May 30 or 31, upon the
ground that they had no authority to do so without the
union shop or union security clause, by specific mandate
of the members of the Union, the Management suspected
that this was a mere excuse put up by said
representatives of petitioners herein. Hence, on June 7,
1963, the Management sent a memorandum (Exhibits 13
and I) to all of its employees, purporting to inform them of
the status of the negotiations with their representatives,
and stating that the latter had refused to sign the draft of
agreement Exhibit D — copies of which were made
available to all employees — and instead "came with a
new1 demand — 'Union Shop' " — upon the ground that
such was the desire of the Union members, who had
allegedly disauthorized the officers of the Union.
Soon thereafter — or from June 10 to June 15, 1963 —
several members of the Union resigned
therefrom irrevocably, effective on June 15, 1963, "in view
of the apparent failure of our Union officers to enter into a
working agreement with our employer for the purpose of
improving our lot even in a small way".2 Considering that
this is false, for the Management had already yielded to
the demand for an increase in the high cost of living
allowance and the creation of a grievance committee; that
these resignations took place immediately after the
Management had dealt with the Union members directly,
through the aforementioned memorandum; and that said
resignations were conveyed in identically
worded communications (Exhibits 6, 7, 8, 9 and 10), some
of which were mimeographed, it was only natural for the
petitioners to believe that said resignations had been
inspired, if not exacted, by the Management, and that the
latter had resorted thereto in order to exert pressure upon
the Union and compel the same to sign the draft of
agreement (Exhibit 5) without the union shop or union
security clause. Hence, on June 13, 1963, petitioners filed
a 30-day notice of strike (Exhibits 5 and E), upon the
ground that respondents had been "bargaining in bad
faith". However, the Management, in turn, filed unfair
labor practice charges against the Union, for alleged
refusal to bargain.
Meanwhile, and thereafter — or from June 10 to June 22,
1963 — the Management had transferred two (2)
members of the Union, suspended a third one and
assigned still another to a work less dignified than that
which he did before.3 So, on June 24, 1963, petitioners
filed an unfair labor practice charge against the
Management, for the suspension or demotion of union
members due allegedly to union activities. On June 25,
1963, the Union gave another notice of strike upon the
ground that the Management was engaged in unfair labor
practices, by suspending, demoting, intimidating and
coercing union members, on account of their union
activities. Thereafter and in accordance with a strike vote
taken on June 26, 1963, the Union staged a strike from
July 1 to July 15, 1963, on which latter date the strike was
called off in conformity with return-to-work agreements,
Exhibits 1 and 2, then signed by both parties.1äwphï1.ñët
Although the Management may have had the strict legal
right to take against union members the disciplinary and
other administrative measures above referred to, there is
no denying the fact that the time chosen by the
Management therefor, when considered in relation with
the attending circumstances, reasonably justified the
belief of the Union that the real or main purpose of the
Management was to discourage membership in the
Union, to discredit the officers thereof, to weaken the
Union and to induce or compel the same to sign the draft
of agreement Exhibit D as amended, on May 29 and 30
or 31, 1963. As stated in the decision of His Honor, the
trial Judge, said belief was confirmed by the fact that
prosecutors of the Court of Industrial Relations found
sufficient grounds to file and did file, against the
Management, a complaint for unfair labor practices.
In other words, both parties had performed acts which
understandably induced each to believe that the other
was guilty of such practices — although, as we now
analyze the whole situation, without the excitement, the
heat and the passion of the direct participants in the labor
dispute, at the peak thereof, such belief may not turn out
to be borne out to the objective realities — and both were
reasonably justified in taking the counter measures
adopted by them. As a consequence, we hold that the
strike in question had been called to offset what
petitioners were warranted in believing in good faith to be
unfair labor practices on the part of Management, that
petitioners were not bound, therefore, to wait for the
expiration of thirty (30) days from notice of strike before
staging the same, that said strike was not, accordingly,
illegal and that the strikers had not thereby lost their status
as employees of respondents herein. Upon the other
hand, considering that the latter have been absolved from
the charge of unfair labor practice, the reinstatement of
the strikers must be without backpay.
Wherefore, the resolution appealed from should be, as it
is hereby modified accordingly, without special
pronouncement as to costs. It is so ordered.
30. Automotive Engine Rebuilders v.
Progresibong Unyon ng mga
Mangagawa sa AER
SUMMARY
AER filed an earlier complaint against the Unyon and 18
members for illegal strike. AER likewise suspended 7
union members who tested positive for illegal drugs. On
the other hand, 32 members of the Unyon filed a
complaint against AER, praying that AER be declared
guilty of Unfair Labor Practices, Illegal Dismissal, Illegal
Suspension, and Run-away shop. In a previous decision,
the Court found out both parties were at fault or in pari
delicto and must bear the consequences of their own
wrongdoing and ruled that the 14 employees (32 less 18)
must be reinstated without backwages. After the MR,
the Court ruled that the 14 employees should be
reinstated with backwages but since only 9 out of the 14
signed the Membership Resolution, the 5 employees who
did not sign cannot be granted the same relief.
FACTS
This labor controversy started when both parties filed
charges against each other. AER filed an earlier
complaint against the Unyon and 18 members for illegal
strike. AER likewise suspended 7 union members who
tested positive for illegal drugs.
On the other hand, 32 members of the Unyon filed a
complaint against AER, praying that AER be declared
guilty of Unfair Labor Practices, Illegal Dismissal, Illegal
Suspension, and Run-away shop and that the that the
complainants be reinstated; and that they be paid "full
backwages and without loss of seniority rights and
privileges, payment of wages during suspension, plus
moral and exemplary damages and attorney's fees.
LA: Ruled in favor of Unyon directing AER to reinstate the
concerned employees but without backwages
NLRC: modified the LA decision by setting aside the order
of reinstatement as it ruled that there was no illegal
dismissal
Unyon filed MR. Unyon also argued that since AER
charged only 18 of the 32 employees with illegal strike,
the employees who were not included in the said charge
should have been admitted back to work by AER
CA: Directed AER to reinstate the petitioners (the 14
excluded from complaint) effective immediately but
without backwages, except those who were tested
positive for illegal drugs and have failed to submit their
respective medical certificates
CA Amended Decision: AER directed to reinstate all
petitioners immediately without backwages.
Unyon argued that the CA erred in not awarding
backwages to the suspended employees who were
ordered reinstated. AER, on the other hand, argued that
the CA erred in ordering the reinstatement
of the suspended employees.
SC: petitions are DENIED. Employees should be
reinstated without backwages. If reinstatement is no
longer feasible, the concerned employees should be
given separation pay up to the date set for their return in
lieu of reinstatement. In arriving at said determination, the
Court found out both parties were at fault or in pari
delicto and must bear the consequences of their own
wrongdoing
Unyon argues that backwages should have been
awarded to the 14 employees who were excluded from
the complaint filed by AER and that the latter should have
reinstated them immediately because they did not have
any case at all.
Issue
W/N the 14 employees excluded from complaint
should be reinstated with backwages
RATIO
The Court holds that only nine (9) of the fourteen (14)
excluded employees deserve to be reinstated
immediately with backwages.
Records disclose that thirty-two (32) employees filed a
complaint for illegal suspension and unfair labor
practice against AER. Out of these 32 workers, only
eighteen (18) of them were charged by AER with illegal
strike leaving fourteen (14) of them excluded from its
complaint.
Technically, as no charges for illegal strike were filed
against these 14 employees, they cannot be among
those found guilty of illegal strike. They cannot be
considered in pari delicto. They should be reinstated
and given their backwages. Out of these 14 employees,
however, five (5) failed to write their names and affix
their signatures in the Membership Resolution.
Because of their failure to affix their names and
signatures in the Membership Resolution, the 5
employees cannot be granted the relief that Unyon
wanted for them in its Motion for Partial
Reconsideration. Only the following nine (9) employees
who signed their names in the petition can be granted
the relief prayed for therein.
These excluded nine (9) workers, who signed their
names in their petition before the CA, deserve to be
reinstated immediately and granted backwages. It is
basic in jurisprudence that illegally dismissed workers
are entitled to reinstatement with backwages plus
interest at the legal rate.
31. Jackbilt Industries, Inc. vs. Jackbilt
Employees Workers Union
FACTS
-Due to the adverse effects of the Asian economic crisis
on the construction industry beginning 1997,petitioner
Jackbilt Industries, Inc. decided to temporarily stop its
business of producing concrete hollowblocks, compelling
most of its employees to go on leave for six
months.- Respondent Jackbilt Employees Workers Unio
n-NAFLU-
KMU immediately protested the temporaryshutdown.
Because its collective bargaining agreement with
petitioner was expiring during the period
of the shutdown, respondent claimed that petitioner halte
d production to avoid its duty to bargaincollectively.
The shutdown was allegedly motivated by anti-union
sentiments.- Accordingly, on March 9, 1998, respondent
went on strike. Its officers and members picketed
petitioner’smain gates and deliberately prevented
persons and vehicles from going into and out of
the compound.
HELD
-Article 264(e) of the Labor Code prohibits any person
engaged in picketing from obstructing the freeingress to
and egress from the employer’s premises. Since
respondent was found in the July 17,
1998decision of the NLRC to have prevented the
free entry into and exit of vehicles from petitioner’scomp
ound, respondent’s officers and employees clearly
committed illegal acts in the course of the March9, 1998
strike. -The use of unlawful means in the course of a strike
renders such strike illegal. Therefore, pursuant to
theprinciple of conclusiveness of judgment, the March 9,
1998 strike wasipso facto illegal.
The filing of apetition to declare the strike illegal was thus
unnecessary.
G.R. No. L-25003 October 23, 1981
32. *LIWAYWAY PUBLICATIONS, INC. vs.
PERMANENT CONCRETE WORKERS UNION,
Affiliated with the NATIONAL ASSOCIATION
OF TRADE UNIONS, HERMOGENES
ATRAZO, AQUILINO DISTOR, BENJAMIN
GUTIERREZ, JOSE RAMOS, TIBURCIO
MARDO, ERNESTO ALMARIO and DOMINGO
LEANO
GUERRERO, J.:
This is an appeal from the decision of the Court of First
Instance of Manila declaring permanent the writ of
preliminary injunction issued in this case and condemning
the defendants (herein appellants) to pay plaintiff (herein
appellee), the amount of P10,152.42 with interest thereon
at the legal rate from the commencement of this action
until fully paid, P1,000.00 as attorney's fees and costs.
The case commenced when Liwayway Publications, Inc.
brought an action in the CFI-Manila against Permanent
Concrete Workers Union, et al. for the issuance of a writ
of preliminary injunction and for damages it incurred when
its employees were prevented from getting their daily
supply of newsprint from its bodega.
Plaintiff alleged that it is a second sublessee of a part of
the premises of the Permanent Concrete Products, Inc. at
1000 Cordeleria Street, Sta. Mesa, Manila from Don
Ramon Roces, a first lessee from the aforesaid company.
The premises of the plaintiff is separated from the
compound of Permanent Concrete Products, Inc. by a
concrete and barbed wire fence with its own entrance and
road leading to the national road. This entrance is
separate and distinct from the entrance road of the
Permanent Concrete Products, Inc. 1
Plaintiff further alleged that it has a bodega for its
newsprint in the sublet property which it uses for its
printing and publishing business. The daily supply of
newsprint needed to feed its printing plant is taken from
this bodega.
On September 10, 1964, the employees of the Permanent
Concrete Products, Inc. who are representatives and
members of the defendant union declared a strike against
their company.
On October 3, 1964 for unknown reasons and without
legal justification, Permanent Concrete Workers Union
and its members picketed, stopped and prohibited
plaintiff's truck from entering the compound to load
newsprint from its bodega. The union members
intimidated and threatened with bodily harm the
employees who were in the truck.
On October 6, 1964, union members stopped and
prohibited the general manager, personnel manager,
bodega-in-charge and other employees of the plaintiff
from getting newsprint in their bodega. 2
Plaintiff made repeated demands to the defendants not to
intimidate and threaten its employees with bodily harm
and not to blockade, picket or prohibit plaintiff's truck from
getting newsprint in their bodega. Defendants refused and
continued to refuse to give in to the demands of the
plaintiff.
As a consequence thereof, plaintiff rented another
bodega during the time members of the defendant union
prevented its employees from entering its bodega in the
compound of Permanent Concrete Products, Inc. and
thus incurred expenses both in terms of bodega rentals
and in transporting newsprint from the pier to the
temporary bodega.
On December 14, 1964, the lower court issued a writ of
preliminary injunction enjoining the defendants from:
(a) threatening and intimidating plaintiff's executive
officers and their representatives, who are going to its
bodega as well as its employees who are getting
newsprint from it;
(b) ordering the defendants and their representatives not
to blockade and/or picket the compound and the gate of
the plaintiff;
(c) ordering the defendants not to stop, prohibit, molest
and interfere with the free passage of the plaintiff in going
in and out of the bodega.
Defendant union moved to dismiss the complaint on the
following grounds:
1. That this case arose out of a labor dispute involving
unfair labor practices and, therefore, the Court of First
Instance where this action was brought has no jurisdiction
to issue an injunction since this case fans within the
exclusive jurisdiction of the Court of Industrial Relations;
2. That plaintiff is not the real party in interest in whose
name the present action may be prosecuted in
accordance with Section 2, Rule 3 of the Rules of Court.
On the first ground, defendants argued that the Court of
Industrial Relations is vested with the exclusive power to
issue injunctions in labor disputes involving unfair labor
practices and that in the long line of decisions, the
Supreme Court hat, repeatedly held that ordinary do not
have jurisdiction to issue an injunction in any labor dispute
particularly when the Court of Industrial Relations has
already acquired jurisdiction over it.
As to the second ground, defendants argue that the real
party in interest in this case is the Permanent Concrete
Products, Inc. against whom the defendants' strike and
picket activities were directed and confined, and they
point to cases between the real parties in interest, namely:
Permanent Concrete products, Inc. on one hand and the
Permanent Concrete Workers Union on the other,
pending before the Court of Industrial Relations docketed
therein as CIR Case No. 156-Inj., Charge 212-ULP and
Charge No. 1414-M.C.
Plaintiff Liwayway Publications, Inc. opposed the motion,
alleging that:
1. There is no employer-employee relationship between
the plaintiff and the defendant;
2. There is no labor dispute between them;
3. Plaintiff's compound is separate and distinct from the
compound of the company where the defendant's are
employed.
Defendants by way of reply to the abovementioned
opposition argued that even if there was no employer-
employee relationship, still the Court of First Instance
would have no jurisdiction to issue an injunction, citing
several cases holding that there could be a labor dispute
regardless of whether or not the disputants stand in
proximate relation of employer and employee and that
peaceful picketing is an extension of the freedom of
speech guaranteed by the Constitution, 3 a fundamental
right granted to labor which cannot be enjoined.
Since plaintiff averred in its complaint that "it is a second
sublessee of a part of the premises of the Permanent
Concrete Products, Inc. at 1000 Cordeleria Street, Sta.
Mesa, Manila from Don Ramon Roces, first lessee from
the aforementioned company, defendants contend that
plaintiff has no cause of action against them but against
Don Ramon Roces under the provisions of Article 1654 of
the New Civil Code which obliges the lessor to maintain
the lessee in the peaceful and adequate enjoyment of the
lease for the entire duration of the contract.
On October 22, 1964, the lower court issued an order
denying the motion to dismiss and motion to dissolve the
writ of preliminary injunction on the ground that there was
no labor dispute between the plaintiff and defendant of
which the Court of Industrial Relations may take
cognizance.
On November 16, 1964, the court, on motion of the
plaintiff, declared defendants in default. Defendants
prayed for the lifting of the order of default, which plaintiff
opposed. In the order of December 16, 1964, the court
denied the motion to lift the order of default, and
subsequently defendants' motion for reconsideration.
Thereafter, the court rendered its decision dated February
16, 1965 which declared permanent the writ of preliminary
injunction and ordered the defendants to pay the plaintiff
jointly and severally the amount of ?10,152.42 with
interest thereon at legal rate from the commencement of
the action until fully paid, Pl,000.00 as attorney's fees and
the costs. Copy of this decision was received by
defendants on July 20, 1965 and forthwith, defendants
filed the notice of appeal on July 26, 1965.
On October 12,1965, Liwayway Publications, Inc. filed
with the Supreme Court a petition praying that a writ of
attachment be issued on any sum of money which is
owing from the company to the union and to other
defendants to be used to satisfy the judgment in its favor
should the same be affirmed by the Supreme Court.
Defendants filed an opposition to the petition for
attachment alleging that even assuming that there is an
amount owing to the union from the company, such would
be in the concept of uncollected wages due the strikers
and, therefore, cannot be subject of attachment as
provided by Art. 1708 of the New Civil Code that the
laborer's wages shall not be subject to execution or
attachment except for debts incurred for food, shelter,
clothing and for medical attendance.
The Supreme Court denied the above petition for
attachment but without prejudice to the movant seeking
remedy in the Court of First Instance.
The sole issue raised in the instant appeal is whether or
not the lower court has jurisdiction to issue a writ of
preliminary injunction considering that there was a labor
dispute between Permanent Concrete Products, Inc. and
appellants for alleged unfair labor practices committed by
the former.
The first question that strikes Us to be of determinative
significance is whether or not this case involves or has
arisen out of a labor dispute. If it does, then with certainty,
section 9 of Republic Act 875, the "Industrial Peace Act",
would apply. If it does not, then the Rules of Court will
govern the issuance of the writ of preliminary injunction
because it will not partake the nature of a labor injunction
which the lower court has no jurisdiction to issue.
The record before Us reveals that appellant union and its
members picketed the gate leading to appellee's bodega.
This gate is about 200 meters from the gate leading to the
premises of the employer of the appellants. Appellee is
not in any way related to the striking union except for the
fact that it is the sublessee of a bodega in the company's
compound. The picketers belonging to the appellant union
had stopped and prohibited the truck of the appellee from
entering the compound to load newsprint from its bodega,
the union members intimidating and threatening with
bodily harm the employees of the appellee who were in
the truck. The union members also stopped and
prohibited the general manager, personnel manager
including the man in-charge of the bodega and other
employees of the Liwayway Publications, Inc. from getting
newsprint in said bodega. The business of the appellee is
exclusively the publication of the magazines Bannawag
Bisaya, Hiligaynon and Liwayway weekly magazines
which has absolutely no relation or connection
whatsoever with the cause of the strike of the union
against their company, much less with the terms,
conditions or demands of the strikers. In such a factual
situation, the query to be resolved is whether the appellee
is a third party or an "innocent bystander" whose right has
been invaded and, therefore, entitled to protection by the
regular courts.
At this juncture it is well to cite and stress the
pronouncements of the Supreme Court on the right to
picket. Thus, in the case of Phil. Association of Free Labor
Unions (PAFLU) vs. Judge Gaudencio Cloribel et al., L-
25878, March 28, 1969, 27 SCRA 465, 472, the Supreme
Court, speaking thru Justice J.B.L. Reyes, said:
The right to picket as a means of
communicating the facts of a labor
dispute is a phrase of the freedom of
speech guaranteed by the constitution. If
peacefully carried out, it cannot be
curtailed even in the absence of
employer-employee relationship.
The right is, however, not an absolute
one. While peaceful picketing is entitled
to protection as an exercise of free
speech, we believe that courts are not
without power to confine or localize the
sphere of communication or the
demonstration to the parties to the labor
dispute, including those with related
interest, and to insulate establishments
or persons with no industrial connection
or having interest totally foreign to the
context of the dispute. Thus, the right
may be regulated at the instance of third
parties or "innocent. bystanders" if it
appears that the inevitable result of its
exercise is to create an impression that a
labor dispute with which they have no
connection or interest exists between
them and the picketing union or
constitute an invasion of their rights. In
one case decided by this Court, we
upheld a trial court's injunction prohibiting
the union from blocking the entrance to a
feed mill located within the compound of
a flour mill with which the union had a
dispute. Although sustained on a
different ground, no connection was
found other than their being situated in
the same premises. It is to be noted that
in the instances cited, peaceful picketing
has not been totally banned but merely
regulated. And in one American case, a
picket by a labor union in front of a motion
picture theater with which the union had
a labor dispute was enjoined by the court
from being extended in front of the main
entrance of the building housing the
theater wherein other stores operated by
third persons were located.
The same case state clearly and succinctly the
rationalization for the court's regulation of the right to
picket in the following wise and manner:
Wellington and Galang are mere
'innocent bystanders'. They are entitled
to seek protection of their rights from the
courts and the courts may, accordingly,
legally extend the same. Moreover,
PAFLU's right to peacefully picket
METBANK is not curtailed by the
injunctions issued by respondent judge.
The picket is merely regulated to protect
the rights of third parties. And the reason
for this is not far-fetched. If the law fails
to afford said protection, men will
endeavor to safeguard their rights by
their own might, take the law in their own
hands, and commit acts which lead to
breaches of the law. 'This should not be
allowed to happen.
It may be conceded that the appellant Union has a labor
dispute with the Permanent Concrete Products company
and that the dispute is pending before the Court of
Industrial Relations docket therein as CIR Case No. 156-
Inj., Charge 212-ULP and Charge No. 1414-M.C.
Nonetheless, the rule laid down in the case of National
Garment and Textile Workers' Union (PAFLU) vs. Hon.
Hermogenes Caluag, et al. G.R. No. L-9104, September
10, 1956, cited by the appellants as authority holding that
"where the Court of Industrial Relations has already
acquired jurisdiction over two unfair labor practices cases
and much later on as a consequence thereof, the Court of
First Instance cannot legally issue a writ of preliminary
injunction against the picketers. Besides, the jurisdiction
of the Court of Industrial Relations is exclusive. (Sec. 5-a,
Republic Act 875)" is not controlling, much less applicable
to the instant case where the facts are essentially and
materially different.
Neither is the case of SMB Box factory Workers' Union vs.
Hon. Gustavo Victoriano, et al. G.R. No. L-12820, Dec.
29, 1957, where We held that "the Court of First Instance
cannot take cognizance of an action for injunction where
the issue involved is interwoven with unfair labor practice
cases pending in the Court of Industrial Relations," nor the
rule laid down in Erlanger & Galinger, Inc. vs. Erlanger &
Galinger Employees Association-NATU, G.R. No. L-
11907, June 24, 1958,104 Phil. 17, holding that "even if
no unfair labor practice suit has been filed at all by any of
the parties in the Court of Industrial Relations at the time
the present petition for injunction was filed in the court
below, still the latter court would have no jurisdiction to
issue the temporary restraining order prayed for if it is
shown to its satisfaction that the labor dispute arose out
of unfair labor practices committed by any of the parties.
The parties would still have to institute the proper action
in the Court of Industrial Relations, and there ask for a
temporary restraining order under sec. 9 (d) of the
Industrial peace Act. "
We cannot agree that the above rules cited by the
appellants are controlling in the instant case for as We
said in Phil. Association of Free Labor Unions (PAFLU),
et at. vs. Tan, 99 Phil. 854, that "with regard to activities
that may be enjoined, in order to ascertain what court has
jurisdiction to issue the injunction, it is necessary to
determine the nature of the controversy, " (emphasis
supplied) We find and hold that there is no connection
between the appellee Liwayway publications, Inc. and the
striking Union, nor with the company against whom the
strikers staged the strike, and neither are the acts of the
driver of the appellee, its general manager, personnel
manager, the man in-charge of the bodega and other
employees of the appellee in reaching the bodega to
obtain newsprint therefrom to feed and supply its
publishing business interwoven with the labor dispute
between the striking Union and the Permanent Concrete
Products company. If there is a connection between
appellee publishing company and the Permanent
Concrete Products company; it is that both are situated in
the same premises, which can hardly be considered as
interwoven with the labor dispute pending in the Court of
Industrial Relations between the strikers and their
employer.
The contention of appellants that the court erred in
denying their motion to dismiss on the ground that the
complaint states no cause of action, is likewise without
merit.
Article 1654 of the New Civil Code cited by the appellants
in support of their motion to dismiss, which obliges the
lessor, among others, to maintain the lessee in the
peaceful and adequate enjoyment of the lease for the
entire duration of the contract, and therefore, the appellee
publishing company should have brought its complaint
against the first sub-lessee, Don Ramon Roces, and not
against the appellant Union is not in point. The acts
complained of against the striking union members are
properly called mere acts of trespass (perturbacion de
mero hecho) such that following the doctrine laid down
in Goldstein vs. Roces, 34 Phil. 562, the lessor shall not
be obliged to answer for the mere fact of a trespass
(perturbacion de mero hecho) made by a third person in
the use of the estate leased but the lessee shag have a
direct action against the trespasser. The instant case fags
squarely under the provisions of Article 1664 of the New
Civil Code which provides as follows:
Art. 1664. The lessor is not obliged to
answer for a mere act of trespass which
a third person may cause on the use of
the thing leased; but the lessee shall
have a direct action against the intruder.
There is a mere act of trespass when the
third person claims no right whatever.
The Goldstein doctrine had been reiterated in Reyes vs.
Caltex (Phil). Inc., 84 Phil. 654; Lo Ching, et al. vs. Court
of Appeals, et al. 81 Phil. 601; Afesa vs. Ayala y Cia 89
Phil. 292; Vda. de Villaruel et al. vs. Manila Motor Co.,
Inc., et al. 104 Phil. 926; Heirs of B.A. Crumb, et al. vs.
Rodriguez, 105 Phil. 391.
The obligation of the lessor under Art. 1654, New Civil
Code, to maintain the lessee in the peaceful and adequate
enjoyment of the lease for the entire duration of the
contract arises only when acts, termed as legal trespass
(perturbacion de derecho), disturb, dispute, object to, or
place difficulties in the way of the lessee's peaceful
enjoyment of the premises that in some manner or other
cast doubt upon the right of the lessor by virtue of which
the lessor himself executed the lease, in which case the
lessor is obliged to answer for said act of trespass.
The difference between simple trespass (perturbacion de
mero hecho and legal trespass (perturbacion de derecho)
is simply but - clearly stated in Goldstein vs. Roces case,
supra, thus:
Briefly, if the act of trespass is not
accompanied or preceded by anything
which reveals a really juridic intention on
the part of the trespasser, in such wise
 that the lessee can only distinguish the
material fact, stripped of all legal form or
reasons, we understand it to be trespass
in fact only (de mero hecho). (pp. 566-
567)
WHEREFORE, IN VIEW OF THE FOREGOING, the
decision appealed from is hereby AFFIRMED in toto.
Costs against appellants.
SO ORDERED.
G.R. No. 170054 January 21, 2013
33. *GOYA, INC. vs. GOYA, INC. EMPLOYEES
UNION-FFW
This petition for review on certiorari under Rule 45 of the
Rules of Civil Procedure seeks to reverse and set aside
the June 16, 2005 Decision1 and October 12, 2005
Resolution2 of the Court of Appeals in CA-G.R. SP No.
87335, which sustained the October 26, 2004 Decision3 of
Voluntary Arbitrator Bienvenido E. Laguesma, the
dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered declaring
that the Company is NOT guilty of unfair labor practice in
engaging the services of PESO.
The company is, however, directed to observe and
comply with its commitment as it pertains to the hiring of
casual employees when necessitated by business
circumstances.4
The facts are simple and appear to be undisputed.
Sometime in January 2004, petitioner Goya, Inc.
(Company), a domestic corporation engaged in the
manufacture, importation, and wholesale of top quality
food products, hired contractual employees from PESO
Resources Development Corporation (PESO) to perform
temporary and occasional services in its factory in
Parang, Marikina City. This prompted respondent Goya,
Inc. Employees Union–FFW (Union) to request for a
grievance conference on the ground that the contractual
workers do not belong to the categories of employees
stipulated in the existing Collective Bargaining Agreement
(CBA).5 When the matter remained unresolved, the
grievance was referred to the National Conciliation and
Mediation Board (NCMB) for voluntary arbitration.
During the hearing on July 1, 2004, the Company and the
Union manifested before Voluntary Arbitrator (VA)
Bienvenido E. Laguesma that amicable settlement was no
longer possible; hence, they agreed to submit for
resolution the solitary issue of "[w]hether or not the
Company is guilty of unfair labor acts in engaging the
services of PESO, a third party service provider, under the
existing CBA, laws, and jurisprudence."6 Both parties
thereafter filed their respective pleadings.
The Union asserted that the hiring of contractual
employees from PESO is not a management prerogative
and in gross violation of the CBA tantamount to unfair
labor practice (ULP). It noted that the contractual workers
engaged have been assigned to work in positions
previously handled by regular workers and Union
members, in effect violating Section 4, Article I of the CBA,
which provides for three categories of employees in the
Company, to wit:
Section 4. Categories of Employees.– The parties agree
on the following categories of employees:
(a) Probationary Employee. – One hired to occupy a
regular rank-and-file position in the Company and is
serving a probationary period. If the probationary
employee is hired or comes from outside the Company
(non-Goya, Inc. employee), he shall be required to
undergo a probationary period of six (6) months, which
period, in the sole judgment of management, may be
shortened if the employee has already acquired the
knowledge or skills required of the job. If the employee is
hired from the casual pool and has worked in the same
position at any time during the past two (2) years, the
probationary period shall be three (3) months.
(b) Regular Employee. – An employee who has
satisfactorily completed his probationary period and
automatically granted regular employment status in the
Company.
(c) Casual Employee, – One hired by the Company to
perform occasional or seasonal work directly connected
with the regular operations of the Company, or one hired
for specific projects of limited duration not connected
directly with the regular operations of the Company.
It was averred that the categories of employees had been
a part of the CBA since the 1970s and that due to this
provision, a pool of casual employees had been
maintained by the Company from which it hired workers
who then became regular workers when urgently
necessary to employ them for more than a year. Likewise,
the Company sometimes hired probationary employees
who also later became regular workers after passing the
probationary period. With the hiring of contractual
employees, the Union contended that it would no longer
have probationary and casual employees from which it
could obtain additional Union members; thus, rendering
inutile Section 1, Article III (Union Security) of the CBA,
which states:
Section 1. Condition of Employment. – As a condition of
continued employment in the Company, all regular rank-
and-file employees shall remain members of the Union in
good standing and that new employees covered by the
appropriate bargaining unit shall automatically become
regular employees of the Company and shall remain
members of the Union in good standing as a condition of
continued employment.
The Union moreover advanced that sustaining the
Company’s position would easily weaken and ultimately
destroy the former with the latter’s resort to retrenchment
and/or retirement of employees and not filling up the
vacant regular positions through the hiring of contractual
workers from PESO, and that a possible scenario could
also be created by the Company wherein it could "import"
workers from PESO during an actual strike.
In countering the Union’s allegations, the Company
argued that: (a) the law expressly allows contracting and
subcontracting arrangements through Department of
Labor and Employment (DOLE) Order No. 18-02; (b) the
engagement of contractual employees did not, in any
way, prejudice the Union, since not a single employee
was terminated and neither did it result in a reduction of
working hours nor a reduction or splitting of the bargaining
unit; and (c) Section 4, Article I of the CBA merely
provides for the definition of the categories of employees
and does not put a limitation on the Company’s right to
engage the services of job contractors or its management
prerogative to address temporary/occasional needs in its
operation.
On October 26, 2004, VA Laguesma dismissed the
Union’s charge of ULP for being purely speculative and
for lacking in factual basis, but the Company was directed
to observe and comply with its commitment under the
CBA. The VA opined:
We examined the CBA provision Section 4, Article I of the
CBAallegedly violated by the Company and indeed the
agreement prescribes three (3) categories of employees
in the Company and provides for the definition, functions
and duties of each. Material to the case at hand is the
definition as regards the functions of a casual employee
described as follows:
Casual Employee – One hired by the COMPANY to
perform occasional or seasonal work directly connected
with the regular operations of the COMPANY, or one hired
for specific projects of limited duration not connected
directly with the regular operations of the COMPANY.
While the foregoing agreement between the parties did
eliminate management’s prerogative of outsourcing parts
of its operations, it serves as a limitation on such
prerogative particularly if it involves functions or duties
specified under the aforequoted agreement. It is clear that
the parties agreed that in the event that the Company
needs to engage the services of additional workers who
will perform "occasional or seasonal work directly
connected with the regular operations of the COMPANY,"
or "specific projects of limited duration not connected
directly with the regular operations of the COMPANY", the
Company can hire casual employees which is akin to
contractual employees. If we note the Company’s own
declaration that PESO was engaged to perform
"temporary or occasional services" (See the Company’s
Position Paper, at p. 1), then it should have directly hired
the services of casual employees rather than do it through
PESO.
It is evident, therefore, that the engagement of PESO is
not in keeping with the intent and spirit of the CBA
provision in question. It must, however, be stressed that
the right of management to outsource parts of its
operations is not totally eliminated but is merely limited by
the CBA. Given the foregoing, the Company’s
engagement of PESO for the given purpose is indubitably
a violation of the CBA.7
While the Union moved for partial reconsideration of the
VA Decision,8 the Company immediately filed a petition
for review9 before the Court of Appeals (CA) under Rule
43 of the Revised Rules of Civil Procedure to set aside
the directive to observe and comply with the CBA
commitment pertaining to the hiring of casual employees
when necessitated by business circumstances.
Professing that such order was not covered by the sole
issue submitted for voluntary arbitration, the Company
assigned the following errors:
THE HONORABLE VOLUNTARY ARBITRATOR
EXCEEDED HIS POWER WHICH WAS EXPRESSLY
GRANTED AND LIMITED BY BOTH PARTIES IN
RULING THAT THE ENGAGEMENT OF PESO IS NOT
IN KEEPING WITH THE INTENT AND SPIRIT OF THE
CBA.10
THE HONORABLE VOLUNTARY ARBITRATOR
COMMITTED A PATENT AND PALPABLE ERROR IN
DECLARING THAT THE ENGAGEMENT OF PESO IS
NOT IN KEEPING WITH THE INTENT AND SPIRIT OF
THE CBA.11
On June 16, 2005, the CA dismissed the petition. In
dispensing with the merits of the controversy, it held:
This Court does not find it arbitrary on the part of the Hon.
Voluntary Arbitrator in ruling that "the engagement of
PESO is not in keeping with the intent and spirit of the
CBA." The said ruling is interrelated and intertwined with
the sole issue to be resolved that is, "Whether or not the
Company is guilty of unfair labor practice in engaging the
services of PESO, a third party service provider, under
existing CBA, laws, and jurisprudence." Both issues
concern the engagement of PESO by the Company which
is perceived as a violation of the CBA and which
constitutes as unfair labor practice on the part of the
Company. This is easily discernible in the decision of the
Hon. Voluntary Arbitrator when it held:
x x x x While the engagement of PESO is in violation of
Section 4, Article I of the CBA, it does not constitute unfair
labor practice as it (sic) not characterized under the law
as a gross violation of the CBA. Violations of a CBA,
except those which are gross in character, shall no longer
be treated as unfair labor practice. Gross violations of a
CBA means flagrant and/or malicious refusal to comply
with the economic provisions of such agreement. x x x
Anent the second assigned error, the Company contends
that the Hon. Voluntary Arbitrator erred in declaring that
the engagement of PESO is not in keeping with the intent
and spirit of the CBA. The Company justified its
engagement of contractual employees through PESO as
a management prerogative, which is not prohibited by
law. Also, it further alleged that no provision under the
CBA limits or prohibits its right to contract out certain
services in the exercise of management prerogatives.
Germane to the resolution of the above issue is the
provision in their CBA with respect to the categories of the
employees:
xxxx
A careful reading of the above-enumerated categories of
employees reveals that the PESO contractual employees
do not fall within the enumerated categories of employees
stated in the CBA of the parties. Following the said
categories, the Company should have observed and
complied with the provision of their CBA. Since the
Company had admitted that it engaged the services of
PESO to perform temporary or occasional services which
is akin to those performed by casual employees, the
Company should have tapped the services of casual
employees instead of engaging PESO.
In justifying its act, the Company posits that its
engagement of PESO was a management prerogative. It
bears stressing that a management prerogative refers to
the right of the employer to regulate all aspects of
employment, such as the freedom to prescribe work
assignments, working methods, processes to be followed,
regulation regarding transfer of employees, supervision of
their work, lay-off and discipline, and dismissal and recall
of work, presupposing the existence of employer-
employee relationship. On the basis of the foregoing
definition, the Company’s engagement of PESO was
indeed a management prerogative. This is in consonance
with the pronouncement of the Supreme Court in the case
of Manila Electric Company vs. Quisumbing where it ruled
that contracting out of services is an exercise of business
judgment or management prerogative.
This management prerogative of contracting out services,
however, is not without limitation. In contracting out
services, the management must be motivated by good
faith and the contracting out should not be resorted to
circumvent the law or must not have been the result of
malicious arbitrary actions. In the case at bench, the CBA
of the parties has already provided for the categories of
the employees in the Company’sestablishment. These
categories of employees particularly with respect to
casual employees serve as limitation to the Company’s
prerogative to outsource parts of its operations especially
when hiring contractual employees. As stated earlier, the
work to be performed by PESO was similar to that of the
casual employees. With the provision on casual
employees, the hiring of PESO contractual employees,
therefore, is not in keeping with the spirit and intent of their
CBA. (Citations omitted)12
The Company moved to reconsider the CA
Decision,13 but it was denied;14 hence, this petition.
Incidentally, on July 16, 2009, the Company filed a
Manifestation15 informing this Court that its stockholders
and directors unanimously voted to shorten the
Company’s corporate existence only until June 30, 2006,
and that the three-year period allowed by law for
liquidation of the Company’s affairs already expired on
June 30, 2009. Referring to Gelano v. Court of
Appeals,16 Public Interest Center, Inc. v. Elma,17 and
Atienza v. Villarosa,18 it urged Us, however, to still resolve
the case for future guidance of the bench and the bar as
the issue raised herein allegedly calls for a clarification of
a legal principle, specifically, whether the VA is
empowered to rule on a matter not covered by the issue
submitted for arbitration.
Even if this Court would brush aside technicality by
ignoring the supervening event that renders this case
moot and academic19 due to the permanent cessation of
the Company’s business operation on June 30, 2009, the
arguments raised in this petition still fail to convince Us.
We confirm that the VA ruled on a matter that is covered
by the sole issue submitted for voluntary arbitration.
Resultantly, the CA did not commit serious error when it
sustained the ruling that the hiring of contractual
employees from PESO was not in keeping with the intent
and spirit of the CBA. Indeed, the opinion of the VA is
germane to, or, in the words of the CA, "interrelated and
intertwined with," the sole issue submitted for resolution
by the parties. This being said, the Company’s invocation
of Sections 4 and 5, Rule IV20 and Section 5, Rule VI21 of
the Revised Procedural Guidelines in the Conduct of
Voluntary Arbitration Proceedings dated October 15,
2004 issued by the NCMB is plainly out of order.
Likewise, the Company cannot find solace in its cited case
of Ludo & Luym Corporation v. Saornido.22 In Ludo, the
company was engaged in the manufacture of coconut oil,
corn starch, glucose and related products. In the course
of its business operations, it engaged the arrastre
services of CLAS for the loading and unloading of its
finished products at the wharf. The arrastre workers
deployed by CLAS to perform the services needed were
subsequently hired, on different dates, as Ludo’s regular
rank-and-file employees. Thereafter, said employees
joined LEU, which acted as the exclusive bargaining
agent of the rank-and-file employees. When LEU entered
into a CBA with Ludo, providing for certain benefits to the
employees (the amount of which vary according to the
length of service rendered), it requested to include in its
members’ period of service the time during which they
rendered arrastre services so that they could get higher
benefits. The matter was submitted for voluntary
arbitration when Ludo failed to act. Per submission
agreement executed by both parties, the sole issue for
resolution was the date of regularization of the workers.
The VA Decision ruled that: (1) the subject employees
were engaged in activities necessary and desirable to the
business of Ludo, and (2) CLAS is a labor-only contractor
of Ludo. It then disposed as follows: (a) the complainants
were considered regular employees six months from the
first day of service at CLAS; (b) the complainants, being
entitled to the CBA benefits during the regular
employment, were awarded sick leave, vacation leave,
and annual wage and salary increases during such
period; (c) respondents shall pay attorney’s fees of 10%
of the total award; and (d) an interest of 12% per annum
or 1% per month shall be imposed on the award from the
date of promulgation until fully paid. The VA added that all
separation and/or retirement benefits shall be construed
from the date of regularization subject only to the
appropriate government laws and other social legislation.
Ludo filed a motion for reconsideration, but the VA denied
it. On appeal, the CA affirmed in toto the assailed
decision; hence, a petition was brought before this Court
raising the issue, among others, of whether a voluntary
arbitrator can award benefits not claimed in the
submission agreement. In denying the petition, We ruled:
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. 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 reasonably
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.23
Indubitably, Ludo fortifies, not diminishes, the soundness
of the questioned VA Decision. Said case reaffirms the
plenary jurisdiction and authority of the voluntary
arbitrator to interpret the CBA and to determine the scope
of his/her own authority. Subject to judicial review, the
leeway of authority as well as adequate prerogative is
aimed at accomplishing the rationale of the law on
voluntary arbitration – speedy labor justice. In this case, a
complete and final adjudication of the dispute between the
parties necessarily called for the resolution of the related
and incidental issue of whether the Company still violated
the CBA but without being guilty of ULP as, needless to
state, ULP is committed only if there is gross violation of
the agreement.
Lastly, the Company kept on harping that both the VA and
the CA conceded that its engagement of contractual
workers from PESO was a valid exercise of management
prerogative. It is confused. To emphasize, declaring that
a particular act falls within the concept of management
prerogative is significantly different from acknowledging
that such act is a valid exercise thereof. What the VA and
the CA correctly ruled was that the Company’s act of
contracting out/outsourcing is within the purview of
management prerogative. Both did not say, however, that
such act is a valid exercise thereof. Obviously, this is due
to the recognition that the CBA provisions agreed upon by
the Company and the Union delimit the free exercise of
management prerogative pertaining to the hiring of
contractual employees. Indeed, the VA opined that "the
right of the management to outsource parts of its
operations is not totally eliminated but is merely limited by
the CBA," while the CA held that "this management
prerogative of contracting out services, however, is not
without limitation. x x x These categories of employees
particularly with respect to casual employees serve as
limitation to the Company’s prerogative to outsource parts
of its operations especially when hiring contractual
employees."
A collective bargaining agreement is the law between the
parties:
It is 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. We said so in Honda Phils.,
Inc. v. Samahan ng Malayang Manggagawa sa Honda:
A collective bargaining agreement or CBA 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.1âwphi1 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.
Moreover, if the terms of a contract, as in a CBA, are clear
and leave no doubt upon the intention of the contracting
parties, the literal meaning of their stipulations shall
control. x x x.24
In this case, Section 4, Article I (on categories of
employees) of the CBA between the Company and the
Union must be read in conjunction with its Section 1,
Article III (on union security). Both are interconnected and
must be given full force and effect. Also, these provisions
are clear and unambiguous. The terms are explicit and
the language of the CBA is not susceptible to any other
interpretation. Hence, the literal meaning should prevail.
As repeatedly held, the exercise of management
prerogative is not unlimited; it is subject to the limitations
found in law, collective bargaining agreement or the
general principles of fair play and justice25 Evidently, this
case has one of the restrictions- the presence of specific
CBA provisions-unlike in San Miguel Corporation
Employees Union-PTGWO v. Bersamira,26 De Ocampo v.
NLRC,27 Asian Alcohol Corporation v. NLRC,28 and
Serrano v. NLRC29cited by the Company. To reiterate, the
CBA is the norm of conduct between the parties and
compliance therewith is mandated by the express policy
of the law.30
WHEREFORE, the petition is DENIED. The assailed June
16, 2005 Decision, as well as the October 12, 2005
Resolution of the Court of Appeals, which sustained the
October 26, 2004 Decision of the Voluntary Arbitrator, are
hereby AFFIRMED.
SO ORDERED.
34. The Insular Life Assurance Co., Ltd.,
Employees Association - NATU, FGU
Insurance Group Workers and Employees
Association - NATU, and Insular Life Building
Employees Association – NATU vs. The
Insular Life Assurance Co., Ltd., FGU
Insurance Group, Jose M. Olbes, and Court
of Industrial Relations
G.R. No. L-25291, January 20, 1971
FACTS:
The Insular Life Assurance Co., Ltd., Employees
Association - NATU, FGU Insurance Group Workers and
Employees Association - NATU, and Insular Life Building
Employees Association - NATU (herein referred to as the
Unions), while still members of the Federation of Free
Workers (FFW), entered into separate collective
bargaining agreements with the Insular Life Assurance
Co., Ltd., and the FGU Insurance Group (herein referred
to as the Companies).
Two of the lawyers and officers of the Unions namely
Felipe Enaje and Ramon Garcia, tried to dissuade the
Unions from disaffiliating with the FFW and joining the
National Association of Trade Unions (NATU), to no avail.
Enaje and Garcia soon left the FFW and secured
employment with the Anti-Dummy Board of the
Department of Justice and were thereafter hired by the
companies - Garcia as assistant corporate secretary and
legal assistant, and Enaje as personnel manager and
chairman of the negotiating panel for the Companies in
the collective bargaining with the Unions.
On October 1957, negotiations for the collective
bargaining was conducted but resulted to a deadlock.
From April 25 to May 6, 1958, the parties negotiated on
the labor demands but with no satisfactory results due to
the stalemate on the matter of salary increases. This
prompted the Unions to declare a strike in protest against
what they considered the Companies’ unfair labor
practices. On May 20, 1958, the Unions went on strike
and picketed the offices of the Insular Life Building at
Plaza Moraga.
On May 21, Jose M. Olbes, the acting manager and
president, sent individual letters to the striking employees
urging them to abandon their strike with a promise of free
coffee, movies, overtime pay, and accommodations. He
also warned the strikers if they fail to return to work by a
certain date, they might be replaced in their jobs. Further,
the Companies hired men to break into the picket lines
resulting in violence, and the filing of criminal charges
against some union officers and members. When
eventually, the strikers called off their strike to return to
their jobs, they were subjected to a screening process by
a management committee, among the members were
Garcia and Enaje. After screening, eighty-three (83)
strikers were rejected due to pending criminal charges,
and adamantly refused readmission of thirty-four (34)
officials and members of the Unions who were most active
in the strike.
The CIR prosecutor filed a complaint for unfair labor
practice against the Companies, specifically (1) interfering
with the members of the Unions in the exercise of their
right to concerted action; and (2) discriminating against
the members of the Unions as regards readmission to
work after the strike on the basis of their union
membership and degree of participation in the strike. After
the trial, the Court of Industrial Relations dismissed the
Unions’ complaint for lack of merit.
ISSUES:
I. Whether or not the Companies are guilty of
unfair labor practice when they sent individual
letters to the strikers with the promise of
additional benefits, and notifying them to
either return to work, or lose their jobs; and
II. Whether or not the Companies are guilty of
unfair labor practice for discriminating against
the striking members of the Unions in
readmission of employees after the strike.
HELD:
First issue. The Companies contended that by sending
those letters, it constituted a legitimate exercise of their
freedom of expression. That contention is untenable. The
Companies are guilty of unfair labor practice when they
sent individual letters to the strikers. It is an act of
interference with the right to collective bargaining through
dealing with the strikers individually instead of through
their collective bargaining representatives. Although the
Unions are on strike, the employer is still obligated to
bargain with the union as the employees’ bargaining
representative. Further, it is also an act of interference for
the employer to send individual letters to the employees
notifying them to return to their jobs, otherwise, they would
be replaced. Individual solicitation of the employees
urging them to cease union activity or cease striking
consists of unfair labor practice. Furthermore, when the
Companies offered to “bribe” the strikers with
“comfortable cots, free coffee, and movies, overtime work
pay” so they would abandon their strike and return to
work, it was guilty of strike-breaking and/or union busting
which constitute unfair labor practice.
Second Issue. Some of the members of the Unions were
refused readmission because they had pending criminal
charges. However, despite the fact they were able to
secure clearances, 34 officials and members were still
refused readmission on the alleged ground that they can die, basing their argument on Art. 40,41, and 42 of
committed acts inimical to the Companies. It should be the Civil Code.
noted, however, that non-strikers who also had criminal
charges pending against them in the fiscal’s office, arising The voluntary arbitrator, Atty. Montaño, ruled in favor of
from the same incidents whence against the criminal Hortillano and “the Union”. Aggrieved, Continental steel
charges against the strikers are involved, were readily elevated the case to the CA which affirmed the ruling of
readmitted and were not required to secure clearances. the voluntary arbitrator.
This is an act of discrimination practiced by the
Companies in the process of rehiring and is therefore a Issue:
violation of Sec. 4(a)(4) of the Industrial Peace Act.
1. Whether o not life is synonymous with civil personality?
The respondent Companies did not merely discriminate
against all strikers in general since they separated the 2. Whether or not a stillborn child can be considered as
active rom the less active unionists on the basis of their dependent?
militancy, or lack of it, on the picket lines. Discrimination
Held:
exists where the record shows that the union activity of
the rehired strikers has been less prominent than that of
Life is not synonymous with civil personality. One need
the strikers who were denied reinstatement.
not acquire civil personality first before he/she could die.
Even a child inside the womb already has life. No less
35. Continental Steel Manufacturing Corp. Vs
than the Constitution recognizes the life of the unborn
Hon. Accredited Voluntary Arbitrator
from conception, that the State must protect equally with
GR 182836, Oct. 13, 2009
the life of the mother. If the unborn already has life, then
Facts:
the cessation thereof even prior to the child being
delivered, qualifies as death.
Hortillano an employee of Continental Steel and a
member of “the Union” filed a claim for for Paternity
Likewise, the unborn child can be considered a
Leave, Bereavement Leave and Death and Accident
dependent under the CBA. As Continental Steel itself
Insurance for dependent, pursuant to a CBA between
defines, a dependent is “one who relies on another for
Continental and “the Union.” Hortillano filed the said
support; one not able to exist or sustain oneself without
claims due to the death of his unborn child while his wife
the power or aid of someone else.” Under said general
was on her 38th week of pregnancy. Continental Steel
definition, even an unborn child is a dependent of its
granted Hortillano’s claim for paternity leave but denied
parents. Hortillano’s child could not have reached 38-39
his other claims. This prompted “the Union” to seek
weeks of its gestational life without depending upon its
reversal of the denial of Hortillano’s claim for
mother, Hortillano’s wife, for sustenance. Additionally, it
Bereavement Leave and Death and Accident Insurance
is explicit in the CBA provisions in question that the
for dependent, through a grievance machinery provided
dependent may be the parent, spouse, or child of a
for in the CBA. However, the parties failed to settle their
married employee; or the parent, brother, or sister of a
dispute, which led the case to be brought before the
single employee. The CBA did not provide a qualification
NCMB and was submitted for voluntary arbitration under
for the child dependent, such that the child must have
Atty. Montaño.
been born or must have acquired civil personality, as
Continental Steel avers. Without such qualification, then
During the arbitration, “the Union” argued that Hortillano
child shall be understood in its more general sense, which
was entitled to the said death benefits provided by the
includes the unborn fetus in the mother’s womb.
CBA, because Art. X and Art. XVIII of the said CBA did
not specifically state that the dependent should have first
G.R. No. 162957 March 6, 2006
been born alive or must have acquired juridical capacity
to be covered by the CBA.
36. *UNITED KIMBERLY-CLARK EMPLOYEES
UNION – PHILIPPINE TRANSPORT GENERAL
Continental Steel on the other hand reasoned out that
WORKERS’ ORGANIZATION (UKCEU-
Hortillano was not qualified to claim the death benefits for
PTGWO) v. KIMBERLY – CLARK
dependent, because, according to Continental Steel, the
PHILIPPINES, INC.
child of Hortillano or the fetus who was stillborn cannot be
considered as a dependent because it never acquired
juridical personality and only one with juridical personality
Before the Court is a Petition for Review on Certiorari of
the Decision1 of the Court of Appeals (CA) which partially
reversed and set aside the March 19, 2001 Resolution2 of
the Voluntary Arbitrator (VA).
Following are the factual antecedents:
United Kimberly-Clark Employees Union (UKCEU), a
local chapter affiliate of the Philippine Transport General
Workers’ Organization (PTGWO), is the certified
collective bargaining agent of all rank-and-file employees
of the San Pedro milling plant of Kimberly-Clark
Philippines, Inc. (KCPI), a multinational corporation
engaged in the manufacture of bathroom and facial
tissues, paper napkins, feminine care products,
disposable diapers and absorbent cotton.
Way back in 1980, KCPI and the UKCEU executed a
Collective Bargaining Agreement (CBA). Article XX,
Section 1 of the CBA reads:
Section 1. The Company agrees to employ, regardless of
sex, the immediate member of the family of an employee
provided qualified, upon the employee's resignation,
retirement, disability or death. In case of resignation,
however, employment of an immediate member of the
family of an employee may be allowed provided the
employee has rendered a service of ten (10) years and
above and the resignation is not a forced resignation. For
the purpose of this section, the phrase "immediate
member of the family of an employee" shall refer to the
employee's legitimate children and in default thereof to
the employee's collateral relative within the third civil
degree. The recommendee of the retired/resigned
employee shall, if qualified, be hired on probationary
status. (Emphasis added)3
However, KCPI did not set any other employment
qualifying standards for the recommendees of retired,
resigned, deceased or disabled employees and agreed to
hire such recommendees who were high school
graduates as an act of liberality and generosity. The
provision remained unchanged.4 Through the years,
several UKCEU members who resigned or were disabled
availed of the said benefits and recommended their
successors. Although such recommendees were merely
high school graduates, KCPI nonetheless employed
them.
Sometime in 1991, Danilo L. Guerrero retired and
recommended his nephew as his replacement. KCPI
rejected Guerrero’s recommendation because his
nephew was not a member of his (Guerrero’s) immediate
family. The matter was brought to Voluntary Arbitrator
Danilo Lorredo who ruled that Guerrero’s nephew should
be employed as his replacement in accordance with the
CBA. KCPI brought the matter to the Court. On
September 21, 1993, the Court affirmed the ruling of the
VA in Kimberly Clark Philippines v. Lorredo,5 where it was
held that:
As we see it, the phrase "in default thereof" has not been
intended or contemplated by the parties as having a
preclusive effect within the group. It simply sets a priority
on who can possibly be recommendees for employment.
The employee, in fine, need not be childless at all for him
to be allowed to nominate a third degree collateral
relative; otherwise, his ability to designate such relative is
all but suddenly lost by the birth of an only child and
regained by the latter's demise. This situation could not
have been intended.6
However, the Court also ruled that KCPI was not obliged
to unconditionally accept the recommendee since the
latter must still meet the required employment standard
theretofore set by it. Even a qualified recommendee
would be hired only on a "probationary status." As such,
KCPI was not left without its own safeguards under the
agreement.7
On November 7, 1995, KCPI issued Guidelines on the
Hiring of Replacements of Retired/Resigned
Employees8 for the effective implementation of Article XX,
Section 1 of the existing CBA, to take effect on January 1,
1996. The Guidelines require, among others, that: (a)
such recommendees must be at least 18 years of age but
not more than 30 years old at the time of the hiring, and
(b) have completed, after graduating from high school, at
least a two-year technical/vocational course or a third
year level of college education. Moreover, where both
husband and wife are employees of the company, they
shall be treated as one family; hence, only one of the
spouses would be allowed to avail of the benefit.9
UKCEU, through its President, Reynaldo B. Hermoso,
requested for a grievance meeting, which was held on
November 22, 1995.10 During the meeting, UKCEU
specifically requested the deferment of the
implementation of the Guidelines until January 1, 1997,
after the next CBA negotiations in 1997 during which the
matter will be taken up. KCPI agreed to postpone the
implementation of the Guidelines until January 1, 1997
but only with respect to the educational qualification.11
During the negotiation for the 1997 CBA, UKCEU
proposed the amendment of Article XX, Section 1 of the
existing CBA. After the negotiation, KCPI and UKCEU
executed a CBA to cover the period from July 1, 1997 to
June 30, 1999. The educational qualifications contained
in the Guidelines prepared and issued by KCPI were not
incorporated in the CBA. Neither were the proposed
amendment of UKCEU. Article XX, Section 1 of the
preceding CBA was retained without any
12
modification. KCPI continued to hire employees
pursuant to the CBA up to 1998. It had employed 44
employees from 1995 to 1998.13
However, in the second half of 1998, KCPI started to
suspend the implementation of the CBA. This was partly
due to the depressed economic conditions then prevailing
in the Philippines, and in compliance with the freeze hiring
policy of its Asia-Pacific headquarters.14 It refused to hire,
as regular employees, 80 recommendees of retiring
employees.15 KCPI and UKCEU failed to settle the matter
through the existing grievance machinery.
On April 23, 1999, the parties filed before the National
Conciliation and Mediation Board (NCMB), a Submission
Agreement referring to arbitration the issue of whether
KCPI violated Article XX, Section 1 of the CBA. The
parties agreed not to appeal any resolution/decision of the
VA.16
Meantime, in August 1999, KCPI and UKCEU executed a
new CBA. Article XX, Section 1 of the preceding CBA was
incorporated in the new CBA, governing the relation of the
parties up to June 30, 2002.17
UKCEU averred in its pleadings that the "qualification in
terms of education," that is, admitting recommendees who
were at least high school graduates, had been an
established practice of KCPI since 1980. They appended
to their position paper as Annexes "A," "A-1" to "A-5"
thereof, a list of such recommendees who were hired by
KCPI.18 This being the case, KCPI could not just
unilaterally revoke such practice without its (UKCEU)
consent and approval. UKCEU explained that while KCPI,
in general, had the discretion to raise the educational
qualification of its applicants for employment, this did not
apply to recommendees due to the manner by which
Article XX, Section 1 was implemented in the past.
UKCEU emphasized that its benefits had already been
institutionalized in the CBAs executed by the parties
through the years. Thus, in refusing to hire the 80
recommendees as regular employees, KCPI violated its
CBA with the union,19 equivalent to breach of contract and
unfair labor practice. It was further pointed out that
contrary to its claim that KCPI was implementing a freeze
hiring policy, KCPI even hired more or less 400 casuals,
most of whom were only high school graduates who
performed activities necessary and desirable to KCPI’s
regular and usual business. They averred that the hiring
of such employees was continuous, and on a five-month
contract without extension or rehiring. UKCEU insisted
that it was not estopped to question the move to "upgrade
the academic standards" of recommendees, and that
KCPI should have indicated its counter-proposal during
the 1997 and 1999 CBA negotiations. Since KCPI
preferred to retain Article XX, Section 1 where the dispute
and ambiguity developed, the union opined that such
provision should be strictly construed against the
company.
UKCEU averred that either the husband or wife had the
"right of replacement," and to the benefits offered by
Article XX, Section 1; to deny them the right would be a
clear discrimination and violation of the CBA, since both
are paying members of union dues and individually vote
for any policy determination.
In its pleadings, KCPI maintained that pursuant to its
management prerogative, it had the right to determine
hiring standards under Article XX, Section 1 of the CBA
without the consent or approval of UKCEU. It argued that
like applicants for regular positions, recommendees of
retiring employees must also be college graduates, in
accordance with its November 7, 1995 Guidelines. It
explained that such recommendees are applying for
regular positions and not as casual, who are hired on a
temporary basis. KCPI averred that the employment
educational standards in the Guidelines it issued on
November 7, 1995 took effect on January 1, 1997 and that
after its implementation was deferred, the union did not
take any action. Hence, UKCEU was estopped from
questioning the implementation of Article XX, Section 1 in
the 1999 CBA. In fact, such upgraded educational
qualifications under the November 7, 1995 Guidelines
were never brought up by UKCEU, and were never
discussed during the 1997 CBA negotiations. It asserted,
however, that it was justified to temporarily suspend the
implementation because the freeze hiring policy of its
Asia-Pacific headquarters had affected both existing and
new regular positions in the company. It pointed out that,
in order to enforce the CBA provision, it normally fills up
two regular positions because the recommendee of a
union member who resigns, retires, dies or is disabled
does not usually possess the same qualifications and
skills of his/her predecessor. KCPI averred that it never
anticipated this undue burden and was not in a position to
sustain the practice, considering the lower volume in
sales and a reduction in the number of working days in
some areas of its operations.
With respect to spouses who are both employed in KCPI,
it was maintained that the policy regarding the availment
of their benefits had always been consistent since 1980:
only one of the spouses is entitled thereto, like the CBA
provisions on the employees’ medical and funeral
benefits. It pointed out that at the time Article XX, Section
1 was adopted, there was already an existing policy in
KCPI prohibiting the hiring of a relative of an employee
within the fourth civil degree of consanguinity or affinity.
Thus, if the interpretation of UKCEU would be considered,
an unwarranted and anomalous situation would result,
since children of spouses who are both employed in the
company fall within the second degree of consanguinity.
Moreover, spouses should be treated as one family, much
like the tax treatment on the claim for additional
dependents. KCPI stressed that, as stated in the
guidelines, the rationale for the policy is to maintain
fairness and equality since the intended or actual
beneficiary is the child of an employee.
On May 8, 1999, the VA visited the premises of KCPI with
prior notice to the parties, and discovered that KCPI
employed casuals who performed the work of certain
regular employees covered by the CBA.20
On March 19, 2001, the VA issued a Resolution in favor
of UKCEU. The dispositive portion of the resolution reads:
WHEREFORE, premises considered, this Voluntary
Arbitrator, finds that (a) the Company cannot suspend
implementation of Section 1, Article XX of the existing
CBA unilaterally by upgrading the educational
qualifications of "applicants-replacements" than are
required previously, and (b) the husband and the wife,
under the said provision, are each entitled separately to
recommend an applicant-replacement.
SO ORDERED.21
The VA ruled that since the CBA is the law between the
parties, KCPI could not just unilaterally change or
suspend the implementation of the existing employment
requirements, even in the light of the business situation
then prevailing in the Philippines. Moreover, an
unambiguous CBA provision must be interpreted
according to its literal meaning and not beyond the parties'
actual intendment, and, in case of doubts, the same
should be resolved in favor of labor. The VA declared that
management prerogative does not give license to a
company to set aside or ignore what had been agreed
upon through negotiation. According to the VA, since
KCPI failed to explain why it continued to hire casual
workers doing the jobs of regular employees, it failed to
substantiate its contention that the economic crisis did not
warrant the hiring of regular employees.22
As to the applicability of Article XX, Section 1 to spouses
employed by KCPI, the VA referred to Article I of the CBA,
which provides that the Agreement covers all regular
rank-and-file employees. Had the intention of the parties
been to grant husband and wife employees the privilege
of recommending only one applicant-replacement, it
should have been stated in unequivocal terms.23
KCPI assailed the decision of the VA via petition for
review24 before the CA. It alleged that:
A. Contrary to the ruling of the Honorable Voluntary
Arbitrator, petitioner may validly suspend the
implementation of Section 1, Article XX, by reason of
economic difficulty.
B. Contrary to the ruling of the Honorable Voluntary
Arbitrator, law and jurisprudence [recognize]
management's prerogative to set the qualifications for
[the] hiring of employees, including those hired as
replacements under Section 1, Article XX.
C. Contrary to the ruling of the Honorable Voluntary
Arbitrator, reasonable application of statutory and
contractual interpretation supports only one conclusion -
that, in case of both spouses being KCPI employees, only
one of them may avail himself or herself of the benefits of
Section 1, Article XX.25
On July 23, 2003, the CA partially set aside the Resolution
of the VA.26 The fallo of the decision reads:
WHEREFORE, the petition is PARTIALLY GRANTED,
and the Resolution of Voluntary Arbitrator Jose A.
Cabatuando, Jr. dated March 19, 2001 is PARTIALLY
REVERSED AND SET ASIDE. Petitioner may not
suspend the implementation of Section 1, Article XX of the
Collective Bargaining Agreement on account of alleged
economic distress. Petitioner, however, may require that
recommendees under the said provision must have
completed at least a two-year technical/vocational course
or reached the third year of any college-level course, as a
valid exercise of management prerogative. And when
spouses are both employed by petitioner, each may
recommend a replacement in case of his death, disability,
retirement or voluntary resignation pursuant to Section 1,
Article XX of the Collective Bargaining Agreement.
SO ORDERED.27
The CA ruled that KCPI may validly exercise its
management prerogative and impose the requirement
that recommendees should have at least completed a
two-year technical/vocational course or reached the third
year of any college-level course. While the right of KCPI
to set hiring standards for recommendees under the
disputed provision of the CBA is apparent in the ruling of
the Court in Kimberly Clark Philippines v. Lorredo,28 the
CA concluded that the right of retired, resigned, disabled
or deceased employees to recommend their
replacements is not absolute. It emphasized that the
recommendees must still meet the standard set by
petitioner. The CA further opined that Article XX, Section
1 is not an inheritance the right to which attaches
immediately upon an employee's death, disability,
retirement or voluntary resignation. However, as to
whether spouses employed by petitioner may separately
recommend a replacement, the CA affirmed the
observation of the VA that the provision was literally made
to apply to "all" employees, and does not mean that only
one of the spouses may avail of said benefit.29
The CA rejected the claim of KCPI that it (the court)
should take judicial notice of the adverse effects of the
Asian economic crisis to the operation of its business in
the Philippines. As in the case of retrenchment, it was
ruled that the company must still prove financial distress
by sufficient and convincing evidence. Moreover, the CA
held that for the theory of rebus sic stantibus to apply, it
must be shown that the economic crisis made it extremely
difficult for the company to comply with Article XX, Section
1 of the CBA, and that the change in the circumstances of
the parties must be one which could not be foreseen at
the time the contract was executed.30
Only UKCEU moved for a partial reconsideration of the
CA Decision with respect to its ruling on the upgraded
educational qualification of the recommendees.31 The CA
denied the motion in a Resolution32 dated March 23,
2004.
UKCEU, now petitioner, seeks relief from this Court in the
instant petition.
The issue in this case is whether or not the CA erred in
ruling that, under Article XX, Section 1 of the 1997 CBA,
respondent is required to hire only those recommendees
of retired/resigned, deceased or disabled members of
petitioner who had completed at least a two-year
technical/vocational course or a third-year level of college
education. This is anchored on the resolution of the issue
of whether the November 7, 1995 Guidelines issued by
respondent took effect on January 1, 1997.
Petitioner avers that the CA erred in holding that, under
Article XX, Section 1 of the 1997 CBA and the ruling of
this Court in Kimberly Clark Philippines v. Lorredo,
respondent is required to hire recommendees of
retired/resigned, deceased or disabled employees who
possess the educational qualification standards for
employees contained in the November 7, 1995 Guidelines
issued by respondent.
Petitioner asserts that the employment qualification
standards in Article XX, Section 1 of the CBA requiring the
recommendees to be at least high school graduates is
contrary to the practice that had been followed by
respondent since 1980 up to 1998. Petitioner further
avers that such practice, which had been established by
respondent in implementing the CBA, cannot be
unilaterally revoked by it. Petitioner argues that to allow
respondent to set higher educational standards for
employment of such recommendees is to render nugatory
the right granted to them under the CBA and would defeat
the ruling of the Court in Kimberly Clark Philippines v.
Lorredo. Petitioner avers that 70% of the employees of
respondent are mere high school graduates who did not
finish any technical or vocational course. This,
notwithstanding, respondent had a profit
of P527,000,000.00 in 1999. Petitioner stresses that the
exercise of management prerogative must be
circumscribed by the CBA of the parties.
For its part, respondent maintains that under Article XX,
Section 1 of its CBA with petitioner, a recommendee of
retired/resigned, deceased or disabled members of
petitioner must also be qualified for the position.
Respondent also invokes Kimberly Clark Philippines v.
Lorredo, insisting that the Court ruled therein that such
recommendees must meet the employment standards set
by respondent; conformably with such ruling, it issued
said Guidelines on November 7, 1995. Thus, it is not
proscribed from setting out higher qualification standards
for said recommendees, such as those set forth in said
Guidelines. Contrary to petitioner’s claim of employing
recommendees who were only high school graduates,
was not an established practice, as its policy had always
been to hire college graduates for regular employment.
Finally, respondent avers that the implementation of
qualifications for the recommendees is a valid exercise of
its management prerogative.
Respondent also points out during their 1997 CBA
negotiations, petitioner proposed the following revisions
of Article XX, Section 1:
Section 1. A replacement of a deceased employee or
recommendee of a retiring or resigning employee with at
least 10 years of service, when at least High School
Graduate and able bodied, shall be hired by the Company
as Trainee for the first six (6) months, and then
probationary employee to a permanent position and if
passed to qualifications made known to him shall be hired
as a regular employee of the Company. Recommendee
entitled to this right shall be limited to up to the third civil
degree only.33
However, said proposal was not incorporated in the CBA
of the parties since by then, the November 7, 1995
Guidelines had already taken effect.
We rule against petitioner.
As a general proposition, an arbitrator is confined to the
interpretation and application of the collective bargaining
agreement. He does not sit to dispense his own brand of
industrial justice: his award is legitimate only in so far as
it draws its essence from the CBA,34 i.e., when there is a
rational nexus between the award and the CBA under
consideration.35 It is said that an arbitral award does not
draw its essence from the CBA; hence, there is an
unauthorized amendment or alteration thereof, if:
1. It is so unfounded in reason and fact;
2. It is so unconnected with the working and
purpose of the agreement;
3. It is without factual support in view of its
language, its context, and any other indicia of the
parties' intention;36
4. It ignores or abandons the plain language of
the contract;37
5. It is mistakenly based on a crucial assumption
which concededly is a nonfact;38
6. It is unlawful, arbitrary or capricious;39 and
7. It is contrary to public policy.40
A CBA is more than a contract; it is a generalized code to
govern a myriad of cases which the draftsmen cannot
wholly anticipate. It covers the whole employment
relationship and prescribes the rights and duties of the
parties. It is a system of industrial self-government with
the grievance machinery at the very heart of the
system.41 The parties solve their problems by molding a
system of private law for all the problems which may arise
and to provide for their solution in a way which will
generally accord with the variant needs and desires of the
parties.
If the terms of a CBA are clear and have no doubt upon
the intention of the contracting parties, the literal meaning
of its stipulation shall prevail.42 However, if, in a CBA, the
parties stipulate that the hirees must be presumed of
employment qualification standards but fail to state such
qualification standards in said CBA, the VA may resort to
evidence extrinsic of the CBA to determine the full
agreement intended by the parties. When a CBA may be
expected to speak on a matter, but does not, its sentence
imports ambiguity on that subject.43 The VA is not merely
to rely on the cold and cryptic words on the face of the
CBA but is mandated to discover the intention of the
parties. Recognizing the inability of the parties to
anticipate or address all future problems, gaps may be left
to be filled in by reference to the practices of the industry,
and the step which is equally a part of the CBA although
not expressed in it.44 In order to ascertain the intention of
the contracting parties, their contemporaneous and
subsequent acts shall be principally considered.45 The VA
may also consider and rely upon negotiating and
contractual history of the parties, evidence of past
practices interpreting ambiguous provisions. The VA has
to examine such practices to determine the scope of their
agreement,46 as where the provision of the CBA has been
loosely formulated.47Moreover, the CBA must be
construed liberally rather than narrowly and technically
and the Court must place a practical and realistic
construction upon it.
In the present case, the parties are in agreement that, on
its face, Article XX, Section 1 of their 1997 CBA does not
contain any provision relative to the employment
qualification standards of recommendees of
retired/resigned, deceased or disabled employees of
respondent who are members of petitioner. However, in
determining the employment qualification standards for
said recommendees, the VA should have relied on the
November 7, 1995 Guidelines issued by respondent,
which reads:
D. Definition of the phrase "immediate member of the
family of an employee"
1. The phrase "immediate member of the family
of an employee" shall refer to the employee’s
legitimate children and in default thereof to the
employee’s collateral relatives within the third civil
degree.
2. A resigned/retired employee may be allowed to
recommend a collateral relative within the third
civil degree (e.g., brother, sister, nephew or
niece) as his/her replacement only in the
following cases:
a. Where the retired/resigned employee
is single or if married has no legitimate
children.
b. Where the retired/resigned employee’s
children are still minors (below 18 years
old) at the time of his/her separation from
the company. (Emphasis added)
E. General Provisions
1. The privilege to recommend a replacement can
be exercised by the employee concerned only
once. Thus, in the following cases, a
recommendee who has been hired on
probationary status can no longer be substituted
with another recommendee.
a. where the recommendee fails to pass
in his performance evaluation.
b. where the recommendee resigns
without completing his probationary
period.
c. where the recommendee is dismissed
for cause.
d. where the recommendee dies during
his probationary period.48
Respondent issued said Guidelines in light of the ruling of
this Court in Kimberly Clark Philippines v. Lorredo.
Respondent saw it imperative to do away with its practice
of accommodating recommendees who were mere high
school graduates, and to require higher employment
standards for them.
By agreement of the parties, the implementation of the
Guidelines was deferred until January 1, 1997, unless
revoked or amended by the 1997 CBA. Petitioner
proposed that the practice of hiring recommendees of
retired/resigned, deceased or disabled employees who
were union members, who were at least high school
graduates, be included in their CBA, but respondent did
not agree. Hence, Article XX, Section 1 of the 1997 CBA
of the parties remained intact. There was thus no more
legal bar for respondent to implement the November 7,
1995 Guidelines. By executing the 1997 CBA, in its
present form, petitioner is bound by the terms and
conditions therein set forth.
The VA, however, ignored the plain language of the 1997
CBA of the parties, as well as the Guidelines issued by
respondent. He capriciously based his resolution on the
respondent’s practice of hiring which, however, by
agreement of petitioner and respondent, was
discontinued.
The Court has recognized in numerous instances the
undoubted right of the employer to regulate, according to
his own discretion and best judgment, all aspects of
employment, including but not limited to, work
assignments and supervision, working methods and
regulations, time, place and manner of work, processes to
be followed, and hiring, supervision, transfer, discipline,
lay off, dismissal and recall of workers. Encompassing
though it could be, the exercise of this right is not
absolute. Management prerogative must be exercised in
good faith for the advancement of the employer’s interest
and not for the purpose of defeating or circumventing the
rights of the employees under special laws, valid
agreements such as the individual contract of
employment and the collective bargaining agreement,
and general principles of justice and fair play. 49 In this
case, the Court finds that respondent acted in accord with
the CBA and the November 7, 1995 Guidelines, which, by
agreement of the parties, may be implemented by
respondent after January 1, 1997.
IN LIGHT OF ALL THE FOREGOING, the petition is
DENIED for lack of merit. Costs against petitioner.
SO ORDERED.
[G.R. No. 124013. June 5, 1998]
37. *ROSARIO MANEJA vs. NATIONAL LABOR
RELATIONS COMMISSION and MANILA
MIDTOWN HOTEL
Assailed in this petition for certiorari under Rule 65 of
the Revised Rules of Court are the Resolution[1] dated
June 3, 1994 of the respondent National Labor Relations
Commission in NLRC NCR-00-10-05297-90, entitled
"Rosario Maneja, Complainant, vs. Manila Midtown
Hotel, Respondent," which dismissed the illegal dismissal
case filed by petitioner against private respondent
company for lack of jurisdiction of the Labor Arbiter over
the case; and its Resolution[2] dated October 20, 1995
denying petitioner's motion for reconsideration.
Petitioner Rosario Maneja worked with private
respondent Manila Midtown Hotel beginning January,
1985 as a telephone operator. She was a member of the
National Union of Workers in Hotels, Restaurants and
Allied Industries (NUWHRAIN) with an existing Collective
Bargaining Agreement (CBA) with private respondent.
In the afternoon of February 13, 1990, a fellow
telephone operator, Rowena Loleng received a Request
for Long Distance Call (RLDC) form and a deposit
of P500.00 from a page boy of the hotel for a call by a
Japanese guest named Hirota Ieda. The call was
unanswered. The P500.00 deposit was forwarded to the
cashier. In the evening, Ieda again made an RLDC and
the page boy collected another P500.00 which was also
given to the operator Loleng. The second call was also
unanswered. Loleng passed on the RLDC to petitioner for
follow-up.Petitioner monitored the call.
On February 15, 1990, a hotel cashier inquired about
the P1,000.00 deposit made by Ieda. After a search,
Loleng found the first deposit of P500.00 inserted in the
guest folio while the second deposit was eventually
discovered inside the folder for cancelled calls with
deposit and official receipts.
When petitioner saw that the second RLDC form was
not time-stamped, she immediately placed it inside the
machine which stamped the date February 15,
1990. Realizing that the RLDC was filed 2 days earlier,
she wrote and changed the date to February 13,
1990. Loleng then delivered the RLDC and the money to
the cashier. The second deposit of P500.00 by Ieda was
later returned to him.
On March 7, 1990, the chief telephone operator
issued a memorandum [3] to petitioner and Loleng
directing the two to explain the February 15 incident.
Petitioner and Loleng thereaftersubmitted their written
explanation.[4]
On March 20, 1990, a written report[5] was submitted
by the chief telephone operator, with the recommendation
that the offenses committed by the operators concerned
covered violations of the Offenses Subject to Disciplinary
Actions (OSDA): (1) OSDA 2.01: forging, falsifying official
document(s), and (2) OSDA 1.11: culpable carelessness
- negligence or failure to follow specific instruction(s) or
established procedure(s).
On March 23, 1990, petitioner was served a notice of
dismissal[6] effective April 1, 1990. Petitioner refused to
sign the notice and wrote therein "under protest."
Meanwhile, a criminal case[7] for Falsification of
Private Documents and Qualified Theft was filed before
the Office of the City Prosecutor of Manila by private
respondent against Loleng and petitioner. However, the
resolution recommending the filing of a case for estafa
was reversed by 2nd Asst. City Prosecutor Virgilio M.
Patag.
On October 2, 1990, petitioner filed a complaint for
illegal dismissal against private respondent before the
Labor Arbiter. The complaint was later amended to
include a claim for unpaid wages, unpaid vacation leave
conversion and moral damages.
Position papers were filed by the parties. Thereafter,
the motion to set the case for hearing filed by private
respondent was granted by the Labor Arbiter and trial on
the merits ensued.
In his decision[8] dated May 29, 1992, Labor Arbiter
Oswald Lorenzo found that the petitioner was illegally
dismissed. However, in the decision, the Labor Arbiter
stated that:
Preliminarily, we hereby state that on the face of the
instant complaint, it is one that revolves on the matter of
the implementation and interpretation of existing company
policies, which per the last par. of Art. 217 of the Labor
Code, as amended, is one within the jurisdictional ambit
of the grievance procedure under the CBA and thereafter,
if unresolved, one proper for voluntary arbitration. This
observation is re-entrenched by the fact, that complainant
claims she is a member of NUWHRAIN with an existing
CBA with respondent hotel.
On this score alone, this case should have been
dismissed outright.[9]
Despite the aforequoted preliminary statement, the
Labor Arbiter still assumed jurisdiction since Labor
Arbiters under Article 217 of the same Labor Code, are
conferred original and exclusive jurisdiction of all
termination case(sic.). The dispositive portion of the
decision states that:
"WHEREFORE, premises considered, judgment is
hereby rendered as follows:
Declaring complainant's dismissal by respondent hotel as
illegally effected;
Ordering respondent to immediately reinstate
complainant to her previous position without loss
of seniority rights;
Ordering further respondent to pay complainant the full
backwages due her, which is computed as follows:
3/23/90 - 10/31/90 = 7.26/mos.
P2,540 x 7.26/mos. P18,440.40
11/1/90 - 1/7/91 = 2.23/mos.
P3,224.16 x 2.23/mos. 7,189.87
1/8/91 - 4/29/92 = 15.7/mos.
P3,589.16 x 15.7/mos. 56,349.89
P81,980.08
Moreover, respondent is ordered to pay the 13th month
pay due the complainant in the amount of P6,831.67
including moral and exemplary damages of P15,000.00
and P10,000.00 respectively, as well as attorney's fees
equivalent to ten (10) percent of the total award herein in
the amount of P11,381.17;
Finally, all other claims are hereby dismissed for lack of
merit.
"SO ORDERED."
Private respondent appealed the decision to the
respondent commission on the ground inter alia that the
Labor Arbiter erred in assuming jurisdiction over the illegal
dismissal case after finding that the case falls within the
jurisdictional ambit of the grievance procedure under the
CBA, and if unresolved, proper for voluntary
arbitration.[10] An Opposition[11] was filed by petitioner.
In the assailed Resolution[12] dated June 3, 1994,
respondent NLRC dismissed the illegal dismissal case for
lack of jurisdiction of the Labor Arbiter because the same
should have instead been subjected to voluntary
arbitration.
Petitioners motion for reconsideration[13] was denied
by respondent NLRC for lack of merit.
In this petition for certiorari, petitioner ascribes to
respondent NLRC grave abuse of discretion in -
Ruling that the Labor Arbiter was without jurisdiction
over the illegal dismissal case;
Not ruling that private respondent is estopped by
laches from questioning the jurisdiction of the Labor
Arbiter over the illegal dismissal case;
Reversing the decision of the Labor Arbiter based on
a technicality notwithstanding the merits of the case.
Petitioner contends that Article 217(a)(2) and (c)
relied upon by
respondent NLRC in divesting the labor arbiter of jurisdic
tion over the illegal dismissal case, should be read in
conjunction with Article 261[14] of the Labor Code. It is the
view of petitioner that termination cases arising from the
interpretation or enforcement of company personnel
policies pertaining to violations of Offenses Subject to
Disciplinary Actions (OSDA), are under the jurisdiction of
the voluntary arbitrator only if these are unresolved in the
plant-level grievance machinery. Petitioner insists that her
termination is not an unresolved grievance as there has
been no grievance meeting between the NUWHRAIN
union and the management. The reason for this,petitioner
adds, is that it has been a company practice that
termination cases are not anymore referred to the
grievance machinery but directly to the labor arbiter.
In its comment, private respondent argues that the
Labor Arbiter should have dismissed the illegal dismissal
case outright after finding that it is within the jurisdictional
ambit of the grievance procedure. Moreover, private
respondent states that the issue of jurisdiction may be
raised at any time and at any stage of the proceedings
even on appeal, and is not in estoppel by laches as
contended by the petitioner.
For its part, public respondent, through the Office of
the Solicitor General, cited the ruling of this Court in
Sanyo Philippines Workers Union-PSSLU vs.
Caizares[15] in dismissing the case for lack of jurisdiction
of the Labor Arbiter.
The legal issue in this case is whether or not the
Labor Arbiter has jurisdiction over the illegal dismissal
case.
The respondent Commission, in holding that the
Labor Arbiter lacks jurisdiction to hear the illegal dismissal
case, cited as basis therefor Article 217 of the Labor
Code, as amended by Republic Act No. 6715. It said:
While it is conceded that under Article 217(a), Labor
Arbiters shall have original and exclusive jurisdiction over
cases involving termination disputes, the Supreme Court,
in a fairly recent case ruled:
The procedure introduced in RA 6715 of referring certain
grievances originally and exclusively to the grievance
machinery, and when not settled at this level, to a panel
of voluntary arbitrators outlined in CBAs does not only
include grievances arising from the interpretation or
implementation of the CBA but applies as well to those
arising from the implementation of company personnel
policies. No other body shall take cognizance of these
cases. x x x. (Sanyo vs. Caizares, 211 SCRA 361, 372)[16]
We find that the respondent Commission has
erroneously interpreted the aforequoted portion of
our ruling in the case of Sanyo, as divesting the Labor
Arbiter of jurisdiction in a termination dispute.
Article 217 of the Labor Code gives us the clue as to
the jurisdiction of the Labor Arbiter, to wit:
Article 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 wages, rates of pay,
hours of work and other terms and conditions of
employment;
4. Claims for actual, moral, exemplary and other forms of
damages arising from the employer-employee relations;
5. Cases arising from any violation of Article 264 of this
Code, including questions involving the legality of strikes
and lockouts;
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.
b) The Commission shall have exclusive appellate
jurisdiction over all cases decided by Labor Arbiters.
c) Cases arising from the interpretation or implementation
of collective bargaining agreements and those arising
from the interpretation or enforcement of company
personnel policies shall be disposed of by the Labor
Arbiter by referring the same to the grievance machinery
and voluntary arbitration as may be provided in said
agreements.
As can be seen from the aforequoted Article,
termination cases fall under the original and exclusive
jurisdiction of the Labor Arbiter. It should be noted,
however, that in the opening paragraph there appears the
phrase: Except as otherwise provided under this Code x
x x. It is paragraph (c) of the same Article which
respondent Commission has erroneously interpreted as
giving the voluntary arbitrator jurisdiction over the illegal
dismissal case.
However, Article 217 (c) should be read in
conjunction with Article 261 of the Labor Code which
grants to voluntary arbitrators 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. Note the phrase
unresolved grievances. In the case at bar, the termination
of petitioner is not an unresolved grievance.
The stance of the Solicitor General in
the Sanyo case is totally the reverse of its posture in the
case at bar. In Sanyo, the Solicitor General was of the
view that a distinction should be made between a case
involving interpretation or implementation of Collective
Bargaining Agreement or interpretation or enforcement of
company personnel policies, on the one hand and a case
involving termination, on the other hand. It argued that the
dismissal of the private respondents does not involve an
interpretation or implementation of a Collective
Bargaining Agreement or interpretation or enforcement of
company personnel policies but involves termination. The
Solicitor General further said that where the dispute is just
in the interpretation, implementation or enforcement
stage, it may be referred to the grievance machinery set
up in the Collective Bargaining Agreement or by voluntary
arbitration. Where there was already actual termination,
i.e., violation of rights, it is already cognizable by the Labor
Arbiter.[17] We fully agree with the theory of the Solicitor
General in the Sanyo case, which is radically apposite to
its position in this case.
Moreover, the dismissal of petitioner does not fall
within the phrase grievances arising from the
interpretation or implementation of collective bargaining
agreement and those arising from the interpretation or
enforcement of company personnel policies, the
jurisdiction of which pertains to the grievance machinery
or thereafter, to a voluntary arbitrator or panel of voluntary
arbitrators. It is to be stressed that under Article 260 of the
Labor Code, which explains the function of the grievance
machinery and voluntary arbitrator, (T)he parties to a
Collective Bargaining Agreement shall include therein
provisions that will ensure the mutual observance of its
terms and conditions. They shall establish a machinery
for the adjustment and resolution of grievances arising
from the interpretation or implementation of their
Collective Bargaining Agreement and those arising from
the interpretation or enforcement of company personnel
policies. Article 260 further provides that the parties to a
CBA shall name or designate their respective
representative to the grievance machinery and if the
grievance is unsettled in that level, it shall automatically
be referred to the voluntary arbitrators designated in
advance by the parties to a CBA of the union and the
company. It can thus be deduced that onlydisputes
involving the union and the company shall be referred to
the grievance machinery or voluntary arbitrators.[18]
In the case at bar, the union does not come into the
picture, not having objected or voiced any dissent to the
dismissal of the herein petitioner. The reason for this,
according to petitioner is that the practice in said Hotel in
cases of termination is that the latter cases are not
referred anymore to the grievance committee; and that
the terminated employee who wishes to question the
legality of his termination usually goes to the Labor Arbiter
for arbitration, whether the termination arose from the
interpretation or enforcement of the company personnel
policies or otherwise.[19]
As we ruled in Sanyo, Since there has been an
actual termination, the matter falls within the jurisdiction of
the Labor Arbiter. The aforequoted doctrine is applicable
foursquare in petitioners case. The dismissal of the
petitioner does not call for the interpretation or
enforcement of company personnel policies but is a
termination dispute which comes under the jurisdiction of
the Labor Arbiter.
It should be explained that company personnel
policies are guiding principles stated in broad, long-range
terms that express the philosophy or beliefs of an
organizations top authority regarding personnel
matters. They deal with matters affecting efficiency and
well-being of employees and include, among others, the
procedure in the administration of wages, benefits,
promotions, transfer and other personnel movements
which are usually not spelled out in the collective
agreement. The usual source of grievances, however, are
the rules and regulations governing disciplinary
actions.[20]
The case of Pantranco North Express, Inc. vs.
NLRC[21] sheds further light on the issue of jurisdiction
where the Court cited the Sanyo case and quoted the
decision of therein Labor Arbiter Olairez in this manner:
In our honest opinion we have jurisdiction over the
complaint on the following grounds:
First, this is a complaint of illegal dismissal of which
original and exclusive jurisdiction under Article 217 has
been conferred to the Labor Arbiters. The interpretation of
the CBA or enforcement of the company policy is only
corollary to the complaint of illegal dismissal. Otherwise,
an employee who was on AWOL, or who committed
offenses contrary to the personnel policies(sic) can no
longer file a case of illegal dismissal because the
discharge is premised on the interpretation or
enforcement of the company policies(sic).
Second. Respondent voluntarily submitted the case to the
jurisdiction of this labor tribunal. It adduced arguments to
the legality of its act, whether such act may be retirement
and/or dismissal, and prayed for reliefs on the merits of
the case. A litigant cannot pray for reliefs on the merits
and at the same time attacks(sic) the jurisdiction of the
tribunal. A person cannot have ones cake and eat it too. x
x x.
As to the second ground, petitioner correctly points
out that respondent NLRC should have ruled that private
respondent is estopped by laches in questioning the
jurisdiction of the Labor Arbiter.
Clearly, estoppel lies. The issue of jurisdiction was
mooted by herein private respondents active participation
in the proceedings below. In Marquez vs. Secretary of
Labor,[22] the Court said:
x x x. The active participation of the party against whom
the action was brought, coupled with his failure to object
to the jurisdiction of the court or quasi-judicial body where
the action is pending, is tantamount to an invocation of
that jurisdiction and a willingness to abide by the
resolution of the case and will bar said party from later on
impugning the court or bodys jurisdiction.
In the assailed Resolution,[23] respondent NLRC
cited La Naval Drug Corporation vs. Court of Appeals[24] in
holding that private respondent is not in estoppel. Thus,
The operation of the principle of estoppel on the question
of jurisdiction seemingly depends upon whether the lower
court actually had jurisdiction or not. If it had no
jurisdiction, but the case was tried and decided upon the
theory that it had jurisdiction, the parties are not barred,
on appeal, from assailing such jurisdiction, for the same
must exist as a matter of law, and may not be conferred
by consent of the parties or by estoppel (5 C.J.S., 861-
863). However, if the lower court had jurisdiction, and the
case was heard and decided upon a given theory, such,
for instance, as that the court had no jurisdiction, the party
who induced it to adopt such theory will not be permitted,
on appeal, to assume an inconsistent position that the
lower court had jurisdiction. Here, the principle of estoppel
applies. The rule that jurisdiction is conferred by law, and
does not depend upon the will of the parties, has no
bearing thereon. (Underscoring ours)
Again, the respondent NLRC has erroneously
interpreted our ruling in the La Naval case. Under the said
ruling, estoppel lies in this case. Private respondent is
estopped from questioning the jurisdiction of the Labor
Arbiter before the respondent NLRC having actively
participated in the proceedings before the former. At no
time before or during the trial on the merits did private
respondent assail the jurisdiction of the Labor
Arbiter. Private respondent took the cue only from the
preliminary statement in the decision of the Labor Arbiter,
which was a mere obiter, and raised the issue of
jurisdiction before the Commission. It was then too
late. Estoppel had set in.
Turning now to the merits of the case, We uphold the
ruling of the Labor Arbiter that petitioner was illegally
dismissed.
The requisites of a valid dismissal are (1) the
dismissal must be for any of the causes expressed in
Article 282 of the Labor Code,[25] and (2) the employee
must be given an opportunity to be heard and to defend
himself.[26] The substantive and procedural laws must be
strictly complied with before a worker can be dismissed
from his employment because what is at stake is not only
the employees position but his livelihood.[27]
Petitioners dismissal was grounded on culpable
carelessness, negligence and failure to follow specific
instruction(s) or established procedure(s) under OSDA
1.11; and, having forged or falsified official document(s)
under OSDA 2.01.
Private respondent blames petitioner for failure to
follow established procedure in the hotel on a guests
request for long distance calls. Petitioner, however,
explained that the usual or established procedures are not
followed by the operators and hotel employees when
circumstances warrant. For instance, the RLDC forms
and the deposits are brought by the page boy directly to
the operators instead of the cashiers if the latter are busy
and cannot attend to the same. Furthermore, she avers
that the telephone operators are not conscious of the
serial numbers in the RLDCs and at times, the used
RLDCs are recycled. Even the page boys do not actually
check the serial numbers of all RLDCs in one batch,
except for the first and the last.
On the charge of taking of the money by petitioner, it
is to be noted that the second P500.00 deposit made by
the Japanese guest Ieda was later discovered to be
inserted in the folder for cancelled calls with deposit and
official receipts. Thus, there exists no basis for personal
appropriation by the petitioner of the money
involved. Another reason is the alleged tampering of
RLDC No. 862406.[28] While petitioner and her co-
operator Loleng admitted that they indeed altered the date
appearing therein from February 15, 1990 to February 13,
the same was purposely made to reflect the true date of
the transaction without any malice whatsoever on their
part.
As pointed out by Labor Arbiter Oswald B. Lorenzo,
thus:
The specifics of the grounds relied by respondent hotels
dismissal of complainant are those stated in Annex F of
the latters POSITION PAPER, which is the Notice of
Dismissal, notably:
OSDA 2.01 - Forging, falsifying official document(s)
OSDA 1.11 - Culpable negligence or failure to follow
specific instruction(s) or established procedure(s)
On this score, we are persuaded by the complainants
arguments that under OSDA 1.11, infractions of this sort
is not without qualifications, which is, that the alleged
culpable carelessness, negligence or failure to follow
instruction(s) or established procedure(s), RESULTING
IN LOSS OR DAMAGE TO COMPANY
PROPERTY. From the facts obtaining in this case, there
is no quantum of proof whatsoever, except the general
allegations in respondents POSITION PAPER and other
pleadings that loss or damage to company property
resulted from the charged infraction. To our mind, this is
where labor tribunals should come in and help correct
interpretation of company policies which in the
enforcement thereof wreaks havoc to the constitutional
guarantee of security of tenure. Apparently, the exercise
of little flexibility by complainant and co-employees which
is predicated on good faith should not be taken against
them and more particularly against the complainant
herein. In this case, to sustain the generalized charge of
respondent hotel under OSDA 1.11 would unduly be
sanctioning the imposition of too harsh a penalty - which
is dismissal.
In the same tenor, the respondents charge under OSDA
1.11 on the alleged falsification of private document is
also with a qualification, in that the alleged act of
falsification must have been done IN SUCH A WAY AS
TO MISLEAD THE USER(S) THEREOF. Again, based on
the facts of the complained act, there appeared no one to
have been misled on the change of date from RLDC
#862406 FROM 15 TO 13 February 1990.
As a matter of fact, we are in agreement with the
jurisprudence cited by VIRGILIO M. PATAG, the 2nd Asst.
City Prosecutor of the City of Manila, who exculpated
complainant MANEJA from the charges of falsification of
private documents and qualified theft under IS No. 90-
11083 and marked Annex H of complainants POSITION
PAPER, when he ruled that an altercation which makes
the document speak the truth cannot be the foundation of
a criminal action. As to the charge of qualified theft, we
too are of the finding, like the city prosecutor above-
mentioned that there was no evidence on the part of
MANEJA to have unlawfully taken the P500.00 either
from the hotel or from guest IEDA on 13 February 1990
and moreover, we too, find no evidence that complainant
MANEJA had the intention to profit thereby nor had
misappropriated the P500.00 in question.[29]
Given the factual circumstances of the case, we
cannot deduce dishonesty from the act and omission of
petitioner. Our norms of social justice demand that we
credit employees with the presumption of good faith in the
performance of their duties,[30] especially petitioner who
has served private respondent since 1985 up to 1990
without any tinge of dishonesty and was even named
Model Employee for the month of April, 1989.[31]
Petitioner has been charged with a very serious
offense - dishonesty. This can irreparably wreck her life
as an employee for no employer will take to its bosom a
dishonest employee.Dismissal is the supreme penalty
that can be meted to an employee and its imposition
cannot be justified where the evidence is ambivalent.[32] It
must, therefore, be based on a clear and not on an
ambiguous or ambivalent ground. Any ambiguity or
ambivalence on the ground relied upon by an employer in
terminating the services of an employee denies the latter
his fullright to contest its legality. Fairness cannot
countenance such ambiguity or ambivalence.[33]
An employer can terminate the services of an
employee only for valid and just causes which must be
supported by clear and convincing evidence. The
employer has the burden of proving that the dismissal was
indeed for a valid and just cause.[34] Failure to do so
results in a finding that the dismissal was unjustified. [35]
Finding that there was no just cause for dismissal of
petitioner, we now determine if the rudiments of due
process have been duly accorded to her.
Well-settled is the dictum that the twin requirements
of notice and hearing constitute the essential elements of
due process in the dismissal of employees. It is a cardinal
rule in our jurisdiction that the employer must furnish the
employee with two written notices before the termination
of employment can be effected: (a) the first apprises the
employee of the particular acts or omissions for which his
dismissal is sought; and, (b) the second informs the
employee of the employers decision to dismiss him. The
requirement of a hearing, on the other hand, is complied
with as long as there was an opportunity to be heard, and
not necessarily that an actual hearing was conducted.[36]
In the case at bar, petitioner and her co-operator
Loleng were issued a memorandum on March 7,
1990. On March 11, 1990, they submitted their written
explanation thereto. On March 20, 1990, a written report
was made with a recommendation that the offenses
committed by them were covered by OSDA 1.11 and
2.01. Thereafter, on March 23, 1990, petitioner was
served with a notice of dismissal for said violations
effective April 1, 1990.
An examination of the record reveals that no hearing
was ever conducted by private respondent before
petitioner was dismissed. While it may be true that
petitioner submitted a written explanation, no hearing was
actually conducted before her employment was
terminated. She was not accorded the opportunity to fully
defend herself.
Consultations or conferences may not be a
substitute for the actual holding of a hearing. Every
opportunity and assistance must be accorded to the
employee by the management to enable him to prepare
adequately for his defense, including legal
[37]
representation. Considering that petitioner denied
having allegedly taken the second P500.00 deposit of the
Japanese guest which was eventually found; and, having
made the alteration of the date on the second RLDC
merely to reflect the true date of the transaction, these
circumstances should have at least warranted a separate
hearing to enable petitioner to fully ventilate her
side. Absent such hearing, petitioners right to due
process was clearly violated.[38]
It bears stressing that a workers employment is
property in the constitutional sense. He cannot be
deprived of his work without due process of
law. Substantive due process mandates that an
employee can only be dismissed based on just or
authorized causes. Procedural due process requires
further that he can only be dismissed after he has been
given an opportunity to be heard. The import of due
process necessitates the compliance of these two
aspects.
Accordingly, we hold that the labor arbiter did not err
in awarding full backwages in view of his finding that
petitioner was dismissed without just cause and without
due process.
We ruled in the case of Bustamante vs. NLRC[39] that
the amount of backwages to be awarded to an illegally
dismissed employee must be computed from the time he
was dismissed to the time he is actually reinstated,
without deducting the earnings he derived elsewhere
pending the resolution of the case.
 Petitioner is likewise entitled to the thirteenth-month
pay. Presidential Decree No. 851, as amended by
Memorandum Order No. 28, provides that employees are
entitled to the thirteenth-month pay benefit regardless of
their designation and irrespective of the method by which
their wages are paid.[40]

The award of moral and exemplary damages to

petitioner is also warranted where there is lack of due
process in effecting the dismissal.

Where the termination of the services of an

employee is attended by fraud or bad faith on the part of
the employer, as when the latter knowingly made false
allegations of a supposed valid cause when none existed,
moral and exemplary damages may be awarded in favor
of the former.[41]

The anti-social and oppressive abuse of its right to

investigate and dismiss its employees constitute a
violation of Article 1701 of the New Civil Code which
prohibits acts of oppression by either capital or labor
against the other, and Article 21 on human relations. The
grant of moral damages to the employees by reason of
such conduct on the part of the company is sanctioned by
Article 2219, No. 10 of the Civil Code, which allows
recovery of such damages in actions referred to in Article
21.[42]

The award of attorneys fees amounting to ten

percent (10%) of the total award by the labor arbiter is
justified under Article 111 of the Labor Code.

WHEREFORE, premises considered, the petition is

GRANTED and the assailed resolutions of the respondent
National Labor Relations Commission dated June 3, 1994
and October 20, 1995 are hereby REVERSED AND SET
ASIDE. The decision dated May 29, 1992 of the Labor
Arbiter is therefore REINSTATED.

SO ORDERED.
 38. Sime Darby Pilipinas, Inc. v. Deputy
Administrator Buenaventura C. Magsalin
G.R. No. 90426,December 15, 1989
Facts:
On 13 June 1989, petitioner Sime Darby and
private respondent Sime Darby Employees Association
(SDEA) executed a Collective Bargaining Agreement
(CBA) providing, among others, that:
Article X, Section 1. A
performance bonus shall be
granted, the amount of which [is]
to be determined by the
Company depending on the
return of [sic] capital investment
as reflected in the annual
financial statement.
On 27 July 1989, private respondent SDEA filed with the
National Conciliation and Mediation Board (NCMB) an
urgent request for preventive conciliation between private
respondent and petitioner, for the reason that petitioner
failed to grant the performance bonus corresponding to
the fiscal year 1988-1989, on the ground that the workers'
performance during said period did not justify the award
of such bonus.
On 1 August 1989, the parties were called to a conciliation
meeting and in such meeting, both parties agreed to
submit their dispute to voluntary arbitration.
On 17 August 1989, the Voluntary Arbitrator issued an
award which declared respondent union entitled to a
performance bonus equivalent to 75% of the monthly
basic pay of its members.
Issues:
(1.) whether or not the Voluntary Arbitrator acted with
grave abuse of discretion or without or in excess
of jurisdiction in passing upon both the question
of whether or not a performance bonus is to be
granted by petitioner Sime Darby to the private
respondents and the further question of the
amount thereof.
(2.) whether or not the award by the Arbitrator of a
performance bonus amounting to seventy five
percent (75%) of the basic monthly salary of
members of private respondent union itself
constituted a grave abuse of discretion or an act
without or in excess of jurisdiction.
Held:
I.
It is thus essential to stress that 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.
Without doubt, the Sime Darby Employees Association is
entitled to performance bonus. This conclusion arises
from an analysis of the imperative terms of the CBA
provision on production bonus.
II.
The award by the Arbitrator of a performance
bonus amounting to seventy five percent (75%) of the
basic monthly salary of members of private respondent
union itself does not constitute a grave abuse of discretion
or an act without or in excess of jurisdiction. The award of
a Voluntary Arbitrator is final and executory after ten (10)
calendar days from receipt of the award by the parties.
The Labor Code and its Implementing Rules thus clearly
reflect the important public policy of encouraging recourse
to voluntary arbitration and of shortening the arbitration
process by rendering the arbitral award non- appealable
to the NLRC.
The CBA provision refers to the return on
investment of the company (ROI). Among those factors
would be the cost of production, the quality of the
products, the cost of money, the debt-equity ratio, the cost
of sales, the level of taxes due and payable, the gross
revenues realized, and so forth. The Voluntary Arbitrator
explicitly considered the net earnings of petitioner Sime
Darby in 1988 (P 100,000,000.00) and in the first
semester of 1989 (P 95,377,507.00) as well as the
increase in the company's retained earnings from P
265,729,826.00 in 1988 to P 324, 370,372.00 as of 30
June 1989. Thus, the Arbitrator impliedly or indirectly took
into account the return on stockholders' investment
realized for the fiscal year 1988-1989. It should also be
noted that the relevant CBA provision does not specify a
minimum rate of return on investment (ROI) which must
be realized before any particular amount of bonus may or
should be declared by the company. The Voluntary
Arbitrator also took into account, again in an indirect
manner, the performance of Sime Darby's employees by
referring in his award to "the total labor cost incurred by
the Company".
 [G.R. No. 155651. July 28, 2005]
39. *COCA-COLA BOTTLERS PHILIPPINES, INC.,
SALES FORCE UNION-PTGWO-BALAIS
vs. COCA-COLA BOTTLERS, PHILIPPINES,
INC.
This is a petition for review on certiorari seeking the
reversal of the Court of Appeals Decision[1] and
Resolution[2] dated 22 May 2002 and 03 October 2002,
respectively, affirming the 21 January 2001 Decision of
the panel of voluntary arbitrators (Panel) of the National
Conciliation Mediation Board (NCMB) for the reason that
the Panel decision had already attained finality.
The following is a narration by the Court of Appeals
of the undisputed facts:
The Coca-Cola Bottlers Philippines, Inc. Sales Force
Union-PTGWO is a legitimate labor organization duly
registered with the Department of Labor and Employment,
and is the sole and exclusive bargaining representative of
all regular route salesmen, regular relief route salesmen,
regular lead helpers, regular relief lead helpers, regular
route helpers, regular relief route helpers and order-taker
collectors who are assigned in various sales offices
specified in the parties collective bargaining agreement.
On the other hand, the respondent company is a domestic
corporation duly organized and existing under the laws of
the Philippines and is engaged in the manufacture and
distribution of its soft drink products.
In January 1989, the UNION filed a Notice of Strike with
the National Conciliation and Mediation Board raising
certain issues for conciliation. As a result of said dispute,
the UNION staged a strike.
Subsequently, the Board succeeded in making the parties
agree to a voluntary settlement of the case via a
Memorandum of Agreement signed by them on February
9, 1989. Among others, the petitioner and the respondent
agreed, as follows:
...
1. Christmas Bonus
The Company shall grant to all those covered by the
Bargaining Unit represented by the Union an amount
equivalent to fifty (50%) percent of their average
commission for the last six (6) months.
The union hereby acknowledges that the granting of a
Christmas bonus is purely a Management prerogative and
as such, in determining the amount thereof the same is
solely a discretion of Management. The parties however
agree that henceforth whenever Management exercises
this prerogative, the same shall include the average
commission for the last six (6) months prior to the grant.
Since then, the management granted to each covered
employee every December of the year a certain
percentage of his basic pay and an amount equivalent to
fifty (50%) percent of his average commission for the last
six months prior to the grant. However, in December
1999, the respondent granted a fixed amount of
P4,000.00 only, eliminating thereby the said 50%
employees average commission for the last six months for
members of the union. Thus, claiming the same as
violation of the MOA, the union submitted its grievance to
the respondent. No settlement was reached, hence, the
case was then referred to a Panel of Voluntary Arbitrators.
Petitioner claimed that the MOA establishes the
companys obligation to pay additionally 50% of the
average commission whenever it decides to grant a
bonus and that the fixed amount of P4,000.00 granted in
December 1999, although denominated as ex-gratia was
actually a Christmas bonus. In support of its stand, the
Union submitted sample payslips for the prior years
wherein the company granted a performance grant or one
time grant computed as a percentage of the employees
basic salary. An illustrative example was that given to
Jose Manalusan. His payslip dated December 6, 1996
shows his basic rate at P5,080.00 and an item SPL GRNT
in the amount of P4,786.41. On top of the payslip (sic)
appear the words 80% performance grant. According to
the Union, this amount of P4,786. is P722.41 more than
80% of Manalusans then basic rate (80% of P5,080.00
being PhP4,064.00). Thus, the Union concludes that the
difference of P722.41 represents additional 50% of
average commission. In sum, the Union asseverates that
the grant of the additional 50% of the average commission
has become a practice since 1989 and has ripened into a
contractual obligation.
On the other hand, the respondent company countered
that in 1999 it suffered its worst financial performance in
its history; that its sales volume was twenty percent (20%)
behind plan and ten percent (10%) below the sales in
1998, as a result, it suffered an abnormal loss of Two
Billion Five Hundred Million Pesos (P2,500,000,000.00);
that faced with tremendous losses, the management
decided not to grant bonuses to its employees in 1999;
that through Memorandum 99010 dated December 14,
1999, its President, Mr. Peter Baker explained to the
employees the companys financial situation and the
decision not to grant bonuses; that in the same memo
however, the company granted a special ex
gratia payment of Four Thousand Pesos (P4,000.00) to
all its permanent employees, . . .
During the past year (sic) we have suffered greatly as a
result of a number of internal and external issues including
the effect of the general economic pressures in the
Philippines.
Our sales volume in 1999 is approximately 20% behind
the plan and 10% below last year. This together with lower
than expected prices and increased costs will result in a
financial performance which is undoubtedly the worst in
our history.
The Coca-cola Amatil Board has announced that it
expects an abnormal loss of PhP2.5 Billion (AUD100
million) before tax at CCBPI in 1999 and that reported on-
going results will be below everyones expectations.
In these circumstances the CCBPI Executive Committee
has decided that the CCBPI is not able to pay bonuses to
any staff in 1999. As your new president, it disappoints
me greatly to have to inform you of this situation.
Our situation has been discussed with the CCA Board and
they are understanding of the difficulties we face a (sic)
present and grateful of the efforts of our associates at all
levels. Furthermore, the management of CCA has agreed
to make a special Ex Gratia payment PhP4,000.00 to all
permanent employees of CCBPI. Our hope that [t]his will
assist in some way to allow you and your families to enjoy
the festive season.
In denying the claim of the Union for the payment of the
additional 50% of the average commission for the last six
months, the respondent argues that the said MOA is not
applicable since the company did not grant Christmas
bonus in 1999.
After hearing and the submission of evidence and position
papers, the Arbitration Panel composed of Apron
Mangabat and Noel Sanchez, as chairman and member,
respectively, denied petitioners claim and declared that
the P4,000.00 given as ex gratia is not a bonus, while
Arnel Dolendo, another member dissented. The
dispositive portion of the decision reads as follows:
WHEREFORE, judgment is hereby rendered declaring
that the special Ex Gratia payment of P4,000.00 made
pursuant to the Memo of Mr. Peter Baker dated December
14, 1999 was not a Christmas bonus and therefore, the
claim of the Union for an additional 50% of average
commission on top of said P4,000.00 is hereby denied.[3]
A copy of this Decision dated 21 January 2001 was
received by petitioners counsel on 20 February 2001.
Said Decision was signed only by the Chairman of the
Panel, Mr. Apron Mangabat, and one of its members, Atty.
Noel Sanchez. As to the third member, Atty. Arnel
Dolendo, instead of a signature on top of his printed
name, the following notation appears:
Dissented during deliberation.
Will file a separate opinion.
No separate opinion, however, was attached to the
Decision as received by petitioner, through its counsel.
Thus, on 22 February 2001 (two days after receipt of the
Decision), petitioner filed an Urgent Ex-Parte
Manifestation with Motion where it essentially questioned
the validity of the decision, opining that the Panels
decision without such dissenting and separate opinion
attached thereto makes the decision incomplete and
prematurely issued. It consequently prayed that the
questioned Decision be held in abeyance and for the
Panel to immediately issue an order to the effect that the
prescriptive period available to any of the parties to seek
any legal remedy or relief be suspended in the meantime.
The Panel did not directly act on this motion. Instead,
on 02 March 2001, petitioner received a Notice of
Transmittal from the NCMB furnishing it a copy of Atty.
Dolendos separate opinion together with the 21 January
2001 Decision. Thus, on 12 March 2001, petitioner filed a
motion for reconsideration of the 21 January 2001
Decision.
On 30 May 2001, the Panel denied petitioners
motion for reconsideration. A copy of the Order of denial
was received by petitioner on 09 July 2001. By virtue
thereof, petitioner filed a Petition for Review before the
Court of Appeals on 24 July 2001.
In dealing with the controversy, the Court of Appeals
adopted a two-tiered approach. First, it held that contrary
to the view of the Panel, the P4,000.00 special ex
gratia payment is a Christmas bonus, hence, petitioners
members are entitled to the additional 50% average
commission for the last six months prior to the grant
pursuant to the Memorandum of Agreement entered into
between petitioner and respondent Coca-Cola Bottlers
Philippines, Inc. This notwithstanding, the Court of
Appeals dismissed the petition on the ground that
petitioners motion for reconsideration dated 12 March
2001 of the Decision of the Panel that was originally
received on 20 February 2001 was filed out of time;
hence, the said Decision already became final and
executory after ten (10) calendar days from receipt of the
copy of the Decision by the parties pursuant to Article 262-
A of the Labor Code. The Court of Appeals ratiocinated
thus:
On the matter of procedure, Article 262-A of the Labor
Code governs. It provides that the award or decision of
the Voluntary Arbitrator or panel of Voluntary Arbitrators
shall be final and executory after ten (10) calendar days
from receipt of the copy of the award or decision by the
parties. Moreover, Section 6, Rule VII of the NCMB
Procedural Guidelines in the Conduct of Voluntary
Arbitration Proceedings, dated July 28, 1989, states
categorically, to wit:
Section 6. Finality of Award or Decisions. Awards or
decisions of voluntary arbitrator become final and
executory after ten (10) calendar days from receipt of
copies of the award or decision by the parties.
The above-mentioned rule makes the voluntary
arbitrators award final and executory after ten calendar
days from receipt of a copy of the decision or award by
the parties. Presumably, the decision may still be
reconsidered by the Voluntary Arbitrator on the basis of a
motion for reconsideration seasonably filed during that
period. Thus, the seasonable filing of a motion for
reconsideration following the receipt by the petitioner of a
copy of the decision or award of the panel of Voluntary
Arbitrators, is a mandatory requirement to forestall the
finality of such decision or award. In the case at bar
however, the petitioner filed on March 12, 2001 a motion
for reconsideration of the arbitrators decision, which it
received on February 20, 2001. Without doubt at the time
the said motion was filed, which was beyond the
reglementary period of ten (10) days, the decision had
already become final and executory. It is a hornbook rule
that once a judgment has become final and executory, it
may no longer be modified in any respect, even if the
modification is meant to be an erroneous conclusion of
fact or law, and regardless of whether the modification is
attempted to be made by the court rendering it or by the
highest court of the land, as what remains to be done is
the purely ministerial enforcement or execution of the
judgment.
The doctrine of finality of judgment is grounded on
fundamental considerations of public policy and sound
practice that at the risk of occasional errors, the judgment
of adjudicating bodies must become final and executory
on some definite date fixed by law. In the more recent
case of DBP v. NLRC, the Supreme Court reiterated that
the doctrine of immutability of final judgment is adhered to
by necessity notwithstanding occasional errors that may
result thereby, since litigations must somehow come to an
end for otherwise, it would be even more intolerable than
the wrong and injustice it is designed to correct.
And, acting on petitioners motion for reconsideration, the
Court of Appeals held:
We cannot simply yield to the submission of the petitioner
that the decision of the panel of Voluntary Arbitrators had
not yet became final and executory. It is not correct to say
that March 2, 2001, the date when the petitioner union
received the January 21, 2001 decision of the panel of
Voluntary Arbitrators together with the dissenting opinion
of Voluntary Arbitrator Arnel Dolendo should be
considered as the reckoning date for purposes of filing a
motion for reconsideration. The absence of the dissenting
opinion in the copy of the assailed decision duly received
by the petitioner on February 20, 2001 did not make the
said decision incomplete, for it disposed of all the issues
of the case validly raised. Well settled is the rule that a
dissenting opinion, as it is, is a mere expression of the
individual view of the dissenting justice from the
conclusion held by the majority of the court and therefore,
not binding. It is the dispositive portion of the decision or
the fallo, which contains the final and actual adjudication
of the rights of the parties that constitutes the judgment of
the court. Hence, to forestall the finality of the arbitrators
award, petitioner should have filed a motion for
reconsideration within the reglementary period of ten (10)
days, without waiting for the dissenting opinion of
Voluntary Arbitrator Dolendo. Thus, the filing of the motion
for reconsideration of the arbitrators award only on March
12, 2001 was way beyond the ten (10) day reglementary
period and had the effect of rendering the panel of
Voluntary Arbitrators decision final and executory.
Certainly, in allowing the arbitrators award to lapse into
finality on the flimsy excuse that it has to receive the
dissenting opinion of Arnel Dolendo does not find support
in law. Finality of judgment becomes a fact when the
reglementary period to appeal lapses, and no appeal is
perfected within such period. It is a jurisdictional event
which can not be made to depend on the convenience of
a party.[4]
From this aspect of the Court of Appeals Decision
and Resolution, petitioner now comes before us for
redress, assigning as sole issue the following:
THE HONORABLE COURT OF APPEALS COMMITTED
A REVERSIBLE ERROR WHEN IT DISMISSED THE
PETITION ON MERE TECHNICALITY CONTRARY TO
SETTLED JURISPRUDENCE, AFTER FAVORABLY
RULING ON THE MERITS IN FAVOR OF PETITIONER
The resolution of the present controversy hinges for
the most part on the correct disposition of petitioners
argument that the Panels Decision sans the dissenting
opinion of one of its members was irregularly issued;
hence, did not toll the running of the prescriptive period
within which to file a motion for reconsideration. To
sustain petitioners argument would mean that the subject
Decision could still be reviewed by the Court of Appeals.
A contrary resolution would stamp the subject decision
with finality rendering it impervious to review pursuant to
the doctrine of finality of judgments.
Rule VII, Section 1 of the Procedural Guidelines in
the Conduct of Voluntary Arbitration Proceedings
provides the key. Therein, what constitutes the voluntary
arbitrators decision (and, by extension, that of the Panel
of voluntary arbitrators) is defined with precision, to wit:
Section 1. Decision Award. -- The final arbitral disposition
of issue/s submitted to voluntary arbitration is the
Decision. The disposition may take the form of a dismissal
of a claim or grant of specific remedy, either by way of
prohibition of particular acts or specific performance of
particular acts. In the latter case the decision is called an
Award.
In herein case, the Decision of the Panel was in the form
of a dismissal of petitioners complaint. Naturally, this
dismissal was contained in the main decision and not in
the dissenting opinion. Thus, under Section 6, Rule VII of
the same guidelines implementing Article 262-A of the
Labor Code, this Decision, as a matter of course, would
become final and executory after ten (10) calendar days
from receipt of copies of the decision by the parties even
without receipt of the dissenting opinion unless, in the
meantime, a motion for reconsideration[5] or a petition for
review to the Court of Appeals under Rule 43 of the Rules
of Court[6] is filed within the same 10-day period. As
correctly pointed out by the Court of Appeals, a dissenting
opinion is not binding on the parties as it is a mere
expression of the individual view of the dissenting
member from the conclusion held by the majority of the
Court, following our ruling in Garcia v. Perez[7] as
reiterated in National Union of Workers in Hotels,
Restaurants and Allied Industries v. NLRC.[8]
Prescinding from the foregoing, the Court of Appeals
correctly dismissed the petition before it as it no longer
had any appellate jurisdiction to alter or nullify the decision
of the Panel.[9]The Panels Decision had become final and
executory, hence, unchallengeable.
We are not unmindful that in labor disputes, social
justice exhorts courts to lean backwards in favor of the
working class. Corollary thereto, it is doctrinal that in labor
disputes, rules of procedure cannot be applied in a rigid
and technical sense.[10] Thus, in appropriate cases, we
have not hesitated to relax matters of procedure in the
interest of substantial justice.[11] As applied herein,
however, our hands are tied by the fact that the case had
already attained finality long before it got here. As we
declared in Nacuray v. National Labor Relations
Commission[12] --
. . . Nothing is more settled in law than that when a
judgment becomes final and executory it becomes
immutable and unalterable. The same may no longer be
modified in any respect, even if the modification is meant
to correct what is perceived to be an erroneous conclusion
of fact or law, and whether made by the highest court of
the land. The reason is grounded on the fundamental
considerations of public policy and sound practice that, at
the risk of occasional error, the judgments or orders of
courts must be final at some definite date fixed by law.
WHEREFORE, premises considered, the Court of
Appeals Decision dated 22 May 2002 and its Resolution
dated 03 October 2002 are hereby AFFIRMED. No costs.
SO ORDERED.
40. *SAN MIGUEL FOODS, INCORPORATED V.
SAN MIGUEL CORPORATION SUPERVISORS
and EXEMPT UNION
G.R. No. 146206
The issues in the present case, relating to the inclusion of
employees in supervisor levels 3 and 4 and the exempt
employees in the proposed bargaining unit, thereby
allowing their participation in the certification election; the
application of the community or mutuality of interests test;
and the determination of the employees who belong to the
category of confidential employees, are not novel.
In G.R. No. 110399, entitled San Miguel
Corporation Supervisors and Exempt Union v.
Laguesma,[1] the Court held that even if they handle
confidential data regarding technical and internal
business operations, supervisory employees 3 and 4 and
the exempt employees of petitioner San Miguel Foods,
Inc. (SMFI) are not to be considered confidential
employees, because the same do not pertain to labor
relations, particularly, negotiation and settlement of
grievances. Consequently, they were allowed to form an
appropriate bargaining unit for the purpose of collective
bargaining. The Court also declared that the employees
belonging to the three different plants of San Miguel
Corporation Magnolia Poultry Products Plants in
Cabuyao, San Fernando, and Otis, having community or
mutuality of interests, constitute a single bargaining
unit. They perform work of the same nature, receive the
same wages and compensation, and most importantly,
share a common stake in concerted activities. It was
immaterial that the three plants have different locations as
they did not impede the operations of a single bargaining
representative.[2]
Pursuant to the Court's decision in G.R. No. 110399, the
Department of Labor and Employment National Capital
Region (DOLE-NCR) conducted pre-election
conferences.[3]However, there was a discrepancy in the
list of eligible voters, i.e., petitioner submitted a list of 23
employees for the San Fernando plant and 33 for the
Cabuyao plant, while respondent listed 60 and 82,
respectively.[4]
On August 31, 1998, Med-Arbiter Agatha Ann L.
Daquigan issued an Order[5] directing Election Officer
Cynthia Tolentino to proceed with the conduct of
certification election in accordance with Section 2, Rule
XII of Department Order No. 9.
On September 30, 1998, a certification election was
conducted and it yielded the following results,[6] thus:
Cabuyao San Fernando Total
Plant Plant
Yes 23 23 46
No 0 0 0
Spoiled 2 0 2
Segregated 41 35 76
Total Votes
Cast 66 58 124
On the date of the election, September 30, 1998,
petitioner filed the Omnibus Objections and Challenge to
Voters,[7] questioning the eligibility to vote by some of its
employees on the grounds that some employees do not
belong to the bargaining unit which respondent seeks to
represent or that there is no existence of employer-
employee relationship with petitioner. Specifically, it
argued that certain employees should not be allowed to
vote as they are: (1) confidential employees; (2)
employees assigned to the live chicken operations, which
are not covered by the bargaining unit; (3) employees
whose job grade is level 4, but are performing managerial
work and scheduled to be promoted; (4) employees who
belong to the Barrio Ugong plant; (5) non-SMFI
employees; and (6) employees who are members of other
unions.
On October 21, 1998, the Med-Arbiter issued an
Order directing respondent to submit proof showing that
the employees in the submitted list are covered by the
original petition for certification election and belong to the
bargaining unit it seeks to represent and, likewise,
directing petitioner to substantiate the allegations
contained in its Omnibus Objections and Challenge to
Voters.[8]
In compliance thereto, respondent averred that (1) the
bargaining unit contemplated in the original petition is the
Poultry Division of San Miguel Corporation, now known as
San Miguel Foods, Inc.; (2) it covered the operations in
Calamba, Laguna, Cavite, and Batangas and its home
base is either in Cabuyao, Laguna or San Fernando,
Pampanga; and (3) it submitted individual and separate
declarations of the employees whose votes were
challenged in the election.[9]
Adding the results to the number of votes canvassed
during the September 30, 1998 certification election, the
final tally showed that: number of eligible voters 149;
number of valid votes cast 121; number of spoiled ballots
- 3; total number of votes cast 124, with 118 (i.e., 46 + 72
= 118 ) Yes votes and 3 No votes.[10]
The Med-Arbiter issued the Resolution[11] dated
February 17, 1999 directing the parties to appear before
the Election Officer of the Labor Relations Division on
March 9, 1999, 10:00 a.m., for the opening of the
segregated ballots. Thereafter, on April 12, 1999, the
segregated ballots were opened, showing that out of the
76 segregated
votes, 72 were cast for Yes and 3 for No, with one spoiled Hence, petitioner filed this present petition raising
ballot.[12] the following issues:

Based on the results, the Med-Arbiter issued the I.

Order[13] dated April 13, 1999, stating that since the Yes
vote received 97% of the valid votes cast, respondent is WHETHER THE COURT OF APPEALS
certified to be the exclusive bargaining agent of the DEPARTED FROM JURISPRUDENCE
supervisors and exempt employees of petitioner's WHEN IT EXPANDED THE SCOPE OF
Magnolia Poultry Products Plants in Cabuyao, San THE BARGAINING UNIT DEFINED BY
Fernando, and Otis. THIS COURT'S RULING IN G.R. NO.
110399.

On appeal, the then Acting DOLE Undersecretary, in the

Resolution[14] dated July 30, 1999, in OS-A-2-70-91 II.
(NCR-OD-M-9010-017), affirmed the Order dated April
13, 1999, with modification that George C. Matias, Alma WHETHER THE COURT OF APPEALS
Maria M. Lozano, Joannabel T. Delos Reyes, and Marilyn DEPARTED FROM JURISPRUDENCE -
G. Pajaron be excluded from the bargaining unit which SPECIFICALLY, THIS COURT'S
respondent seeks to represent. She opined that the DEFINITION OF A CONFIDENTIAL
challenged voters should be excluded from the bargaining EMPLOYEE - WHEN IT RULED FOR
unit, because Matias and Lozano are members of THE INCLUSION OF THE PAYROLL
Magnolia Poultry Processing Plants Monthly Employees MASTER POSITION IN THE
Union, while Delos Reyes and Pajaron are employees of BARGAINING UNIT.
San Miguel Corporation, which is a separate and distinct
entity from petitioner.

Petitioners Partial Motion for III.

Reconsideration[15] dated August 14, 1999 was denied by
the then Acting DOLE Undersecretary in the
Order[16] dated August 27, 1999.
In the Decision[17] dated April 28, 2000, in CA-
G.R. SP No. 55510, entitled San Miguel Foods, Inc. v.
The Honorable Office of the Secretary of Labor, Bureau
of Labor Relations, and San Miguel Corporation
Supervisors and Exempt Union, the Court of Appeals
(CA) affirmed with modification the Resolution dated July
30, 1999 of the DOLE Undersecretary, stating that
those holding the positions of Human Resource Assistant
and Personnel Assistant are excluded from the bargaining
unit.
Petitioners Motion for Partial
Reconsideration[18] dated May 23, 2000 was denied by
the CA in the Resolution[19] dated November 28, 2000.
WHETHER THIS PETITION IS A
REHASH OR A RESURRECTION OF
THE ISSUES RAISED IN G.R. NO.
110399, AS ARGUED BY PRIVATE
RESPONDENT.
Petitioner contends that with the Court's ruling in
G.R. No. 110399[20] identifying the specific employees
who can participate in the certification election, i.e., the
supervisors (levels 1 to 4) and exempt employees of San
Miguel Poultry Products Plants in Cabuyao, San
Fernando, and Otis, the CA erred in expanding the scope
of the bargaining unit so as to include employees who do
not belong to or who are not based in its Cabuyao or San
Fernando plants. It also alleges that the employees of the
Cabuyao, San Fernando, and Otis plants of petitioners
predecessor, San Miguel Corporation, as stated in G.R.
No. 110399, were engaged in dressed chicken
processing, i.e., handling and packaging of chicken meat,
while the new bargaining unit, as defined by the CA in the
present case, includes employees engaged in live
chicken operations, i.e., those who breed chicks and grow
chickens.
Respondent counters that petitioners proposed
exclusion of certain employees from the bargaining unit
was a rehashed issue which was already settled in G.R.
No. 110399.It maintains that the issue of union
membership coverage should no longer be raised as a
certification election already took place on September 30,
1998, wherein respondent won with 97% votes.
Petitioners contentions are erroneous. In G.R.
No. 110399, the Court explained that the employees of
San Miguel Corporation Magnolia Poultry Products Plants
of Cabuyao, San Fernando, and Otis constitute a single
bargaining unit, which is not contrary to the one-company,
one-union policy. An appropriate bargaining unit is
defined as a group of employees of a given employer,
comprised of all or less than all of the entire body of
employees, which the collective interest of all the
employees, consistent with equity to the employer,
indicate to be best suited to serve the reciprocal rights and
duties of the parties under the collective bargaining
provisions of the law.[21]
In National Association of Free Trade Unions v.
Mainit Lumber Development Company Workers
Union United Lumber and General Workers of the
Phils,[22] the Court, taking into account the community or
mutuality of interests test, ordered the formation of a
single bargaining unit consisting of the Sawmill Division in
Butuan City and the Logging Division in Zapanta Valley,
Kitcharao, Agusan [Del] Norte of the Mainit Lumber
Development Company. It held that while the existence of
a bargaining history is a factor that may be reckoned with
in determining the appropriate bargaining unit, the same
is not decisive or conclusive. Other factors must be
considered. The test of grouping is community or
mutuality of interest. This is so because the basic test of
an asserted bargaining units acceptability is whether or
not it is fundamentally the combination which will best
assure to all employees the exercise of their collective
bargaining rights.[23] Certainly, there is a mutuality of
interest among the employees of the Sawmill Division and
the Logging Division. Their functions mesh with one
another. One group needs the other in the same way that
the company needs them both. There may be differences
as to the nature of their individual assignments, but the
distinctions are not enough to warrant the formation of a
separate bargaining unit.[24]
Thus, applying the ruling to the present case, the
Court affirms the finding of the CA that there should be
only one bargaining unit for
the employees in Cabuyao, San Fernando, and Otis[25] of
Magnolia Poultry Products Plant involved in dressed
chicken processing and Magnolia Poultry Farms engaged
in live chicken operations. Certain factors, such as
specific line of work, working conditions, location of work,
mode of compensation, and other relevant conditions do
not affect or impede their commonality of
interest. Although they seem separate and distinct from
each other, the specific tasks of each division are actually
interrelated and there exists mutuality of interests which
warrants the formation of a single bargaining unit.
Petitioner asserts that the CA erred in not
excluding the position of Payroll Master in the definition of
a confidential employee and, thus, prays that the said
position and all other positions with access to salary and
compensation data be excluded from the bargaining unit.
This argument must fail. Confidential employees
are defined as those who (1) assist or act in a confidential
capacity, in regard (2) to persons who formulate,
determine, and effectuate management policies in the
field of labor relations.[26] The two criteria are cumulative,
and both must be met if an employee is to be considered
a confidential employee - that is, the confidential
relationship must exist between the employee and his
supervisor, and the supervisor must handle the
prescribed responsibilities relating to labor relations. The
exclusion from bargaining units of employees who, in the
normal course of their duties, become aware of
management policies relating to labor relations is a
principal objective sought to be accomplished by the
confidential employee rule.[27]
A confidential employee is one entrusted with
confidence on delicate, or with the custody, handling or
care and protection of the employers
property.[28] Confidential employees, such as accounting
personnel, should be excluded from the bargaining unit,
as their access to confidential information may become
the source of undue advantage.[29] However, such fact
does not apply to the position of Payroll Master and the
whole gamut of employees who, as perceived by
petitioner, has access to salary and compensation
data. The CA correctly held that the position of Payroll
Master does not involve dealing with confidential labor
relations information in the course of the performance of
his functions. Since the nature of his work does not
pertain to company rules and regulations and confidential
labor relations, it follows that he cannot be excluded from
the subject bargaining unit.
Corollarily, although Article 245[30] of the Labor
Code limits the ineligibility to join, form and assist any
labor organization to managerial employees,
jurisprudence has extended this prohibition to
confidential employees or those who by reason of their
positions or nature of work are required to assist or act in
a fiduciary manner to managerial employees and, hence,
are likewise privy to sensitive and highly confidential
records.[31] Confidential employees are thus excluded
from the rank-and-file bargaining unit. The rationale for
their separate category and disqualification to join any
labor organization is similar to the inhibition for
managerial employees, because if allowed to be affiliated
with a union, the latter might not be assured of their loyalty
in view of evident conflict of interests and the union can
also become company-denominated with the presence of
managerial employees in the union
membership.[32] Having access to confidential
information, confidential employees may also become the
source of undue advantage. Said employees may act as
a spy or spies of either party to a collective bargaining
agreement.[33]
In this regard, the CA correctly ruled that the
positions of Human Resource Assistant and Personnel
Assistant belong to the category of confidential
employees and, hence, are excluded from the bargaining
unit, considering their respective positions and job
descriptions. As Human
Resource Assistant,[34] the scope of ones
work necessarily involves labor relations, recruitment and
selection of employees, access to employees' personal
files and compensation package, and human resource
management. As regards a Personnel Assistant,[35] one's
work includes the recording of minutes for management
during collective bargaining negotiations, assistance to
management during grievance meetings and
administrative investigations, and securing legal advice
for labor issues from the petitioners team of lawyers, and
implementation of company programs. Therefore, in the
discharge of their functions, both gain access to vital labor
relations information which outrightly disqualifies them
from union membership.
The proceedings for certification election
are quasi-judicial in nature and, therefore, decisions
rendered in such proceedings can attain
finality.[36] Applying the doctrine of res judicata, the issue
in the present case pertaining to the coverage of the
employees who would constitute the bargaining unit is
now a foregone conclusion.
It bears stressing that a certification election is the
sole concern of the workers; hence, an employer lacks the
personality to dispute the same. The general rule is that
an employer has no standing to question the process of
certification election, since this is the sole concern of the
workers.[37] Law and policy demand that employers take a
strict, hands-off stance in certification elections. The
bargaining representative of employees should be chosen
free from any extraneous influence of management. A
labor bargaining representative, to be effective, must owe
its loyalty to the employees alone and to no other.[38] The
only exception is where the employer itself has to file the
petition pursuant to Article 258[39] of the Labor Code
because of a request to bargain collectively.[40]
With the foregoing disquisition, the Court
writes finis to the issues raised so as to forestall future
suits of similar nature.
41. *EMPLOYEES UNION OF BAYER PHILS.,
FFW v. BAYER PHILIPPINES, INC.
G.R. No. 162943
This petition for review on certiorari assails the
Decision[1] dated December 15, 2003 and
Resolution[2] dated March 23, 2004 of the Court of
Appeals (CA) in CA-G.R. SP No. 73813.
Petitioner Employees Union of Bayer
Philippines[3] (EUBP) is the exclusive bargaining agent of
all rank-and-file employees of Bayer Philippines (Bayer),
and is an affiliate of the Federation of Free Workers
(FFW). In 1997, EUBP, headed by its president Juanito S.
Facundo (Facundo), negotiated with Bayer for the signing
of a collective bargaining agreement (CBA). During the
negotiations, EUBP rejected Bayers 9.9% wage-increase
proposal resulting in a bargaining deadlock.
Subsequently, EUBP staged a strike, prompting the
Secretary of the Department of Labor and Employment
(DOLE) to assume jurisdiction over the dispute.
In November 1997, pending the resolution of the dispute,
respondent Avelina Remigio (Remigio) and 27 other
union members, without any authority from their union
leaders, accepted Bayers wage-increase proposal.
EUBPs grievance committee questioned Remigios action
and reprimanded Remigio and her allies. On January 7,
1998, the DOLE Secretary issued an arbitral award
ordering EUBP and Bayer to execute a CBA retroactive
to January 1, 1997 and to be made effective
until December 31, 2001. The said CBA[4] was registered
on July 8, 1998 with the Industrial Relations Division of
the DOLE-National Capital Region (NCR).[5]
Meanwhile, the rift between Facundos leadership and
Remigios group broadened. On August 3, 1998, barely
six months from the signing of the new CBA, during a
company-sponsored seminar,[6] Remigio solicited
signatures from union members in support of a resolution
containing the decision of the signatories to: (1) disaffiliate
from FFW, (2) rename the union as Reformed Employees
Union of Bayer Philippines (REUBP), (3) adopt a new
constitution and by-laws for the union, (4) abolish all
existing officer positions in the union and elect a new set
of interim officers, and (5) authorize REUBP to administer
the CBA between EUBP and Bayer.[7] The said resolution
was signed by 147 of the 257 local union members. A
subsequent resolution was also issued affirming the first
resolution.[8]
A tug-of-war then ensued between the two rival groups,
with both seeking recognition from Bayer and demanding
remittance of the union dues collected from its rank-and-
file members. On September 8, 1998, Remigios splinter
group wrote Facundo, FFW and Bayer informing them of
the decision of the majority of the union members to
disaffiliate from FFW.[9] This was followed by another
letter informing Facundo, FFW and Bayer that an interim
set of REUBP executive officers and board of directors
had been appointed, and demanding the remittance of all
union dues to REUBP. Remigio also asked Bayer to
desist from further transacting with EUBP. Facundo,
meanwhile, sent similar requests to Bayer[10] requesting
for the remittance of union dues in favor of EUBP and
accusing the company of interfering with purely union
matters.[11] Bayer responded by deciding not to deal with
either of the two groups, and by placing the union dues
collected in a trust account until the conflict between the
two groups is resolved.[12]
On September 15, 1998, EUBP filed a complaint for unfair
labor practice (first ULP complaint) against Bayer for non-
remittance of union dues. The case was docketed as
NLRC-NCR-Case No. 00-09-07564-98.[13]
EUBP later sent a letter dated November 5, 1998 to Bayer
asking for a grievance conference.[14] The meeting was
conducted by the management on November 11, 1998,
with all REUBP officers including their lawyers
present. Facundo did not attend the meeting, but sent two
EUBP officers to inform REUBP and the management
that a preventive mediation conference between the two
groups has been scheduled on November 12,
1998 before the National Conciliation and Mediation
Board (NCMB).[15]
Apparently, the two groups failed to settle their issues as
Facundo again sent respondent Dieter J. Lonishen two
more letters, dated January 14, 1999[16] and September
2, 1999,[17] asking for a grievance meeting with the
management to discuss the failure of the latter to comply
with the terms of their CBA. Both requests remained
unheeded.
On February 9, 1999, while the first ULP case was still
pending and despite EUBPs repeated request for a
grievance conference, Bayer decided to turn over the
collected union dues amounting to P254,857.15 to
respondent Anastacia Villareal, Treasurer of REUBP.
Aggrieved by the said development, EUBP lodged a
complaint[18] on March 4, 1999 against Remigios group
before the Industrial Relations Division of the DOLE
praying for their expulsion from EUBP for commission of
acts that threaten the life of the union.
On June 18, 1999, Labor Arbiter Jovencio Ll. Mayor, Jr.
dismissed the first ULP complaint for lack of
jurisdiction.[19] The Arbiter explained that the root cause
for Bayers failure to remit the collected union dues can be
traced to the intra-union conflict between EUBP and
Remigios group[20] and that the charges imputed against
Bayer should have been submitted instead to voluntary
arbitration.[21] EUBP did not appeal the said decision.[22]
On December 14, 1999, petitioners filed a second ULP
complaint against herein respondents docketed as NLRC-
RAB-IV Case No. 12-11813-99-L. Three days later,
petitioners amended the complaint charging the
respondents with unfair labor practice committed by
organizing a company union, gross violation of the CBA
and violation of their duty to bargain.[23] Petitioners
complained that Bayer refused to remit the collected
union dues to EUBP despite several demands sent to the
management.[24] They also alleged that notwithstanding
the requests sent to Bayer for a renegotiation of the last
two years of the 1997-2001 CBA between EUBP and
Bayer, the latter opted to negotiate instead with Remigios
group.[25]
On even date, REUBP and Bayer agreed to sign a new
CBA. Remigio immediately informed her allies of the
managements decision.[26]
In response, petitioners immediately filed an urgent
motion for the issuance of a restraining
order/injunction[27] before the National Labor Relations
Commission (NLRC) and the Labor Arbiter against
respondents. Petitioners asserted their authority as the
exclusive bargaining representative of all rank-and-file
employees of Bayer and asked that a temporary
restraining order be issued against Remigios group and
Bayer to prevent the employees from ratifying the new
CBA. Later, petitioners filed a second amended
complaint[28] to include in its complaint the issue of gross
violation of the CBA for violation of the contract bar rule
following Bayers decision to negotiate and sign a new
CBA with Remigios group.
Meanwhile, on January 26, 2000, the Regional Director of
the Industrial Relations Division of DOLE issued a
decision dismissing the issue on expulsion filed by EUBP
against Remigio and her allies for failure to exhaust reliefs
within the union and ordering the conduct of a referendum
to determine which of the two groups should be
recognized as union officers.[29] EUBP seasonably
appealed the said decision to the Bureau of Labor
Relations (BLR).[30] On June 16, 2000, the BLR reversed
the Regional Directors ruling and ordered the
management of Bayer to respect the authority of the duly-
elected officers of EUBP in the administration of the
prevailing CBA.[31]
Unfortunately, the said BLR ruling came late since Bayer
had already signed a new CBA[32] with REUBP
on February 21, 2000. The said CBA was eventually
ratified by majority of the bargaining unit.[33]
On June 2, 2000, Labor Arbiter Waldo Emerson R. Gan
dismissed EUBPs second ULP complaint for lack of
jurisdiction.[34] The Labor Arbiter explained the dismissal
as follows:
All told, were it not for the fact that there
were two (2) [groups] of employees, the
Union led by its President Juanito
Facundo and the members who decided
to disaffiliate led by Ms. Avelina Remigio,
claiming to be the rightful representative
of the rank and file employees, the
Company would not have acted the way
it did and the Union would not have filed
the instant case.
Clearly then, as the case involves intra-
union disputes, this Office is bereft of any
jurisdiction pursuant to Article 226 of the
Labor Code, as amended, which
provides pertinently in part, thus:
Bureau of Labor Relations The
Bureau of Labor Relations and the
Labor Relations Divisions in the
regional offices of the Department of
Labor and Employment shall have
original and exclusive authority to
act, at their own initiative or upon
request of either or both parties, on
all inter-union and intra-union
conflicts, and all disputes, grievances
or problems arising from or affecting
labor-management relations in all
workplaces whether agricultural or
non-agricultural, except those arising
from the implementation or
interpretation of collective bargaining
agreements which shall be the
subject of grievance procedure
and/or voluntary arbitration.
Specifically, with respect to the union
dues, the authority is the case of Cebu
Seamens Association[,] Inc. vs. Ferrer-
Calleja, (212 SCRA 51), where the
Supreme Court held that when the issue
calls for the determination of which
between the two groups within a union is
entitled to the union dues, the same
cannot be taken cognizance of by the
NLRC.
xxxx
WHEREFORE, premises considered, the
instant complaint is hereby DISMISSED
on the ground of lack of jurisdiction.
SO ORDERED.[35]
On June 28, 2000, the NLRC resolved to
dismiss[36] petitioners motion for a restraining order and/or
injunction stating that the subject matter involved an intra-
union dispute, over which the said Commission has no
jurisdiction.[37]
Aggrieved by the Labor Arbiters decision to dismiss the
second ULP complaint, petitioners appealed the said
decision, but the NLRC denied the appeal.[38] EUBPs
motion for reconsideration was likewise denied.[39]
Thus, petitioners filed a Rule 65 petition to the denying the motion for reconsideration,
CA. On December 15, 2003, the CA sustained both the by the National Labor Relations
Labor Arbiter and the NLRCs rulings. The appellate court Commission, First Division, in NLRC
explained, Case No. RAB-IV-12-11813-99-L, are
hereby AFFIRMED in toto. Costs against
A cursory reading of the three pleadings, petitioners.
to wit: the Complaint (Vol. I, Rollo, p[p].
166-167); the Amended Complaint (Vol. SO ORDERED.[40]
I, Rollo[,] pp. 168-172) and the Second
Amended Complaint dated March 8, Undaunted, petitioners filed this Rule 45 petition before
2000 (Vol. II, Rollo, pp. 219-225) will this Court. Initially, the said petition was denied for having
readily show that the instant case was been filed out of time and for failure to comply with the
brought about by the action of the Group requirements provided in the 1997 Rules of Civil
of REM[I]GIO to disaffiliate from FFW Procedure, as amended.[41] Upon petitioners motion,
and to organized (sic) REUBP under the however, we decided to reinstate their appeal.
tutelage of REM[I]GIO and VILLAREAL.
At first glance of the case at bar, it The following are the issues raised by petitioners, to wit:
involves purely an (sic) inter-union and
intra-union conflicts or disputes between I. WHETHER OR NOT THE
EUBP-FFW and REUBP which issue HONORABLE COURT OF
should have been resolved by the APPEALS, IN ARRIVING AT THE
Bureau of Labor Relations under Article DECISION PROMULGATED ON
226 of the Labor Code. However, since 15 DECEMBER 2003 AND
no less than petitioners who admitted RESOLUTION PROMULGATED
that respondents committed gross ON 23 MARCH 2004, DECIDED
violations of the CBA, then the BLR is THE CASE IN ACCORDANCE
divested of jurisdiction over the case and WITH LAW AND
the issue should have been referred to JURISPRUDENCE; AND
the Grievance Machinery and Voluntary
Arbitrator and not to the Labor Arbiter as II. WHETHER OR NOT THE
what petitioners did in the case at bar. x HONORABLE COURT OF
xx APPEALS, IN ARRIVING AT THE
DECISION PROMULGATED ON
xxxx 15 DECEMBER 2003 AND
RESOLUTION PROMULGATED
Furthermore, the CBA entered between ON 23 MARCH 2004, GRAVELY
BAYER and EUBP-FFW [has] a life span ABUSE[D] ITS DISCRETION IN
of only five years and after the said ITS FINDINGS AND
period, the employees have all the right CONCLUSION THAT:
to change their bargaining unit who will
represent them. If there exist[s] two THE ACTS OF
opposing unions in the same company, ABETTING OR
the remedy is not to declare that such act ASSISTING IN THE
is considered unfair labor practice but CREATION OF
rather they should conduct a certification ANOTHER UNION,
election provided [that] it should be NEGOTIATING OR
conducted within 60 days of the so[- BARGAINING WITH
]called freedom period before the SUCH UNION, WHICH
expiration of the CBA. IS NOT THE SOLE AND
EXCLUSIVE
WHEREFORE, premises considered, BARGAINING AGENT,
this Petition is DENIED and the assailed VIOLATING THE DUTY
Decision dated September 27, 2001 as TO BARGAIN
well as the Order dated June 21, 2002, COLLECTIVELY,
REFUSAL TO
 PROCESS GRIEVABLE union is among those considered by the Labor Code, as
ISSUES IN THE amended, specifically under Article 248 (d)[44] thereof, as
GRIEVANCE unfair labor practice; (2) the act of negotiating with such
MACHINERY AND/OR union constitutes a violation of Bayers duty to bargain
REFUSAL TO DEAL collectively; and (3) Bayers unjustified refusal to process
WITH THE SOLE AND EUBPs grievances and to recognize the said union as the
EXCLUSIVE sole and exclusive bargaining agent are tantamount to
BARGAINING AGENT unfair labor practice.[45]
ARE ACTS
CONSTITUTING OR Respondents Bayer, Lonishen and Amistoso, on the other
TANTAMOUNT TO hand, contend that there can be no unfair labor practice
UNFAIR LABOR on their part since the requisites for unfair labor
PRACTICE.[42] practice i.e., that the violation of the CBA should be gross,
and that it should involve violation in the economic
Respondents Bayer, Lonishen and Amistoso, meanwhile, provisions of the CBA were not satisfied. Moreover, they
identify the issues as follows: cite the ruling of the Labor Arbiter that the issues raised in
the complaint should have been ventilated and threshed
I. WHETHER OR NOT THE UNIFORM out before the voluntary arbitrators as provided in Article
FINDINGS OF THE COURT OF 261 of the Labor Code, as amended.[46] Respondents
APPEALS, THE NLRC AND THE Remigio and Villareal, meanwhile, point out that the case
LABOR ARBITER ARE BINDING should be dismissed as against them since they are not
ON THIS HONORABLE COURT; real parties in interest in the ULP complaint against
Bayer,[47] and since there are no specific or material acts
II. WHETHER OR NOT THE LABOR imputed against them in the complaint.[48]
ARBITER AND THE NLRC HAVE
JURISDICTION OVER THE The petition is partly meritorious.
INSTANT CASE;
An intra-union dispute refers to any conflict between and
III. WHETHER OR NOT THE INSTANT among union members, including grievances arising from
CASE INVOLVES AN INTRA- any violation of the rights and conditions of membership,
UNION DISPUTE; violation of or disagreement over any provision of the
unions constitution and by-laws, or disputes arising from
IV. WHETHER OR NOT chartering or disaffiliation of the union.[49] Sections 1 and
RESPONDENTS COMPANY, 2, Rule XI of Department Order No. 40-03, Series of 2003
LONISHEN AND AMISTOSO of the DOLE enumerate the following circumstances as
COMMITTED AN ACT OF inter/intra-union disputes, viz:
UNFAIR LABOR PRACTICE;
AND RULE XI

V. WHETHER OR NOT THE INSTANT INTER/INTRA-UNION DISPUTES AND

CASE HAS BECOME MOOT AND
ACADEMIC.[43] OTHER RELATED LABOR RELATIONS
DISPUTES
Essentially, the issue in this petition is whether the act of
the management of Bayer in dealing and negotiating with SECTION 1. Coverage. -
Remigios splinter group despite its validly existing CBA Inter/intra-union disputes shall include:
with EUBP can be considered unfair labor practice and, if
so, whether EUBP is entitled to any relief. (a) cancellation of
registration of a labor
Petitioners argue that the subject matter of their organization filed by its
complaint, as well as the subsequent amendments members or by another
thereto, pertain to the unfair labor practice act of labor organization;
respondents Bayer, Lonishen and Amistoso in dealing
with Remigios splinter union. They contend that (1) the (b) conduct of election of
acts of abetting or assisting in the creation of another union and workers
 association organizations, except
officers/nullification of interpretation of collective
election of union and bargaining agreements;
workers association
officers; (n) such other disputes or
conflicts involving the
(c) audit/accounts rights to self-organization,
examination of union or union membership and
workers association funds; collective bargaining

(d) deregistration of (1) between and among

collective bargaining legitimate labor
agreements; organizations;

(e) validity/invalidity of (2) between and among

union affiliation or members of a union or
disaffiliation; workers association.

(f) validity/invalidity of SECTION 2. Coverage. Other

acceptance/non- related labor relations disputes shall
acceptance for union include any conflict between a labor
membership; union and the employer or any individual,
entity or group that is not a labor
(g) validity/invalidity of organization or workers association. This
impeachment/expulsion of includes: (1) cancellation of registration
union and workers of unions and workers associations; and
association officers and (2) a petition for interpleader.
members;
It is clear from the foregoing that the issues raised
(h) validity/invalidity of by petitioners do not fall under any of the aforementioned
voluntary recognition; circumstances constituting an intra-union dispute. More
importantly, the petitioners do not seek a determination of
(i) opposition to whether it is the Facundo group (EUBP) or the Remigio
application for union and group (REUBP) which is the true set of union officers.
CBA registration; Instead, the issue raised pertained only to the validity of
the acts of management in light of the fact that it still has
(j) violations of or an existing CBA with EUBP. Thus as to Bayer, Lonishen
disagreements over any and Amistoso the question was whether they were liable
provision in a union or for unfair labor practice, which issue was within the
workers association jurisdiction of the NLRC. The dismissal of the second ULP
constitution and by-laws; complaint was therefore erroneous.

(k) disagreements over However, as to respondents Remigio and

chartering or registration Villareal, we find that petitioners complaint was validly
of labor organizations and dismissed.
collective bargaining
agreements; Petitioners ULP complaint cannot prosper as
against respondents Remigio and Villareal because the
(l) violations of the rights issue, as against them, essentially involves an intra-union
and conditions of union or dispute based on Section 1 (n) of DOLE Department
workers association Order No. 40-03. To rule on the validity or illegality of their
membership; acts, the Labor Arbiter and the NLRC will necessarily
touch on the issues respecting the propriety of their
(m) violations of the rights of disaffiliation and the legality of the establishment of
legitimate labor REUBP issues that are outside the scope of their
jurisdiction. Accordingly, the dismissal of the complaint
was validly made, but only with respect to these two
respondents.
But are Bayer, Lonishen and Amistoso liable for
unfair labor practice? On this score, we find that the
evidence supports an answer in the affirmative.
It must be remembered that a CBA is entered into
in order to foster stability and mutual cooperation between
labor and capital. An employer should not be allowed to
rescind unilaterally its CBA with the duly certified
bargaining agent it had previously contracted with, and
decide to bargain anew with a different group if there is no
legitimate reason for doing so and without first following
the proper procedure. If such behavior would be tolerated,
bargaining and negotiations between the employer and
the union will never be truthful and meaningful, and no
CBA forged after arduous negotiations will ever be
honored or be relied upon. Article 253 of the Labor Code,
as amended, plainly provides:
ART. 253. Duty to bargain collectively
when there exists a collective bargaining
agreement. Where there is a collective
bargaining agreement, the duty to
bargain collectively shall also mean
that neither party shall terminate or
modify such agreement during its
lifetime. However, either party can serve
a written notice to terminate or modify the
agreement at least sixty (60) days prior to
its expiration date. It shall be the duty of
both parties to keep the status quo and to
continue in full force and effect the terms
and conditions of the existing agreement
during the 60-day period and/or until a
new agreement is reached by the parties.
(Emphasis supplied.)
This is the reason why it is axiomatic in labor relations that
a CBA entered into by a legitimate labor organization that
has been duly certified as the exclusive bargaining
representative and the employer becomes the law
between them. Additionally, in the Certificate of
Registration[50] issued by the DOLE, it is specified that the
registered CBA serves as the covenant between the
parties and has the force and effect of law between them
during the period of its duration. Compliance with the
terms and conditions of the CBA is mandated by express
policy of the law primarily to afford protection to
labor[51] and to promote industrial peace. Thus, when a
valid and binding CBA had been entered into by the
workers and the employer, the latter is behooved to
observe the terms and conditions thereof bearing on
union dues and representation.[52] If the employer grossly
violates its CBA with the duly recognized union, the former
may be held administratively and criminally liable for
unfair labor practice.[53]
Respondents Bayer, Lonishen and Amistoso, contend
that their acts cannot constitute unfair labor practice as
the same did not involve gross violations in the economic
provisions of the CBA, citing the provisions of Articles 248
(1) and 261[54] of the Labor Code, as amended.[55] Their
argument is, however, misplaced.
Indeed, in Silva v. National Labor Relations
Commission,[56] we explained the correlations of Article
248 (1) and Article 261 of the Labor Code to mean that for
a ULP case to be cognizable by the Labor Arbiter, and for
the NLRC to exercise appellate jurisdiction thereon, the
allegations in the complaint must show prima facie the
concurrence of two things, namely: (1) gross violation of
the CBA; and (2) the violation pertains to the economic
provisions of the CBA.[57]
This pronouncement in Silva, however, should
not be construed to apply to violations of the CBA which
can be considered as gross violations per se, such as
utter disregard of the very existence of the CBA itself,
similar to what happened in this case. When an employer
proceeds to negotiate with a splinter union despite the
existence of its valid CBA with the duly certified and
exclusive bargaining agent, the former indubitably
abandons its recognition of the latter and terminates the
entire CBA.
Respondents cannot claim good faith to justify their acts.
They knew that Facundos group represented the duly-
elected officers of EUBP. Moreover, they were cognizant
of the fact that even the DOLE Secretary himself had
recognized the legitimacy of EUBPs mandate by
rendering an arbitral award ordering the signing of the
1997-2001 CBA between Bayer and EUBP. Respondents
were likewise well-aware of the pendency of the intra-
union dispute case, yet they still proceeded to turn over
the collected union dues to REUBP and to effusively deal
with Remigio. The totality of respondents conduct,
therefore, reeks with anti-EUBP animus.
Bayer, Lonishen and Amistoso argue that the
case is already moot and academic following the lapse of
the 1997-2001 CBA and their renegotiation with EUBP for
the 2006-2007 CBA. They also reason that the act of the
company in negotiating with EUBP for the 2006-2007
CBA is an obvious recognition on their part that EUBP is
now the certified collective bargaining agent of its rank-
and-file employees.[58]
 We do not agree. First, a legitimate labor
organization cannot be construed to have abandoned its
pending claim against the management/employer by
returning to the negotiating table to fulfill its duty to
represent the interest of its members, except when the
pending claim has been expressly waived or
compromised in its subsequent negotiations with the
management. To hold otherwise would be tantamount to
subjecting industrial peace to the precondition that
previous claims that labor may have against capital must
first be waived or abandoned before negotiations between
them may resume. Undoubtedly, this would be against
public policy of affording protection to labor and will
encourage scheming employers to commit unlawful acts
without fear of being sanctioned in the future.
Second, that the management of Bayer decided
to recognize EUBP as the certified collective bargaining
agent of its rank-and-file employees for purposes of its
2006-2007 CBA negotiations is of no moment. It did not
obliterate the fact that the management of Bayer had
withdrawn its recognition of EUBP and supported REUBP
during the tumultuous implementation of the 1997-2001
CBA. Such act of interference which is violative of the
existing CBA with EUBP led to the filing of the subject
complaint.
On the matter of damages prayed for by the
petitioners, we have held that as a general rule, a
corporation cannot suffer nor be entitled to moral
damages. A corporation, and by analogy a labor
organization, being an artificial person and having
existence only in legal contemplation, has no feelings, no
emotions, no senses; therefore, it cannot experience
physical suffering and mental anguish. Mental suffering
can be experienced only by one having a nervous system
and it flows from real ills, sorrows, and griefs of life all of
which cannot be suffered by an artificial, juridical
person.[59] A fortiori, the prayer for exemplary damages
must also be denied.[60] Nevertheless, we find it in order
to award (1) nominal damages in the amount
of P250,000.00 on the basis of our ruling in De La Salle
University v. De La Salle University Employees
Association (DLSUEA-NAFTEU)[61] and Article
[62]
2221, and (2) attorneys fees equivalent to 10% of the
monetary award. The remittance to petitioners of the
collected union dues previously turned over to Remigio
and Villareal is likewise in order.
WHEREFORE, the petition for review on
certiorari is PARTLY GRANTED. The Decision
dated December 15, 2003 and the Resolution
dated March 23, 2004 of the Court of Appeals in CA-G.R.
SP No. 73813 are MODIFIED as follows:
1) Respondents Bayer Phils., Dieter J.
Lonishen and Asuncion Amistoso are
found LIABLE for Unfair Labor Practice,
and are hereby ORDERED to remit to
petitioners the amount of P254,857.15
representing the collected union dues
previously turned over to Avelina Remigio
and Anastacia Villareal. They are
likewise ORDERED to pay petitioners
nominal damages in the amount
of P250,000.00 and attorneys fees
equivalent to 10% of the monetary award;
and
2) The complaint, as against respondents
Remigio and Villareal. is DISMISSED due
to the lack of jurisdiction of the Labor
Arbiter and the NLRC, the complaint being
in the nature of an intra-union dispute.
No pronouncement as to costs.
SO ORDERED.
[G.R. No. 137863. March 31, 2005]
42. *BANK OF THE PHILIPPINE ISLANDS
EMPLOYEES UNION and ZENAIDA
UY, petitioners, vs. BANK OF THE
PHILIPPINE ISLANDS, CARLOS FRAGANTE,
DELFIN SANTOS, ALBERTO JUGO and/or
OSCAR CONTRERAS, respondents.
This petition for review on certiorari under Rule 45 of
the 1997 Rules on Civil Procedure, as amended, seeks to
partially reverse the Decision[1] of 28 October 1998 and
the Resolution[2] of 08 March 1999 of the Court of
Appeals, in CA-G.R. SP No. 47363, which affirmed with
modification the Decision[3] rendered by the Accredited
Voluntary Arbitrator dated 31 December 1997, in VA Case
No. 08-001-97. The case before the Voluntary Arbitrator
was for illegal transfer and termination, with the latter
ruling in favor of the petitioners herein.
The facts as narrated by the Court of Appeals are
quoted hereunder:
On 26 October 1995, respondent[4] Zenaida V. Uy, former
teller of the Escolta Branch of BPI, shouted at her Senior
Manager, petitioner[5] Delfin D. Santos (Santos for
brevity). Uy was told to go to the office of the petitioner
Carlos B. Fragante, BPIs area head and Assistant Vice
President, to discuss her complaint. On the same date,
AVP Fragante told Uy to transfer to the nearby Plaza
Cervantes Branch of BPI and report to its operations
manager to defuse (sic) the tense situation prevailing at
the Escolta Branch. On 27 October 1995, AVP Fragante
received the report of the Escolta Branch Manager
(Santos) on the shouting incident, together with the
written letter-reports of some branch personnel. On the
same day, AVP Fragante ordered Uy to transfer to the
Plaza Cervantes Branch. Upon receipt of the order, Uy
commented that she will not transfer and will await the
result of the grievance meeting. The respondent BPI
Employees Union initiated a grievance proceeding
against the BPI Management for the transfer of Uy to the
Plaza Cervantes Branch. A meeting was set for 30
October 1995. On 30 October 1995, AVP Fragante sent
Uy a letter . . . directing her to explain within 24 hours why
no disciplinary action should be taken against her for
insubordination, for not paying heed to the order to
transfer. Uy sent a reply on the same date . . . explaining
that she could not transfer from Escolta Branch because
there was no proper turnover of her accountabilities; that
she was not able to do so on October 27, 1995 because
she was not allowed to open (as a teller); and, that since
then she has been barred from entering the bank
premises. On the same day, a meeting was held to hear
Uys grievance relative to her transfer, but no agreement
was reached. On 31 October 1995, AVP Fragante sent
Uy another letter . . . asking her to explain why no
disciplinary action should be taken against her for uttering
disrespectful, discourteous, insulting and unbecoming
language to her superior, Senior Manager Delfin Santos.
Uy sent an undated reply thereto . . . reiterating why she
could just not leave her position at the Escolta Branch,
and requesting that she be considered on leave starting
November 2, 1995. On 13 November 1995, AVP Fragante
wrote Uy another letter . . . directing her to show cause on
or before 16 November 1995 why no disciplinary action,
including possible termination, should be taken against
her for the October 26, 1995 incident, for insubordination
or defiance to the transfer order, and for going on absence
without leave. A copy thereof was furnished the Union. Uy
sent a reply letter dated November 20, 1995, asking for
particulars relative to the alleged highly disrespectful,
discourteous, insulting, threatening, and unbecoming
language and behavior towards your Manager, Delfin
Santos and on the alleged past instances when she was
involved with quarrels with your co-employees, and
alleging that she felt binabastos mo ako (I was being
sexually harassed) when he uttered Dito ka na lang,
marami and [ang] lalaki dito (You just stay here, there are
plenty of men here), and when she answered Hindi ako
mahilig sa lalaki (I am not fond of men), he retorted, Maski
dito ka na lang sa kuwarto ko (You may just stay here in
my room . . .). The union asked for a suspension of the
grievance machinery and for investigation of the sexual
harassment charge. On November 24, 1995, Uy
requested Management through Mr. Oscar L. Cervantes,
for transfer to the Taft Avenue Branch to save on gasoline
expenses. Two meetings were held between the union
side and the management side, represented by Mr.
Fragantes superior, Senior Vice President Alberto Jugo
and Senior Manager Efren Tuble. When no agreement
was reached, the management advised Uy and the Union
as well as their counsel that the management had no
choice but to terminate Uy. Both the union and Uy were
sent copies of the Notice of Termination . . . dated
December 8, 1995, which had the following tenor:
NOTICE OF TERMINATION
Dear Ms. Uy:
This is to advise you of the termination of your
employment effective December 14, 1995 on the grounds
of gross disrespect/discourtesy towards an officer,
insubordination and absence without leave.
It has been established that you used highly disrespectful,
discourteous, insulting, threatening and unbecoming
language and behavior towards your branch manager,
Delfin Santos, last October 26. Despite being given the
chance to explain or justify your actions, you chose to skirt
the issue by pointing out that I am in no position to make
a conclusion as I was not around when the incident
happened. You know fully well that as Sales Director of
North Manila area having supervision over Escolta
Branch, such incident was reported to me. Mr. Delfin
Santos appropriately inhibited himself from conducting
the investigation for obvious reasons. We disagree with
you when you dismissed the incident as trivial. Moreover,
the explanations you gave at our Head Office were found
wanting in circumstances that would absolve you or
mitigate your wrongdoing as said explanations in fact
confirmed the findings at the branch level. With regard to
quarrels with your officemates, you can be considered as
recidivist. You can of course recall your quarrels, using
very strong and insulting words, with your co-employees
Ms. Teresa Manalang last year and with Jocelyn Ng this
year.
You refused to follow the transfer instruction to report to
Cervantes Branch last October 27 alleging failure to
properly turn over your accountabilities despite being in
the branch for practically the whole day on October 27.
We have adequate procedure for the opening of pico
boxes in the presence of witnesses in cases of refusal and
AWOL.
In a further manifestation of your contempt towards
managerial authority, you went on absence without leave
starting October 30. After refusing to receive all
communications sent to your residence, you tried to
rectify this AWOL by sending an undated letter received
by us last November 6 wherein you declared yourself to
be on leave beginning November 2. You have since
refused to report for work.
Under the circumstances, you left us with no alternative
but to terminate your employment with us.
(SGD.) CARLOS B. FRAGANTE
Asst. Vice President
Uy filed a case for illegal transfer and termination. On
June 29, 1996, Labor Arbiter Manuel R. Caday who
initially heard and decided the case issued a decision
declaring the dismissal of Uy as illegal and ordering her
reinstatement with full backwages and 10% attorneys
fees BPI appealed the said decision to the National Labor
Relations Commission (NLRC) which rendered a decision
on May 28, 1997, setting aside the Labor Arbiters
Decision for lack of jurisdiction, and ruling that the case
falls under the jurisdiction of a Voluntary Arbitrator.
The case was raffled to respondent Arbitrator Entuna,
who requested the parties to submit their respective
position papers.[6]
The Voluntary Arbitrator, in his disputed Decision of
31 December 1997, adjudged:
WHEREFORE, premises considered, judgment is hereby
rendered declaring the dismissal of complainant Zenaida
Uy as illegal and ordering the respondent Bank of the
Philippine Islands to immediately reinstate her to her
position as bank teller of the Escolta Branch without loss
of seniority rights and with full backwages computed from
the time she was dismissed on December 14, 1995 until
she is actually reinstated in the service, and including all
her other benefits which are benefits under their
Collective Bargaining Agreement (CBA).
For reasonable attorneys fees, respondent is also ordered
to pay complainant the equivalent of 10% of the
recoverable award in this case.[7]
The Motion for Reconsideration of the herein
respondents BPI, et al., was subsequently denied.
Aggrieved, they then filed a Petition for Review
before the Court of Appeals assailing the aforestated
decision.
On 28 October 1998, the Court of Appeals issued the
assailed decision affirming the finding of the Voluntary
Arbitrator that indeed Uys employment was illegally
terminated. The appellate court, however, modified the
award for backwages by limiting it to three years as well
as finding that there was strained relations between the
parties, to wit:
WHEREFORE, the judgment appealed from
is AFFIRMED with the MODIFICATION that instead of
reinstatement, the petitioner Bank of the Philippine
Islands is DIRECTED to pay Uy back salaries not
exceeding three (3) years and separation pay of one
month for every year of service. The said judgment
is AFFIRMED in all other respects.[8]
Both parties seasonably filed their respective
motions for partial reconsideration of the aforesaid
decision but the appellate court denied them in a
Resolution dated 08 March 1999.
Hence, the parties individually went to this Court via
a Petition for Review on Certiorari.
The petition[9] filed by herein respondents BPI, et al.,
however, was denied for their failure to submit a
certification duly executed by themselves that no other
action or proceeding involving the same issues raised in
this case has been filed or is pending before this Court,
the Court of Appeals, or in the different divisions thereof,
or in any other tribunal or quasi-judicial agency, with the
undertaking to inform the Court of any similar case filed or
pending in any court, tribunal or quasi-judicial agency that
may thereafter come to their knowledge in accordance
with Section 4(e), Rule 45 in relation to Section 5, Rule 7,
Section 2, Rule 42, and Sections 4 and 5(d), Rule 56 of
the Rules of Court. The corresponding Entry of
Judgment[10] was entered in the Book of Entries of
Judgments on 22 September 1999.
For the reason above stated, only the following errors
imputed by herein petitioners Bank of the Philippine
Islands Employees Union (BPIEU) and Uy to the
appellate court are in issue:
I
WITH DUE RESPECT, THE QUESTIONED
RESOLUTION AND DECISION OF THE HONORABLE
COURT OF APPEALS ARE CONTRARY TO LAW
INSOFAR AS THEY LIMITED THE AWARD OF
BACKWAGES TO THREE (3) YEARS; AND
II
WITH DUE RESPECT, THE HONORABLE COURT OF
APPEALS COMMITTED GRAVE ABUSE OF
DISCRETION IN HOLDING THAT STRAINED
RELATIONS EXIST BETWEEN THE BANK AND
PETITIONER UY DESPITE THE FACT THAT THE
SHOUTING INCIDENT IS NOT SO SERIOUS AND IT
INVOLVED ONLY PETITIONER UY AND
RESPONDENT DELFIN SANTOS.[11]
Anent the first issue, the petitioners contend that the
decision of the appellate court limiting the award of
backwages to three (3) years is contrary to law and
jurisprudence.
The petition is meritorious.
The rule providing for the entitlement of an illegally
dismissed employee to only three years backwages
without deduction or qualification to obviate the need for
further proceedings in the course of execution, otherwise
known as the Mercury Drug Rule,[12] has long been
abandoned.
In a long line of cases,[13] we have stated that the
case of Mercury Drug, Co., Inc. v. CIR,[14] is no longer
applicable. To preclude the recurrence of the situation
where the employee, with folded arms, remains inactive
in the expectation that windfall would come to him and to
speed up the process of execution, the aforementioned
Mercury Drug case provided a remedy by ruling that an
employee whose illegal termination had lasted some
years was entitled to backwages for a fixed period without
further qualifications, i.e., without need of taking account
of whatever he might have earned during such period, and
deducting it from the amount of recovery, by providing a
base period of three years. The three-year-limit doctrine
has been consistently and uniformly applied by this Court
over many years until the promulgation of Republic Act
No. 6715 which amended Article 279 of the Labor Code
in 1989.
With the new law before us, we clarified the
computation of backwages due an employee on account
of his illegal dismissal from employment in the case
of Osmalik Bustamante, et al. v. NLRC and Evergreen
Farms, Inc.[15] We held that the passing of Republic Act
No. 6715,[16] particularly Section 34,[17] which took effect
on 21 March 1989, amended Article 279 of the Labor
Code, which now states in part:
ART. 279. Security of Tenure. - 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.
Verily, the evident legislative intent as expressed in
Rep. Act No. 6715, above-quoted, is that the backwages
to be awarded to an illegally dismissed employee, should
not, as a general rule, be diminished or reduced by the
earnings derived by him elsewhere during the period of
his illegal dismissal. The underlying reason for this ruling
is that the employee, while litigating the legality (illegality)
of his dismissal, must still earn a living to support himself
and his family. Corollary thereto, full backwages have to
be paid by the employer as part of the price or penalty he
has to pay for illegally dismissing his employee. Thus, a
closer adherence to the legislative policy behind Rep. Act.
No. 6715 points to full backwages as meaning exactly
that, i.e., without deducting from backwages the earnings
derived elsewhere by the concerned employee during the
period of his illegal dismissal. In other words, the provision
calling for full backwages to illegally dismissed employees
is clear, plain and free from ambiguity and, therefore, must
be applied without attempted or strained interpretation.[18]
Consequently, in accordance with Section 34, Rep.
Act No. 6715, employees illegally dismissed after 21
March 1989 are entitled to their full backwages, inclusive
of other benefits or their monetary equivalent, from the
time their actual compensation was withheld from them up
to the time of their actual reinstatement.
Under the factual circumstances of the case, the law
and jurisprudence prevailing, therefore, we find that the
Court of Appeals committed a reversible error in limiting
the award of backwages for a fixed period of three years.
The illegal dismissal of petitioner Uy was effected in 1995,
or after Rep. Act No. 6715 took effect on 21 March 1989.
Absent any exceptional circumstance, it is now settled
that an employee who is unjustly dismissed from work
shall be entitled to full backwages, inclusive of
allowances, and to his other benefits or their monetary
equivalent from the time his compensation was withheld
from him up to the time of his actual reinstatement.[19]
Apropos the issue of non-reinstatement of petitioner
Uy, the Court of Appeals held that in a number of cases,
the High Court had allowed mere payment of severance
pay, when reinstatement would no longer be beneficial to
either party in view of strained relations between
them.[20] And, thus, in lieu of reinstatement, it ordered the
payment of separation pay instead.
The petitioners, on the other hand, posit that the
material incidents of the case at bar are but confined or
personal to the individual respondents Delfin Santos and
Carlos Fragante. The other respondents, namely Alberto
Jugo and Oscar Contreras were impleaded merely
because of their position in respondent BPIs Human
Resources Department. In the words of the petitioners,
the controversy was a personal matter between Ms. Uy
and Messrs. Delfin Santos and Carlos Fragante. [21] In
addition, they bolstered their position by relying on what
this Court had to say in Globe-Mackay Cable and Radio
Corp. v. NLRC:[22]
Obviously, the principle of strained relations cannot be
applied indiscriminately. Otherwise, reinstatement can
never be possible simply because some hostility is
invariably engendered between the parties as a result of
litigation. That is human nature.
Besides, no strained relations should arise from a valid
and legal act of asserting ones right; otherwise an
employee who shall assert his right could be easily
separated from the service, by merely paying his
separation pay on the pretext that his relationship with his
employer had already become strained.
Petitioners reliance is well placed.
We have oft said that mere allegation of strained
relations to bar reinstatement is frowned upon.
In the case of PLDT, et al. v. Tolentino,[23] we
reiterated our ruling in Quijano v. Mercury Drug
Corp.[24] wherein we propitiously said that the strained
relations doctrine should be strictly applied so as not to
deprive an illegally dismissed employee of his right to
reinstatement. We further stated that:
Well-entrenched is the rule that an illegally dismissed
employee is entitled to reinstatement as a matter of right.
Over the years, however, the case law developed that
where reinstatement is not feasible, expedient or
practical, as where reinstatement would only exacerbate
the tension and strained relations between the parties, or
where the relationship between the employer and
employee has been unduly strained by reason of their
irreconcilable differences, particularly where the illegally
dismissed employee held a managerial or key position in
the company, it would be more prudent to order payment
of separation pay instead of reinstatement. Some
unscrupulous employers, however, have taken advantage
of the overgrowth of this doctrine of strained relations by
using it as a cover to get rid of its employees and thus
defeat their right to job security.
To protect labors security of tenure, we emphasize that
the doctrine of strained relations should be strictly applied
so as not to deprive an illegally dismissed employee of his
right to reinstatement. Every labor dispute almost always
results in strained relations and the phrase cannot be
given an overarching interpretation, otherwise, an unjustly
dismissed employee can never be reinstated.
The said case went on further to quote our
pronouncement in the case of Almira v. B.F. Goodrich,
Philippines, Inc.:[25]
This Court is cognizant of managements right to select the
people who will manage its business as well as its right to
dismiss them. However, this right cannot be abused. Its
exercise must always be tempered with compassion and
understanding. As former Chief Justice Enrique Fernando
eloquently put it:
Where penalty less severe would suffice, whatever
missteps may be committees by labor ought not to be
visited with consequence so severe. It is not only because
of the laws concern for the workingmen. There is, in
addition, his family to consider. Unemployment brings
untold hardships and sorrows on those dependent on the
wage-earner. The misery and pain attendant on the loss
of jobs then could be avoided if there be acceptance of
the view that under all the circumstances of a case, the
workers should not be deprived of their means of
livelihood. Nor is this to condone what has been done by
them.
Moreover, it has been almost a decade since the
incident that led to the dismissal of petitioner Uy occurred.
Petitioner Uy contends, and the respondents do not
contradict, that respondent Carlos Fragante has long
been assigned in another area and Messrs. Alberto Jugo
and Oscar Contreras are no longer connected with
respondent BPI. Considering, thus, that there now
appears no more basis for strained relations between the
present management and petitioner Uy, reinstatement is
possible.
WHEREFORE, the instant petition is GRANTED.
The assailed 28 October 1998 Decision and 8 March 1999
Resolution of the Court of Appeals are hereby MODIFIED
as follows: 1) respondent BPI is DIRECTED to pay
petitioner Uy backwages from the time of her illegal
dismissal until her actual reinstatement; and 2)
respondent BPI is ORDERED to reinstate petitioner Uy to
her former position, or to a substantially equivalent one,
without loss of seniority right and other benefits attendant
to the position.
SO ORDERED.
 [G.R. No. 140518. December 16, 2004]
43. *MANILA DIAMOND HOTEL EMPLOYEES
UNION, petitioner, vs. THE HON. COURT OF
APPEALS, THE SECRETARY OF LABOR
AND EMPLOYMENT, and THE MANILA
DIAMOND HOTEL, respondents.
This petition for review of a decision of the Court of
Appeals arose out of a dispute between the Philippine
Diamond Hotel and Resort, Inc. (Hotel), owner of the
Manila Diamond Hotel, and the Manila Diamond Hotel
Employees Union (Union). The facts are as follows:
On November 11, 1996, the Union filed a petition for
a certification election so that it may be declared the
exclusive bargaining representative of the Hotels
employees for the purpose of collective bargaining. The
petition was dismissed by the Department of Labor and
Employment (DOLE) on January 15, 1997. After a few
months, however, on August 25, 1997, the Union sent a
letter to the Hotel informing it of its desire to negotiate for
a collective bargaining agreement.[1] In a letter dated
September 11, 1997, the Hotels Human Resources
Department Manager, Mary Anne Mangalindan, wrote to
the Union stating that the Hotel cannot recognize it as the
employees bargaining agent since its petition for
certification election had been earlier dismissed by the
DOLE.[2] On that same day, the Hotel received a letter
from the Union stating that they were not giving the Hotel
a notice to bargain, but that they were merely asking for
the Hotel to engage in collective bargaining negotiations
with the Union for its members only and not for all the rank
and file employees of the Hotel.[3]
On September 18, 1997, the Union announced that
it was taking a strike vote. A Notice of Strike was
thereafter filed on September 29, 1997, with the National
Conciliation and Mediation Board (NCMB) for the Hotels
alleged refusal x x x to bargain and for alleged acts of
unfair labor practice. The NCMB summoned both parties
and held a series of dialogues, the first of which was on
October 6, 1997.
On November 29, 1997, however, the Union staged
a strike against the Hotel. Numerous confrontations
between the two parties followed, creating an obvious
strain between them. The Hotel claims that the strike was
illegal and it had to dismiss some employees for their
participation in the allegedly illegal concerted activity. The
Union, on the other hand, accused the Hotel of illegally
dismissing the workers. What is pertinent to this case,
however, is the Order issued by the then Secretary of
Labor and Employment Cresenciano B. Trajano
assuming jurisdiction over the labor dispute. A Petition for
Assumption of Jurisdiction was filed by the Union on April
2, 1998. Thereafter, the Secretary of Labor and
Employment issued an Order dated April 15, 1998, the
dispositive portion of which states:
WHEREFORE, premises considered[,] this Office
CERTIFIES the labor dispute at the Manila Diamond
Hotel to the National Labor Relations Commission, for
compulsory arbitration, pursuant to Article 263 (g) of the
Labor Code, as amended.
Accordingly, the striking officers and members of the
Manila Diamond Hotel Employees Union --- NUWHRAIN
are hereby directed to return to work within twenty-four
(24) hours upon receipt of this Order and the Hotel to
accept them back under the same terms and conditions
prevailing prior to the strike. The parties are enjoined from
committing any act that may exacerbate the situation.
The Union received the aforesaid Order on April 16,
1998 and its members reported for work the next day,
April 17, 1998. The Hotel, however, refused to accept the
returning workers and instead filed a Motion for
Reconsideration of the Secretarys Order.
On April 30, 1998, then Acting Secretary of Labor
Jose M. Espaol, issued the disputed Order, which
modified the earlier one issued by Secretary Trajano.
Instead of an actual return to work, Acting Secretary
Espaol directed that the strikers be reinstated only in the
payroll.[4] The Union moved for the reconsideration of this
Order, but its motion was denied on June 25, 1998.
Hence, it filed before this Court on August 26, 1998, a
petition for certiorari under Rule 65 of the Rules of Court
alleging grave abuse of discretion on the part of the
Secretary of Labor for modifying its earlier order and
requiring instead the reinstatement of the employees in
the payroll. However, in a resolution dated July 12, 1999,
this Court referred the case to the Court of Appeals,
pursuant to the principle embodied in National Federation
of Labor v. Laguesma.[5]
On October 19, 1999, the Court of Appeals rendered
a Decision dismissing the Unions petition and affirming
the Secretary of Labors Order for payroll reinstatement.
The Court of Appeals held that the challenged order is
merely an error of judgment and not a grave abuse of
discretion and that payroll reinstatement is not prohibited
by law, but may be called for under certain
circumstances.[6]
 Hence, the Union now stands before this Court
maintaining that:
THE HONORABLE COURT OF APPEALS
GRIEVIOUSLY ERRED IN RULING THAT THE
SECRETARY OF LABORS UNAUTHORIZED ORDER
OF MERE PAYROLL REINSTATEMENT IS NOT GRAVE
ABUSE OF DISCRETION[7]
The petition has merit.
The Court of Appeals based its decision on this
Courts ruling in University of Santo Tomas (UST) v.
NLRC.[8] There, the Secretary assumed jurisdiction over
the labor dispute between striking teachers and the
university. He ordered the striking teachers to return to
work and the university to accept them under the same
terms and conditions. However, in a subsequent order,
the NLRC provided payroll reinstatement for the striking
teachers as an alternative remedy to actual
reinstatement. True, this Court held therein that the NLRC
did not commit grave abuse of discretion in providing for
the alternative remedy of payroll reinstatement. This
Court found that it was merely an error of judgment, which
is not correctible by a special civil action for certiorari. The
NLRC was only trying its best to work out a satisfactory ad
hoc solution to a festering and serious problem.
However, this Court notes that the UST ruling was
made in the light of one very important fact: the teachers
could not be given back their academic assignments
since the order of the Secretary for them to return to work
was given in the middle of the first semester of the
academic year. The NLRC was, therefore, faced with a
situation where the striking teachers were entitled to a
return to work order, but the university could not
immediately reinstate them since it would be
impracticable and detrimental to the students to change
teachers at that point in time.
In the present case, there is no showing that the facts
called for payroll reinstatement as an alternative remedy.
A strained relationship between the striking employees
and management is no reason for payroll reinstatement in
lieu of actual reinstatement. Petitioner correctly points out
that labor disputes naturally involve strained relations
between labor and management, and that in most strikes,
the relations between the strikers and the non-strikers will
similarly be tense.[9] Bitter labor disputes always leave an
aftermath of strong emotions and unpleasant situations.
Nevertheless, the government must still perform its
function and apply the law, especially if, as in this case,
national interest is involved.
After making the distinction between UST and the
present case, this Court now addresses the issue of
whether the Court of Appeals erred in ruling that the
Secretary did not commit any grave abuse of discretion in
ordering payroll reinstatement in lieu of actual
reinstatement. This question is answered by the nature of
Article 263(g). As a general rule, the State encourages an
environment wherein employers and employees
themselves must deal with their problems in a manner that
mutually suits them best. This is the basic policy
embodied in Article XIII, Section 3 of the
Constitution,[10] which was further echoed in Article 211 of
the Labor Code.[11] Hence, a voluntary, instead of
compulsory, mode of dispute settlement is the general
rule.
However, Article 263, paragraph (g) of the Labor
Code, which allows the Secretary of Labor to assume
jurisdiction over a labor dispute involving an industry
indispensable to the national interest, provides an
exception:
(g) When, in his opinion, there exists a labor dispute
causing or likely to cause a strike or lockout in an industry
indispensable to the national interest, the Secretary of
Labor and Employment may assume jurisdiction over the
dispute and decide it or certify the same to the
Commission for compulsory arbitration. Such assumption
or certification shall have the effect of automatically
enjoining the intended or impending strike or lockout as
specified in the assumption or certification order. If one
has already taken place at the time of assumption or
certification, all striking or locked out employees shall
immediately return to work and the employer shall
immediately resume operations and readmit all workers
under the same terms and conditions prevailing before
the strike or lockout. x x x
This provision is viewed as an exercise of the police
power of the State. A prolonged strike or lockout can be
inimical to the national economy and, therefore, the
situation is imbued with public necessity and involves the
right of the State and the public to self-protection.[12]
Under Article 263(g), all workers must immediately
return to work and all employers must readmit all of them
under the same terms and conditions prevailing before
the strike or lockout. This Court must point out that the law
uses the precise phrase of under the same terms and
conditions, revealing that it contemplates only actual
reinstatement. This is in keeping with the rationale that
any work stoppage or slowdown in that particular industry
can be inimical to the national economy. It is clear that
Article 263(g) was not written to protect labor from the
excesses of management, nor was it written to ease
management from expenses, which it normally incurs
during a work stoppage or slowdown. It was an error on
the part of the Court of Appeals to view the assumption
order of the Secretary as a measure to protect the striking
workers from any retaliatory action from the Hotel. This
Court reiterates that this law was written as a means to be
used by the State to protect itself from an emergency or
crisis. It is not for labor, nor is it for management.

It is, therefore, evident from the foregoing that the

Secretarys subsequent order for mere payroll
reinstatement constitutes grave abuse of discretion
amounting to lack or excess of jurisdiction. Indeed, this
Court has always recognized the great breadth of
discretion by the Secretary once he assumes jurisdiction
over a labor dispute. However, payroll reinstatement in
lieu of actual reinstatement is a departure from the rule in
these cases and there must be showing of special
circumstances rendering actual reinstatement
impracticable, as in the USTcase aforementioned, or
otherwise not conducive to attaining the purpose of the
law in providing for assumption of jurisdiction by the
Secretary of Labor and Employment in a labor dispute that
affects the national interest. None appears to have been
established in this case. Even in the exercise of his
discretion under Article 236(g), the Secretary must always
keep in mind the purpose of the law. Time and again, this
Court has held that when an official by-passes the law on
the asserted ground of attaining a laudable objective, the
same will not be maintained if the intendment or purpose
of the law would be defeated.[13]

WHEREFORE, the petition is GRANTED and the

assailed Decision of the Court of Appeals dated October
19, 1999 is REVERSED and SET ASIDE. The Order
dated April 30, 1998 issued by the Secretary of Labor and
Employment modifying the earlier Order dated April 15,
1998, is likewise SET ASIDE. No pronouncement as to
costs.

SO ORDERED
 44. *A. SORIANO AVIATION v. EMPLOYEES
ASSOCIATION OF A. SORIANO AVIATION
G.R. No. 166879
On May 22, 1997, A. Soriano Aviation (petitioner or the
company) which is engaged in providing transportation of
guests to and from Amanpulo and El Nido resorts in
Palawan, and respondent Employees Association of A.
Soriano Aviation (the Union), the duly-certified exclusive
bargaining agent of the rank and file employees of
petitioner, entered into a Collective Bargaining Agreement
(CBA) effective January 1, 1997 up to December 31,
1999. The CBA included a No-Strike, No-Lock-out clause.
On May 1 & 12, and June 12, 1997, which were legal
holidays and peak season for the company, eight
mechanics-members of respondent Union, its herein co-
respondents Albert Aguila (Aguila), Reynante Amimita
(Amimita), Galmier Balisbis (Balisbis), Raymond Barco
(Barco), Gerardo Bungabong (Bungabong), Josefino
Espino (Espino), Jeffrey Neri (Neri) and Rodolfo Ramos,
Jr. (Ramos), refused to render overtime work.
Petitioner treated the refusal to work as a
concerted action which is a violation of the No-Strike, No-
Lockout clause in the CBA. It thus meted the workers a
30-day suspension. It also filed on July 31, 1997 a
complaint for illegal strike against them, docketed as
NLRC Case No. 07-05409-97, which was later dismissed
at its instance in order to give way to settlement, without
prejudice to its re-filing should settlement be unavailing.
The attempted settlement between the parties
having been futile, the Union filed a Notice of Strike with
the National Conciliation and Mediation Board (NCMB) on
October 3, 1997, attributing to petitioner the following
acts: (1) union busting, (2) illegal dismissal of union
officer, (3) illegal suspension of eight mechanics, (4)
violation of memorandum of agreement, (5) coercion of
employees and interrogation of newly-hired mechanics
with regard to union affiliation, (6) discrimination against
the aircraft mechanics, (7) harassment through
systematic fault-finding, (8) contractual labor, and (9)
constructive dismissal of the Union President, Julius
Vargas (Vargas).
As despite conciliation no amicable settlement of
the dispute was arrived at, the Union went on strike
on October 22, 1997.
Meanwhile, pursuant to its reservation in NLRC
Case No. 07-05409-97, petitioner filed a Motion to Re-
Open the Case which was granted by Labor Arbiter
Manuel P. Asuncion by Order of October 21, 1997.
By Decision[1] dated September 28,
1998 rendered in petitioners complaint in NLRC Case No.
07-05409-97, the Labor Arbiter declared that the newly
implemented work-shift schedule was a valid exercise of
management prerogative and the refusal of herein
individual respondents to work on three consecutive
holidays was a form of protest by the Union, hence,
deemed a concerted action. Noting that the Union failed
to comply with the formal requirements prescribed by the
Labor Code in the holding of strike, the strike was
declared illegal.
The Union appealed to the NLRC which
dismissed it in a per curiam Decision[2] dated September
14, 1999, and the subsequent motion for reconsideration
was denied by Resolution dated November 11, 1999.
In the interim or on June 16, 1998, eight months
into the second strike, petitioner filed a complaint against
respondents before the Labor Arbiter, praying for the
declaration as illegal of the strike on account of their
alleged pervasive and widespread use of force and
violence and for the loss of their employment, citing the
following acts committed by them: publicly shouting of foul
and vulgar words to company officers and non-striking
employees; threatening of officers and non-striking
employees with bodily harm and dousing them with water
while passing by the strike area; destruction of or inflicting
of damage to company property, as well as private
property of company officers; and putting up of placards
and streamers containing vulgar and insulting epithets
including imputing crime on the company.
By Decision[3] of June 15, 2000, Labor Arbiter Ramon
Valentin C. Reyes declared the second strike illegal.
Taking judicial notice of the September 28, 1998 Decision
of Labor Arbiter Asuncion, he noted that as the Union
went on the first strike on a non-strikeable issue ─ the
questioned change of work schedule, it violated the No-
Strike, No-Lockout clause in the CBA and, in any event,
the Union failed to comply with the requirements for a
valid strike.
The Labor Arbiter went on to hold that the Union
deliberately resorted to the use of violent and unlawful
acts in the course of the second strike, hence, the
individual respondents were deemed to have lost their
employment.
 On appeal, the National Labor Relations
Commission (NLRC) affirmed in toto the Labor Arbiters
decision, by Resolution[4] dated October 31, 2001. It held
that even if the strike were legal at the onset, the
commission of violent and unlawful acts by individual
respondents in the course thereof rendered it illegal.
Its motion for reconsideration having been
denied by Resolution[5] dated December 14, 2001,
the Union appealed to the Court of Appeals.
By the assailed Decision of April 16, 2004,[6] the
appellate court reversed and set aside the NLRC ruling,
holding that the acts of violence committed by the Union
members in the course of the strike were not, as
compared to the acts complained of in Shell Oil Workers
Union v. Shell Company of the Philippines,[7] First City
Interlink Transportation Co., Inc., v. Roldan-
Confesor[8] and Maria Cristina Fertilizer Plant Employees
Association v. Tandaya, [9] (this case was applied by the
Labor Arbiter in his Decision of September 28, 2008)
where the acts of violence resulted in loss of employment,
concluded that the acts in the present case were not as
serious or pervasive as in these immediately-cited cases
to call for loss of employment of the striking employees.
Specifically, the appellate court noted that at the time
petitioner filed its complaint in June 1998, almost eight
months had already elapsed from the commencement of
the strike and, in the interim, the alleged acts of violence
were committed only during nine non-consecutive
days, viz: one day in October, two days in November, four
days in December, all in 1997, and two days in January
1998. To the appellate court, these incidents did not
warrant the conversion of an otherwise legal strike into an
illegal one, and neither would it result in the loss of
employment of the strikers. For, so the appellate court
held, the incidents consisted merely of name-calling and
using of banners imputing negligence and criminal acts to
the company and its officers, which do not indicate a
degree of violence that could be categorized as grave or
serious to warrant the loss of employment of the individual
strikers found to be responsible.
By Resolution of January 25, 2005, the appellate court
denied petitioners motion for reconsideration, hence, the
present petition.
Petitioner insists that, contrary to the appellate courts
finding, the questioned acts of the strikers were of a
serious character, widespread and pervasive; and that the
Unions imputation of crime and negligence on its part, and
the prolonged strike resulted in its loss of goodwill and
business, particularly the termination of its lease and air-
service contract with Amanpulo, the loss of its after-sales
repair service agreement with Bell Helicopters, the loss of
its accreditation as the Beechcraft service facility, and the
decision of El Nido to put up its own aviation company.
Apart from the acts of violence committed by the strikers,
petitioner bases its plea that the strike should be declared
illegal on the violation of the No-Strike-No-Lockout clause
in the CBA, the strike having arisen from non-strikeable
issues. Petitioner proffers that what actually prompted the
holding of the strike was the implementation of the new
shift schedule, a valid exercise of management
prerogative.
In issue then is whether the strike staged by respondents
is illegal due to the alleged commission of illegal acts and
violation of the No Strike-No Lockout clause of the CBA
and, if in the affirmative, whether individual respondents
are deemed to have lost their employment status on
account thereof.
The Court rules in the affirmative.
The Court notes that, as found by the Labor
Arbiter in NLRC Case No. 07-05409-97, the first strike or
the mechanics refusal to work on 3 consecutive holidays
was prompted by their disagreement with the
management-imposed new work schedule. Having been
grounded on a non-strikeable issue and without
complying with the procedural requirements, then the
same is a violation of the No Strike-No Lockout Policy in
the existing CBA. Respecting the second strike, where
the Union complied with procedural requirements, the
same was not a violation of the No Strike- No Lockout
provisions, as a No Strike-No Lockout provision in the
Collective Bargaining Agreement (CBA) is a valid
stipulation but may be invoked only by employer when the
strike is economic in nature or one which is conducted to
force wage or other concessions from the employer that
are not mandated to be granted by the law. It would be
inapplicable to prevent a strike which is grounded on
unfair labor practice.[10] In the present case,
the Union believed in good faith that petitioner committed
unfair labor practice when it went on strike on account of
the 30-day suspension meted to the striking mechanics,
dismissal of a union officer and perceived union-busting,
among others. As held in Malayang Samahan ng mga
Manggaggawa sa M. Greenfield v. Ramos:[11]
 On the submission that the strike was
illegal for being grounded on a non-
strikeable issue, that is, the intra-union
conflict between the federation and the
local union, it bears reiterating that when
respondent company dismissed the
union officers, the issue was
transformed into a termination
dispute and brought respondent
company into the picture. Petitioners
believed in good faith that in dismissing
them upon request by the federation,
respondent company was guilty of unfair
labor practice in that it violated the
petitioners right to self-organization. The
strike was staged to protest respondent
companys act of dismissing the union
officers. Even if the allegations of
unfair labor practice are subsequently
found out to be untrue, the
presumption of legality of the strike
prevails. (Emphasis supplied)
Be that as it may, the Court holds that the second
strike became invalid due to the commission of illegal
action in its course.
It is hornbook principle that the exercise of the
right of private sector employees to strike is not
absolute. Thus Section 3 of Article XIII of the
Constitution provides:
SECTION 3. x x x
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 withlaw. They
shall be entitled to security of tenure,
humane conditions of work, and a living
wage. They shall also participate in policy
and decision-making processes affecting
their rights and benefits as may be
provided by law. (Emphasis and
underscoring supplied)
Indeed, even if the purpose of a strike is valid,
the strike may still be held illegal where
the means employed are illegal. Thus, the
employment of violence, intimidation, restraint or
coercion in carrying out concerted activities which
are injurious to the right to property renders
a strike illegal. And so is picketing or the
obstruction to the free use of property or the
comfortable enjoyment of life or property, when
accompanied by intimidation, threats, violence,
and coercion as to constitute nuisance.[12]
Apropos is the following ruling
in Sukhothai Cuisine v. Court of Appeals:[13]
Well-settled is the rule that even
if the strike were to be declared valid
because its objective or purpose is lawful,
the strike may still be declared invalid
where the means employed are
illegal. Among such limits are the
prohibited activities under Article 264 of
the Labor Code, particularly paragraph
(e), which states that no person engaged
in picketing shall:
a) commit any act of violence,
coercion, or intimidation or
b) obstruct the free ingress to
or egress from the employer's
premises for lawful purposes, or
c) obstruct public
thoroughfares.
The following acts have been
held to be prohibited activities: where
the strikers shouted slanderous and
scurrilous words against the
owners of the vessels; where
the strikers used unnecessary and
obscene language or epithets to
prevent other laborers to go to work,
and circulated libelous statements
against the employer which show
actual malice; where the protestors
used abusive and threatening
language towards the patrons of a
place of business or against co-
employees, going beyond the mere
attempt to persuade customers to
withdraw their patronage; where the
strikers formed a human cordon and
blocked all the ways and approaches to
the launches and vessels of the vicinity of
the workplace and perpetrated acts of
violence and coercion to prevent work
from being performed; and where
the strikers shook their fists and
threatened non-striking employees
with bodily harm if they persisted to
proceed to the workplace. Permissible
activities of the picketing workers do
not include obstruction of access of
customers. (emphasis supplied)
The appellate court found in the present
case, as in fact it is not disputed, that the acts
complained of were the following:[14]

1. On 29 October 1997, while
Robertus M. Cohen, personnel manager
of the Company, was eating at the
canteen, petitioner Rodolfo
Ramos shouted insults and other
abusive, vulgar and foul-mouthed
word with the use of a megaphone,
such as, sige, ubusin mo yung
pagkain, kapal ng mukha mo; that
when he left the canteen to go back to his
office he was splashed with water from
behind so that his whole back was
drenched; that when he confronted that
strikers at the picket line accompanied by
three (3) security guards, to find out who
was responsible, he was told by
petitioner Oswald Espion who was then
holding a thick piece of wood
approximately two (2) feet long to leave.
2. On the same day, 29 October
1997, petitioners Julius Vargas, Jeffrey
Neri, and Rodolfo Ramos, together with
Jose Brin, shouted to Capt. Ben Hur
Gomez, the chief operating officer of the
Company, in this wise, Matanda ka na,
balatuba ka pa rin. Mangungurakot ka
sa kompanya!
3. In the morning of 11 November
1997, petitioner Ramos was reported to
have shouted to Mr. Maximo Cruz, the
Mechanical and Engineering Manager of
the Company, Max, mag-resign ka na,
ang baho ng bunganga mo!
4. In the afternoon of the same day, 11
November 1997, petitioner Jeffrey Neri
was said to have shouted these
words Max, mag-resign ka na, ang
baho ng bunganga mo! to Mr. Maximo
Cruz;
` purportedly outside the Company
5. On 12 November 1997. petitioners
Julius Vargas, Jeffrey Neri, Oswald
Espion, Raymond Barco, together with
Jose Brin, were reported to have shouted
to Capt. Gomez and Mr. Maximo
Cruz, Matanda ka na, balatuba ka pa
rin! Max, ang baho ng bunganga mo,
kasing baho ng ugali mo!
6. On the same day, 12 November
1997, petitioner Oswald Espion was said
to have shouted to the non-striking
employees and officers of the
Company, putang-ina ninyo!
7. Also, on 12 November 1997,
petitioner Oswald Espion was reported to
have thrown gravel and sand to the car
owned by Celso Villamor Gomez, lead
man of the Company, as the said car
was traveling along company
premises near the picket line; (apart
from the marks of mud, gravel and sand
found on the entire body of the car, no
heavy damages, however, appears to
have been sustained by the car).
8. On 08 December 1997, petitioners
Julius Vargas, Rey Espero, Rey Barry,
Galmier Balisbis, Rodolfo Ramos, Sonny
Bawasanta and Arturo Ines, together with
Jose Brin, shouted, Max, ang sama mo
talaga, lumabas ka dito at pipitpitin ko
ang mukha mo! Cohen, inutil ka
talaga. Nagpahaba ka pa ng balbas
para kang tsonggo! Cohen, lumabas
ka dito at hahalikan kita.
9. On 10 December 1997, petitioners
Vargas and Espion were reported to have
shouted to Mr. Maximino Cruz, Hoy, Max
Cruz, wala kang alam dyan, huwag
kang poporma-porma dyan! and then
flashed the dirty finger at him;
10. On 15 December 1997, petitioner
Neri was said to have shouted to non-
striking employees at the
canteen, Hoy, mga iskerol, kain lang
ng kain, mga putangina ninyo!
11. Also on 15 December 1997,
petitioners Vargas, Neri, Espion, Mar
Nimuan, Ramir Licuanan, Albert Aguila
and Sonny Bawasanta, together with
Jose Brin, splashed water over
Edmund C. Manibog, Jr., security
guard of the Company;
12. On 20 December 1997, the strikers
admittedly lit and threw firecrackers
premises, as part of a noise barrage,
while the Company was having its
Christmas party inside the Company
premises;
13. On 14 January 1998, when Chris A.
Oballas, collector of the Company,
boarded a public utility jeepney where
Jose Brin, a striker, was also passenger,
Jose Brin was said to have shouted to the
other passengers and driver of the
jeepney, Mga pasahero, driver, itong
tao ito sherol, ang kapal ng
mukha. Iyong pinagtrabahuhan namin
kinakain nito, ibenebent[a] kami nito,
hudas ito! Mga pasahero, tingnan
niyo, hindi makatingin-tingin sa akin,
hindi makapagsalita. Hoy, tingin ka sa
 akin, napahiya ka sa mga ginagawa
mo ano? and, that when Chris Oballas
was alighting from the jeepney, he
was kicked on his leg by Jose Brin; and,
14. On 15 January 1998, while Julio
Tomas, Avionics Technician of the
Company, and his girlfriend, Elizabeth
Gali, also an employee of the Company,
were waiting for their ride, several union
members shouted to Elizabeth Gali, Beth
iwanan mo na yang taong yan, walang
kwentang tao yan! Beth, paano na
yung pinagsamahan natin? irked, Julio
Tomas upon boarding the passenger
jeepney with his girlfriend threw a P2.00
coin in the direction of the picketers, the
coin hit the windshield of a privately-
owned jeepney belonging to petitioner
Espion which was parked alongside the
premises of the strike area; The act of
Tomas, provoked the petitioners Espion
and Amimita to follow Tomas, who when
left alone inside the tricycle after his
girlfriend took a separate tricycle to her
home, was approached by petitioners
Espion and Amimita; petitioner Espion
then threw a P2.00 coin at him, and while
pointing a baseball bat to his face
shouted, Huwag mong uulitin yung
ginawa mo kundi tatamaan ka sa
akin! (Emphasis and italics in the
original)
The Court notes that the placards and banners put up by
the striking workers in the company premises
read: ANDRES SORIANO AVIATION, INC. CAUGHT IN
THE ACT, ATTEMPTING TO BRIBE GOVERNMENT
OFFICIALS BEWARE, NOW A NAME YOU CAN TRASH,
ASAI DETERIORATING SAFETY RECORD KILLS 2
DEAD + VARIOUS (IN PLANE CRASH) FLIGHT
MISHAPS BEWARE, FLY AT YOUR OWN RISK,
ANDRES SORIANO AVIATION, INC. DETERIORATING
SAFETY RECORD KILLS INNOCENT PEOPLE IN
PLANE CRASH, THE CAUSE: UNTRAINED
MECHANICS DOING AIRCRAFT RELEASE, THE
RESULT: SLIPSHOD MAINTENANCE AND SLOPPY
PLANE INSPECTION, WANNA FLY BLIND?, BENHUR
GOMEZ DRAGS COMPANY TO DEBT AND SHAMEFUL
EXPERIENCE (MAHIYA KA NAMAN, OY!), A. SORIANO
AVIATION, INC., DEAD PEOPLE IN PLANE CRASH,
ELY BONIFACIO (MASAKIT ANG TOTOO)
MAGNANAKAW NG PIYESA, PALITAN NA RIN!
TINGNAN NYO KUNG NAGNANAKAW, MEKANIKO DE
EROPLANO Y HUELGA UN VIAJE DE PELIGRO,
AIRCRAFT MANAGEMENT BULOK; A. SORIANO
AVIATION KILLS PEOPLE FOR LAX OVERSIGHT OF
SAFETY PROC. (ELY BONIFACIO-PATALSIKIN NA
RIN, MANDARAMBONG MUKHANG KWARTA, SAAN
MO DINALA ANG DORNIER SPECIAL TOOLS? IKAW
HA!), ELY BONIFACIO KAWATAN BANTAY SALAKAY,
AMANPULO AND EL NIDO GUESTS, BEWARE OF
ASAI FLIGHTS, AIRCRAFT MECHANICS STILL ON
STRIKE, GOING TO BORACAY AND EL NIDO IS GOOD
BUT FLYING WITH A. SORIANO AVIATION? THINK
TWICE! ACHTUNG: A SORIANO AVIATION DEAD
PEOPLE IN PLANE CRASH INSURANCE
ENTITLEMENTS DENIED DUE TO CAR VIOLATIONS,
UNDRESS SORIANO AVIATION, INC. UNRELIABLE
FIXED BASED OPERATOR KILLS PEOPLE FOR LAX
OVERSIGHT OF SAFETY PROCEDURES.
It cannot be gainsaid that by the above-enumerated
undisputed acts, the Union committed illegal acts during
the strike. The Union members repeated name-calling,
harassment and threats of bodily harm directed against
company officers and non-striking employees and, more
significantly, the putting up of placards, banners and
streamers with vulgar statements imputing criminal
negligence to the company, which put to doubt reliability
of its operations, come within the purview of illegal acts
under Art. 264 and jurisprudence.
That the alleged acts of violence were committed
in nine non-consecutive days during the almost eight
months that the strike was on-going does not render the
violence less pervasive or widespread to be
excusable. Nowhere in Art. 264 does it require that
violence must be continuous or that it should be for the
entire duration of the strike.
The appellate court took against petitioner its
filing of its complaint to have the strike declared illegal
almost eight months from the time it commenced. Art. 264
does not, however, state for purposes of having a strike
declared as illegal that the employer should immediately
report the same. It only lists what acts are prohibited. It is
thus absurd to expect an employer to file a complaint at
the first instance that an act of violence is alleged to be
committed, especially, as in the present case, when an
earlier complaint to have the refusal of the individual
respondents to work overtime declared as an illegal strike
was still pending an issue resolved in its favor only on
September 25, 1998.
 The records show that the Union went on strike
on October 22, 1997, and the first reported harassment
incident occurred on October 29, 1997, while the last
occurred in January, 1998. Those instances may have
been sporadic, but as found by the Labor Arbiter and the
NLRC, the display of placards, streamers and banners
even up to the time the appeal was being resolved by the
NLRC works against the Unions favor.
The acts complained of including the display of
placards and banners imputing criminal negligence on the
part of the company and its officers, apparently with the
end in view of intimidating the companys clientele, are,
given the nature of its business, that serious as to make
the second strike illegal. Specifically with respect to the
putting up of those banners and placards, coupled with
the name-calling and harassment, the same indicates that
it was resorted to to coerce the resolution of the dispute
the very evil which Art. 264 seeks to prevent.
While the strike is the most preeminent
economic weapon of workers to force management to
agree to an equitable sharing of the joint product of labor
and capital, it exerts some disquieting effects not only on
the relationship between labor and management, but also
on the general peace and progress of society and
economic well-being of the State.[15] If such weapon has
to be used at all, it must be used sparingly and within the
bounds of law in the interest of industrial peace and public
welfare.
As to the issue of loss of employment of those who
participated in the illegal strike, Sukhothai[16] instructs:
In the determination of the liabilities of the
individual respondents, the applicable provision is
Article 264(a) of the Labor Code:
Art. 264. Prohibited Activities (a)
x x x x Any union officer who
knowingly participates in an illegal
strike and any worker or union officer
who knowingly participates in the
commission of illegal acts during
an illegal strike may be declared to
have lost his employment status:
Provided, That mere participation of a
worker in a lawful strike shall not
constitute sufficient ground for
termination of his employment, even if
a replacement had been hired by the
employer during such lawful strike.
xxxx
In Samahang Manggagawa sa
Sulpicio Lines, Inc.-NAFLU v. Sulpicio
Lines, Inc., this Court explained that the
effects of such illegal strikes, outlined in
Article 264, make a distinction between
workers and union officers who
participate therein: an ordinary striking
worker cannot be terminated for mere
participation in an illegal. There must be
proof that he or she committed illegal
acts during a strike. A union officer,
on the other hand, may be terminated
from work when he knowingly
participates in an illegal strike, and
like other workers, when he commits
an illegal act during an illegal strike. In
all cases, the striker must be
identified. But proof beyond reasonable
doubt is not required. Substantial
evidence available under the attendant
circumstances, which may justify the
imposition of the penalty of dismissal,
may suffice.[17] (Emphasis supplied)
The liability for prohibited acts has thus to be
determined on an individual basis. A perusal of the Labor
Arbiters Decision, which was affirmed in toto by the
NLRC, shows that on account of the staging of the illegal
strike, individual respondents were all deemed to have
lost their employment, without distinction as to their
respective participation.
Of the participants in the illegal strike, whether
they knowingly participated in the illegal strike in the case
of union officers or knowingly participated in the
commission of violent acts during the illegal strike in the
case of union members, the records do not
indicate. While respondent Julius Vargas was identified to
be a union officer, there is no indication if he knowingly
participated in the illegal strike. The Court not being a trier
of facts, the remand of the case to the NLRC is in order
only for the purpose of determining the status in
the Union of individual respondents and their respective
liability, if any.
WHEREFORE, the petition
is GRANTED. The Court of Appeals Decision and
Resolution dated April 16, 2004 and January 25, 2005,
respectively, are REVERSED and SET ASIDE.
The Resolutions dated October 31, 2001 and December
14, 2001 of the National Labor Relations Commission
affirming the Decision of the Labor Arbiter in NLRC-NCR
Case No. 00-06-04890-98 are AFFIRMED with
the MODIFICATION in light of the foregoing discussions.
The case is accordingly REMANDED to
the National Labor Relations Commission for the
purpose of determining the Union status and respective
liabilities, if any, of the individual respondents.
G.R. No. 211526, June 29, 2016
45. *PMI-FACULTY AND EMPLOYEES
UNION, Petitioner, v. PMI COLLEGES
BOHOL, Respondent.
We resolve the present petition for review
on certiorari1 which seeks to nullify the December 20,
2012and January 30, 2014 resolutions2 of the Court of
Appeals in CA-G.R. CEB-SP No. 07204.
The Antecedents
Respondent PMI Colleges Bohol (respondent) is an
educational institution that offers maritime and customs
administration courses to the public. Petitioner PMI-
Faculty and Employees Union (Union) is the collective
bargaining representative of the respondent's rank-and-
file faculty members and administrative staff.
On October 2, 2009, the Union filed a notice of strike3 with
the National Conciliation and Mediation Board (NCMB) in
Cebu City, against the respondent, on grounds of gross
violation of Sections 3 and 3(a) of their collective
bargaining agreement (CBA). The Union threatened to go
on strike on the first working day of the year 2010
following the failure of the conciliation and mediation
proceedings to settle the dispute. In an order 4 dated
December 29, 2009, Secretary Marianito D. Roque of the
Department of Labor and Employment (DOLE) certified
the dispute to the National Labor Relations
Commission (NLRC)for compulsory arbitration.
On July 19, 2010, the Union filed a second notice of strike
allegedly over the same CBA violation. On July 28, 2010,
the respondent filed a Motion to Strike Out Notice of Strike
and to Refer the Dispute to Voluntary Arbitration, claiming
that the Union failed to exhaust administrative remedies
before resorting to a 2nd notice of strike. On August 5,
2010, the respondent filed a Motion for Joinder of
Issues under the 2nd notice of strike with those of the 1st
notice.
On August 2, 2010, the Union submitted its strike vote. It
alleged that while waiting for the expiration of the 15-day
cooling-off period and/or the completion of the 7-day
strike vote period, its members religiously reported for
duty. On August 9, 2010, the last day of the cooling-off
and strike vote periods, the Union officers and members
reported for work (except for Union President
Alberto Porlacin who was attending to his sick wife at the
time), but they were allegedly not allowed entry to the
school premises. This incident, according to the Union,
was confirmed under oath by its officers/members.
In protest of what it considered a lock-out by the
respondent, the Union staged a strike on the same day.
The respondent reacted with a Petition to Declare the
Strike Illegal, also filed on the same day. DOLE Secretary
Rosalinda D. Baidoz assumed jurisdiction over the
dispute through an order5 dated August 10, 2010. She
directed the strikers to return rework, and the school to
resume operations.
The Compulsory Arbitration Decisions
In his decision6 of September 26, 2011, Labor Arbiter Leo
N. Montenegro (LA Montenegro) dismissed the petition
for lack of merit, declaring that the petitioner substantially
complied with all the requirements of a valid strike, except
for staging the strike a day earlier. LA Montenegro
considered the staging of the strike one day earlier not
sufficient for a declaration of illegality as the Union
"officers/members were illegally locked out by the
petitioner in not allowing them to enter the school
premises to perform their respective jobs x x
x."7chanrobleslaw
LA Montenegro brushed aside the respondent's
submission that there is no proof that it locked out the
Union officers/members on August 9, 2010, for the
Union's failure to present as evidence the memorandum
the school supposedly issued regarding the alleged
lockout. LA Montenegro gave more credence to the
testimonies8 of the Union officers and members regarding
the lockout. He stressed that the respondent could have
been more convincing had it presented the statements of
the security guards who manned the gates during the
strike on whether the strikers were prevented from
reporting for work on August 9, 2010.
On appeal by the respondent, the NLRC reversed9 LA
Montenegro's decision as it found the strike "to be illegal
for having failed to comply with the requisites of a valid
strike. Thus, the Union officers serving and acting as such
during the period of the illegal strike are x x x deemed to
have lost their employment status with complainant PMI
Colleges Bohol."10chanrobleslaw
The NLRC was not persuaded by the Union's claim that
its premature strike was precipitated by the respondent's
refusal to admit the members and officers of the Union
inside the school premises when they reported for work
on August 9, 2010. It considered the affidavits of the
officers and members on the alleged lockout self-serving.
On the other hand, the NLRC pointed out, the compact
disc submitted in evidence by the respondent revealed
that the strikers never mentioned that they were staging a
strike due to the respondent's refusal to give them entry
to the school. It added that during the strike, the entry to
and exit from the school premises did not appear to be
restricted by the security guards.
The Union moved for reconsideration, but the NLRC
denied the motion in its resolution11 of June 29, 2012. The
Union was thus constrained to seek relief from the CA
through a Rule 65 petition for certiorari.
The CA Ruling
In its first assailed resolution,12 the CA 20th Division
dismissed the petition due to the following procedural
infirmities:ChanRoblesVirtualawlibrary
1. There is a deficiency in the docket and
other lawful fees paid by the petitioner in
the amount of P30.00;
2. Petitioner failed to append an Affidavit of
Service, in violation of Section 13, Rule
13 of the Rules of Court;
3. Petitioner failed to attach the Postal
Registry Receipts in violation of Section
13, Rule 13 of the Rules of Court;
4. Petitioner failed to explain why the
preferred personal mode of FILING was
not availed of, in violation of Section 11,
Rule 13 of the Rules of Court;
5. Petitioner merely attached photocopies
of the certified true copies of the assailed
NLRC Decision and Resolution in
violation of Section 3, Rule 46 in relation
to Section 1, Rule 65 of the 1997 Rules
of Civil Procedure;
6. Petitioner failed to state in the verification
that the allegations in the petition are
'based on authentic records,' in violation
of Section 4, Rule 7 of the 1997 Rules of
Civil Procedure, as amended by A.M. No.
00-2-10-SC (May 1, 2000);
7. In the Verification and Certification of
Non-forum Shopping, no competent
evidence as to the identity of the
petitioner was shown fat least one
current identification document issued by
an official agency bearing the photograph
and signature of the petitioner) in
violation of Section 12, Rule II of the 2004
Rules on Notarial Commission;
and cralawlawlibrary
8. The Notarial Certificate in the Verification
and Certification of Non- forum Shopping
did not contain the serial number of the
notary public, the province or city where
he was commissioned and the office
address of the notary public, in violation
of Section (b) and (c), Rule VIII of the
2004 Rules of Notarial Practice."
Additionally, the CA noted that '"the petition is bereft of
any proof of authority for Mr. ALBERTO PORLACIN to
sign the Verification and Certification of Non-forum
Shopping page in behalf of petitioner PMI Faculty and
Employees Union."13chanrobleslaw
Under the Rules of Court, the CA emphasized, a pleading
that lacks proper verification is treated as an unsigned
pleading14 and, an unsigned pleading produces no legal
effect."15chanrobleslaw
Undaunted, the Union moved for reconsideration, but the
CA denied the motion in its resolution of January 30,
2014.16 It stressed that the motion was not a challenge to
its December 20, 2012 resolution, but an appeal for a
liberal application of the formal requirements for
a certiorari petition. The Union offered its explanation for
its procedural lapses and, as a gesture of its willingness
to abide by the rules, it submitted an amended
petition.17chanrobleslaw
The CA was not persuaded by the Union's submission. It
regarded the Union's explanations to be "either admission
of negligence or dismal excuses"18 which, in its
appreciation, were a sufficient justification for the
dismissal of the petition. Moreover, the CA considered the
amended petition to be of no help in curing the Union's
procedural lapses as the pleading itself was defective. It
pointed out in this respect that an attachment to the
amended petition, a certified true copy of the NLRC's
assailed April 30, 2012 decision,19 had no relevance to
the present case.
The CA explained that, in this case, the Union assailed
the April 30, 2012 NLRC decision20 in NLRC Case No.
VAC-01-000054-2012 which stemmed from RAB Case
No. VIII-04-0024-11-B involving the issue of the legality oi
illegality of the strike on August 9, 2010. On the other
hand, what was attached to the amended petition was the
April 30, 2012 NLRC decision21 in NLRC Case No.VAC-
01-000053-2012which arose from RAB Case No. VII-04-
0026-B where the respondent sought to have the Union
declared liable for unfair labor practice on grounds of
alleged refusal to sign a negotiated CBA.
The Petition
The Union is now before the Court seeking a reversal of
the CA resolutions on the issue of whether the appellate
court committed a reversible error of law when it
dismissed its petition for ceniorari solely on technical
grounds. It argues that in dismissing the petition, the CA
ignored the principle that "substantial justice must prevail
over procedural infirmities."22chanrobleslaw
The Union pleads for a liberal application of the rules of
procedure in the resolution of its dispute with the
respondent, especially when "it is obvious that the NLRC
seriously erred and committed grave abuse of discretion
in holding that the strike was illegal and declaring all union
officers who have participated in the strike to have lost
their employment status."23 It impugns the evidence-the
video footage (compact disc) of the strike area-relied
upon by the NLRC in concluding that the strike was illegal.
Particularly, the Union faults the NLRC for not checking
the source of the video footage and the credibility of
whoever took it. It questions the reliability of the compact
disc as it-was presented only on appeal or after the lapse
of 15 months from the happening, of the strike on August
9, 2012. It bewails that due to the advances in science
and technology, the footage could have been edited and
even altered to produce the desired result.
The Respondent's Position
In its Comment24 dated September 1, 2014, the
respondent prays that the petition be dismissed for lack of
merit and for being procedurally flawed.
On the matter of procedure, the respondent submits that
the verification and certification of non-forum shopping
attached to the petition is defective because: (1) it was
executed before the petition was completed, pointing out
that the document was executed on April 3, 2014, while
the petition was completed only on April 5, 2014; and (2)
the authority of the affiant (Alberto Porlacin) had not been
shown.
Further, the respondent maintains, the Union was guilty of
forum-shopping considering that contrary to the Union's
averment in the petition's verification and certification
page, the Union officers also filed an illegal dismissal case
before the NLRC,
In any event, the respondent argues, the petition would
still be without merit as the NLRC correctly found illegal
the strike declared by the Union on August 9, 2010.
The Court's Ruling
The procedural question
The CA decided the present labor dispute purely on
technical grounds. Also, the respondent itself would want
the petition dismissed for alleged procedural lapses on
the part of the Union.
After a careful study of the records, we find that the
relaxation of the rules of procedure in this case was the
more prudent move to follow in the interest of substantial
justice. Rules of procedure are not inflexible tools
designed to hinder or delay, but rather to facilitate and
promote the administration of justice. Their strict and rigid
application which would result in technicalities that tend to
frustrate rather than promote substantial justice must
always be eschewed.25cralawred Procedural rules were
conceived to aid in the attainment of justice. If the
stringent application of the rules would hinder rather than
service the demands of justice, the former must yield to
the latter.26chanrobleslaw
Moreover, it must be emphasized that the right to appeal
should not be lightly disregarded by a stringent application
of rules of procedure especially where the appeal is on its
face meritorious and the interest of substantial justice
would be served by permitting the appeal.27 This principle
finds particular significance in administrative and quasi-
judicial bodies, like the NLRC, which are not bound by
technical rules of procedure in the adjudication of
cases.28chanrobleslaw
Had the CA also looked into the merits of the case, it could
have found that the Union's certiorari petition was not
without basis, as we shall discuss below. The case calls
for a resolution on the merits. And, although the Court is
not a trier of facts, we deem it proper not to remand the
case to the CA anymore and to resolve the appeal
ourselves, without further delay.
In Metro Eye Security, Inc., v. Julie V. Salsona,29 the
Court avoided a remand of the case to the CA, "x x x since
all the records of this case are before us, there is no need
to remand the case to the Court of Appeals. On many
occasions, the Court, in the public interest and for
expeditious administration of justice, has resolved actions
on the merits, instead of remanding them for further
proceedings, as where the ends of justice would not be
sub-served by the remand of the case."30 The present
case is in this same situation.
The merits of the case
The declaration of the strike a day before the completion
of the cooling-off and strike vote periods was but a
reaction to the respondent's locking out the officers and
members of the Union. The Union does not deny that it
staged the strike on August 9, 2010, or on the 21st day
after the filing of the strike notice on July 19, 2010, and
the submission of the strike vote on August 2, 2010, a day
earlier than the 22 days required by law (15 days strike
notice, plus 7 days strike vote period).31 It, however,
maintained that it was left with no choice but to go on
strike a day earlier because the respondent had barred its
officers and members from entering the school premises.
The NLRC had been too quick in rejecting the sworn
statements32 of the Union officers and members that they
had been locked out by the respondent when they
reported for duty in the morning of August 9, 2010,
branding their affidavits as self-serving, without providing
any basis for such a conclusion other than who submitted
the statements in evidence,33 which it implied to be the
Union.
On the contrary, we find the statements credible,
particularly those of Engr. Teodomila Mascardo, Engr.
Conchita Bagaslao, Ms. Mary Jean Enriquez, and Mr.
Cirilo Fallar34 that they had classes at 7:30 a.m. to 8:30
a.m. on Monday, August 9, 2010, and that, in compliance
with their teaching load, they had to be in the school
premises at 7:00 a.m. but were surprised when they were
not allowed to enter on that day by the guards on duty.
They protested, they added, and insisted on entering the
school premises, but they were pushed out of the school
grounds by the guards who said that they were just
following orders from the PMI management.
Under the circumstances, we find no reason for
Mascardo, Bagaslao, Enriquez, and Fallar to make self-
serving and therefore false statements on their failure to
hold their classes in the morning of August 9, 2010
because they were refused entry by the security guards.
While they are Union members, they are first and
foremost teachers who were reporting for duty on that
day. The same thing can be said of the Union officers who
were also refused entry by the guards. We likewise find
no reason for the officers to throw away all their
preparations for a lawful strike on the very last day, had
they not been pushed to act by the respondent's closing
of the gates on August 9, 2010.
It was thus grave abuse of discretion for the NLRC to
completely ignore the affidavits of the officers and
members of the Union directly saying that they were
refused entry into the school premises on August 9, 2010,
especially when LA Montenegro intimated that the
respondent could have presented the testimonies of the
guards on duty at the time to belie .the statements of the
Union officers and members.
In sharp contrast, the NLRC readily admitted the video
footage of the strike area on August 9, 2010, which the
respondent offered in evidence only on appeal or more
than a year (15 months) after it was supposed to have
been taken. The much belated submission of the video
footage puts in question, as the Union argued in its
certwrari petition, the authenticity and. therefore, the
credibility of the footage. Why was the footage not
presented to the labor arbiter, considering that the
respondent reserved the right to adduce additional
evidence, documentary and testimonial, in the resolution
of the case?35 Why did it take more than a year to present
it when the footage was taken on the first day of the
strike?
The respondent's explanation for the 15-month delay in
the presentation of the compact disc contents to prove
that the school did not lock out the Union members and members of the Union and readily admitted the
officers deserves scant consideration. We are not respondent's belatedly submitted video footage.
convinced that the respondent spent more than a year to
secure the affidavits of the personnel of Ramasola WHEREFORE, premises considered, the petition for
Superstudio, based in Tagbilaran City, that purportedly review on certiorari is GRANTED. The assailed
took the footage. As the Union pointed out,-a member of resolutions of the Court of Appeals are SET ASIDE. The
the school's management, lawyer Evaneliza Cloma- September 26, 2011 decision of Labor Arbiter Leo N.
Lucero, who resides in Tagbilaran City could have been Montenegro is REINSTATED, and the April 30, 2012
asked to depose the studio's personnel. Neither are we decision of the National Labor Relations
persuaded by the excuse that the respondent's counsel is Commission VACATED.
residing in Pasig City. Again, as observed by the Union,
air travel can bring the lawyer to Tagbilaran City in just a SO ORDERED
little over an hour to take the deposition.
46. *EASTERN TELECOMMUNICATIONS
The inordinate delay in the submission of the compact PHILIPPINES, INC. vs EASTERN TELECOMS
disc cannot but generate negative speculations on why it EMPLOYEES UNION
took so long for the respondent to introduce it in evidence.
We thus find the Union's apprehension about the
authenticity and credibility of the compact disc not
surprising; 15 months are too long a period to wait for the FACTS:
submission of a piece of evidence which existed on the
first day of the strike way back on August 9, 2010.

Like its immediate rejection of the affidavits of the Union
members and officers for being "self-serving," without
giving any credible basis for its sweeping declaration, we
find the NLRC to have overstepped the bounds of its
discretionary authority in "swallowing hook, line, and
sinker," as the Union put it,36 the compact disc submitted
by the school, as it is obvious that it was suffering from a
serious doubt in credibility because of its much belated
submission. The doubt should have been resolved in
favor of the Union.
Eastern Telecommunications Phils., Inc. (ETPI) is
a corporation engaged in the business of providing
telecommunications facilities. Eastern Telecoms
Employees Union (ETEU) is the certified exclusive
bargaining agent of the company’s rank and file
employees. It has an existing CBA with the company to
expire in the year 2004 with a Side Agreement signed on
September 3, 2001.

In essence, the labor dispute was a spin-off of the

At this point, it is well to stress that under Article 4 of the
company’s plan to defer payment of the 2003 14th, 15th
Labor Code, "all doubts in the implementation and
and 16th month bonuses sometime in April 2004. The
interpretation of the provisions of this Code, including its
company’s main ground in postponing the payment of
implementing rules and regulations, shall be resolved in
bonuses is due to allege continuing deterioration of
favor of labor." In Peñaflor v. Outdoor Clothing
company’s financial position which started in the year
Manufacturing Corporation,37 the Court reiterated that the
2000. However, ETPI while postponing payment of
principle laid down in the law has been extended by
bonuses sometime in April 2004, such payment would
jurisprudence to cover doubts in the evidence presented
also be subject to availability of funds.
by the employer and the employee.38 As discussed
earlier, the Union has raised serious doubt on the
Invoking the Side Agreement of the existing CBA for the
evidence relied on by the NLRC. Consistent with Article 4
period 2001-2004 between ETPI and ETEU, the union
of the Labor Code, we resolve the doubt in the Union's
strongly opposed the deferment in payment of the
favor.
bonuses by filing a preventive mediation complaint with
the NCMB.
In sum, we find merit in the petition. The CA reversibly
erred when (1) it decided the present labor dispute and
dismissed the Union's certiorari petition purely on
technical grounds, and (2) in blindly ignoring the blatant Later, the company made a sudden turnaround in
grave abuse of discretion on the part of the NLRC that its position by declaring that they will no longer pay the
completely disregarded the affidavits of the officers and
bonuses until the issue is resolved through compulsory
arbitration.
Thus ETEU filed a Notice of Strike on the ground
of unfair labor practice for failure of ETPI to pay the
bonuses in gross violation of the economic provision of
the existing CBA.
ETPI insists that it is under no legal compulsion
to pay 14th, 15th and 16th month bonuses for the year
2003 and 14th month bonus for the year 2004 contending
that they are not part of the demandable wage or salary
and that their grant is conditional based on successful
business performance and the availability of company
profits from which to source the same. To thwart ETEU’s
monetary claims, it insists that the distribution of the
subject bonuses falls well within the company’s
prerogative, being an act of pure gratuity and generosity
on its part. Thus, it can withhold the grant thereof
especially since it is currently plagued with economic
difficulties and financial losses.
ETPI further avers that the act of giving the
subject bonuses did not ripen into a company practice
arguing that it has always been a contingent one
dependent on the realization of profits and, hence, the
workers are not entitled to bonuses if the company does
not make profits for a given year. It asseverates that the
1998 and 2001 CBA Side Agreements did not
contractually afford ETEU a vested property right to a
perennial payment of the bonuses. It opines that the
bonus provision in the Side Agreement allows the giving
of benefits only at the time of its execution. For this
reason, it cannot be said that the grant has ripened into a
company practice.
ISSUES:
Whether or not ETPI is liable to pay 14th, 15th
and 16th month bonuses for the year 2003 and 14th
month bonus for the year 2004 to the members of
respondent union.
HELD:
YES
From a legal point of view, a bonus is a gratuity
or act of liberality of the giver which the recipient has no
right to demand as a matter of right. The grant of a bonus
is basically a management prerogative which cannot be
forced upon the employer who may not be obliged to
assume the onerous burden of granting bonuses or other
benefits aside from the employee’s basic salaries or
wages.
A bonus, however, becomes a demandable or
enforceable obligation when it is made part of the wage or
salary or compensation of the employee. Particularly
instructive is the ruling of the Court in Metro Transit
Organization, Inc. v. NLRC, where it was written:
Whether or not a bonus forms part of wages
depends upon the circumstances and conditions for its
payment. If it is additional compensation which the
employer promised and agreed to give without any
conditions imposed for its payment, such as success of
business or greater production or output, then it is part of
the wage. But if it is paid only if profits are realized or if a
certain level of productivity is achieved, it cannot be
considered part of the wage. Where it is not payable to all
but only to some employees and only when their labor
becomes more efficient or more productive, it is only an
inducement for efficiency, a prize therefore, not a part of
the wage.
In the case at bench, it is indubitable that ETPI
and ETEU agreed on the inclusion of a provision for the
grant of 14th, 15th and 16th month bonuses in the 1998-
2001 CBA Side Agreement, as well as in the 2001-2004
CBA Side Agreement, which was signed on September 3,
2001. The provision, which was similarly worded, states:
Employment-Related Bonuses
 The Company confirms that the 14th, 15th and
16th month bonuses (other than the 13th month pay) are
granted.
A reading of the above provision reveals that the
same provides for the giving of 14th, 15th and 16th month
bonuses without qualification. The wording of the
provision does not allow any other interpretation. There
were no conditions specified in the CBA Side Agreements
for the grant of the benefits contrary to the claim of ETPI
that the same is justified only when there are profits
earned by the company. Terse and clear, the said
provision does not state that the subject bonuses shall be
made to depend on the ETPI’s financial standing or that
their payment was contingent upon the realization of
profits. Neither does it state that if the company derives
no profits, no bonuses are to be given to the employees.
In fine, the payment of these bonuses was not related to
the profitability of business operations.
The records are also bereft of any showing that
the ETPI made it clear before or during the execution of
the Side Agreements that the bonuses shall be subject to
any condition. Indeed, if ETPI and ETEU intended that the
subject bonuses would be dependent on the company
earnings, such intention should have been expressly
declared in the Side Agreements or the bonus provision
should have been deleted altogether. Verily, by virtue of
its incorporation in the CBA Side Agreements, the grant
of 14th, 15th and 16th month bonuses has become more
than just an act of generosity on the part of ETPI but a
contractual obligation it has undertaken. Moreover, the
continuous conferment of bonuses by ETPI to the union
members from 1998 to 2002 by virtue of the Side
Agreements evidently negates its argument that the
giving of the subject bonuses is a management
prerogative.
Granting arguendo that the CBA Side Agreement
does not contractually bind petitioner ETPI to give the
subject bonuses, nevertheless, the Court finds that its act
of granting the same has become an established
company practice such that it has virtually become part of
the employees’ salary or wage. A bonus may be granted
on equitable consideration when the giving of such bonus
has been the company’s long and regular practice. In
Philippine Appliance Corporation v. CA, it was
pronounced:
To be considered a “regular practice,” however,
the giving of the bonus should have been done over a long
period of time, and must be shown to have been
consistent and deliberate. The test or rationale of this rule
on long practice requires an indubitable showing that the
employer agreed to continue giving the benefits knowing
fully well that said employees are not covered by the law
requiring payment thereof.
The records show that ETPI, aside from
complying with the regular 13th month bonus, has been
further giving its employees 14th month bonus every April
as well as 15th and 16th month bonuses every December
of the year, without fail, from 1975 to 2002 or for 27 years
whether it earned profits or not. The considerable length
of time ETPI has been giving the special grants to its
employees indicates a unilateral and voluntary act on its
part to continue giving said benefits knowing that such act
was not required by law. Accordingly, a company practice
in favor of the employees has been established and the
payments made by ETPI pursuant thereto ripened into
benefits enjoyed by the employees.
NOTES:
From the foregoing, ETPI cannot insist on
business losses as a basis for disregarding its
undertaking. It is manifestly clear that although it incurred
business losses in the year 2000, it continued to distribute
14th, 15th and 16th month bonuses for said year.
Notwithstanding such huge losses, ETPI entered into the
2001-2004 CBA Side Agreement on September 3, 2001
whereby it contracted to grant the subject bonuses to
ETEU in no uncertain terms. ETPI continued to sustain
losses for the succeeding years of 2001 and 2002. Still
and all, this did not deter it from honoring the bonus
provision in the Side Agreement as it continued to give the
subject bonuses to each of the union members in 2001
and 2002 despite its alleged precarious financial
condition. Parenthetically, it must be emphasized that
ETPI even agreed to the payment of the 14th, 15th and
16th month bonuses for 2003 although it opted to defer
the actual grant in April 2004. All given, business losses
could not be cited as grounds for ETPI to repudiate its
obligation under the 2001-2004 CBA Side Agreement.
 The Court finds no merit in ETPI’s contention that
the bonus provision confirms the grant of the subject
bonuses only on a single instance because if this is so,
the parties should have included such limitation in the
agreement. Nowhere in the Side Agreement does it say
that the subject bonuses shall be conferred once during
the year the Side Agreement was signed.
The giving of the subject bonuses cannot be
peremptorily withdrawn by ETPI without violating Article
100 of the Labor Code:
Art. 100. Prohibition against elimination or diminution of
benefits. – Nothing in this Book shall be construed to
eliminate or in any way diminish supplements, or other
employee benefits being enjoyed at the time of
promulgation of this Code.
The rule is settled that any benefit and supplement being
enjoyed by the employees cannot be reduced,
diminished, discontinued or eliminated 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.
[G.R. No. 146728. February 11, 2004]
47. *GENERAL MILLING
CORPORATION, petitioner, vs. HON. COURT
OF APPEALS, GENERAL MILLING
CORPORATION INDEPENDENT LABOR
UNION (GMC-ILU), and RITO
MANGUBAT, respondents.
Before us is a petition for certiorari assailing the
decision[1] dated July 19, 2000, of the Court of Appeals in
CA-G.R. SP No. 50383, which earlier reversed the
decision[2] dated January 30, 1998 of the National Labor
Relations Commission (NLRC) in NLRC Case No. V-
0112-94.
The antecedent facts are as follows:
In its two plants located at Cebu City and Lapu-Lapu
City, petitioner General Milling Corporation (GMC)
employed 190 workers. They were all members of private
respondent General Milling Corporation Independent
Labor Union (union, for brevity), a duly certified bargaining
agent.
On April 28, 1989, GMC and the union concluded a
collective bargaining agreement (CBA) which included the
issue of representation effective for a term of three
years. The CBA was effective for three years retroactive
to December 1, 1988. Hence, it would expire on
November 30, 1991.
On November 29, 1991, a day before the expiration
of the CBA, the union sent GMC a proposed CBA, with a
request that a counter-proposal be submitted within ten
(10) days.
As early as October 1991, however, GMC had
received collective and individual letters from workers
who stated that they had withdrawn from their union
membership, on grounds of religious affiliation and
personal differences. Believing that the union no longer
had standing to negotiate a CBA, GMC did not send any
counter-proposal.
On December 16, 1991, GMC wrote a letter to the
unions officers, Rito Mangubat and Victor Lastimoso. The
letter stated that it felt there was no basis to negotiate with
a union which no longer existed, but that management
was nonetheless always willing to dialogue with them on
matters of common concern and was open to suggestions
on how the company may improve its operations.
In answer, the union officers wrote a letter dated
December 19, 1991 disclaiming any massive disaffiliation
or resignation from the union and submitted a manifesto,
signed by its members, stating that they had not
withdrawn from the union.
On January 13, 1992, GMC dismissed Marcia
Tumbiga, a union member, on the ground of
incompetence. The union protested and requested GMC
to submit the matter to the grievance procedure provided
in the CBA. GMC, however, advised the union to refer to
our letter dated December 16, 1991.[3]
Thus, the union filed, on July 2, 1992, a complaint
against GMC with the NLRC, Arbitration Division, Cebu
City. The complaint alleged unfair labor practice on the
part of GMC for: (1) refusal to bargain collectively; (2)
interference with the right to self-organization; and (3)
discrimination. The labor arbiter dismissed the case with
the recommendation that a petition for certification
election be held to determine if the union still enjoyed the
support of the workers.
The union appealed to the NLRC.
 On January 30, 1998, the NLRC set aside the labor
arbiters decision. Citing Article 253-A of the Labor Code,
as amended by Rep. Act No. 6715,[4] which fixed the
terms of a collective bargaining agreement, the NLRC
ordered GMC to abide by the CBA draft that the union
proposed for a period of two (2) years beginning
December 1, 1991, the date when the original CBA
ended, to November 30, 1993. The NLRC also ordered
GMC to pay the attorneys fees.[5]
WHEREFORE, the petition is hereby GRANTED. The
NLRC Resolution of October 6, 1998 is hereby SET
ASIDE, and its decision of January 30, 1998 is, except
with respect to the award of attorneys fees which is
hereby deleted, REINSTATED.[6]
A motion for reconsideration was seasonably filed by
GMC, but in a resolution dated October 26, 2000, the CA
denied it for lack of merit.

In its decision, the NLRC pointed out that upon the Hence, the instant petition for certiorari alleging that:
effectivity of Rep. Act No. 6715, the duration of a CBA,
insofar as the representation aspect is concerned, is five I
(5) years which, in the case of GMC-Independent Labor
Union was from December 1, 1988 to November 30, THE COURT OF APPEALS DECISION
1993. All other provisions of the CBA are to be VIOLATED THE CONSTITUTIONAL RULE
renegotiated not later than three (3) years after its THAT NO DECISION SHALL BE RENDERED
execution. Thus, the NLRC held that respondent union BY ANY COURT WITHOUT EXPRESSING
remained as the exclusive bargaining agent with the right THEREIN CLEARLY AND DISTINCTLY THE
to renegotiate the economic provisions of the FACTS AND THE LAW ON WHICH IT IS
CBA. Consequently, it was unfair labor practice for GMC BASED.
not to enter into negotiation with the union.
II
The NLRC likewise held that the individual letters of
withdrawal from the union submitted by 13 of its members THE COURT OF APPEALS COMMITTED
from February to June 1993 confirmed the pressure GRAVE ABUSE OF DISCRETION IN
exerted by GMC on its employees to resign from the REVERSING THE DECISION OF THE
union. Thus, the NLRC also found GMC guilty of unfair NATIONAL LABOR RELATIONS
labor practice for interfering with the right of its employees COMMISSION IN THE ABSENCE OF ANY
to self-organization. FINDING OF SUBSTANTIAL ERROR OR
GRAVE ABUSE OF DISCRETION
With respect to the unions claim of discrimination, the AMOUNTING TO LACK OR EXCESS OF
NLRC found the claim unsupported by substantial JURISDICTION.
evidence.
III
On GMCs motion for reconsideration, the NLRC set
aside its decision of January 30, 1998, through a THE COURT OF APPEALS COMMITTED
resolution dated October 6, 1998. It found GMCs doubts SERIOUS ERROR IN NOT APPRECIATING
as to the status of the union justified and the allegation of THAT THE NLRC HAS NO JURISDICTION TO
coercion exerted by GMC on the unions members to DETERMINE THE TERMS AND CONDITIONS
resign unfounded. Hence, the union filed a petition OF A COLLECTIVE BARGAINING
for certiorari before the Court of Appeals. For failure of the AGREEMENT.[7]
union to attach the required copies of pleadings and other
Thus, in the instant case, the principal issue for our
documents and material portions of the record to support
determination is whether or not the Court of Appeals acted
the allegations in its petition, the CA dismissed the petition
with grave abuse of discretion amounting to lack or
on February 9, 1999. The same petition was
excess of jurisdiction in (1) finding GMC guilty of unfair
subsequently filed by the union, this time with the
labor practice for violating the duty to bargain collectively
necessary documents. In its resolution dated April 26,
and/or interfering with the right of its employees to self-
1999, the appellate court treated the refiled petition as a
organization, and (2) imposing upon GMC the draft CBA
motion for reconsideration and gave the petition due
proposed by the union for two years to begin from the
course.
expiration of the original CBA.
On July 19, 2000, the appellate court rendered a
On the first issue, Article 253-A of the Labor Code,
decision the dispositive portion of which reads:
as amended by Rep. Act No. 6715, states:
ART. 253-A. Terms of a collective bargaining
agreement. Any Collective Bargaining Agreement that
the parties may enter into shall, insofar as the
representation aspect is concerned, be for a term of five
(5) years. No petition questioning the majority status of
the incumbent bargaining agent shall be entertained and
no certification election shall be conducted by the
Department of Labor and Employment outside of the
sixty-day period immediately before the date of expiry of
such five year term of the Collective Bargaining
Agreement. All other provisions of the Collective
Bargaining Agreement shall be renegotiated not later than
three (3) years after its execution....
The law mandates that the representation provision
of a CBA should last for five years. The relation between
labor and management should be undisturbed until the
last 60 days of the fifth year. Hence, it is indisputable that
when the union requested for a renegotiation of the
economic terms of the CBA on November 29, 1991, it was
still the certified collective bargaining agent of the
workers, because it was seeking said renegotiation within
five (5) years from the date of effectivity of the CBA on
December 1, 1988. The unions proposal was also
submitted within the prescribed 3-year period from the
date of effectivity of the CBA, albeit just before the last
day of said period. It was obvious that GMC had no valid
reason to refuse to negotiate in good faith with the
union. For refusing to send a counter-proposal to the
union and to bargain anew on the economic terms of the
CBA, the company committed an unfair labor practice
under Article 248 of the Labor Code, which provides that:
ART. 248. Unfair labor practices of employers. It shall
be unlawful for an employer to commit any of the following
unfair labor practice:
...
(g) To violate the duty to bargain collectively as prescribed
by this Code;
...
Article 252 of the Labor Code elucidates the meaning
of the phrase duty to bargain collectively, thus:
ART. 252. Meaning of duty to bargain collectively. The
duty to bargain collectively means the performance of a
mutual obligation to meet and convene promptly and
expeditiously in good faith for the purpose of negotiating
an agreement....
We have held that the crucial question whether or not
a party has met his statutory duty to bargain in good faith
typically turn$ on the facts of the individual case. [8] There
is no per setest of good faith in bargaining.[9] Good faith or
bad faith is an inference to be drawn from the facts.[10] The
effect of an employers or a unions actions individually is
not the test of good-faith bargaining, but the impact of all
such occasions or actions, considered as a whole.[11]
Under Article 252 abovecited, both parties are
required to perform their mutual obligation to meet and
convene promptly and expeditiously in good faith for the
purpose of negotiating an agreement. The union lived up
to this obligation when it presented proposals for a new
CBA to GMC within three (3) years from the effectivity of
the original CBA. But GMC failed in its duty under Article
252. What it did was to devise a flimsy excuse, by
questioning the existence of the union and the status of
its membership to prevent any negotiation.
It bears stressing that the procedure in collective
bargaining prescribed by the Code is mandatory because
of the basic interest of the state in ensuring lasting
industrial peace. Thus:
ART. 250. Procedure in collective bargaining. The
following procedures shall be observed in collective
bargaining:
(a) When a party desires to negotiate an agreement, it
shall serve a written notice upon the other party with a
statement of its proposals. The other party shall make a
reply thereto not later than ten (10) calendar days from
receipt of such notice. (Underscoring supplied.)
GMCs failure to make a timely reply to the proposals
presented by the union is indicative of its utter lack of
interest in bargaining with the union. Its excuse that it felt
the union no longer represented the workers, was mainly
dilatory as it turned out to be utterly baseless.
We hold that GMCs refusal to make a counter-
proposal to the unions proposal for CBA negotiation is an
indication of its bad faith. Where the employer did not
even bother to submit an answer to the bargaining
proposals of the union, there is a clear evasion of the duty
to bargain collectively.[12]
Failing to comply with the mandatory obligation to
submit a reply to the unions proposals, GMC violated its
duty to bargain collectively, making it liable for unfair labor
practice. Perforce, the Court of Appeals did not commit
grave abuse of discretion amounting to lack or excess of
jurisdiction in finding that GMC is, under the
circumstances, guilty of unfair labor practice.
 Did GMC interfere with the employees right to self-
organization? The CA found that the letters between
February to June 1993 by 13 union members signifying
their resignation from the union clearly indicated that
GMC exerted pressure on its employees. The records
show that GMC presented these letters to prove that the
union no longer enjoyed the support of the workers. The
fact that the resignations of the union members occurred
during the pendency of the case before the labor arbiter
shows GMCs desperate attempts to cast doubt on the
legitimate status of the union. We agree with the CAs
conclusion that the ill-timed letters of resignation from the
union members indicate that GMC had interfered with the
right of its employees to self-organization. Thus, we hold
that the appellate court did not commit grave abuse of
discretion in finding GMC guilty of unfair labor practice for
interfering with the right of its employees to self-
organization.
Finally, did the CA gravely abuse its discretion when
it imposed on GMC the draft CBA proposed by the union
for two years commencing from the expiration of the
original CBA?
The Code provides:
ART. 253. Duty to bargain collectively when there
exists a collective bargaining agreement. ....It shall be
the duty of both parties to keep the status quo and to
continue in full force and effect the terms and conditions
of the existing agreement during the 60-day period [prior
to its expiration date] and/or until a new agreement is
reached by the parties. (Underscoring supplied.)
The provision mandates the parties to keep
the status quo while they are still in the process of working
out their respective proposal and counter proposal. The
general rule is that when a CBA already exists, its
provision shall continue to govern the relationship
between the parties, until a new one is agreed upon. The
rule necessarily presupposes that all other things are
equal. That is, that neither party is guilty of bad faith.
However, when one of the parties abuses this grace
period by purposely delaying the bargaining process, a
departure from the general rule is warranted.
In Kiok Loy vs. NLRC,[13] we found that petitioner
therein, Sweden Ice Cream Plant, refused to submit any
counter proposal to the CBA proposed by its employees
certified bargaining agent. We ruled that the former had
thereby lost its right to bargain the terms and conditions
of the CBA. Thus, we did not hesitate to impose on the
erring company the CBA proposed by its employees
union - lock, stock and barrel. Our findings in Kiok Loy are
similar to the facts in the present case, to wit:
petitioner Companys approach and attitude stalling the
negotiation by a series of postponements, non-
appearance at the hearing conducted, and undue delay in
submitting its financial statements, lead to no other
conclusion except that it is unwilling to negotiate and
reach an agreement with the Union. Petitioner has not at
any instance, evinced good faith or willingness to discuss
freely and fully the claims and demands set forth by the
Union much less justify its objection thereto.[14]
Likewise, in Divine Word University of Tacloban vs.
Secretary of Labor and Employment,[15] petitioner therein,
Divine Word University of Tacloban, refused to perform its
duty to bargain collectively. Thus, we upheld the unilateral
imposition on the university of the CBA proposed by the
Divine Word University Employees Union. We said
further:
That being the said case, the petitioner may not validly
assert that its consent should be a primordial
consideration in the bargaining process. By its acts, no
less than its action which bespeak its insincerity, it has
forfeited whatever rights it could have asserted as an
employer.[16]
Applying the principle in the foregoing cases to the
instant case, it would be unfair to the union and its
members if the terms and conditions contained in the old
CBA would continue to be imposed on GMCs employees
for the remaining two (2) years of the CBAs duration. We
are not inclined to gratify GMC with an extended term of
the old CBA after it resorted to delaying tactics to prevent
negotiations. Since it was GMC which violated the duty to
bargain collectively, based on Kiok Loy and Divine Word
University of Tacloban, it had lost its statutory right to
negotiate or renegotiate the terms and conditions of the
draft CBA proposed by the union.
We carefully note, however, that as strictly
distinguished from the facts of this case, there was no pre-
existing CBA between the parties in Kiok Loy and Divine
Word University of Tacloban. Nonetheless, we deem it
proper to apply in this case the rationale of the doctrine in
the said two cases. To rule otherwise would be to allow
GMC to have its cake and eat it too.
Under ordinary circumstances, it is not obligatory
upon either side of a labor controversy to precipitately
accept or agree to the proposals of the other. But an erring
party should not be allowed to resort with impunity to
schemes feigning negotiations by going through empty
gestures.[17] Thus, by imposing on GMC the provisions of
the draft CBA proposed by the union, in our view, the
interests of equity and fair play were properly served and
both parties regained equal footing, which was lost when
GMC thwarted the negotiations for new economic terms
of the CBA.
The findings of fact by the CA, affirming those of the
NLRC as to the reasonableness of the draft CBA
proposed by the union should not be disturbed since they
are supported by substantial evidence. On this score, we
see no cogent reason to rule otherwise. Hence, we hold
that the Court of Appeals did not commit grave abuse of
discretion amounting to lack or excess of jurisdiction when
it imposed on GMC, after it had committed unfair labor
practice, the draft CBA proposed by the union for the
remaining two (2) years of the duration of the original
CBA. Fairness, equity, and social justice are best served
in this case by sustaining the appellate courts decision on
this issue.
WHEREFORE, the petition is DISMISSED and the
assailed decision dated July 19, 2000, and the resolution
dated October 26, 2000, of the Court of Appeals in CA-
G.R. SP No. 50383, are AFFIRMED. Costs against
petitioner.
SO ORDERED.
[G.R. No. 124224. March 17, 2000]
48. *NEW PACIFIC TIMBER SUPPLY COMPANY,
CO., INC., petitioner, vs. NATIONAL LABOR
RELATIONS COMMISSION, MUSIB M. BUAT,
LEON G. GONZAGA, JR., ET AL., NATIONAL
FEDERATION OF LABOR, MARIANO AKILIT
and 350 OTHERS, respondents.
May the term of a Collective Bargaining Agreement (CBA)
as to its economic provisions be extended beyond the
term expressly stipulated therein, and, in the absence of
a new CBA, even beyond the three-year period provided
by law? Are employees hired after the stipulated term of
a CBA entitled to the benefits provided thereunder?
These are the issues at the heart of the instant petition
for certiorari with prayer for the issuance of preliminary
injunction and/or temporary restraining order filed by
petitioner New Pacific Timber & Supply Company,
Incorporated against the National Labor Relations
Commission (NLRC), et al. and the National Federation of
Labor, et al.
The antecedent facts, as found by the NLRC, are as
follows:
The National Federation of Labor (NFL, for brevity) was
certified as the sole and exclusive bargaining
representative of all the regular rank-and-file employees
of New Pacific Timber & Supply Co., Inc. (hereinafter
referred to as petitioner Company).[1] As such, NFL
started to negotiate for better terms and conditions of
employment for the employees in the bargaining unit
which it represented. However, the same was allegedly
met with stiff resistance by petitioner Company, so that
the former was prompted to file a complaint for unfair labor
practice (ULP) against the latter on the ground of refusal
to bargain collectively.[2]Misj uris
On March 31, 1987, then Executive Labor Arbiter Hakim
S. Abdulwahid issued an order declaring (a) herein
petitioner Company guilty of ULP; and (b) the CBA
proposals submitted by the NFL as the CBA between the
regular rank-and-file employees in the bargaining unit and
petitioner Company.[3]
Petitioner Company appealed the above order to the
NLRC. On November 15, 1989, the NLRC rendered a
decision dismissing the appeal for lack of merit. A motion
for reconsideration thereof was, likewise, denied in a
Resolution, dated November 12, 1990.[4]
Unsatisfied, petitioner Company filed a petition
for certiorari with this Court. But the Court dismissed said
petition in a Resolution, dated January 21, 1991.[5]
Thereafter, the records of the case were remanded to the
arbitration branch of origin for the execution of Labor
Arbiter Abdulwahid's Order, dated March 31, 1987,
granting monetary benefits consisting of wage increases,
housing allowances, bonuses, etc. to the regular rank-
and-file employees. Following a series of conferences to
thresh out the details of computation, Labor Arbiter
Reynaldo S. Villena issued an Order, dated October 18,
1993, directing petitioner Company to pay the 142
employees entitled to the aforesaid benefits the
respective amounts due them under the CBA. Petitioner
Company complied; and, the corresponding quitclaims
were executed. The case was considered closed
following NFL's manifestation that it will no longer appeal
the October 18, 1993 Order of Labor Arbiter Villena.[6]Jj
lex
However, notwithstanding such manifestation, a "Petition
for Relief" was filed in behalf of 186 of the private
respondents "Mariano J. Akilit and 350 others" on May 12,
1994. In their petition, they claimed that they were
wrongfully excluded from enjoying the benefits under the
CBA since the agreement with NFL and petitioner
Company limited the CBA's implementation to only the
142 rank-and-file employees enumerated. They claimed
that NFL's misrepresentations had precluded them from 94 are Set Aside and Vacated for lack of
appealing their exclusion.[7] legal bases.

Treating the petition for relief as an appeal, the NLRC Conformably, respondent New Pacific
entertained the same. On August 4, 1994, said Timber and Supply Co., Inc. is hereby
commission issued a resolution[8] declaring that the 186 directed to pay individual complainants
excluded employees "form part and parcel of the then their CBA benefits in the aggregate
existing rank-and-file bargaining unit" and were, amount of P13,559,510.37, the detailed
therefore, entitled to the benefits under the CBA. The computation thereof is contained in
NLRC held, thus: Annex "A" which forms an integral part of
this resolution, plus ten (10%) percent
WHEREFORE, the appeal is hereby thereof as Attorney's fees.
granted and the Order of the Labor
arbiter dated October 18, 1993 is SO ORDERED.[10]
hereby Set Aside and Vacated. In lieu
hereof, a new Order is hereby issued Hence, the instant petition wherein petitioner Company
directing respondent New Pacific Timber raises the following issues: Acct mis
& Supply Co., Inc. to pay all its regular
rank-and-file workers their wage I
differentials and other benefits arising
from the decreed CBA as explained THE PUBLIC RESPONDENT NLRC
above, within ten (10) days from receipt COMMITTED GRAVE ABUSE OF
of this order. DISCRETION IN ALLOWING THE
"PETITION FOR RELIEF" TO
SO ORDERED.[9] PROSPER.

Petitioner Company filed a motion for reconsideration of II

the aforequoted resolution.
THE PUBLIC RESPONDENT NLRC
Meanwhile, four separate groups of the private COMMITTED GRAVE ABUSE OF
respondents, including the original 186 who had filed the DISCRETION IN RULING THAT
"Petition for Relief" filed individual money claims, PRIVATE RESPONDENTS MARIANO
docketed as NLRC Cases Nos. M-001991-94 to M- AKILIT AND 350 OTHERS ARE
001994-94, before the Arbitration Branch of the NLRC, ENTITLED TO BENEFITS UNDER THE
Cagayan de Oro City. However, Labor Arbiter Villena COLLECTIVE BARGAINING
dismissed these cases in Orders, dated March 11, 1994; AGREEMENT IN SPITE OF THE FACT
April 13, 1994; March 9, 1994; and, May 10, 1994. The THAT THEY WERE NOT EMPLOYED
employees appealed the respective dismissal of their BY THE PETITIONER MUCH LESS
complaints to the NLRC. The latter consolidated these WERE THEY MEMBERS OF THE
appeals with the aforementioned motion for BARGAINING UNIT DURING THE
reconsideration filed by petitioner Company. New miso TERM OF THE CBA. Mis act

On February 29, 1996, the NLRC issued a resolution, the III

dispositive portion of which reads as follows:
PUBLIC RESPONDENT NLRC
WHEREFORE, the instant petition for COMMITTED GRAVE ABUSE OF
reconsideration of respondent DISCRETION IN MAKING FACTUAL
is Denied for lack of merit and the FINDINGS WITHOUT BASIS.
Resolution of this Commission dated
August 4, 1994 Sustained. The separate IV
orders of the Labor Arbiter dated March
11, 1994, April 13, 1994, March 9, 1994 THE DISPOSITIVE PORTIONS OF THE
and May 10, 1994, respectively, in NLRC ASSAILED RESOLUTIONS ARE
Cases Nos. M-001991-94 to M-001994- DEFECTIVE AND/OR REVEAL THE
GRAVE ABUSE OF DISCRETION
 COMMITTED BY PUBLIC
RESPONDENT.[11]
Petitioner Company contends that a "Petition for Relief" is
not the proper mode of seeking a review of a decision
rendered by the arbitration branch of the
NLRC.[12] According to the petitioner, nowhere in the
Labor Code or in the NLRC Rules of Procedure is there
such a pleading. Rather, the remedy of a party aggrieved
by an unfavorable ruling of the labor arbiter is to appeal
said judgment to the NLRC.[13]
Petitioner asseverates that even assuming that the NLRC
correctly treated the petition for relief as an appeal, still, it
should not have allowed the same to prosper, because
the petition was filed several months after the ten-day
reglementary period for filing an appeal had expired; and,
therefore, it failed to comply with the requirements of an
appeal under the Labor Code and the NLRC Rules of
Procedure.
Petitioner Company further contends that in filing
separate complaints and/or money claims at the
arbitration level in spite of their pending petition for relief
and in spite of the final order, dated October 18, 1993, in
NLRC Case No.RAB-IX-0334-82, the private respondents
were in fact forum-shopping, an act which is proscribed
as trifling with the courts and abusing their practices. S
djad
Anent the second issue, petitioner argues that the private
respondents are not entitled to the benefits under the CBA
because employees hired after the term of a CBA are not
parties to the agreement, and therefore, may not claim
benefits thereunder, even if they subsequently become
members of the bargaining unit.
As for the term of the CBA, petitioner maintains that Article
253 of the Labor Code refers to the continuation in full
force and effect of the previous CBA's terms and
conditions. By necessity, it could not possibly refer to
terms and conditions which, as expressly stipulated,
ceased to have force and effect.[14]
According to petitioner, the provision on wage increase in
the 1981 to 1984 CBA between petitioner Company and
NFL provided for yearly wage increases. Logically, these
provisions ended in the year 1984 - the last year that the
economic provisions of the CBA were, pursuant to
contract and law, effective. Petitioner claims that there is
no contractual basis for the grant of CBA benefits such as
wage increases in 1985 and subsequent years, since the
CBA stipulates only the increases for the years 1981 to
1984.
Moreover, petitioner alleges that it was through no fault of
theirs that no new CBA was entered pending appeal of
the decision in NLRC Case No. RAB-IX-0334-82.
Finally, petitioner Company claims that it was never given
the opportunity to submit a counter-computation of the
benefits supposedly due the private respondents. Instead,
the NLRC allegedly relied on the self-serving
computations of private respondents. Sppedsc
Petitioner's contentions are untenable.
We find no grave abuse of discretion on the part of the
NLRC, when it entertained the petition for relief filed by
the private respondents and treated it as an appeal. even
if it was filed beyond the reglementary period for filing an
appeal. Ordinarily, once a judgment has become final and
executory, it can no longer be disturbed, altered or
modified. However, a careful scrutiny of the facts and
circumstances of the instant case warrants liberality in the
application of technical rules and procedure. It would be a
greater injustice to deprive the concerned employees of
the monetary benefits rightly due them because of a
circumstance over which they had no control. As stated
above, private respondents, in their petition for relief,
claimed that they were wrongfully excluded from the list of
those entitled to the CBA benefits by their union, NFL,
without their knowledge; and, because they were under
the impression that they were ably represented, they were
not able to appeal their case on time. C alrsc
The Supreme Court has allowed appeals from decisions
of the labor arbiter to the NLRC, even if filed beyond the
reglementary period, in the interest of
justice.[15] Moreover, under Article 218 (c) of the Labor
Code, the NLRC may, in the exercise of its appellate
powers, "correct, amend or waive any error, defect or
irregularity whether in substance or in form." Further,
Article 221 of the same provides that: "In any proceeding
before the Commission or any of the Labor Arbiters, the
rules of evidence prevailing in courts of law or equity shall
not be controlling and it is the spirit and intention of this
Code that the Commission and its members and the
Labor Arbiters shall use every and all reasonable means
to ascertain the facts in each case speedily and
objectively and without regard to technicalities of law or
procedure, all in the interest of due process. x x x"[16]
Anent the issue of whether or not the term of an existing
CBA, particularly as to its economic provisions, can be
extended beyond the period stipulated therein, and even
beyond the three-year period prescribed by law, in the
absence of a new agreement, Article 253 of the Labor
Code explicitly provides:
 ART. 253. Duty to bargain collectively
when there exists a collective bargaining
agreement. - When there is a collective
bargaining agreement, the duty to
bargain collectively shall also mean that
neither party shall terminate nor modify
such agreement during its lifetime.
However, either party can serve a written
notice to terminate or modify the
agreement at least sixty (60) days prior to
its expiration date. It shall be the duty of
both parties to keep the status quo and to
continue in full force and effect the terms
and conditions of the existing agreement
during the 60-day period and/or until a
new agreement is reached by the
parties. (Underlining supplied. )
It is clear from the above provision of law that until a new
Collective Bargaining Agreement has been executed by
and between the parties, they are duty-bound to keep
the status quo and to continue in full force and effect the
terms and conditions of the existing agreement. The law
does not provide for any exception nor qualification as to
which of the economic provisions of the existing
agreement are to retain force and effect; therefore, it must
be understood as encompassing all the terms and
conditions in the said agreement. Sccal r
In the case at bar, no new agreement was entered into by
and between petitioner Company and NFL pending
appeal of the decision in NLRC Case No. RAB-IX-0334-
82; nor were any of the economic provisions and/or terms
and conditions pertaining to monetary benefits in the
existing agreement modified or altered. Therefore, the
existing CBA in its entirety, continues to have legal effect.
In a recent case, the Court had occassion to rule that
Articles 253 and 253-A[17] mandate the parties to keep
the status quo and to continue in full force and effect the
terms and conditions of the existing agreement during the
60-day period prior to the expiration of the old CBA and/or
until a new agreement is reached by the parties.
Consequently, the automatic renewal clause provided for
by the law, which is deemed incorporated in all CBA's,
provides the reason why the new CBA can only be given
a prospective effect.[18]Calrsp ped
In the case of Lopez Sugar Corporation vs. Federation of
Free Workers, et.al,[19] this Court reiterated the rule that
although a CBA has expired, it continues to have legal
effects as between the parties until a new CBA has been
entered into. It is the duty of both parties to the CBA to
keep the status quo, and to continue in full force and effect
the terms and conditions of the existing agreement during
the 60-day period and/or until a new agreement is
reached by the parties.[20]
To rule otherwise, i.e., that the economic provisions of the
existing CBA in the instant case ceased to have force and
effect in the year 1984, would be to create a gap during
which no agreement would govern, from the time the old
contract expired to the time a new agreement shall have
been entered into. For if, as contended by the petitioner,
the economic provisions of the existing CBA were to have
no legal effect, what agreement as to wage increases and
other monetary benefits would govern at all? None, it
would seem, if we are to follow the logic of petitioner
Company. Consequently, the employees from the year
1985 onwards would be deprived of a substantial amount
of monetary benefits which they could have enjoyed had
the terms and conditions of the CBA remained in force
and effect. Such a situation runs contrary to the very intent
and purpose of Articles 253 and 253-A of the Labor Code
which is to curb labor unrest and to promote industrial
peace, as can be gleaned from the discussions of the
legislators leading to the passage of said laws, thus:
HON. CHAIRMAN HERRERA: Pag nag-
survey tayo sa mga unyon, ganoon ang
mangyayari. And I think our responsibility
here is to create a legal framework to
promote industrial peace and to develop
responsible and fair labor movement.
HON. CHAIRMAN VELOSO: In other
words, the longer the period of the
effectivity.... Sce dp
xxx
HON. CHAIRMAN VELOSO:
(continuing).... in other words, the longer
period of effectivity of the CBA, the better
for industrial peace.
xxx.[21]
Having established that the CBA between petitioner
Company and NFL remained in full force and effect even
beyond the stipulated term, in the absence of a new
agreement; and, therefore, that the economic provisions
such as wage increases continued to have legal effect,
we are now faced with the question of who are entitled to
the benefits provided thereunder.
Petitioner Company insists that the rank-and-file
employees hired after the term of the CBA inspite of their
subsequent membership in the bargaining unit, are not
parties to the agreement, and certainly may not claim the
benefits thereunder.
We do not agree. In a long line of cases, this Court has
held that when a collective bargaining contract is entered
into by the union representing the employees and the
employer, even the non-member employees are entitled
to the benefits of the contract. To accord its benefits only
to members of the union without any valid reason would
constitute undue discrimination against
[22]
nonmembers. It is even conceded, that a laborer can
claim benefits from a CBA entered into between the
company and the union of which he is a member at the
time of the conclusion of the agreement, after he has
resigned from said union.[23]Edp sc
In the same vein, the benefits under the CBA in the instant
case should be extended to those employees who only
became such after the year 1984. To exclude them would
constitute undue discrimination and deprive them of
monetary benefits they would otherwise be entitled to
under a new collective bargaining contract to which they
would have been parties. Since in this particular case, no
new agreement had been entered into after the CBA's
stipulated term, it is only fair and just that the employees
hired thereafter be included in the existing CBA. This is in
consonance with our ruling that the terms and conditions
of a collective bargaining agreement continue to have
force and effect beyond the stipulated term when no new
agreement is executed by and between the parties to
avoid or prevent the situation where no collective
bargaining agreement at all would govern between the
employer company and its employees.
Anent the other issues raised by petitioner Company, the
Court finds that these pertain to questions of fact that have
already been passed upon by the NLRC. It is axiomatic
that, the factual findings of the National Labor Relations
Commission, which have acquired expertise because its
jurisdiction is confined to specific matters, are accorded
respect and finality by the Supreme Court, when these are
supported by substantial evidence. A perusal of the
assailed resolution reveals that the same was reached on
the basis of the required quantum of evidence.
WHEREFORE, in view of the foregoing, the instant
petition for certiorari is hereby DISMISSED for lack of
merit.
SO ORDERED.
G.R. No. 198783 April 15, 2013
49. *ROYAL PLANT WORKERS UNION v. COCA-
COLA BOTTLERS PHILIPPINES, INC.-CEBU
PLANT
Assailed in this petition is the May 24, 2011 Decision1 and
the September 2, 2011 Resolution2 of the Court of
Appeals (CA) in CA-G.R. SP No. 05200, entitled Coca-
Cola Bottlers Philippines, Inc.-Cebu Plant v. Royal Plant
Workers Union, which nullified and set aside the June 11,
2010 Decision3 of the Voluntary Arbitration Panel
(Arbitration Committee) in a case involving the removal of
chairs in the bottling plant of Coca-Cola Bottlers
Philippines, Inc. (CCBPI).
The Factual and Procedural
Antecedents
The factual and procedural antecedents have been
accurately recited in the May 24, 2011 CA decision as
follows:
Petitioner Coca-Cola Bottlers Philippines, Inc. (CCBPI) is
a domestic corporation engaged in the manufacture, sale
and distribution of softdrink products. It has several
bottling plants all over the country, one of which is located
in Cebu City. Under the employ of each bottling plant are
bottling operators. In the case of the plant in Cebu City,
there are 20 bottling operators who work for its Bottling
Line 1 while there are 12-14 bottling operators who man
its Bottling Line 2. All of them are male and they are
members of herein respondent Royal Plant Workers
Union (ROPWU).
The bottling operators work in two shifts. The first shift is
from 8 a.m. to 5 p.m. and the second shift is from 5 p.m.
up to the time production operations is finished. Thus, the
second shift varies and may end beyond eight (8) hours.
However, the bottling operators are compensated with
overtime pay if the shift extends beyond eight (8) hours.
For Bottling Line 1, 10 bottling operators work for each
shift while 6 to 7 bottling operators work for each shift for
Bottling Line 2.
Each shift has rotations of work time and break time. Prior
to September 2008, the rotation is this: after two and a
half (2 ½) hours of work, the bottling operators are given
a 30-minute break and this goes on until the shift ends. In
September 2008 and up to the present, the rotation has
changed and bottling operators are now given a 30-
minute break after one and one half (1 ½) hours of work.
In 1974, the bottling operators of then Bottling Line 2 were
provided with chairs upon their request. In 1988, the
bottling operators of then Bottling Line 1 followed suit and
asked to be provided also with chairs. Their request was
likewise granted. Sometime in September 2008, the
chairs provided for the operators were removed pursuant
to a national directive of petitioner. This directive is in line
with the "I Operate, I Maintain, I Clean" program of
petitioner for bottling operators, wherein every bottling
operator is given the responsibility to keep the machinery
and equipment assigned to him clean and safe. The
program reinforces the task of bottling operators to
constantly move about in the performance of their duties
and responsibilities.
With this task of moving constantly to check on the
machinery and equipment assigned to him, a bottling
operator does not need a chair anymore, hence,
petitioner’s directive to remove them. Furthermore,
CCBPI rationalized that the removal of the chairs is
implemented so that the bottling operators will avoid
sleeping, thus, prevent injuries to their persons. As
bottling operators are working with machines which
consist of moving parts, it is imperative that they should
not fall asleep as to do so would expose them to hazards
and injuries. In addition, sleeping will hamper the efficient
flow of operations as the bottling operators would be
unable to perform their duties competently.
The bottling operators took issue with the removal of the
chairs. Through the representation of herein respondent,
they initiated the grievance machinery of the Collective
Bargaining Agreement (CBA) in November 2008. Even
after exhausting the remedies contained in the grievance
machinery, the parties were still at a deadlock with
petitioner still insisting on the removal of the chairs and
respondent still against such measure. As such,
respondent sent a Notice to Arbitrate, dated 16 July 2009,
to petitioner stating its position to submit the issue on the
removal of the chairs for arbitration. Nevertheless, before
submitting to arbitration the issue, both parties availed of
the conciliation/mediation proceedings before the
National Conciliation and Mediation Board (NCMB)
Regional Branch No. VII. They failed to arrive at an
amicable settlement.
Thus, the process of arbitration continued and the parties
appointed the chairperson and members of the Arbitration
Committee as outlined in the CBA. Petitioner and
respondent respectively appointed as members to the
Arbitration Committee Mr. Raul A. Kapuno, Jr. and Mr.
Luis Ruiz while they both chose Atty. Alice Morada as
chairperson thereof. They then executed a Submission
Agreement which was accepted by the Arbitration
Committee on 01 October 2009. As contained in the
Submission Agreement, the sole issue for arbitration is
whether the removal of chairs of the operators assigned
at the production/manufacturing line while performing
their duties and responsibilities is valid or not.
Both parties submitted their position papers and other
subsequent pleadings in amplification of their respective
stands. Petitioner argued that the removal of the chairs is
valid as it is a legitimate exercise of management
prerogative, it does not violate the Labor Code and it does
not violate the CBA it contracted with respondent. On the
other hand, respondent espoused the contrary view. It
contended that the bottling operators have been
performing their assigned duties satisfactorily with the
presence of the chairs; the removal of the chairs
constitutes a violation of the Occupational Health and
Safety Standards, the policy of the State to assure the
right of workers to just and humane conditions of work as
stated in Article 3 of the Labor Code and the Global
Workplace Rights Policy.
Ruling of the Arbtration Committee
On June 11, 2010, the Arbitration Committee rendered a
decision in favor of the Royal Plant Workers Union (the
Union) and against CCBPI, the dispositive portion of
which reads, as follows:
Wherefore, the undersigned rules in favor of ROPWU
declaring that the removal of the operators chairs is not
valid. CCBPI is hereby ordered to restore the same for the
use of the operators as before their removal in 2008.4
The Arbitration Committee ruled, among others, that the
use of chairs by the operators had been a company
practice for 34 years in Bottling Line 2, from 1974 to 2008,
and 20 years in Bottling Line 1, from 1988 to 2008; that
the use of the chairs by the operators constituted a
company practice favorable to the Union; that it ripened
into a benefit after it had been enjoyed by it; that any
benefit being enjoyed by the employees could not be
reduced, diminished, discontinued, or eliminated by the
employer in accordance with Article 100 of the Labor
Code, which prohibited the diminution or elimination by
the employer of the employees’ benefit; and that
jurisprudence had not laid down any rule requiring a
specific minimum number of years before a benefit would
constitute a voluntary company practice which could not
be unilaterally withdrawn by the employer.
The Arbitration Committee further stated that, although
the removal of the chairs was done in good faith, CCBPI
failed to present evidence regarding instances of sleeping
while on duty. There were no specific details as to the
number of incidents of sleeping on duty, who were
involved, when these incidents happened, and what
actions were taken. There was no evidence either of any
accident or injury in the many years that the bottling
operators used chairs. To the Arbitration Committee, it
was puzzling why it took 34 and 20 years for CCBPI to be
so solicitous of the bottling operators’ safety that it
removed their chairs so that they would not fall asleep and
injure themselves.
Finally, the Arbitration Committee was of the view that,
contrary to CCBPI’s position, line efficiency was the result
of many factors and it could not be attributed solely to one
such as the removal of the chairs.
Not contented with the Arbitration Committee’s decision,
CCBPI filed a petition for review under Rule 43 before the
CA.
Ruling of the CA
On May 24, 2011, the CA rendered a contrasting decision
which nullified and set aside the decision of the Arbitration
Committee. The dispositive portion of the CA decision
reads:
WHEREFORE, premises considered, the petition is
hereby GRANTED and the Decision, dated 11 June 2010,
of the Arbitration Committee in AC389-VII-09-10-2009D is
NULLIFIED and SET ASIDE. A new one is entered in its
stead SUSTAINING the removal of the chairs of the
bottling operators from the manufacturing/production
line.5
The CA held, among others, that the removal of the chairs
from the manufacturing/production lines by CCBPI is
within the province of management prerogatives; that it
was part of its inherent right to control and manage its
enterprise effectively; and that since it was the employer’s
discretion to constantly develop measures or means to
optimize the efficiency of its employees and to keep its
machineries and equipment in the best of conditions, it
was only appropriate that it should be given wide latitude
in exercising it.
The CA stated that CCBPI complied with the conditions of
a valid exercise of a management prerogative when it
decided to remove the chairs used by the bottling
operators in the manufacturing/production lines. The
removal of the chairs was solely motivated by the best
intentions for both the Union and CCBPI, in line with the
"I Operate, I Maintain, I Clean" program for bottling
operators, wherein every bottling operator was given the
responsibility to keep the machinery and equipment
assigned to him clean and safe. The program would
reinforce the task of bottling operators to constantly move
about in the performance of their duties and
responsibilities. Without the chairs, the bottling operators
could efficiently supervise these machineries’ operations
and maintenance. It would also be beneficial for them
because the working time before the break in each
rotation for each shift was substantially reduced from two
and a half hours (2 ½ ) to one and a half hours (1 ½)
before the 30-minute break. This scheme was clearly
advantageous to the bottling operators as the number of
resting periods was increased. CCBPI had the best
intentions in removing the chairs because some bottling
operators had the propensity to fall asleep while on the
job and sleeping on the job ran the risk of injury exposure
and removing them reduced the risk.
The CA added that the decision of CCBPI to remove the
chairs was not done for the purpose of defeating or
circumventing the rights of its employees under the
special laws, the Collective Bargaining Agreement (CBA)
or the general principles of justice and fair play. It opined
that the principles of justice and fair play were not violated
because, when the chairs were removed, there was a
commensurate reduction of the working time for each
rotation in each shift. The provision of chairs for the
bottling operators was never part of the CBAs contracted
between the Union and CCBPI. The chairs were not
provided as a benefit because such matter was
dependent upon the exigencies of the work of the bottling
operators. As such, CCBPI could withdraw this provision
if it was not necessary in the exigencies of the work, if it
was not contributing to the efficiency of the bottling
operators or if it would expose them to some hazards.
Lastly, the CA explained that the provision of chairs to the
bottling operators cannot be covered by Article 100 of the
Labor Code on elimination or diminution of benefits
because the employee’s benefits referred to therein
mainly involved monetary considerations or privileges
converted to their monetary equivalent.
Disgruntled with the adverse CA decision, the Union has
come to this Court praying for its reversal on the following
GROUNDS
I
THAT WITH DUE RESPECT, THE COURT OF
APPEALS COMMITTED REVERSIBLE ERROR IN
HOLDING THAT A PETITION FOR REVIEW UNDER
RULE 43 OF THE RULES OF COURT IS THE PROPER
REMEDY OF CHALLENGING BEFORE SAID COURT
THE DECISION OF THE VOLUNTARY ARBITRATOR
OR PANEL OF VOLUNTARY ARBITRATORS UNDER
THE LABOR CODE.
II
THAT WITH DUE RESPECT, THE COURT OF
APPEALS GRAVELY ABUSED ITS DISCRETION IN
NULLIFYING AND SETTING ASIDE THE DECISION OF
THE PANEL OF VOLUNTARY ARBITRATORS WHICH
DECLARED AS NOT VALID THE REMOVAL OF THE
CHAIRS OF THE OPERATORS IN THE
MANUFACTURING AND/OR PRODUCTION LINE.
In advocacy of its positions, the Union argues that the
proper remedy in challenging the decision of the
Arbitration Committee before the CA is a petition for
certiorari under Rule 65. The petition for review under
Rule 43 resorted to by CCBPI should have been
dismissed for being an improper remedy. The Union
points out that the parties agreed to submit the unresolved
grievance involving the removal of chairs to voluntary
arbitration pursuant to the provisions of Article V of the
existing CBA. Hence, the assailed decision of the
Arbitration Committee is a judgment or final order issued
under the Labor Code of the Philippines. Section 2, Rule
43 of the 1997 Rules of Civil Procedure, expressly states
that the said rule does not cover cases under the Labor
Code of the Philippines. The judgments or final orders of
the Voluntary Arbitrator or Panel of Voluntary Arbitrators
are governed by the provisions of Articles 260, 261, 262,
262-A, and 262-B of the Labor Code of the Philippines.
On the substantive aspect, the Union argues that there is
no connection between CCBPI’s "I Operate, I Maintain, I
Clean" program and the removal of the chairs because
the implementation of the program was in 2006 and the
removal of the chairs was done in 2008. The 30-minute
break is part of an operator’s working hours and does not
make any difference. The frequency of the break period is
not advantageous to the operators because it cannot
compensate for the time they are made to stand
throughout their working time. The bottling operators get
tired and exhausted after their tour of duty even with
chairs around. How much more if the chairs are removed?
The Union further claims that management prerogatives
are not absolute but subject to certain limitations found in
law, a collective bargaining agreement, or general
principles of fair play and justice. The operators have
been performing their assigned duties and responsibilities
satisfactorily for thirty (30) years using chairs. There is no
record of poor performance because the operators are
sitting all the time. There is no single incident when the
attention of an operator was called for failure to carry out
his assigned tasks. CCBPI has not submitted any
evidence to prove that the performance of the operators
was poor before the removal of the chairs and that it has
improved after the chairs were removed. The presence of
chairs for more than 30 years made the operators awake
and alert as they could relax from time to time. There are
sanctions for those caught sleeping while on duty. Before
the removal of the chairs, the efficiency of the operators
was much better and there was no recorded accident.
After the removal of the chairs, the efficiency of the
operators diminished considerably, resulting in the drastic
decline of line efficiency.
Finally, the Union asserts that the removal of the chairs
constitutes violation of the Occupational Health and
Safety Standards, which provide that every company shall
keep and maintain its workplace free from hazards that
are likely to cause physical harm to the workers or
damage to property. The removal of the chairs constitutes
a violation of the State policy to assure the right of workers
to a just and humane condition of work pursuant to Article
3 of the Labor Code and of CCBPI’s Global Workplace
Rights Policy. Hence, the unilateral withdrawal,
elimination or removal of the chairs, which have been in
existence for more than 30 years, constitutes a violation
of existing practice.
The respondent’s position
CCBPI reiterates the ruling of the CA that a petition for
review under Rule 43 of the Rules of Court was the proper
remedy to question the decision of the Arbitration
Committee. It likewise echoes the ruling of the CA that the
removal of the chairs was a legitimate exercise of
management prerogative; that it was done not to harm the
bottling operators but for the purpose of optimizing their
efficiency and CCBPI’s machineries and equipment; and
that the exercise of its management prerogative was done
in good faith and not for the purpose of circumventing the
rights of the employees under the special laws, the CBA
or the general principles of justice and fair play.
The Court’s Ruling
The decision in this case rests on the resolution of two
basic questions. First, is an appeal to the CA via a petition
for review under Rule 43 of the 1997 Rules of Civil
Procedure a proper remedy to question the decision of the
Arbitration Committee? Second, was the removal of the
bottling operators’ chairs from CCBPI’s
production/manufacturing lines a valid exercise of a
management prerogative?
The Court sustains the ruling of the CA on both issues.
Regarding the first issue, the Union insists that the CA
erred in ruling that the recourse taken by CCBPI in
appealing the decision of the Arbitration Committee was
proper. It argues that the proper remedy in challenging the
decision of the Voluntary Arbitrator before the CA is by
filing a petition for certiorari under Rule 65 of the Rules of
Court, not a petition for review under Rule 43.
CCBPI counters that the CA was correct in ruling that the
recourse it took in appealing the decision of the Arbitration
Committee to the CA via a petition for review under Rule
43 of the Rules of Court was proper and in conformity with
the rules and prevailing jurisprudence.
A Petition for Review
under Rule 43 is the
proper remedy
CCBPI is correct. This procedural issue being debated
upon is not novel. The Court has already ruled in a
number of cases that a decision or award of a voluntary
arbitrator is appealable to the CA via a petition for review
under Rule 43. The recent case of Samahan Ng Mga
Manggagawa Sa Hyatt (SAMASAH-NUWHRAIN) v. Hon.
Voluntary Arbitrator Buenaventura C. Magsalin and Hotel
Enterprises of the Philippines6 reiterated the well-settled
doctrine on this issue, to wit:
In the case of Samahan ng mga Manggagawa sa Hyatt-
NUWHRAIN-APL v. Bacungan,7 we repeated the well-
settled rule that a decision or award of a voluntary
arbitrator is appealable to the CA via petition for review
under Rule 43. We held that:
"The question on the proper recourse to assail a decision
of a voluntary arbitrator has already been settled in Luzon
Development Bank v. Association of Luzon Development
Bank Employees, where the Court held that 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 (now embodied in Rule 43 of the 1997
Rules of Civil Procedure), just like those of the quasi-
judicial agencies, boards and commissions enumerated
therein, and consistent with the original purpose to
provide a uniform procedure for the appellate review of
adjudications of all quasi-judicial entities.
Subsequently, in Alcantara, Jr. v. Court of Appeals, and
Nippon Paint Employees Union-Olalia v. Court of
Appeals, the Court reiterated the aforequoted ruling. In
Alcantara, the Court held that notwithstanding Section 2
of Rule 43, the ruling in Luzon Development Bank still
stands. The Court explained, thus:
‘The provisions may be new to the Rules of Court but it is
far from being a new law. Section 2, Rules 42 of the 1997
Rules of Civil Procedure, as presently worded, is nothing
more but a reiteration of the exception to the exclusive
appellate jurisdiction of the Court of Appeals, as provided
for in Section 9, Batas Pambansa Blg. 129, as amended
by Republic Act No. 7902:
(3) Exclusive appellate jurisdiction over all final
judgments, decisions, resolutions, orders or awards of
Regional Trial Courts and quasi-judicial agencies,
instrumentalities, boards or commissions, including the
Securities and Exchange Commission, the Employees’
Compensation Commission and the Civil Service
Commission, except those falling within the appellate
jurisdiction of the Supreme Court in accordance with the
Constitution, the Labor Code of the Philippines under
Presidential Decree No. 442, as amended, the provisions
of this Act and of subparagraph (1) of the third paragraph
and subparagraph (4) of the fourth paragraph of Section
17 of the Judiciary Act of 1948.’
The Court took into account this exception in Luzon
Development Bank but, nevertheless, held that the
decisions of voluntary arbitrators issued pursuant to the
Labor Code do not come within its ambit x x x."
Furthermore, Sections 1, 3 and 4, Rule 43 of the 1997
Rules of Civil Procedure, as amended, 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
or authorized by any quasi-judicial agency in the exercise
of its quasi-judicial functions. Among these agencies are
the x x x, and voluntary arbitrators authorized by law.
xxxx
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 therein provided, whether the appeal involves
questions of fact, of law, or mixed questions of fact and
law.
SEC. 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. x x x.
(Emphasis supplied.)’
Hence, upon receipt on May 26, 2003 of the Voluntary
Arbitrator’s Resolution denying petitioner’s motion for
reconsideration, petitioner should have filed with the CA,
within the fifteen (15)-day reglementary period, a petition
for review, not a petition for certiorari.
On the second issue, the Union basically claims that the
CCBPI’s decision to unilaterally remove the operators’
chairs from the production/manufacturing lines of its
bottling plants is not valid because it violates some
fundamental labor policies. According to the Union, such
removal constitutes a violation of the 1) Occupational
Health and Safety Standards which provide that every
worker is entitled to be provided by the employer with
appropriate seats, among others; 2) policy of the State to
assure the right of workers to a just and humane condition
of work as provided for in Article 3 of the Labor Code;8 3)
Global Workplace Rights Policy of CCBPI which provides
for a safe and healthy workplace by maintaining a
productive workplace and by minimizing the risk of
accident, injury and exposure to health risks; and 4)
diminution of benefits provided in Article 100 of the Labor
Code.9
Opposing the Union’s argument, CCBPI mainly contends
that the removal of the subject chairs is a valid exercise of
management prerogative. The management decision to
remove the subject chairs was made in good faith and did
not intend to defeat or circumvent the rights of the Union
under the special laws, the CBA and the general
principles of justice and fair play.
Again, the Court agrees with CCBPI on the matter.
A Valid Exercise of
Management Prerogative
The Court has held that management is free to regulate,
according to its own discretion and judgment, all aspects
of employment, including hiring, work assignments,
working methods, time, place, and manner of work,
processes to be followed, supervision of workers, working
regulations, transfer of employees, work supervision, lay-
off of workers, and discipline, dismissal and recall of
workers. The exercise of management prerogative,
however, is not absolute as it must be exercised in good
faith and with due regard to the rights of labor.10
In the present controversy, it cannot be denied that CCBPI
removed the operators’ chairs pursuant to a national
directive and in line with its "I Operate, I Maintain, I Clean"
program, launched to enable the Union to perform their
duties and responsibilities more efficiently. The chairs
were not removed indiscriminately. They were carefully
studied with due regard to the welfare of the members of
the Union. The removal of the chairs was compensated
by: a) a reduction of the operating hours of the bottling
operators from a two-and-one-half (2 ½)-hour rotation
period to a one-and-a-half (1 ½) hour rotation period; and
b) an increase of the break period from 15 to 30 minutes
between rotations.
Apparently, the decision to remove the chairs was done
with good intentions as CCBPI wanted to avoid instances
of operators sleeping on the job while in the performance
of their duties and responsibilities and because of the fact
that the chairs were not necessary considering that the
operators constantly move about while working. In short,
the removal of the chairs was designed to increase work
efficiency. Hence, CCBPI’s exercise of its management
prerogative was made in good faith without doing any
harm to the workers’ rights.
The fact that there is no proof of any operator sleeping on
the job is of no moment. There is no guarantee that such
incident would never happen as sitting on a chair is
relaxing. Besides, the operators constantly move about
while doing their job. The ultimate purpose is to promote
work efficiency.
No Violation of Labor Laws
The rights of the Union under any labor law were not
violated. There is no law that requires employers to
provide chairs for bottling operators. The CA correctly
ruled that the Labor Code, specifically Article
13211 thereof, only requires employers to provide seats
for women. No similar requirement is mandated for men
or male workers. It must be stressed that all concerned
bottling operators in this case are men.
There was no violation either of the Health, Safety and
Social Welfare Benefit provisions under Book IV of the
Labor Code of the Philippines. As shown in the foregoing,
the removal of the chairs was compensated by the
reduction of the working hours and increase in the rest
period. The directive did not expose the bottling operators
to safety and health hazards.
The Union should not complain too much about standing
and moving about for one and one-half (1 ½) hours
because studies show that sitting in workplaces for a long
time is hazardous to one’s health. The report of VicHealth,
Australia,12 disclosed that "prolonged workplace sitting is
an emerging public health and occupational health issue
with serious implications for the health of our working
population. Importantly, prolonged sitting is a risk factor
for poor health and early death, even among those who
meet, or exceed, national13 activity guidelines." In another
report,14 it was written:
Workers needing to spend long periods in a seated
position on the job such as taxi drivers, call centre and
office workers, are at risk for injury and a variety of
adverse health effects.
The most common injuries occur in the muscles, bones,
tendons and ligaments, affecting the neck and lower back
regions. Prolonged sitting:
● reduces body movement making muscles more likely to
pull, cramp or strain when stretched suddenly, causes
fatigue in the back and neck muscles by slowing the blood
supply and puts high tension on the spine, especially in
the low back or neck, and
● causes a steady compression on the spinal discs that
hinders their nutrition and can contribute to their
premature degeneration.
Sedentary employees may also face a gradual
deterioration in health if they do not exercise or do not
lead an otherwise physically active life. The most common
health problems that these employees experience are
disorders in blood circulation and injuries affecting their
ability to move. Deep Vein Thrombosis (DVT), where a
clot forms in a large vein after prolonged sitting (eg after
a long flight) has also been shown to be a risk.
Workers who spend most of their working time seated
may also experience other, less specific adverse health
effects. Common effects include decreased fitness,
reduced heart and lung efficiency, and digestive
problems. Recent research has identified too much sitting
as an important part of the physical activity and health
equation, and suggests we should focus on the harm
caused by daily inactivity such as prolonged sitting.
Associate professor David Dunstan leads a team at the
Baker IDI in Melbourne which is specifically researching
sitting and physical activity. He has found that people who
spend long periods of time seated (more than four hours
per day) were at risk of:
● higher blood levels of sugar and fats,
● larger waistlines, and
● higher risk of metabolic syndrome
regardless of how much moderate to vigorous exercise
they had.
In addition, people who interrupted their sitting time more
often just by standing or with light activities such as
housework, shopping, and moving about the office had
healthier blood sugar and fat levels, and smaller
waistlines than those whose sitting time was not broken
up.
Of course, in this case, if the chairs would be returned, no
risks would be involved because of the shorter period of
working time. The study was cited just to show that there
is a health risk in prolonged sitting.
No Violation of the CBA
The CBA15 between the Union and CCBPI contains no
provision whatsoever requiring the management to
provide chairs for the operators in the
production/manufacturing line while performing their
duties and responsibilities. On the contrary, Section 2 of
Article 1 of the CBA expressly provides as follows:
Article I
SCOPE
SECTION 2. Scope of the Agreement. All the terms and
conditions of employment of employees and workers
within the appropriate bargaining unit (as defined in
Section 1 hereof) are embodied in this Agreement and the
same shall govern the relationship between the
COMPANY and such employees and/or workers. On the
other hand, all such benefits and/or privileges as are not
expressly provided for in this Agreement but which are
now being accorded, may in the future be accorded, or
might have previously been accorded, to the employees
and/or workers, shall be deemed as purely voluntary acts
on the part of the COMPANY in each case, and the
continuance and repetition thereof now or in the future, no
matter how long or how often, shall not be construed as
establishing an obligation on the part of the COMPANY. It
is however understood that any benefits that are agreed
upon by and between the COMPANY and the UNION in
the Labor-Management Committee Meetings regarding
the terms and conditions of employment outside the CBA
that have general application to employees who are
similarly situated in a Department or in the Plant shall be
implemented. [emphasis and underscoring supplied]
As can be gleaned from the aforecited provision, the CBA
expressly provides that benefits and/or privileges, not
expressly given therein but which are presently being
granted by the company and enjoyed by the employees,
shall be considered as purely voluntary acts by the
management and that the continuance of such benefits
and/or privileges, no matter how long or how often, shall
not be understood as establishing an obligation on the
company’s part. Since the matter of the chairs is not
expressly stated in the CBA, it is understood that it was a
purely voluntary act on the part of CCBPI and the long
practice did not convert it into an obligation or a vested
right in favor of the Union.
No Violation of the general principles
of justice and fair play
The Court completely agrees with the CA ruling that the
removal of the chairs did not violate the general principles
of justice and fair play because the bottling operators’
working time was considerably reduced from two and a
half (2 ½) hours to just one and a half (1 ½) hours and the
break period, when they could sit down, was increased to
30 minutes between rotations. The bottling operators’ new
work schedule is certainly advantageous to them because
it greatly increases their rest period and significantly
decreases their working time. A break time of thirty (30)
minutes after working for only one and a half (1 ½) hours
is a just and fair work schedule.
No Violation of Article 100
of the Labor Code
The operators’ chairs cannot be considered as one of the
employee benefits covered in Article 10016 of the Labor
Code. In the Court’s view, the term "benefits" mentioned
in the non-diminution rule refers to monetary benefits or
privileges given to the employee with monetary
equivalents.
Such benefits or privileges form part of the employees’
wage, salary or compensation making them enforceable
obligations.
This Court has already decided several cases regarding
the non-diminution rule where the benefits or privileges
involved in those cases mainly concern monetary
considerations or privileges with monetary equivalents.
Some of these cases are: Eastern Telecommunication
Phils. Inc. v. Eastern Telecoms Employees
Union,17 where the case involves the payment of 14th,
15th and 16th month bonuses; Central Azucarera De
Tarlac v. Central Azucarera De Tarlac Labor Union-
NLU,18 regarding the 13th month pay, legal/special
holiday pay, night premium pay and vacation and sick
leaves; TSPIC Corp. v. TSPIC Employees
Union,19 regarding salary wage increases; and American
Wire and Cable Daily Employees Union vs. American
Wire and Cable Company, Inc.,20 involving service
awards with cash incentives, premium pay, Christmas
party with incidental benefits and promotional increase.
In this regard, the Court agrees with the CA when it
resolved the matter and wrote:
Let it be stressed that the aforequoted article speaks of
non-diminution of supplements and other employee
benefits. Supplements arc privileges given to an
employee which constitute as extra remuneration besides
his or her basic ordinary earnings and wages. From this
definition, We can only deduce that the other employee
benefits spoken of by Article 100 pertain only to those
which are susceptible of monetary considerations.
Indeed, this could only be the most plausible conclusion
because the cases tackling Article 100 involve mainly with
monetary considerations or privileges converted to their
monetary equivalents.
xxxx
Without a doubt, equating the provision of chairs to the
bottling operators Ds something within the ambit of
"benefits'' in the context of Article 100 of the Labor Code
is unduly stretching the coverage of the law. The
interpretations of Article 100 of the Labor Code do not
show even with the slightest hint that such provision of
chairs for the bottling operators may be sheltered under
its mantle.21
Jurisprudence recognizes the exercise of management
prerogatives. Labor Jaws also discourage interference
with an employer's judgment in the conduct of its
business. For this reason, the Court often declines to
interfere in legitimate business decisions of employers.
The law must protect not only the welfare of the
employees, but also the right of the employers.22
WHEREFORE, the petition is DENIED.
SO ORDERED.
[G.R. No. 106518. March 11, 1999]
50. *ABS CBN SUPERVISORS EMPLOYEE
UNION MEMBERS, petitioner, vs. ABS CBN
BROADCASTING CORP., HERBERT RIVERA,
ALBERTO BERBON, CINDY MUNOZ, CELSO
JAMBALOS, SALVADOR DE VERA,
ARNULFO ALCAZAR, JAKE MADERAZO,
GON CARPIO, OSCAR LANDRITO, FRED
GARCIA, CESAR LOPEZ and RUBEN
BARRAMEDA, respondents.
 At bar is a special civil action for Certiorari[1] seeking
the reversal of the Order[2] dated July 31, 1992 of public
respondent Department of Labor and Employment
Undersecretary Bienvenido E. Laguesma[3] in Case No.
NCR OD M 90 07 - 037.
From the records on hand, it can be gathered, that:
On December 7, 1989, the ABS-CBN Supervisors
Emloyees Union (the Union), represented by respondent
Union Officers, and ABS-CBN Broadcasting Corporation
(the Company) signed and concluded a Collective
Bargaining Agreement with the following check-off
provision, to wit:
Article XII The [C]ompany agrees to advance to the Union
a sum equivalent to 10% of the sum total of all the salary
increases and signing bonuses granted to the
Supervisors under this collective Bargaining Agreement
and upon signing hereof to cover the Unions incidental
expenses, including attorneys fees and representation
expenses for its organization and (sic) preparation and
conduct hereof, and such advance shall be deducted from
the benefits granted herein as they accrue.
On September 19, 1990, Petitioners[4] filed with the
Bureau of Labor Relations, DOLE-NCR, Quezon City, a
Complaint against the Union Officers[5] and ABS-CBN
Broadcasting corporation, praying that (1) the special
assessment of ten percent (10%) of the sum total of all
salary increases and signing bonuses granted by
respondent Company to the members of the Union be
declared illegal for failure to comply with the labor Code,
as amended, particularly Article 241, paragraphs (g), (n),
and (o); and in utter violation of the Constitution and By-
Laws of the ABS-CBN Supervisors Employees
Union; (2)respondent Company be ordered to suspend
further deductions from petitioners salaries for their
shares thereof.
In their Answers, respondent Union Officers and
Company prayed for the dismissal of the Complaint for
lack of merit. They argued that the check-off provision is
in accordance with law as majority of the Union
members individually executed a written
authorization giving the Union officers and the Company
a blanket authority to deduct subject amount.
On January 21, 1991, Med-Arbiter Rasidali C.
Abdula issued the following Order:[6]
WHEREFORE, premises considered, judgment is hereby
rendered:
a) declaring the special assessment of 10% of the sum
total of CBA benefits as illegal;
b) ordering respondents union officers to refund to the
complainants and other union members the amount of
five Hundred Thousand Pesos (P500,000.00) advanced
by the respondent Company as part of the 10% sum total
of CBA benefits without unnecessary delay;
c) ordering the respondent company to stop and desist
from further making advances and deductions from the
union members salaries their share in the advances
already made to the union;
d) ordering the respondent Company to remit directly to
the complainants and other union members the amount
already deducted from the union members salaries as
part of their share in the advances already made to the
union and which it had kept in trust during the pendency
of this case; and
e) directing the respondents union officers and
respondent Company to submit report on the compliance
thereof.
SO ORDERED.
On appeal, respondent DOLE Undersecretary
Bienvenido E. Laguesma handed down a Decision[7] on
July 1, 1991, disposing as follows:
WHEREFORE, the appeals are hereby denied, the Order
of the Med-Arbiter is affirmed en toto.
On July 5, 1991, the aforesaid Decision was received
by the respondent Union Officers and respondent
Company. On July 13, 1991, they filed their Motion for
Reconsideration stating, inter alia that the questioned ten
percent (10%) special assessment is valid pursuant to the
ruling in Bank of the Philippine Islands Employee Union
ALU vs. NLRC.[8]
On July 31, 1992, Undersecretary B.E. Laguesma
issued an Order[9]; resolving, thus:
"WHEREFORE, the Decision dated 01 July 1991 is
hereby SET ASIDE. In lieu thereof, a new one is hereby
entered DISMISSING the Complaint/Petition for lack of
merit."
Hence, the present petition seeking to annul and set
aside the above-cited Order of public respondent
Undersecretary B.E. Laguesma, for being allegedly
tainted with grave abuse of discretion amounting to lack
of jurisdiction.
 Did the public respondent act with grave abuse of
discretion in issuing the challenged Order reversing his
own Decision of July 1, 1991? Such is the sole issue
posited,which we resolve in the negative.The petition is
unmeritorious.
Petitioners claim[10] that the Decision of the Secretary
of Labor and Employment dated July 1, 1991, affirming in
toto the Order of Med-Arbiter Rasidali Abdullah dated
January 31, 1991, cannot be a subject of a motion for
reconsideration because it is final and unappealable
pursuant to Section 8, Rule VIII, Book V of the Omnibus
Rule Implementing the Labor Code. It is further argued
that the only remedy of the respondent Union Officers' is
to file a petition for certiorari with this Court.
Section 8, Rule VIII, Book V of the Omnibus Rules
Implementing the Labor Code, provides:
"The Secretary shall have fifteen (15) calendar days
within which to decide the appeal from receipt of the
records of the case. The decision of the Secretary shall
be final and inappealable." [Underscoring supplied].
(Comment, p. 101)
The aforecited provision cannot be construed to
mean that the Decision of the public respondent cannot
be reconsidered since the same is reviewable by writ of
certiorari under Rule 65 of the Rules of Court. As a rule,
the law requires a motion for reconsideration to enable
the public respondent to correct his mistakes, if
any. In Pearl S. Buck Foundation, Inc., vs. NLRC,[11] this
Court held:
"Hence, the only way by which a labor case may reach
the Supreme Court is through a petition for certiorari
under Rule 65 of the Rules of Court alleging lack or
excess of jurisdiction or grave abuse of discretion. Such
petition may be filed within a reasonable time from receipt
of the resolution denying the motion for reconsideration of
the NLRC decision." [Underscoring; supplied].
Clearly, before a petition for certiorari under Rule 65 of
the Rules of Court may be availed of, the filing of a motion
for reconsideration is a condition sine qua non to afford
an opportunity for the correction of the error or mistake
complained of.
So also, considering that a decision of the Secretary
of Labor is subject to judicial review only through a special
civil action of certiorari and, as a rule, cannot be resorted
to without the aggrieved party having exhausted
administrative remedies through a motion for
reconsideration, the aggrieved party, must be allowed to
move for a reconsideration of the same so that he can
bring a special civil action for certiorari before the
Supreme Court.[12]
Furthermore, it appears that the petitioners filed with
the public respondent a Motion for Early
Resolution[13] dated June 24, 1992. Averring that private
respondents' Motion for Reconsideration did not contain
substantial factual or legal grounds for the reversal of
subject decision. Consequently, petitioners are
now estopped from raising the issue sought for
resolution. In Alfredo Marquez vs. Secretary of
Labor,[14] the Court said:
"xxx The active participation of the party against whom the
action was brought, coupled with his failure to object to
the jurisdiction of the court or quasi-judicial body where
the action is pending, is tantamount to an invocation of
that jurisdiction and a willingness to abide by the
resolution of the case and will bar said party from later on
impugning the court or body's jurisdiction."
What is more, it was only when the public
respondents issued the Order adverse to them that the
petitioners raised the question for the first time before this
Court. Obviously, it is a patent afterthought which must be
abhorred.
Petitioners also argued that the check-off provision
in question is illegal because it was never submitted for
consideration and approval to "all the members at a
general membership meeting called for the purpose"; and
further alleged that the formalities mandated by Art. 241,
paragraphs (n) and (o) of the Labor Code, as amended,
were not complied with.
"A check-off is a process or device whereby the
employer, on agreement with the Union, recognized as
the proper bargaining representative, or on prior
authorization from its employees, deducts union dues or
agency fees from the latter's wages and remits them
directly to the union."[15] Its desirability in a labor
organization is quite evident. It is assured thereby of
continuous funding. As this Court has acknowledged, the
system of check-off is primarily for the benefit of the Union
and only indirectly, for the individual employees.
The legal basis of check-off is found in statutes or in
contracts.[16] The statutory limitations on check-offs are
found in Article 241, Chapter II, Title IV, Book Five of the
Labor Code, which reads:
"Rights and conditions of membership in a labor
organization. - The following are the rights and conditions
of membership in a labor organization:
xxx
(g) No officer, agent, member of a labor organization shall
collect any fees, dues, or other contributions in its behalf
or make any disbursement of its money or funds unless
he is duly authorized pursuant to its constitution and by-
laws.
xxx
(n) No special assessment or other extraordinary fees
may be levied upon the members of a labor
organization unless authorized by a written resolution of a
majority of all the members of a general membership
meeting duly called for the purpose. The secretary of the
organization shall record the minutes of the meeting
including the list of all members present, the votes cast,
the purpose of the special assessment or fees and the
recipient of such assessment or fees. The record shall be
attested to by the president.
(o) Other than for mandatory activities under the Code, no
special assessments, attorney's fees, negotiation fees or
any other extraordinary fees may be checked off from any
amount due to an employee with an individual written
authorization duly signed by the employee. The
authorization should specifically state the amount,
purpose and beneficiary of the deductions. [Underscoring;
supplied]
Article 241 of the Labor Code, as amended, must be
read in relation to Article 222, paragraph (b) of the same
law, which states:
"No attorney's fees, negotiation fees or similar charges of
any kind arising from collective bargaining negotiations or
conclusion of the collective agreement shall be imposed
on any individual member of the contracting
union: Provided, however, that attorney's fees may be
charged against union funds in an amount to be agreed
upon by the parties. Any contract, agreement or
arrangement of any sort to the contrary shall be null and
void." [Underscoring; supplied]
And this court elucidated the object and import of the
said provision of law in Bank of Philippine Islands
Employees Union - Association Labor Union (BPIEU-
ALU) vs. National Labor Relations Commission:[17]
"The Court reads the afore-cited provision (Article 222 [b]
of the Labor Code) as prohibiting the payment of
attorney's fees only when it is effected through forced
contributions from the workers from their own funds as
distinguished from the union funds. xxx"
Noticeably, Article 241 speaks of three (3) requisites
that must be complied with in order that the special
assessment for Union's incidental expenses, attorney's
fees and representation expenses, as stipulated in Article
XII of the CBA, be valid and upheld
namely: 1) authorization by a written resolution of the
majority of all the members at the general membership
meeting duly called for the purpose; (2)secretary's record
of the minutes of the meeting; and (3) individual written
authorization for check-off duly signed by the employee
concerned.
After a thorough review of the records on hand, we
find that the three (3) requisites for the validity of the ten
percent (10%) special assessment for Union's incidental
expenses, attorney's fees and representation expenses
were met.
It can be gleaned that on July 14, 1989, the ABS-
CBN Supervisors Employee Union held its general
meeting, whereat it was agreed that a ten percent (10%)
special assessment from the total economic package due
to every member would be checked-off to cover expenses
for negotiation, other miscellaneous expenses and
attorney's fees. The minutes of the said meeting were
recorded by the Union's Secretary, Ma. Carminda M.
Munoz, and noted by its President, Herbert Rivera.[18]
On May 24, 1991, said Union held its General
Membership Meeting, wherein majority of the members
agreed that "in as much as the Union had already paid
Atty. P. Pascual the amount of P500,000.00, the same
must be shared by all the members until this is fully
liquidated."[19]
Eighty-five (85) members of the same Union
executed individual written authorizations for check-off,
thus:
"Towards that end, I hereby authorize the Management
and/or Cashier of ABS-CBN BROADCASTING
CORPORATION to deduct from my salary the sum
of P30.00 per month as my regular union dues and said
Management and/or Cashier are further authorize (sic) to
deduct a sum equivalent to 10% of all and whatever
benefits that will become due to me under the
COLLECTIVE BARGAINING AGREEMENT (CBA) that
may be agreed upon by the UNION and MANAGEMENT
and to apply the said sum to the advance that
Management will make to our Union for incidental
expenses such as attorney's fees, representations and
other miscellaneous expenses pursuant to Article XII of
the proposed CBA."[20]
 Records do not indicate that the aforesaid check-off
authorizations were executed by the eighty-five (85)
Union members under the influence of force or
compulsion. There is then, the presumption that such
check-off authorizations were executed voluntarily by the
signatories thereto. Petitioners contention that the
amount to be deducted is uncertain[21] is not persuasive
because the check-off authorization clearly stated that the
sum to be deducted is equivalent to ten percent (10%) of
all and whatever benefits may accrue under the CBA. In
other words, although the amount is not fixed, it is
determinable.
Petitioners further contend that Article 241 (n) of the
Labor Code, as amended, on special assessments,
contemplates a general meeting after the conclusion of
the collective bargaining agreement.
Subject Article does not state that the general
membership meeting should be called after the
conclusion of a collective bargaining agreement. Even
granting ex gratia argumenti that the general meeting
should be held after the conclusion of the CBA, such
requirement was complied with since the May 24, 1991
General Membership Meeting was held after the
conclusion of the Collective Bargaining Agreement, which
was signed and concluded on December 7, 1989.
Considering that the three requisites afforesaid for
the validity of a special assessment were observed or
met, we uphold the validity of the ten percent (10%)
special assessment authorized in Article XII of the CBA.
We also concur in the finding by public respondent
that the Bank of the Philippine Islands Employees Union
ALU vs. NLRC[22] is apposite in this case. In BPIEU-ALU,
the petitioners, impugned the Order of the NLRC, holding
that the validity of the five percent (5%) special
assessment for attorneys fees is contrary to Article 222,
paragraph (b) of the Labor Code, as amended. The court
ratiocinated, thus:
The Court reads the aforecited provision as prohibiting the
payment of attorneys fees only when it is effected
through forced contributions from the workers from
their own funds a distinguished from the union
funds. The purpose of the provision is to prevent
imposition on the workers of the duty to individually
contribute their respective shares in the fee to be paid the
attorney for his services on behalf of the union in its
negotiations with the management. xxx [Underscoring
supplied]
However, the public respondent overlooked the fact
that in the said case, the deduction of the stipulated five
percent (5%) of the total economic benefits under the new
collective bargaining agreement was applied only to
workers who gave their individual signed
authorizations. The Court explained:
xxx And significantly, the authorized deduction affected
only the workers who adopted and signed the resolution
and who were the only ones from whose benefits the
deductions were made by BPI. No similar deductions
were taken from the other workers who did not sign the
resolution and so were not bound by it. [Underscoring;
supplied]
While the court also finds merit in the finding by the
public respondents that Palacol vs. Ferrer-Calleja[23] is
inapropos in the case under scrutiny, it does not subscribe
to public respondents reasoning that Palacol should not
be retroactively applied to the present case in the interest
of justice, equity and fairplay.[24] The inapplicability
of Palacol lies in the fact that it has a different factual
milieu from the present case. In Palacol, the check-off
authorization was declared invalid because majority of
the Union members had withdrawn their individual
authorizations, to wit:
Paragraph (o) on the other hand requires an individual
written authorization duly signed by every employee in
order that special assessment maybe validly check-
off. Even assuming that the special assessment was
validly levied pursuant to paragraph (n), and granting that
individual written authorizations were obtained by the
Union, nevertheless there can be no valid check-off
considering that the majority of the Union members had
already withdrawn their individual authorizations. A
withdrawal of individual authorization is equivalent to no
authorization at all. xxx [Underscoring; supplied]
In this case, the majority of the Union members gave their
individual written check-off authorizations for the ten
percent (10%) special assessment. And they have never
withdraw their individual written authorizations for check-
off.
There is thus cogent reason to uphold the assailed
Order, it appearing from the records of the case that
twenty (20)[25] of the forty-two (42) petitioners executed as
Compromise Agreement[26] ratifying the controversial
check-off provision in the CBA.
Premises studiedly considered, we are of the
irresistable conclusion and, so find, that the ruling
in BPIEU-ALU vs. NLRC that (1) the prohibition against
attorneys fees in Article 222, paragraph (b) of the Labor
Code applies only when the payment of attorneys fees is
effected through forced contributions from the workers;
and (2) that no deductions must be taken from the workers
who did not sign the check-off authorization, applies to the
case under consideration.

WHEREFORE, the assailed Order, dated July 31,

1992, of DOLE Undersecretary B.E. Laguesma is
AFFIRMED except that no deductions shall be taken from
the workers who did not give their individual written check-
off authorization. No pronouncement as to costs.

SO ORDERED.