3) Lopez vs FFW

267 Phil. 212





FELICIANO, J.:
In this Petition, petitioner Lopez Sugar Corporation seeks reversal of the
Decision dated 2 July 1986 of public respondent National Labor Relations
Commission ("NLRC") which affirmed the decision of the Labor Arbiter
dated 30 September 1983. The Labor Arbiter (a) had denied petitioner's
application to retrench some of its employees and (b) had ordered the
reinstatement of twenty-seven (27) employees and to pay them full
backwages from the time of termination until actual reinstatement.
Petitioner, allegedly to prevent losses due to major economic problems, and
exercising its privilege under Article XI, Section 2 of its 1975 - 1977
Collective Bargaining Agreement ("CBA") entered into between petitioner
and private respondent Philippine Labor Union Association ("PLUA-
NACUSIP"), caused the retrenchment and retirement of a number of its
employees.
Thus, on 3 January 1980, petitioner filed with the Bacolod District Office of
the then Ministry of Labor and Employment ("MOLE") a combined report
on retirement and application for clearance to retrench, dated 28 December
1979,[1] affecting eighty-six (86) of its employees. This was docketed as
NLRC Case No. A-217-80. Of these eighty-six (86) employees, fifty-nine
(59) were retired effective 1 January 1980 and twenty-seven (27) were to be
retrenched effective 16 January 1980 "in order to prevent losses."
Also, on 3 January 1980, private respondent Federation of Free Workers
("FFW"), as the certified bargaining agent of the rank-and-file employees of
petitioner, filed with the Bacolod District Office of the MOLE a complaint
dated 27 December 1979 for unfair labor practices and recovery of union
dues, docketed as NLRC Case No. A-198-80. In said complaint, FFW
claimed that the terminations undertaken by petitioner were violative of the
security of tenure of its members and were intended to "bust" the union
and hence constituted an unfair labor practice. FFW claimed that after the
termination of the services of its members, petitioner advised 110 casuals to
report to its personnel office. FFW further argued that to justify
retrenchment, serious business reverses must be "actual, real and amply
supported by sufficient and convincing evidence." FFW prayed for
reinstatement of its members who had been retired or retrenched.
Petitioner denied having hired casuals to replace those it had retired or
retrenched. It explained that the announcement calling for 110 workers to
report to its personnel office was only for the purpose of organizing a pool
of extra workers which could be tapped whenever there were temporary
vacancies by reason of leaves of absence of regular workers.
On 22 January 1980, another report on retirement affecting an additional
twenty-five (25) employees effective 1 February 1980 was filed by
petitioner.[2]
On 3 March 1980, petitioner filed its Position Paper in NLRC Case No.
A-217-80 contending that certain economic factors jeopardizing its very
existence rendered the dismissals necessary. Petitioner explained:
"As a business firm, the Applicant must earn [a] fair return of (sic) its
investment. Its income is generated from the sales of the Central's shares of
sugar and molasses production. It has however no control of the selling
price of both products. It is of common knowledge that for the past years
the price of sugar has been very low. In order to survive, the Applicant has
effected several forms of cost reduction. Now that there is hope in the price
of sugar the applicant is again faced with two major economic problems,
i.e., the stoppage of its railway operation and the spiralling cost of
production.
The Applicant was forced to stop its railway operation because the owners
of the land upon which the Applicant's railway lines traverse are no longer
willing to allow the Applicant to make further use of portions of their lands.
xxx
The other economic problem that confronted the Applicant is the rising cost
of labor, materials, supplies, equipment, etc. These two major economic
problems the rising cost of production and the stoppage of its railway
facilities, put together pose a very serious threat against the economic
survival of the Applicant. In view of this, the Applicant was constrained to
touch on the last phase of its cost reduction program which is the reduction
of its workforce.
x x x                                         x x x                                  x x x
The Applicant as a business proposition must be allowed to earn income in
order to survive. This is the essence of private enterprise. Being plagued
with two major economic problems, the applicant is not expected to remain
immobile. It has to react accordingly. As many other business firms have
resorted to reduction of force in view of the present economic crisis
obtaining here and abroad, the applicant was likewise compelled to do the
same as a last alternative remedy for survival."[3]
In a decision dated 30 September 1983,[4] the Labor Arbiter denied
petitioner's application for clearance to retrench its employees on the
ground that for retrenchment to be valid, the employer's losses must be
serious, actual and real and must be amply supported by sufficient and
convincing evidence. The application to retire was also denied on the
ground that petitioner's prerogative to so retire its employees was granted
by the 1975-77 collective bargaining agreement which agreement had long
ago expired. Petitioner was, therefore, ordered to reinstate twenty-seven
retired or retrenched employees represented by private respondent
Philippine Labor Union Association ("PLUA") and FFW and to pay them
full backwages from the time of termination until actual reinstatement.
Both dissatisfied with the Labor Arbiter's decision, petitioner and
respondent FFW appealed the case to public respondent NLRC. On appeal,
the NLRC, finding no justifiable reason for disturbing the decision of the
Labor Arbiter, affirmed that decision on 2 July 1986.[5]
Hence, this Petition for Certiorari making the following arguments:
1.      That portions of the decision of public respondent NLRC dated July 2,
1986 affirming the decision of Labor Arbiter Ethelwoldo Ovejera dated
September 30, 1983 are contrary to law and jurisprudence;
2.      That said decision subject of this petition are in some respects not
supported by evidence and self-contradictory;
3.      That said decision subject of this petition were rendered with grave
abuse of discretion and in excess of jurisdiction;
4.      That the dismissals at bar are valid and based on justifiable grounds.[6]
Petitioner contends that the NLRC acted with grave abuse of discretion in
denying its combined report on retirement and application for clearance to
retrench. Petitioner argues that under the law, it has the right to reduce its
workforce if made necessary by economic factors which would endanger its
existence, and that for retrenchment to be valid, it is not necessary that
losses be actually sustained. The existence of valid grounds to anticipate or
expect losses would be sufficient justification to enable the employer to take
the necessary actions to prevent any threat to its survival.
Upon the other hand, the Solicitor General argued that the Decision
rendered by the Labor Arbiter and affirmed by the NLRC is supported by
substantial evidence on record; that, therefore, no grave abuse of discretion
was committed by public respondent NLRC when it rendered that Decision.
Article 283 of the Labor Code provides:
"Article 283. Closure of establishment and reduction of personnel. -- The
employer may also terminate the employment of any employee due to the
installation of labor saving devices, redundancy, retrenchment to prevent
losses or the closing or cessation of operation of the establishment or
undertaking unless the closing is for the purpose of circumventing the
provisions of this Title, by serving a written notice on the workers and the
Ministry of Labor and Employment at least one (1) month before the
intended date thereof. In case of termination due to the installation of labor
saving devices or redundancy, the worker affected thereby shall be entitled
to a separation pay equivalent to at least his one (1) month pay or to at least
one (1) month pay for every year of service, whichever is higher. In case
of retrenchment to prevent losses and in cases of closures or cessation of
operations of establishment or undertaking not due to serious business
losses or financial reverses, the separation pay shall be equivalent to one (1)
month pay or at least one half (1/2) month pay for every year of service,
whichever is higher. A fraction of at least six (6) months shall be considered
one (1) whole year." (Underscoring supplied)
In its ordinary connotation, the phrase "to prevent losses" means that
retrenchment or termination of the services of some employees is
authorized to be undertaken by the employer sometime before the losses
anticipated are actually sustained or realized. It is not, in other words, the
intention of the lawmaker to compel the employer to stay his hand and
keep all his employees until sometime after losses shall have in fact
materialized;[7] if such an intent were expressly written into the law, that
law may well be vulnerable to constitutional attack as taking property from
one man to give to another. This is simple enough.
At the other end of the spectrum, it seems equally clear that not every
asserted possibility of loss is sufficient legal warrant for reduction of
personnel. In the nature of things, the possibility of incurring losses is
constantly present, in greater or lesser degree, in the carrying on of
business operations, since some, indeed many, of the factors which impact
upon the profitability or viability of such operations may be substantially
outside the control of the employer. Thus, the difficult question is
determination of when, or under what circumstances, the employer
becomes legally privileged to retrench and reduce the number of his
employees.
We consider it may be useful to sketch the general standards in terms of
which the acts of petitioner employer must be appraised. Firstly, the losses
expected should be substantial and not merely de minimis in extent. If the
loss purportedly sought to be forestalled by retrenchment is clearly shown
to be insubstantial and inconsequential in character, the bonafide nature of
the retrenchment would appear to be seriously in question. Secondly, the
substantial loss apprehended must be reasonably imminent, as such
imminence can be perceived objectively and in good faith by the employer.
There should, in other words, be a certain degree of urgency for the
retrenchment, which is after all a drastic recourse with serious
consequences for the livelihood of the employees retired or otherwise laid-
off. Because of the consequential nature of retrenchment, it must, thirdly,
be reasonably necessary and likely to effectively prevent the expected
losses. The employer should have taken other measures prior or parallel to
retrenchment to forestall losses, i.e., cut other costs than labor costs. An
employer who, for instance, lays off substantial numbers of workers while
continuing to dispense fat executive bonuses and perquisites or so-called
"golden parachutes", can scarcely claim to be retrenching in good faith to
avoid losses. To impart operational meaning to the constitutional policy of
providing "full protection" to labor, the employer's prerogative to bring
down labor costs by retrenching must be exercised essentially as a measure
of last resort, after less drastic means -- e.g., reduction of both management
and rank-and-file bonuses and salaries, going on reduced time, improving
manufacturing efficiencies, trimming of marketing and advertising costs,
etc. -- have been tried and found wanting.
Lastly, but certainly not the least important, alleged losses if already
realized, and the expected imminent losses sought to be forestalled, must
be proved by sufficient and convincing evidence. The reason for requiring
this quantum of proof is readily apparent: any less exacting standard of
proof would render too easy the abuse of this ground for termination of
services of employees. In Garcia v. National Labor Relations Commission,
[8] the Court said:

"x x x But it is essentially required that the alleged losses in business

operations must be prove[n]. (National Federation of Labor Unions
[NAFLU] vs. Ople, 143 SCRA 124 [1986]). Otherwise, said ground for
termination would be susceptible to abuse by scheming employers who
might be merely feigning business losses or reverses in their business
ventures in order to ease out employees."[9](Underscoring supplied)
Whether or not an employer would imminently suffer serious or substantial
losses for economic reasons is essentially a question of fact for the Labor
Arbiter and the NLRC to determine. In the instant case, the Labor Arbiter
found no sufficient and convincing evidence to sustain petitioner's essential
contention that it was acting in order to prevent substantial and serious
losses. The Labor Arbiter said:
"There is no question that an employer may reduce its work force to
prevent losses, however, these losses must be serious, actual and real. In
the instant case, even assuming arguendo that company was, in fact,
surrounded by the major economic problems stated earlier, the question
may be asked - will it suffer serious losses as a result of the said economic
problems? We find the answer to be negative. We had scanned the records
but failed to find evidence submitted to show that applicant company
would suffer serious business losses or reverses as a consequence of the
alleged major economic problems. In fact, applicant company asseverated
that these problems only threatens its survival, hence, it had to reduce its
work force. Another thing, while applicant company was retrenching its
regular employees, it also hired the services of casuals. This militated its
claim to reduce its work force to set up cost reduction. It must be stated
that settled is the rule that serious business losses or reverses must be
actual, real and amply supported by sufficient and convincing
evidence."[10] (Underscoring supplied)
We are in principle bound by such findings in accordance with well-
established jurisprudence that the factual findings of labor administrative
officials, if supported by substantial evidence, are entitled not only to great
respect but even to finality,[11] unless, indeed, petitioner is able to show that
the Labor Arbiter and the NLRC simply and arbitrarily disregarded
evidence before them or had misapprehended evidence of such a nature as
to compel a contrary conclusion if properly appreciated.
The submissions made by petitioner in this respect are basically that from
the crop year 1975-1976 to the crop year 1980-1981, the amount of cane
deliveries made to petitioner Central was declining and that the degree of
utilization of the mill's capacity and the sugar recovery from the cane
actually processed, were similarly declining.[12] Petitioner also argued that
the competition among the existing sugar mills for the limited supply of
sugar cane was lively and that such competition resulted in petitioner
having to close approximately thirty-eight (38) of its railroad lines by the
end of 1979.[13] According to the petitioner, the cost of producing one (1)
picul of sugar during the same period (i.e., from crop year 1976-1977 to crop
year 1979-1980) increased from P69.97 to P93.11.
The principal difficulty with petitioner's case as above presented was that
no proof of actual declining gross and net revenues was submitted. No
audited financial statements showing the financial condition of petitioner
corporation during the above mentioned crop years were submitted. Since
financial statements audited by independent external auditors constitute
the normal method of proof of the profit and loss performance of a
company, it is not easy to understand why petitioner should have failed to
submit such financial statements.
Moreover, while petitioner made passing reference to cost reduction
measures it had allegedly undertaken, it was, once more, a fairly
conspicuous failure to specify the cost-reduction measures actually
undertaken in good faith before resorting to retrenchment. Upon the other
hand, it appears from the record that petitioner, after reducing its work
force, advised 110 casual workers to register with the company personnel
officer as extra workers. Petitioner, as earlier noted, argued that it did not
actually hire casual workers but that it merely organize[d] a pool of 'extra
workers' from which workers could be drawn whenever vacancies occurred
by reason of regular workers going on leave of absence. Both the Labor
Arbiter and the NLRC did not accord much credit to petitioner's
explanation but petitioner has not shown that the Labor Arbiter and the
NLRC were merely being arbitrary and capricious in their evaluation. We
note also that petitioner did not claim that the retrenched and retired
employees were brought into the "pool of extra workers" rather than new
casual workers.
Petitioner next contends that the NLRC committed grave abuse of
discretion in affirming the ruling of the Labor Arbiter that the retirements
effected by petitioner were not valid since the basis therefor, i.e., Article XI,
Section 2 of the 1975-1977 CBA, had by then already expired and was thus
no longer enforceable or operative.[14] Article XI, Section 2 of the CBA
provides:
"Section 2. -- Any employee may apply for retirement after having rendered
the equivalent of at least eighteen (18) years of service to the
COMPANY. The COMPANY, as a right, may retire any employee who has
rendered twenty (20) years of service, or has reached the age of sixty (60)
years. Employees who are physically incapacitated to continue to work in
the COMPANY upon certification of the COMPANY Physician, shall be
entitled to a separation pay equivalent to the retirement benefits herein
provided for that may have accrued The heirs or surviving legally married
spouse of the deceased employee shall be granted by the COMPANY the
amount equivalent to the accrued retirement benefit of the deceased
employee at the time of his death."[15] (Underscoring supplied)
Petitioner argues that the CBA was "extended" not merely by implication,
but by reciprocal acts -- in the sense that even after the CBA had expired,
petitioner continued to give, and the workers continued to receive, the
benefits and exercise the prerogatives provided therein. Under these
circumstances, petitioner urges, the employees are estopped from denying
the extended effectivity of the CBA.
The Solicitor General, as well as private respondents, argue basically that
petitioner's right to retire its employees was coterminous with the life of the
CBA.
On this point, we must find for petitioner. Although the CBA expired on 31
December 1977, it continued to have legal effects as between the parties
until a new CBA had been negotiated and entered into. This proposition
finds legal support in Article 253 of the Labor Code, which provides:
"Article 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." (Underscoring
supplied)
Accordingly, in the instant case, despite the lapse of the formal effectivity of
the CBA by virtue of its own provisions, the law considered the same as
continuing in force and effect until a new CBA shall have been validly
executed. Hence, petitioner acted within legal bounds when it decided to
retire several employees in accordance with the CBA. That the employees
themselves similarly acted in accordance with the CBA is plain from the
record. Even after the expiration of the CBA, petitioner's employees
continued to receive the benefits and enjoy the privileges granted therein.
They continued to avail of vacation and sick leaves as computed in
accordance with Articles VII and VIII of the CBA. They also continued to
avail of medical and dental aid under Article IX, death aid and bereavement
leave under Articles X and XIV, insurance coverage under Article XVI and
housing allowance under Article XVIII. Seventeen (17) employees even
availed of Section XI (dealing with retirement) when they voluntarily
retired between 1 January 1978 and 31 December 1980 and received
retirement pay computed on the basis of Section 3 of the same article. If the
workers chose to avail of the CBA despite its expiration, equity if not the
law -- dictates that the employer should likewise be able to invoke the CBA.
The fact that several workers signed quitclaims will not by itself bar them
from joining in the complaint. Quitclaims executed by laborers are
commonly frowned upon as contrary to public policy and ineffective to bar
claims for the full measure of the workers' legal rights. In AFP Mutual
Benefit Association, Inc. v. AFP-MBAI-EU,[16] the Court held:
"In labor jurisprudence, it is well-established that quitclaims and/or
complete releases executed by the employees do not estop them from
pursuing their claims arising from the unfair labor practice of the
employer. The basic reason for this is that such quitclaims and/or complete
releases are against public policy and, therefore, null and void. The
acceptance of termination pay does not divest a laborer of the right to
prosecute his employer for unfair labor practice acts (Cariño vs. ACCFA,
L-19808, September 29, 1966, 18 SCRA 183; Philippine Sugar Institute vs.
CIR, L-13475, September 29, 1960, 109 Phil. 452; Mercury Drug Co. vs.
CIR, L-23357, April 30, 1974, 56 SCRA 694, 704)
In the Cariño case, supra, the Supreme Court, speaking thru Justice
Sanchez, said:
'Acceptance of those benefits would not amount to estoppel. The reason is
plain. Employer and employee, obviously, do not stand on the same footing.
The employer drove the employee to the wall. The latter must have to get
hold of money. Because, out of job, he had to face the harsh necessities of
life. He thus found himself in no position to resist money proffered. His,
then, is a case of adherence, not of choice. One thing sure, however, is that
petitioners did not relent their claim. They pressed it. They are deemed not
to have waived any of their
rights. Renuntiatio non praesumitur.'" (Underscoring supplied)
We conclude that because the attempted retrenchment on the part of the
petitioner was legally ineffective, all retrenched employees should be
reinstated and backwages paid them corresponding to a period of three (3)
years without qualification or deduction, in accordance with the three-year
rule laid down in a long line of cases.[17] In the case of employees who had
received payments for which they had executed quitclaims, the amount of
such payments shall be deducted from the backwages due to them. Where
reinstatement is no longer possible because the positions they had
previously filled are no longer in existence, petitioner shall pay backwages
plus, in lieu of reinstatement, separation pay in the amount of one month's
pay for every year of service including the three (3) year period of putative
service for which backwages will be paid. Upon the other hand, we find
valid the retirement of those employees who were retired by petitioner
pursuant to the applicable provisions of the CBA.
WHEREFORE, the Petition for Certiorari is partially GRANTED due
course and the Decision dated 2 July 1986 of the public respondent NLRC
is hereby MODIFIED to the extent that it had affirmed that portion of the
Decision of the Labor Arbiter dated 30 September 1983 ordering the
reinstatement of employees who had been retired by petitioner under the
applicable provisions of the CBA. Except as so modified, the Decision of the
NLRC is hereby AFFIRMED. No pronouncement as to costs.
SO ORDERED.
Fernan, C.J., Gutierrez, Jr., Bidin, and Cortes, JJ., concur.




[1]Rollo, pp. 38-39; Annexes "A" and "A-1" of Petition.

[2]Id., pp. 40-41; Annexes "B" and "B-1" of the Petition.
[3]Id., pp. 46-48; Annex "E" of Petition.
[4]Id., pp. 86-100; Annex "J" of Petition.
[5]Id., pp. 114-119; Annex "L" of Petition.
[6]Id., p. 20.
[7] Indino v.
National Labor Relations Commission, et al., G.R. No. 80352,
September 29, 1989.
[8] 153
SCRA 639 (1987); See also Camara Shoes v. Kapisanan ng
Manggagawa sa Camara Shoes, 173 SCRA 127 (1989); and
Indino v.National Labor Relations Commission, supra.
[9] 153 SCRA at 651.
[10] Rollo, p. 98.
[11] Mamerto v.
Inciong, 118 SCRA 265 (1982); Atlas Consolidated Mining
and Development Corp. v. National Labor Relations Commission, 167
SCRA 758 (1988); Reyes v. Minister of Labor, 170 SCRA 134 (1989); Bristol
Laboratories Employees Association-DFA, et al. v. National Labor
Relations Commission, et al., G.R. No. 87974, 2 July 1990.
[12] In its Petition, petitioner alleged that:
"1. Based on its sugar mills' rated capacity of 7,500 to 8,000 tons of cane
per day, petitioner's production figures were as follows:

Degree Sugar Rate

Crop Cane Rate of
Mill Recoveri Increase
Year Deliveries in Increase
Utililizati es in (Decreas
(CY) Tons (Decrease)
on Piculs e)
1975 1,307,121.90 2,047,29
  71.96%  
-76 1 1
1976 1,282,189.53 1,934,83
(1%) 70.80% (5%)
-77 0 0
1977- 1,004,490.3 1,709,50
(21%) 55.56% (11%)
78 58 4
1978 1,161,604.79 1,884,61
15% 64.25% 10%
-79 1 1
1979 1,163,662.68
.0177% 64.26% 1,854,115 (1%)
-80 7
1980 1,008,643.9 1,594,31
(13%) 55.64% (14%)
-81 90 0
           

These figures show that there was a continued decrease in production, both
in cane deliveries and in sugar recoveries from CY 1975-76 to CY 1977-78.
While there were increases in cane deliveries in CY 1978-79 and CY
1979-80, this was more because of Petitioner's increased trucking
allowance which proved to be too expensive. But petitioner's studies
projected that such increase were temporary and would not hold, as
tonnage of deliveries did fall in CY 1980-81 to a level only slightly higher
than those in CY 1977-78." (Rollo, p. 32)
[13] Rollo, p. 33.
[14] This
CBA lapsed on 31 December 1977. The retirements, on the other
hand, were made on 1 January 1980 and 1 February 1980.
[15] Rollo, p. 143; Comment of the Solicitor General, p. 5.
[16] 97 SCRA 715 (1980).
[17] Insular
Life Assurance Co., Ltd. v. National Labor Relations
Commission, 135 SCRA 697 (1985); Lepanto Consolidated Mining
Company v. Encarnacion, 136 SCRA 256 (1985); Panay Railways, Inc. v.
NLRC, 137 SCRA 480 (1985); Atlas Consolidated Mining and Development
Corp. v. National Labor Relations Commission, et al., 167 SCRA 758 (1988).


7) Phil. Electric vs CA

LEONEN, J.:
An appeal to reverse or modify a Voluntary Arbitrator's award or decision
must be filed before the Court of Appeals within 10 calendar days from
receipt of the award or decision.



This is a petition[1] for review on certiorari of the Court of Appeals'
decision[2] dated May 25, 2004, dismissing the Philippine Electric
Corporation's petition for certiorari for lack of merit.



Philippine Electric Corporation (PHILEC) is a domestic corporation
"engaged in the manufacture and repairs of high voltage
transformers."[3] Among its rank-and-file employees were Eleodoro V. Lipio
(Lipio) and Emerlito C. Ignacio, Sr. (Ignacio, Sr.), former members of the
PHILEC Workers' Union (PWU).[4] PWU is a legitimate labor organization
and the exclusive bargaining representative of PHILEC's rank-and-file
employees.[5]



From June 1, 1989 to May 31, 1997, PHILEC and its rank-and-file
employees were governed by collective bargaining agreements providing for
the following step increases in an employee's basic salary in case of
promotion:[6]




Pay Grade Rank-and-File (PWU)

June 1, 1989 to
 June 1, 1992 to
 June 1, 1994 to

  May 31, 1992 May 31, 1994 May 31, 1997
I II 50 60 65
II III 60 70 78
III IV 70 80 95
IV V 80 110 120
V- VI 100 140 150
VI VII 120 170 195
 VII VIII 170 230 255
VIII IX 220 290 340
IX X 260 350 455


On August 18, 1997 and with the previous collective bargaining agreements
already expired, PHILEC selected Lipio for promotion from Machinist
under Pay Grade VIII[7] to Foreman I under Pay Grade B.[8] PHILEC served
Lipio a memorandum,[9] instructing him to undergo training for the
position of Foreman I beginning on August 25, 1997. PHILEC undertook to
pay Lipio training allowance as provided in the memorandum:




This will confirm your selection and that you will undergo training for the
position of Foreman I (PG B) of the Tank Finishing Section, Distribution
Transformer Manufacturing and Repair effective August 25, 1997.



You will be trained as a Foreman I, and shall receive the following training
allowance until you have completed the training/observation period which
shall not exceed four (4) months.


First Month ----- P350.00

Second Month ----- P815.00
Third Month ----- P815.00
Fourth Month ----- P815.00



Please be guided accordingly.[10]


Ignacio, Sr., then DT-Assembler with Pay Grade VII,[11] was likewise
selected for training for the position of Foreman I.[12] On August 21, 1997,
PHILEC served Ignacio, Sr. a memorandum,[13] instructing him to undergo
training with the following schedule of allowance:



This will confirm your selection and that you will undergo training for the
position of Foreman I (PG B) of the Assembly Section, Distribution
Transformer Manufacturing and Repair effective August 25, 1997.



You will be trained as a Foreman I, and shall receive the following training
allowance until you have completed the training/observation period which
shall not exceed four (4) months.


First Month ----- P255.00

Second Month ----- P605.00
Third Month ----- P1,070.00
Fourth Month ----- P1,070.00



Please be guided accordingly.[14]


On September 17, 1997, PHILEC and PWU entered into a new collective
bargaining agreement, effective retroactively on June 1, 1997 and expiring
on May 31, 1999.[15] Under Article X, Section 4 of the June 1, 1997 collective
bargaining agreement, a rank-and-file employee promoted shall be entitled
to the following step increases in his or her basic salary:[16]




Section 4. STEP INCREASES. [Philippine Electric Corporation] shall adopt

the following step increases on the basic salary in case of promotion
effective June 1, 1997. Such increases shall be based on the scale below or
upon the minimum of the new pay grade to which the employee is
promoted, whichever is higher:


Pay Grade Step Increase

I - II P80.00
II - III P105.00
III - IV P136.00
IV - V P175.00
 V - VI P224.00
VI - VII P285.00
VII - VIII P361.00
VIII - IX P456.00
IX - X P575.00



To be promoted, a rank-and-file employee shall undergo training or
observation and shall receive training allowance as provided in Article IX,
Section 1(f) of the June 1, 1997 collective bargaining agreement:[17]




Section 1. JOB POSTING AND BIDDING:




. . . .



(f) Allowance for employees under Training or Observation shall be on a
graduated basis as follows:



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



As an example, if a Grade I employee qualifies for a Grade III position, he
will receive the training allowance for Grade I to Grade II for the first
month. On the second month, he will receive the training allowance for
Grade I to Grade II plus the allowance for Grade II to Grade III. He will
then continue to receive this amount until he finishes his training or
observation period.[18]


Claiming that the schedule of training allowance stated in the memoranda
served on Lipio and Ignacio, Sr. did not conform to Article X, Section 4 of
the June 1, 1997 collective bargaining agreement, PWU submitted the
grievance to the grievance machinery.[19]



PWU and PHILEC failed to amicably settle their grievance. Thus, on
December 21, 1998, the parties filed a submission agreement[20]with the
National Conciliation and Mediation Board, submitting the following issues
to voluntary arbitration:




I


WHETHER OR NOT PHILEC VIOLATED SECTION 4 (Step Increases)
ARTICLE X (Wage and Position Standardization) OF THE EXISTING
COLLECTIVE BARGAINING AGREEMENT (CBA) IN IMPLEMENTING
THE STEP INCREASES RELATIVE TO THE PROMOTION OF
INDIVIDUAL COMPLAINANTS.




II


WHETHER OR NOT PHILEC's MANNER OF IMPLEMENTING THE
STEP INCREASES IN CONNECTION WITH THE PROMOTION OF
INDIVIDUAL COMPLAINANTS IN RELATION TO THE PROVISIONS OF
SECTION 4, ARTICLE X OF THE CBA CONSTITUTES UNFAIR LABOR
PRACTICE.[21]


In their submission agreement, PWU and PHILEC designated Hon. Ramon
T. Jimenez as Voluntary Arbitrator (Voluntary Arbitrator Jimenez).[22]



Voluntary Arbitrator Jimenez, in the order[23] dated January 4, 1999,
directed the parties to file their respective position papers.



In its position paper,[24] PWU maintained that PHILEC failed to follow the
schedule of step increases under Article X, Section 4 of the June 1, 1997
collective bargaining agreement. Machinist I, Lipio's position before he
underwent training for Foreman I, fell under Pay Grade VIII, while
Foreman I fell under Pay Grade X. Following the schedule under Article X,
Section 4 of the June 1, 1997 collective bargaining agreement and the
formula under Article IX, Section 1(f), Lipio should be paid training
allowance equal to the step increase for pay grade bracket VIII-IX for the
first month of training. For the succeeding months, Lipio should be paid an
allowance equal to the step increase for pay grade bracket VIII-IX plus the
step increase for pay grade bracket IX-X, thus:[25]




First Month ----- P456.00

Second Month ----- P1,031.00
Third Month ----- P1,031.00
Fourth Month ----- P1,031.00


With respect to Ignacio, Sr., he was holding the position of DT-Assembler
under Pay Grade VII when he was selected to train for the position of
Foreman I under Pay Grade X. Thus, for his first month of training,
Ignacio, Sr. should be paid training allowance equal to the step increase
under pay grade bracket VII-VIII. For the second month, he should be paid
an allowance equal to the step increase under pay grade bracket VII-VIII
plus the step increase under pay grade bracket VIII-IX. For the third and
fourth months, Ignacio, Sr. should receive an allowance equal to the
amount he received for the second month plus the amount equal to the step
increase under pay grade bracket IX-X, thus:[26]




First Month ----- P361.00

Second Month ----- P817.00
Third Month ----- P1,392.00
Fourth Month ----- P1,392.00


For PHILEC's failure to apply the schedule of step increases under Article X
of the June 1, 1997 collective bargaining agreement, PWU argued that
PHILEC committed an unfair labor practice under Article 248[27] of the
Labor Code.[28]



In its position paper,[29] PHILEC emphasized that it promoted Lipio and
Ignacio, Sr. while it was still negotiating a new collective bargaining
agreement with PWU. Since PHILEC and PWU had not yet negotiated a
new collective bargaining agreement when PHILEC selected Lipio and
Ignacio, Sr. for training, PHILEC applied the "Modified SGV" pay grade
scale in computing Lipio's and Ignacio, Sr.'s training allowance.[30]



This "Modified SGV" pay grade scale, which PHILEC and PWU allegedly
agreed to implement beginning on May 9, 1997, covered both rank-and-file
and supervisory employees.[31] According to PHILEC, its past collective
bargaining agreements with the rank-and-file and supervisory unions
resulted in an overlap of union membership in Pay Grade IX of the rank-
and-file employees and Pay Grade A of the supervisory employees.
[32] Worse, past collective bargaining agreements resulted in rank-and-file

employees under Pay Grades IX and X enjoying higher step increases than
supervisory employees under Pay Grades A and B:[33]




Pay Grade
 Pay Grade Scale


Scale under the
 under the

Step Increase Step Increase
  Rank-and-File
   Supervisory
  CBA CBA
VIII-IX P340.00 A P290.00
IX-X P455.00 A-B P350.00


To preserve the hierarchical wage structure within PHILEC's enterprise,
PHILEC and PWU allegedly agreed to implement the uniform pay grade
scale under the "Modified SGV" pay grade system, thus:[34]




Pay Grade Step Increase

Rank-and-File Supervisory
I II P65.00
II-III P78.00
III-IV P95.00
IV-V P120.00
V-VI P150.00
VI-VII P195.00
VII-VIII P255.00
 VIII-IX A P350.00
IX-X A-B P465.00
X-XI B-C P570.00
XI-XII C-D P710.00
D-E P870.00
E-F P1,055.00


Pay grade bracket I IX covered rank-and-file employees, while pay grade
bracket A F covered supervisory employees.[35]



Under the "Modified SGV" pay grade scale, the position of Foreman I fell
under Pay Grade B. PHILEC then computed Lipio's and Ignacio, Sr.'s
training allowance accordingly.[36]



PHILEC disputed PWU's claim of unfair labor practice. According to
PHILEC, it did not violate its collective bargaining agreement with PWU
when it implemented the "Modified SGV" scale. Even assuming that it
violated the collective bargaining agreement, PHILEC argued that its
violation was not "gross" or a "flagrant and/or malicious refusal to comply
with the economic provisions of [the collective bargaining
agreement]."[37] PHILEC, therefore, was not guilty of unfair labor practice.
[38]




Voluntary Arbitrator Jimenez held in the decision[39] dated August 13, 1999,
that PHILEC violated its collective bargaining agreement with PWU.
[40] According to Voluntary Arbitrator Jimenez, the June 1, 1997 collective

bargaining agreement governed when PHILEC selected Lipio and Ignacio,

Sr. for promotion on August 18 and 21, 1997.[41] The provisions of the
collective bargaining agreement being the law between the parties, PHILEC
should have computed Lipio's and Ignacio, Sr.'s training allowance based
on Article X, Section 4 of the June 1, 1997 collective bargaining agreement.
[42]




As to PHILEC's claim that applying Article X, Section 4 would result in
salary distortion within PHILEC's enterprise, Voluntary Arbitrator Jimenez
ruled that this was "a concern that PHILEC could have anticipated and
could have taken corrective action"[43] before signing the collective
bargaining agreement.



Voluntary Arbitrator Jimenez dismissed PWU's claim of unfair labor
practice.[44] According to him, PHILEC's acts "cannot be considered a gross
violation of the [collective bargaining agreement] nor . . . [a] flagrant and/
or malicious refusal to comply with the economic provisions of the
[agreement]."[45]



Thus, Voluntary Arbitrator Jimenez ordered PHILEC to pay Lipio and
Ignacio, Sr. training allowance based on Article X, Section 4 and Article IX,
Section 1 of the June 1, 1997 collective bargaining agreement.[46]



PHILEC received a copy of Voluntary Arbitrator Jimenez's decision on
August 16, 1999.[47] On August 26, 1999, PHILEC filed a motion for partial
reconsideration[48] of Voluntary Arbitrator Jimenez's decision.



In the resolution[49] dated July 7, 2000, Voluntary Arbitrator Jimenez
denied PHILEC's motion for partial reconsideration for lack of merit.
PHILEC received a copy of the July 7, 2000 resolution on August 11, 2000.
[50]




On August 29, 2000, PHILEC filed a petition[51] for certiorari before the
Court of Appeals, alleging that Voluntary Arbitrator Jimenez gravely
abused his discretion in rendering his decision.[52] PHILEC maintained that
it did not violate the June 1, 1997 collective bargaining agreement.[53] It
applied the "Modified SGV" pay grade rates to avoid salary distortion
within its enterprise.[54]



In addition, PHILEC argued that Article X, Section 4 of the collective
bargaining agreement did not apply to Lipio and Ignacio, Sr. Considering
that Lipio and Ignacio, Sr. were promoted to a supervisory position, their
training allowance should be computed based on the provisions of
PHILEC's collective bargaining agreement with ASSET, the exclusive
bargaining representative of PHILEC's supervisory employees.[55]



The Court of Appeals affirmed Voluntary Arbitrator Jimenez's decision.
[56] It agreed that PHILEC was bound to apply Article X, Section 4 of its

June 1, 1997 collective bargaining agreement with PWU in computing

Lipio's and Ignacio, Sr.'s training allowance.[57] In its decision, the Court of
Appeals denied due course and dismissed PHILEC's petition for certiorari
for lack of merit.[58]



PHILEC filed a motion for reconsideration, which the Court of Appeals
denied in the resolution[59] dated June 23, 2005.



On August 3, 2005, PHILEC filed its petition for review on certiorari before
this court,[60] insisting that it did not violate its collective bargaining
agreement with PWU.[61] PHILEC maintains that Lipio and Ignacio, Sr.
were promoted to a position covered by the pay grade scale for supervisory
employees.[62] Consequently, the provisions of PHILEC's collective
bargaining agreement with its supervisory employees should apply, not its
collective bargaining agreement with PWU.[63] To insist on applying the pay
grade scale in Article X, Section 4, PHILEC argues, would result in a salary
distortion within PHILEC.[64]



In the resolution[65] dated September 21, 2005, this court ordered PWU to
comment on PHILEC's petition for review on certiorari.



In its comment,[66] PWU argues that Voluntary Arbitrator Jimenez did not
gravely abuse his discretion in rendering his decision. He correctly applied
the provisions of the PWU collective bargaining agreement, the law
between PHILEC and its rank-and-file employees, in computing Lipio's and
Ignacio, Sr.'s training allowance.[67]



On September 27, 2006, PHILEC filed its reply,[68] reiterating its
arguments in its petition for review on certiorari.



The issue for our resolution is whether Voluntary Arbitrator Jimenez
gravely abused his discretion in directing PHILEC to pay Lipio's and
Ignacio, Sr.'s training allowance based on Article X, Section 4 of the June 1,
1997 rank-and-file collective bargaining agreement.



This petition should be denied.




I




The Voluntary Arbitrator's decision

dated August 13, 1999 is already

final and executory



We note that PHILEC filed before the Court of Appeals a petition for
certiorari under Rule 65 of the Rules of Court against Voluntary Arbitrator
Jimenez's decision.[69]



This was not the proper remedy.



Instead, the proper remedy to reverse or modify a Voluntary Arbitrator's or
a panel of Voluntary Arbitrators' decision or award is to appeal the award
or decision before the Court of Appeals. Rule 43, Sections 1 and 3 of the
Rules of Court provide:




Section 1. Scope.



This Rule shall apply to appeals from judgments or final orders of the Court
of Tax Appeals and from awards, judgments, final orders or resolutions of
or authorized by any quasi-judicial agency in the exercise of its quasi-
judicial functions. Among these agencies are the Civil Service Commission,
Central Board of Assessment Appeals, Securities and Exchange
Commission, Office of the President, Land Registration Authority, Social
Security Commission, Civil Aeronautics Board, Bureau of Patents,
Trademarks and Technology Transfer, National Electrification
Administration, Energy Regulatory Board, National Telecommunications
Commission, Department of Agrarian Reform under Republic Act No.
6657, Government Service Insurance System, Employees Compensation
Commission, Agricultural Inventions Board, Insurance Commission,
Philippine Atomic Energy Commission, Board of Investments, Construction
Industry Arbitration Commission, and voluntary arbitrators authorized by
law.



. . . .



Sec. 3. Where to appeal.



An appeal under this Rule may be taken to the Court of Appeals within the
period and in the manner herein provided, whether the appeal involves
questions of fact, of law, or mixed questions of fact and law. (Emphasis
supplied)


A Voluntary Arbitrator or a panel of Voluntary Arbitrators has the exclusive
original jurisdiction over grievances arising from the interpretation or
implementation of collective bargaining agreements. Should the parties
agree, a Voluntary Arbitrator or a panel of Voluntary Arbitrators shall also
resolve the parties' other labor disputes, including unfair labor practices
and bargaining deadlocks. Articles 261 and 262 of the Labor Code provide:




ART. 261. JURISDICTION OF VOLUNTARY ARBITRATORS OR PANEL

OF VOLUNTARY ARBITRATORS.



The Voluntary Arbitrator or panel of Voluntary Arbitrators shall have
original and exclusive jurisdiction to hear and decide all unresolved
grievances arising from the interpretation or implementation of the
Collective Bargaining Agreement and those arising from the interpretation
or enforcement of company personnel policies referred to in the
immediately preceding article. Accordingly, violations of a Collective
Bargaining Agreement, except those which are gross in character, shall no
longer be treated as unfair labor practice and shall be resolved as
grievances under the Collective Bargaining Agreement. For purposes of this
article, gross violations of Collective Bargaining Agreement shall mean
flagrant and/or malicious refusal to comply with the economic provisions of
such agreement.



The Commission, its Regional Offices and the Regional Directors of the
Department of Labor and Employment shall not entertain disputes,
grievances, or matters under the exclusive and original jurisdiction of the
Voluntary Arbitrator or panel of Voluntary Arbitrators and shall
immediately dispose and refer the same to the Grievance Machinery or
Voluntary Arbitration provided in the Collective Bargaining Agreement.



ART. 262. JURISDICTION OVER OTHER LABOR DISPUTES.



The Voluntary Arbitrator or panel of Voluntary Arbitrators, upon
agreement of the parties, shall also hear and decide all other labor disputes
including unfair labor practices and bargaining deadlocks.


In Luzon Development Bank v. Association of Luzon Development Bank
Employees,[70] this court ruled that the proper remedy against the award or
decision of the Voluntary Arbitrator is an appeal before the Court of
Appeals. This court first characterized the office of a Voluntary Arbitrator
or a panel of Voluntary Arbitrators as a quasi-judicial agency,
citing Volkschel Labor Union, et al. v. NLRC[71] and Oceanic Bic Division
(FFW) v. Romero:[72]




In Volkschel Labor Union, et al. v. NLRC, et al., on the settled premise that
the judgments of courts and awards of quasi-judicial agencies must become
final at some definite time, this Court ruled that the awards of voluntary
arbitrators determine the rights of parties; hence, their decisions have the
same legal effect as judgments of a court. In Oceanic Bic Division (FFW), et
al. v. Romero, et al., this Court ruled that "a voluntary arbitrator by the
nature of her functions acts in a quasi-judicial capacity." Under these
rulings, it follows that the voluntary arbitrator, whether acting solely or in a
panel, enjoys in law the status of a quasi-judicial agency but independent
of, and apart from, the NLRC since his decisions are not appealable to the
latter.[73] (Citations omitted)


This court then stated that the office of a Voluntary Arbitrator or a panel of
Voluntary Arbitrators, even assuming that the office is not strictly a quasi-
judicial agency, may be considered an instrumentality, thus:




Assuming arguendo that the voluntary arbitrator or the panel of voluntary

arbitrators may not strictly be considered as a quasi-judicial agency, board
or commission, still both he and the panel are comprehended within the
concept of a "quasi-judicial instrumentality." It may even be stated that it
was to meet the very situation presented by the quasi-judicial functions of
the voluntary arbitrators here, as well as the subsequent arbitrator/arbitral
tribunal operating under the Construction Industry Arbitration
Commission, that the broader term "instrumentalities" was purposely
included in the above-quoted provision.



An "instrumentality" is anything used as a means or agency. Thus, the
terms governmental "agency" or "instrumentality" are synonymous in the
sense that either of them is a means by which a government acts, or by
which a certain government act or function is performed. The word
"instrumentality," with respect to a state, contemplates an authority to
which the state delegates governmental power for the performance of a
state function. An individual person, like an administrator or executor, is a
judicial instrumentality in the settling of an estate, in the same manner that
a sub-agent appointed by a bankruptcy court is an instrumentality of the
court, and a trustee in bankruptcy of a defunct corporation is an
instrumentality of the state.



The voluntary arbitrator no less performs a state function pursuant to a
governmental power delegated to him under the provisions therefor in the
Labor Code and he falls, therefore, within the contemplation of the term
"instrumentality" in the aforequoted Sec. 9 of B.P. 129. [74] (Citations
omitted)


Since the office of a Voluntary Arbitrator or a panel of Voluntary
Arbitrators is considered a quasi-judicial agency, this court concluded that
a decision or award rendered by a Voluntary Arbitrator is appealable before
the Court of Appeals. Under Section 9 of the Judiciary Reorganization Act
of 1980, the Court of Appeals has the exclusive original jurisdiction over
decisions or awards of quasi-judicial agencies and instrumentalities:




Section 9. Jurisdiction. The Court of Appeals shall exercise:




. . . .



3. Exclusive appellate jurisdiction over all final judgements, resolutions,
orders or awards of Regional Trial Courts and quasi-judicial agencies,
instrumentalities, boards or commission, including the Securities and
Exchange Commission, the Social Security Commission, the Employees
Compensation Commission and the Civil Service Commission, except those
falling within the appellate jurisdiction of the Supreme Court in accordance
with the Constitution, the Labor Code of the Philippines under Presidential
Decree No. 442, as amended, the provisions of this Act, and of
subparagraph (1) of the third paragraph and subparagraph 4 of the fourth
paragraph of Section 17 of the Judiciary Act of 1948. (Emphasis supplied)


Luzon Development Bank was decided in 1995 but remains "good
law."[75] In the 2002 case of Alcantara, Jr. v. Court of Appeals,[76]this court
rejected petitioner Santiago Alcantara, Jr.'s argument that the Rules of
Court, specifically Rule 43, Section 2, superseded the Luzon Development
Bank ruling:




Petitioner argues, however, that Luzon Development Bank is no longer

good law because of Section 2, Rule 43 of the Rules of Court, a new
provision introduced by the 1997 revision. The provision reads:


SEC. 2. Cases not covered. - This Rule shall not apply to judgments or final
orders issued under the Labor Code of the Philippines.
The provisions may be new to the Rules of Court but it is far from being a
new law. Section 2, Rule 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. 129,7 as amended by Republic Act No.
7902:8


(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. The fact that [the voluntary arbitrator's] functions and powers are
provided for in the Labor Code does not place him within the exceptions to
said Sec. 9 since he is a quasi-judicial instrumentality as contemplated
therein. It will be noted that, although the Employees' Compensation
Commission is also provided for in the Labor Code, Circular No. 1-91, which
is the forerunner of the present Revised Administrative Circular No. 1-95,
laid down the procedure for the appealability of its decisions to the Court of
Appeals under the foregoing rationalization, and this was later adopted by
Republic Act No. 7902 in amending Sec. 9 of B.P. 129.



A fortiori, the decision or award of the voluntary arbitrator or panel of
arbitrators should likewise be appealable to the Court of Appeals, in line
with the procedure outlined in Revised Administrative Circular No. 1-95,
just like those of the quasi-judicial agencies, boards and commissions
enumerated therein.[77] (Emphases in the original)


This court has since reiterated the Luzon Development Bank ruling in its
decisions.[78]



Article 262-A of the Labor Code provides that the award or decision of the
Voluntary Arbitrator "shall be final and executory after ten (10) calendar
days from receipt of the copy of the award or decision by the parties":




Art. 262-A. PROCEDURES. The Voluntary Arbitrator or panel of Voluntary

Arbitrators shall have the power to hold hearings, receive evidences and
take whatever action is necessary to resolve the issue or issues subject of
the dispute, including efforts to effect a voluntary settlement between
parties.



All parties to the dispute shall be entitled to attend the arbitration
proceedings. The attendance of any third party or the exclusion of any
witness from the proceedings shall be determined by the Voluntary
Arbitrator or panel of Voluntary Arbitrators. Hearing may be adjourned for
cause or upon agreement by the parties.



Unless the parties agree otherwise, it shall be mandatory for the Voluntary
Arbitrator or panel of Voluntary Arbitrators to render an award or decision
within twenty (20) calendar days from the date of submission of the dispute
to voluntary arbitration.



The award or decision of the Voluntary Arbitrator or panel of Voluntary
Arbitrators shall contain the facts and the law on which it is based. It shall
be final and executory after ten (10) calendar days from receipt of the
copy of the award or decision by the parties.



Upon motion of any interested party, the Voluntary Arbitrator or panel of
Voluntary Arbitrators or the Labor Arbiter in the region where the movant
resides, in case of the absence or incapacity of the Voluntary Arbitrator or
panel of Voluntary Arbitrators, for any reason, may issue a writ of execution
requiring either the sheriff of the Commission or regular courts or any
public official whom the parties may designate in the submission
agreement to execute the final decision, order or award. (Emphasis
supplied)


Thus, in Coca-Cola Bottlers Philippines, Inc. Sales Force Union-PTGWO-
BALAIS v. Coca Cola-Bottlers Philippines, Inc.,[79] this court declared that
the decision of the Voluntary Arbitrator had become final and executory
because it was appealed beyond the 10-day reglementary period under
Article 262-A of the Labor Code.



It is true that Rule 43, Section 4 of the Rules of Court provides for a 15-day
reglementary period for filing an appeal:




Section 4. Period of appeal. The appeal shall be taken within fifteen (15)

days from notice of the award, judgment, final order or resolution, or
from the date of its last publication, if publication is required by law for its
effectivity, or of the denial of petitioner's motion for new trial or
reconsideration duly filed in accordance with the governing law of the
court or agency a quo. Only one (1) motion for reconsideration shall be
allowed. Upon proper motion and the payment of the full amount of the
docket fee before the expiration of the reglementary period, the Court of
Appeals may grant an additional period of fifteen (15) days only within
which to file the petition for review. No further extension shall be granted
except for the most compelling reason and in no case to exceed fifteen (15)
days. (Emphasis supplied)


The 15-day reglementary period has been upheld by this court in a long line
of cases.[80] In AMA Computer College-Santiago City, Inc. v. Nacino,
[81] Nippon Paint Employees Union-OLALIA v. Court of Appeals,[82] Manila
Midtown Hotel v. Borromeo,[83] and Sevilla Trading Company v. Semana,
[84] this court denied petitioners' petitions for review on certiorari since

petitioners failed to appeal the Voluntary Arbitrator's decision within the

15-day reglementary period under Rule 43. In these cases, the Court of
Appeals had no jurisdiction to entertain the appeal assailing the Voluntary
Arbitrator's decision.



Despite Rule 43 providing for a 15-day period to appeal, we rule that the
Voluntary Arbitrator's decision must be appealed before the Court of
Appeals within 10 calendar days from receipt of the decision as provided in
the Labor Code.



Appeal is a "statutory privilege,"[85] which may be exercised "only in the
manner and in accordance with the provisions of the law."[86]"Perfection of
an appeal within the reglementary period is not only mandatory but also
jurisdictional so that failure to do so rendered the decision final and
executory, and deprives the appellate court of jurisdiction to alter the final
judgment much less to entertain the appeal."[87]



We ruled that Article 262-A of the Labor Code allows the appeal of
decisions rendered by Voluntary Arbitrators.[88] Statute provides that the
Voluntary Arbitrator's decision "shall be final and executory after ten (10)
calendar days from receipt of the copy of the award or decision by the
parties." Being provided in the statute, this 10-day period must be complied
with; otherwise, no appellate court will have jurisdiction over the appeal.
This absurd situation occurs when the decision is appealed on the 11th to
15th day from receipt as allowed under the Rules, but which decision, under
the law, has already become final and executory.



Furthermore, under Article VIII, Section 5(5) of the Constitution, this court
"shall not diminish, increase, or modify substantive rights" in promulgating
rules of procedure in courts.[89] The 10-day period to appeal under the
Labor Code being a substantive right, this period cannot be diminished,
increased, or modified through the Rules of Court.[90]



In Shioji v. Harvey,[91] this court held that the "rules of court, promulgated
by authority of law, have the force and effect of law, if not in conflict with
positive law."[92] Rules of Court are "subordinate to the statute."[93] In case
of conflict between the law and the Rules of Court, "the statute will
prevail."[94]



The rule, therefore, is that a Voluntary Arbitrator's award or decision shall
be appealed before the Court of Appeals within 10 days from receipt of the
award or decision. Should the aggrieved party choose to file a motion for
reconsideration with the Voluntary Arbitrator,[95]the motion must be filed
within the same 10-day period since a motion for reconsideration is filed
"within the period for taking an appeal."[96]



A petition for certiorari is a special civil action "adopted to correct errors of
jurisdiction committed by the lower court or quasi-judicial agency, or when
there is grave abuse of discretion on the part of such court or agency
amounting to lack or excess of jurisdiction."[97] An extraordinary remedy,
[98] a petition for certiorari may be filed only if appeal is not available.[99] If

appeal is available, an appeal must be taken even if the ground relied upon
is grave abuse of discretion.[100]



As an exception to the rule, this court has allowed petitions for certiorari to
be filed in lieu of an appeal "(a) when the public welfare and the
advancement of public policy dictate; (b) when the broader interests of
justice so require; (c) when the writs issued are null; and (d) when the
questioned order amounts to an oppressive exercise of judicial
authority."[101]



In Unicraft Industries International Corporation, et al. v. The Hon. Court
of Appeals,[102] petitioners filed a petition for certiorari against the
Voluntary Arbitrator's decision. Finding that the Voluntary Arbitrator
rendered an award without giving petitioners an opportunity to present
evidence, this court allowed petitioners' petition for certiorari despite being
the wrong remedy. The Voluntary Arbitrator's award, this court said, was
null and void for violation of petitioners' right to due process. This court
decided the case on the merits.



In Leyte IV Electric Cooperative, Inc. v. LEYECO IV Employees Union-
ALU,[103] petitioner likewise filed a petition for certiorari against the
Voluntary Arbitrator's decision, alleging that the decision lacked basis in
fact and in law. Ruling that the petition for certiorari was filed within the
reglementary period for filing an appeal, this court allowed petitioner's
petition for certiorari in "the broader interests of justice."[104]



In Mora v. Avesco Marketing Corporation,[105] this court held that
petitioner Noel E. Mora erred in filing a petition for certiorari against the
Voluntary Arbitrator's decision. Nevertheless, this court decided the case on
the merits "in the interest of substantial justice to arrive at the proper
conclusion that is conformable to the evidentiary facts."[106]



None of the circumstances similar to Unicraft, Leyte IV Electric
Cooperative, and Mora are present in this case. PHILEC received Voluntary
Arbitrator Jimenez's resolution denying its motion for partial
reconsideration on August 11, 2000.[107] PHILEC filed its petition for
certiorari before the Court of Appeals on August 29, 2000,[108] which was 18
days after its receipt of Voluntary Arbitrator Jimenez's resolution. The
petition for certiorari was filed beyond the 10-day reglementary period for
filing an appeal. We cannot consider PHILEC's petition for certiorari as an
appeal.



There being no appeal seasonably filed in this case, Voluntary Arbitrator
Jimenez's decision became final and executory after 10 calendar days from
PHILEC's receipt of the resolution denying its motion for partial
reconsideration.[109] Voluntary Arbitrator Jimenez's decision is already
"beyond the purview of this Court to act upon."[110]




II




PHILEC must pay training allowance

based on the step increases provided

in the June 1, 1997 collective

bargaining agreement



The insurmountable procedural issue notwithstanding, the case will also
fail on its merits. Voluntary Arbitrator Jimenez correctly awarded both
Lipio and Ignacio, Sr. training allowances based on the amounts and
formula provided in the June 1, 1997 collective bargaining agreement.



A collective bargaining agreement is "a contract executed upon the request
of either the employer or the exclusive bargaining representative of the
employees incorporating the agreement reached after negotiations with
respect to wages, hours of work and all other terms and conditions of
employment, including proposals for adjusting any grievances or questions
arising under such agreement."[111] A collective bargaining agreement being
a contract, its provisions "constitute the law between the parties"[112] and
must be complied with in good faith.[113]



PHILEC, as employer, and PWU, as the exclusive bargaining representative
of PHILEC's rank-and-file employees, entered into a collective bargaining
agreement, which the parties agreed to make effective from June 1, 1997 to
May 31, 1999. Being the law between the parties, the June 1, 1997 collective
bargaining agreement must govern PHILEC and its rank-and-file
employees within the agreed period.



Lipio and Ignacio, Sr. were rank-and-file employees when PHILEC selected
them for training for the position of Foreman I beginning August 25, 1997.
Lipio and Ignacio, Sr. were selected for training during the effectivity of the
June 1, 1997 rank-and-file collective bargaining agreement. Therefore,
Lipio's and Ignacio, Sr.'s training allowance must be computed based on
Article X, Section 4 and Article IX, Section 1(f) of the June 1, 1997 collective
bargaining agreement.



Contrary to PHILEC's claim, Lipio and Ignacio, Sr. were not transferred out
of the bargaining unit when they were selected for training. Lipio and
Ignacio, Sr. remained rank-and-file employees while they trained for the
position of Foreman I. Under Article IX, Section 1(e) of the June 1, 1997
collective bargaining agreement,[114] a trainee who is "unable to
demonstrate his ability to perform the work . . . shall be reverted to his
previous assignment. . . ."[115] According to the same provision, the trainee
"shall hold that job on a trial or observation basis and . . . subject to prior
approval of the authorized management official, be appointed to the
position in a regular capacity."[116]



Thus, training is a condition precedent for promotion. Selection for training
does not mean automatic transfer out of the bargaining unit of rank-and-
file employees.



Moreover, the June 1, 1997 collective bargaining agreement states that the
training allowance of a rank-and-file employee "whose application for a
posted job is accepted shall [be computed] in accordance with Section (f) of
[Article IX]."[117] Since Lipio and Ignacio, Sr. were rank-and-file employees
when they applied for training for the position of Foreman I, Lipio's and
Ignacio, Sr.'s training allowance must be computed based on Article IX,
Section 1(f) of the June 1, 1997 rank-and-file collective bargaining
agreement.



PHILEC allegedly applied the "Modified SGV" pay grade scale to prevent
any salary distortion within PHILEC's enterprise. This, however, does not
justify PHILEC's non-compliance with the June 1, 1997 collective
bargaining agreement. This pay grade scale is not provided in the collective
bargaining agreement. In Samahang Manggagawa sa Top Form
Manufacturing United Workers of the Philippines (SMTFM-UWP) v.
NLRC,[118] this court ruled that "only provisions embodied in the [collective
bargaining agreement] should be so interpreted and complied with. Where
a proposal raised by a contracting party does not find print in the [collective
bargaining agreement], it is not part thereof and the proponent has no
claim whatsoever to its implementation."[119]



Had PHILEC wanted the "Modified SGV" pay grade scale applied within its
enterprise, "it could have requested or demanded that [the 'Modified SGV'
scale] be incorporated in the [collective bargaining
agreement]."[120] PHILEC had "the means under the law to compel [PWU]
to incorporate this specific economic proposal in the [collective bargaining
agreement]."[121] It "could have invoked Article 252 of the Labor
Code"[122] to incorporate the "Modified SGV" pay grade scale in its collective
bargaining agreement with PWU. But it did not. Since this "Modified SGV"
pay grade scale does not appear in PHILEC's collective bargaining
agreement with PWU, PHILEC cannot insist on the "Modified SGV" pay
grade scale's application. We reiterate Voluntary Arbitrator Jimenez's
decision dated August 13, 1999 where he said that:




. . . since the signing of the current CBA took place on September 27, 1997,
PHILEC, by oversight, may have overlooked the possibility of a wage
distortion occurring among ASSET-occupied positions. It is surmised that
this matter could have been negotiated and settled with PWU before the
actual signing of the CBA on September 27. Instead, PHILEC, again,
allowed the provisions of Art. X, Sec. 4 of the CBA to remain the way it is
and is now suffering the consequences of its laches.[123] (Emphasis in the
original)


We note that PHILEC did not dispute PWU's contention that it selected
several rank-and-file employees for training and paid them training
allowance based on the schedule provided in the collective bargaining
agreement effective at the time of the trainees' selection.[124] PHILEC
cannot choose when and to whom to apply the provisions of its collective
bargaining agreement. The provisions of a collective bargaining agreement
must be applied uniformly and complied with in good faith.



Given the foregoing, Lipio's and Ignacio, Sr.'s training allowance should be
computed based on Article X, Section 4 in relation to Article IX, Section 1(f)
of the June 1, 1997 rank-and-file collective bargaining agreement. Lipio,
who held the position of Machinist before selection for training as Foreman
I, should receive training allowance based on the following schedule:




First Month ----- P456.00

Second Month ----- P1,031.00
Third Month ----- P1,031.00
Fourth Month ----- P1,031.00


Ignacio, Sr., who held the position of DT-Assembler before selection for
training as Foreman I, should receive training allowance based on the
following schedule:




First Month ----- P361.00

Second Month ----- P817.00
Third Month ----- P1,392.00
Fourth Month ----- P1,392.00


Considering that Voluntary Arbitrator Jimenez's decision awarded sums of
money, Lipio and Ignacio, Sr. are entitled to legal interest on their training
allowances. Voluntary Arbitrator Jimenez's decision having become final
and executory on August 22, 2000, PHILEC is liable for legal interest equal
to 12% per annum from finality of the decision until full payment as this
court ruled in Eastern Shipping Lines, Inc. v. Court of Appeals:[125]




When the judgment of the court awarding a sum of money becomes final
and executory, the rate of legal interest. . . shall be 12% per annum from
such finality until its satisfaction, this interim period being deemed to be by
then as equivalent to a forbearance of credit.[126]


The 6% legal interest under Circular No. 799, Series of 2013, of the Bangko
Sentral ng Pilipinas Monetary Board shall not apply, Voluntary Arbitrator
Jimenez's decision having become final and executory prior to the
effectivity of the circular on July 1, 2013. In Nacar v. Gallery Frames,
[127] we held that:


. . . with regard to those judgments that have become final and executory
prior to July 1, 2013, said judgments shall not be disturbed and shall
continue to be implemented applying the rate of interest fixed therein.[128]


WHEREFORE, the petition for review on certiorari is DENIED. The
Court of Appeals' decision dated May 25, 2004 is AFFIRMED.



Petitioner Philippine Electric Corporation
is ORDERED to PAY respondent Eleodoro V. Lipio a total of P3,549.00
for a four (4)-month training for the position of Foreman I with legal
interest of 12% per annum from August 22, 2000 until the amount's full
satisfaction.



For respondent Emerlito C. Ignacio, Sr., Philippine Electric Corporation
is ORDERED to PAY a total of P3,962.00 for a four (4)-month training
for the position of Foreman I with legal interest of 12% per annum from
August 22, 2000 until the amount's full satisfaction.



SO ORDERED.



Carpio, (Chairperson), Del Castillo, Villarama, Jr.,* and Mendoza,
JJ., concur.



* Designated acting member per Special Order No. 1888 dated November
28, 2014.



[1] Rollo, pp. 9 29.



[2] Id.
at 32 40. The decision docketed as CA-G.R. SP No. 60457 was penned
by Associate Justice Aurora Santiago-Lagman and concurred in by
Associate Justices Romeo A. Brawner and Juan Q. Enriquez, Jr., of the
Twelfth Division.



[3] Id. at 84.



[4] Id.




[5] Id.




[6] Id. at 84 and 91.



[7] Id. at 76.



[8] Id. at 134.



[9] Id.




[10] Id.




[11] Id. at 76.



[12] Id. at 135.



[13] Id.




[14] Id.




[15] Id. at 64 and 113.



[16] Id. at 86 87 and 113 114.



[17] Id. at 113 114.



[18] Id. at 65.



[19] Id. at 85 86 and 115.



[20] Id. at 73 74.



[21] Id. at 73.



[22] Id.




[23] Id. at 82.



[24] Id. at 111 133.



[25] Id. at 123 125.



[26] Id.




[27] LABOR CODE, Art. 248 provides:



Art. 248. Unfair labor practices of employers. It shall be unlawful for an
employer to commit any of the following unfair labor practice:



. . . .



(i) To violate a collective bargaining agreement.



[28] Rollo, p. 129.



[29] Id. at 83 90.



[30] Id. at 86 87.



[31] Id. at 85.



[32] Id. at 87.



[33] Id. at 67.



[34] Id.




[35] Id.




[36] Id. at 54.



[37] LABOR CODE, Art. 261 provides:



Art. 261. Jurisdiction of Voluntary Arbitrators or panel of Voluntary
Arbitrators. The Voluntary Arbitrator or panel of Voluntary Arbitrators
shall have original and exclusive jurisdiction to hear and decide all
unresolved grievances arising from the interpretation or implementation of
the Collective Bargaining Agreement and those arising from the
interpretation or enforcement of company personnel policies referred to in
the immediately preceding article. Accordingly, violations of a Collective
Bargaining Agreement, except those which are gross in character, shall no
longer be treated as unfair labor practice and shall be resolved as
grievances under the Collective Bargaining Agreement. For purposes of this
article, gross violations of Collective Bargaining Agreement shall mean
flagrant and/or malicious refusal to comply with the economic provisions of
such agreement.



[38] Rollo, p. 88.



[39] Id. at 63 71.



[40] Id. at 70.



[41] Id. at 68 69.



[42] Id.




[43] Id. at 69 70.



[44] Id. at 71.



[45] Id. at 70 71.



[46] Id. at 70.



[47] Id. at 180.



[48] Id. at 179 185.



[49] Id. at 72.



[50] Id. at 46.



[51] Id. at 45 59.



[52] Id. at 52.



[53] Id. at 57.



[54] Id. at 53.



[55] Id.




[56] Id. at 40.



[57] Id. at 38.



[58] Id. at 40.



[59] Id. at 42 43.



[60] Id. at 9.



[61] Id. at 19.



[62] Id. at 23.



[63] Id.




[64] Id. at 24.



[65] Id. at 335.



[66] Id. at 350 387. The May 7, 2006 comment was entitled
"MEMORANDUM."



[67] Id. at 351.



[68] Id. at 398 408.



[69] Id. at 45.



[70] 319 Phil. 262 (1995) [Per J. Romero, En Banc].



[71] 187 Phil. 202 (1980) [Per J. De Castro, First Division].



[72] 215 Phil. 340 (1984) [Per J. Gutierrez, Jr., Second Division].



[73] Luzon
Development Bank v. Association of Luzon Development Bank
Employees, 319 Phil. 262, 269 (1995) [Per J. Romero, En Banc].



[74] Id. at 270 271.



[75] Alcantara,
Jr. v. Court of Appeals, 435 Phil. 395, 404 (2002) [Per J.
Kapunan, First Division].



[76] 435 Phil. 395 (2002) [Per J. Kapunan, First Division].



[77] Id. at 404 406.



[78] Royal
Plant Workers Union v. Coca-Cola Bottlers Philippines, Inc.-
Cebu Plant, G.R. No. 198783, April 15, 201
 8) G.R. No. 191714, February 26, 2014
T & H SHOPFITTERS CORPORATION/GIN QUEEN CORPORATION, STINNES HUANG, BEN HUANG
AND ROGELIO MADRIAGA, Petitioners, v. T & H SHOPFITTERS CORPORATION/GIN QUEEN
WORKERS UNION, ELPIDIO ZALDIVAR, DARIOS GONZALES, WILLIAM DOMINGO, BOBBY
CASTILLO, JIMMY M. PASCUA, GERMANO M. BAJO, RICO L. MANZANO, ALLAN L. CALLORINA,
ROMEO BLANCO, GILBERT M. GARCIA, CARLOS F. GERILLO, EDUARDO A. GRANDE, EDILBRANDO
MARTICIO, VIVENCIO SUSANO, ROLANDO GARCIA, JR., MICHAEL FABABIER, ROWELL
MADRIAGA, PRESNIL TOLENTINO, MARVIN VENTURA, FRANCISCO RIVARES, PLACIDO
TOLENTINO AND ROLANDO ROMERO, Respondents.
DECISION
MENDOZA, J.:
Assailed in this petition for review on certiorari under Rule 45 of the Rules of Court are: 1) the November
12, 2009 Decision1 of the Court of Appeals (CA), in CA–G.R. SP No. 107188, which affirmed the July 24,
2007 and November 13, 2008 Decision2 of the National Labor Relations Commission (NLRC); and 2) its
March 24, 2010 Resolution3 denying reconsideration of its decision.
The Facts
On September 7, 2004, the T&H Shopfitters Corporation/Gin Queen Corporation workers union (THS–GQ
Union) and Elpidio Zaldivar,4 Darios Gonzales, William Domingo, Bobby Castillo, Jimmy M. Pascua, Germano
M. Bajo,5 Rico L. Manzano, Allan L. Callorina,6 Romeo Blanco, Gilbert M. Garcia, Carlos F. Gerillo, Eduardo A.
Grande, Edilbrando Marticio, Vivencio Susano, Rolando Garcia, Jr., Michael Fababier, Rowell Madriaga, Presnil
Tolentino, Marvin Ventura, Francisco Rivares, Placido Tolentino, and Rolando Romero (respondents), all of
whom are officers and/or members of THS–GQ union, filed their Complaint7for Unfair Labor Practice (ULP)
by way of union busting, and Illegal Lockout, with moral and exemplary damages and attorney’s fees,
against T&H Shopfitters Corporation (T&H Shopfitters) and Gin Queen Corporation (Gin Queen) (collectively
referred to as “petitioners”), before the Labor Arbiter (LA).
Respondents treated T&H Shopfitters and Gin Queen as a single entity and their sole employer. In their
desire to improve their working conditions, respondents and other employees of petitioners held their first
formal meeting on November 23, 2003 to discuss the formation of a union. The following day or on
November 24, 2003, seventeen (17) employees were barred from entering petitioners’ factory premises
located in Castillejos, Zambales, and ordered to transfer to T&H Shopfitters’ warehouse at Subic Bay
Freeport Zone (SBFZ) purportedly because of its expansion. Afterwards, the said seventeen (17) employees
were repeatedly ordered to go on forced leave due to the unavailability of work.
On December 18, 2003, the Department of Labor and Employment (DOLE), Regional Office No. III issued a
certificate of registration in favor of THS–GQ Union.
Respondents contended that the affected employees were not given regular work assignments, while
subcontractors were continuously hired to perform their functions. This development prompted respondents
to seek the assistance of the National Conciliation and Mediation Board. Subsequently, an agreement
between petitioners and THS–GQ Union was reached. Petitioners agreed to give priority to regular
employees in the distribution of work assignments. Respondents averred, however, that petitioners never
complied with its commitment but instead hired contractual workers.
On March 24, 2004, THS–GQ Union filed a petition for certification election. On July 12, 2004, an order was
issued to hold the certification election in both T&H Shopfitters and Gin Queen. Eventually, the certification
election was scheduled on October 11, 2004.
Meanwhile, through a memorandum, dated August 17, 2004, petitioner Ben Huang (Huang), Director for Gin
Queen, informed its employees of the expiration of the lease contract between Gin Queen and its lessor in
Castillejos, Zambales and announced the relocation of its office and workers to Cabangan, Zambales. Some
of the respondents, who visited the site in Cabangan, discovered that it was a “talahiban” or grassland.
Later, the said union officers and members were made to work as grass cutters in Cabangan, under the
supervision of a certain Barangay Captain Greg Pangan. Due to these circumstances, the employees
assigned in Cabangan did not report for work. As a consequence, the THS–GQ Union president was made to
explain why he should not be terminated for insubordination. The other employees who likewise failed to
report in Cabangan were meted out with suspension.
On October 10, 2004, petitioners sponsored a field trip to Iba, Zambales, for its employees. The officers and
members of the THS–GQ Union were purportedly excluded from the field trip. On the evening of the field
trip, a certain Angel Madriaga, a sales officer of petitioners, campaigned against the union in the
forthcoming certification election.
The following day or on October 11, 2004, the employees were escorted from the field trip to the polling
center in Zambales to cast their votes. On October 13, 2004, the remaining employees situated at the SBFZ
plant cast their votes as well. Due to the heavy pressure exerted by petitioners, the votes for “no union”
prevailed. On October 14, 2004, the THS–GQ Union filed its protest with respect to the certification election
proceedings.
Respondents averred that the following week after the certification elections were held, petitioners
retrenched THG–GQ Union officers and members assigned at the Zambales plant. Respondents claimed that
the work weeks of those employees in the SBFZ plant were drastically reduced to only three (3) days in a
month.
In its defense, Gin Queen, claiming that it is a corporation separate and distinct from T&H Shopfitters,
stressed that respondents were all employees. Gin Queen claimed that due to the decrease in orders from
its customers, they had to resort to cost cutting measures to avoid anticipated financial losses. Thus, it
assigned work on a rotational basis. It was of the impression that the employees, who opposed its economic
measures, were merely motivated by spite in filing the complaint for ULP against it.
In addition, Gin Queen explained that its transfer from Castillejos, Zambales to Cabangan, Zambales was a
result of the expiration of its lease agreement with Myra D. Lumibao (Myra), its lessor. Since the Cabangan
site was bare and still required construction, Gin Queen offered work, to employees who opted to stay, on
rotation as well.
In its Decision,8 dated December 21, 2005, the LA dismissed respondents’ complaint and all their money
claims for lack of merit.
In dismissing the complaint, the LA explained:
x x x x.
In the case at bar, we carefully examined the grounds raised by the complainants [herein respondents] as
basis for claiming that the respondents [herein petitioners] committed unfair labor practices by way of illegal
lockout, one of which is the alleged transfer of 17 workers to Subic Bay Freeport Zone, however, we are
dismay (sic) to know that not even one of these 17 workers is a complainant in these cases. While the labor
union may represent its members in filing cases before this Office, at least these members must show their
intention to file a case by signing in the complaint to prove that they have grievances against their employer
which was lacking in these cases. Further, there was no showing that the transfer of these 17 workers is
considered an unfair labor practice of the respondents considering that their transfer was effected long
before the union was organized.
We also analyzed the allegations of the complainants that the transfer of the working cite (sic) of the
respondent Gin Queen Corporation was a part of the unfair labor practices committed by the respondents,
however, the complainants failed miserably to controvert the documentary evidence adduced by the
respondent Gin Queen Corporation that the lease contract agreement of the place had already expired and it
was the management prerogative to transfer as a cost cutting measures. Again the transfer of the place of
work would not be considered as unfair labor practice.
Complainants alleged that the respondents committed unfair labor practices by means of ‘lockout’ wherein
the respondents should have temporarily refused to provide work to the complainants by a result of labor or
industrial dispute. Complainants failed to show that the rotation of work for them is considered an unfair
labor practice and considered a ‘Lockout’. Complainants rather submitted several notices showing that the
company has no sufficient orders coming from clients and does not have enough raw materials for
production as basis for these complainants not to render work and be rotated, and thus controvert their
allegations that there was ‘lockout’ committed by the respondents. Further, the documentary evidences
adduced by the complainants clearly show that respondents never terminated the complainants when they
were given their notices of suspension negating the claim that there was ‘lockout’ committed by
respondents.
x x x x.9
Aggrieved, respondents appealed to the NLRC. In its July 24, 2007 Decision, the NLRC reversed the LA
decision and ruled in favor of respondents. The dispositive portion of the said decision reads:
WHEREFORE, the decision appealed from is hereby REVERSED.
Respondents T & H Shopfitters Corp., Gin Queen Corp. (or ‘MDL’, as it is now called), Stennis Huang, as well
as the presidents of the respondent corporations as of November 2003 and the date of the execution of this
decision are hereby ordered to pay each of the complainants moral and exemplary damages amounting to
P50,000.00 and P35,000.00 respectively. In addition, they shall pay the complainants attorney’s fees
equivalent to ten percent (10%) of the total judgment award.
SO ORDERED.
In granting the appeal, the NLRC reasoned:
Based on the above–mentioned affidavits,10 it may be concluded that the respondents [herein petitioners]
committed unfair labor practice acts consisting in interfering with the exercise of the employees’ right to
self–organization (specifically, sponsoring a field trip on the day preceding the certification election, warning
the employees of dire consequences should the union prevail, and escorting them to the polling center) and
discriminating in regard to conditions of employment in order to discourage union membership (assigning
union officers and active union members as grass cutters on rotation basis).
xxxx
Furthermore, it is noteworthy that, based on their Articles of Incorporation, T & H Corporation and Gin
Queen Corporation are engaged in the same line of business.
It should also be noted that respondents did not controvert the allegations to the effect that Myra D.
Lumibao, the supposed lessor of respondent corporations, is the wife of respondent Stennis Huang, and that
Gin Queen Corporation has been renamed ‘MDL’, but still carries on the same business in the same premises
using the same machines and facilities. These circumstances, together with the supposed assignment of
respondent Stennis Huang’s interest in Gin Queen Corporation to a third party are badges of fraud that
justify the piercing of the veil of corporate fiction. x x x
Thus, based on the foregoing, respondents T & H Shopfitters Corporation, Gin Queen Corporation (now
known as ‘MDL’) and Stennis Huang, as well as the presidents of the respondent corporations as of
November 2003 and the date of execution of this decision may be held liable for unfair labor practice and
the corresponding award of moral and exemplary damages.11
Petitioners filed a motion for reconsideration but the NLRC denied the same in its November 13, 2008
Decision.
Dissatisfied with the adverse ruling, petitioners instituted a petition for certiorari under Rule 65 of the Rules
of Court before the CA arguing grave abuse of discretion on the part of the NLRC in reversing the LA
decision.
In its Decision, dated November 12, 2009, the CA sustained the NLRC ruling. The fallo of which reads:
WHEREFORE, premises considered, the petition for certiorari is DENIED. The NLRC Decisions dated July 24,
2007 and November 13, 2008 in NLRC NCR CA NO. 048258 (NLRC RAB III–09–7882–04, NLRC RAB III–09–
7980–04) are AFFIRMED.
SO ORDERED.
The CA held that errors of judgment are not within the province of a special civil action for certiorari. It
declared that factual findings of quasi–judicial agencies that had acquired expertise in matters entrusted to
their jurisdiction were accorded not only respect but finality if they were supported by substantial evidence.
The CA noted that the NLRC considered the evidence and applied the law in this case, thus, no grave abuse
of discretion could be imputed on the part of the NLRC in reversing the LA ruling.
Petitioners moved for reconsideration but the same was denied by the CA in its March 24, 2010 Resolution.
Not in conformity with the ruling of the CA, petitioners seek relief with this Court raising the following
ISSUES
II. WHETHER OR NOT PETITIONER GIN QUEEN CORPORATION IS
LIABLE TO THE RESPONDENTS FOR UNFAIR LABOR PRACTICE.

III WHETHER OR NOT THE AWARD OF MORAL AND EXEMPLARY

. DAMAGES IN FAVOR OF THE RESPONDENTS IS PROPER.

IV WHETHER OR NOT THE AWARD OF TEN PERCENT (10%)

. ATTORNEY’S FEES IN FAVOR OF THE RESPONDENT IS PROPER.
12

Simply put, the issue for the Court’s resolution is whether ULP acts were committed by petitioners against
respondents in the case at bench.
In support of their position, petitioners stress that T&H Shopfitters and Gin Queen are corporations separate
and distinct from each other. Consequently, T&H Shopfitters and Stinnes Huang, an officer of T&H
Shopfitters, cannot be held liable for ULP for the reason that there is no employer–employee relationship
between the former and respondents. Further, Gin Queen avers that its decision to implement an enforced
rotation of work assignments for respondents was a management prerogative permitted by law, justified by
the decrease in the orders it received from its customers. It explains that its failure to present concrete
proof of its decreasing orders was due to the impossibility of proving a negative assertion. It also asserts
that the transfer from Castillejos to Cabangan was made in good faith and solely because of the expiration
of its lease contract in Castillejos.
The Court’s Ruling
As to the issue of ULP, petitioners’ argument is utterly without merit.
In the case at bench, petitioners are being accused of violations of paragraphs (a), (c), and (e) of Article
257 (formerly Article 248) of the Labor Code,13 to wit:
Article 257. Unfair labor practices of employers.––It shall be unlawful for an employer to commit any of the
following unfair labor practices:
(a) To interfere with, restrain or coerce employees in the exercise of their right to self–organization;
xxxx
(c) To contract out services or functions being performed by union members when such will interfere with,
restrain, or coerce employees in the exercise of their right to self–organization;
xxxx
(e) To discriminate in regard to wages, hours of work, and other terms and conditions of employment in
order to encourage or discourage membership in any labor organization. x x x
The concept of ULP is embodied in Article 256 (formerly Article 247) of the Labor Code,14 which provides:
Article 256. Concept of unfair labor practice and procedure for prosecution thereof.––Unfair labor practices
violate the constitutional right of workers and employees to self–organization, are inimical to the legitimate
interests of both labor and management, including their right to bargain collectively and otherwise deal with
each other in an atmosphere of freedom and mutual respect, disrupt industrial peace and hinder the
promotion of healthy and stable labor–management relations.
xxxx
In essence, ULP relates to the commission of acts that transgress the workers’ right to organize. As specified
in Articles 248 [now Article 257] and 249 [now Article 258] of the Labor Code, the prohibited acts must
necessarily relate to the workers’ right to self–organization x x x.15
In the case of Insular Life Assurance Co., Ltd. Employees Association – NATU v. Insular Life Assurance Co.
Ltd.,16 this Court had occasion to lay down the test of whether an employer has interfered with and coerced
employees in the exercise of their right to self–organization, that is, whether the employer has engaged in
conduct which, it may reasonably be said, tends to interfere with the free exercise of employees’ rights; and
that it is not necessary that there be direct evidence that any employee was in fact intimidated or coerced
by statements of threats of the employer if there is a reasonable inferencethat anti–union conduct of the
employer does have an adverse effect on self–organization and collective bargaining.
The questioned acts of petitioners, namely: 1) sponsoring a field trip to Zambales for its employees, to the
exclusion of union members, before the scheduled certification election; 2) the active campaign by the sales
officer of petitioners against the union prevailing as a bargaining agent during the field trip; 3) escorting its
employees after the field trip to the polling center; 4) the continuous hiring of subcontractors performing
respondents’ functions; 5) assigning union members to the Cabangan site to work as grass cutters; and 6)
the enforcement of work on a rotational basis for union members, all reek of interference on the part of
petitioners.
Indubitably, the various acts of petitioners, taken together, reasonably support an inference that, indeed,
such were all orchestrated to restrict respondents’ free exercise of their right to self–organization. The Court
is of the considered view that petitioners’ undisputed actions prior and immediately before the scheduled
certification election, while seemingly innocuous, unduly meddled in the affairs of its employees in selecting
their exclusive bargaining representative. In Holy Child Catholic School v. Hon. Patricia Sto. Tomas,17 the
Court ruled that a certification election was the sole concern of the workers, save when the employer itself
had to file the petition x x x, but even after such filing, its role in the certification process ceased and
became merely a bystander. Thus, petitioners had no business persuading and/or assisting its employees in
their legally protected independent process of selecting their exclusive bargaining representative. The fact
and peculiar timing of the field trip sponsored by petitioners for its employees not affiliated with THS–GQ
Union, although a positive enticement, was undoubtedly extraneous influence designed to impede
respondents in their quest to be certified. This cannot be countenanced.
Not content with achieving a “no union” vote in the certification election, petitioners launched a vindictive
campaign against union members by assigning work on a rotational basis while subcontractors performed
the latter’s functions regularly. Worse, some of the respondents were made to work as grass cutters in an
effort to dissuade them from further collective action. Again, this cannot be countenanced.
More importantly, petitioners’ bare denial of some of the complained acts and unacceptable explanations, a
mere afterthought at best, cannot prevail over respondents’ detailed narration of the events that transpired.
At this juncture, it bears to emphasize that in labor cases, the quantum of proof necessary is substantial
evidence,18 or that amount of relevant evidence as a reasonable mind might accept as adequate to support
a conclusion, even if other minds, equally reasonable, might conceivably opine otherwise.19
In fine, mindful of the nature of the charge of ULP, including its civil and/or criminal consequences, the Court
finds that the NLRC, as correctly sustained by the CA, had sufficient factual and legal bases to support its
finding of ULP.
Anent the issue on the award of attorney’s fess, the applicable law concerning the grant thereof in labor
cases is Article 11120 of the Labor Code. Pursuant thereto, the award of 10% attorney’s fees is limited to
cases of unlawful withholding of wages. In this case, however, the Court cannot find any claim or proof that
petitioners unlawfully withheld the wages of respondents. Consequently, the grant of 10% attorney’s fees in
favor of respondents is not justified under the circumstances. Accordingly, the Court deems it proper to
delete the same.
WHEREFORE, the November 12, 2009 Decision of the Court of Appeals and its March 24, 2010 Resolution,
in CA–G.R. SP No. 107188, are AFFIRMED, except with respect to the award of attorney’s fees which is
hereby DELETED.
SO ORDERED.
Velasco, Jr., J., (Chairperson), Peralta, Bersamin,* and Leonen, JJ., concur.

Endnotes:
*
Designated Acting Member in lieu of Associate Justice Roberto A. Abad, per Special Order No. 1640 dated
February 19, 2014.
1
Rollo, pp. 34–45. Penned by Associate Justice Jose C. Reyes with Presiding Justice Conrado M. Vasquez and
Associate Justice Apolinario D. Bruselas, Jr., concurring.
2
Id. at 81–90 and 91–93, respectively.
3
Id. at 47.
4
Also referred to as Elpidio Saldivar in the Certification Against Non–forum Shopping filed before the LA, id.
at 105.
5
Also referred to as Germano P. Bajo in the Certification Against Non–forum Shopping filed before the LA,
id.
6
Also referred to as Allan F. Callorina in the Certification Against Non–forum Shopping filed before the LA,
id. chanrobleslaw

7
Id. at 104–106.
8
Id. at 203–215.
9
Citations omitted.
10
Executed by herein respondent Elpidio Zaldivar; and a certain Darius Bustamante, who is not a party in
the present case.
11
Citations omitted.
12
Rollo, p. 16.
13
Renumbered pursuant to Republic Act No. 10151.
14
Renumbered pursuant to Republic Act No. 10151.
15
Baptista v. Villanueva, G.R. No. 194709, July 31, 2013.
16
147 Phil. 194 (1971).
17
G.R. No. 179146, July 23, 2013.
18
Antiquina v. Magsaysay Maritime Corporation, G.R. No. 168922, April 13, 2011, 648 SCRA 659, 675,
citing National Union of Workers in Hotels, Restaurants and Allied Industries–Manila Pavilion Hotel Chapter
v. National Labor Relations Commission, G.R. No. 179402, September 30, 2008, 567 SCRA 291.
19
Surigao Del Norte Electric Cooperative v. Gonzaga, G.R. No. 187722, June 10, 2013, citing Caltex
Philippines, Inc. v. Agad, G.R. No. 162017, April 23, 2010, 619 SCRA 196, 207.
20
Art. 111. Attorney’s fees.
a. In cases of unlawful withholding of wages, the culpable party may be assessed attorney’s fees equivalent
to ten percent of the amount of wages recovered. 

b. It shall be unlawful for any person to demand or accept, in any judicial or administrative proceedings for
the recovery of wages, attorney’s fees which exceed ten percent of the amount of wages recovered.
 FIRST DIVISION 



[G.R. Nos. 178222-23 : September 29, 2010] 



MANILA MINING CORP. EMPLOYEES ASSOCIATION-FEDERATION OF FREE WORKERS CHAPTER,
SAMUEL G. ZUÑIGA, IN HIS CAPACITY AS PRESIDENT, PETITIONERS, VS. MANILA MINING CORP.
AND/OR ARTEMIO F. DISINI, PRESIDENT, RENE F. CHANYUNGCO, (SVP-TREASURER), RODOLFO
S. MIRANDA, (VP-CONTROLLER), VIRGILIO MEDINA (VP), ATTY. CRISANTO MARTINEZ (HRD),
NIGEL TAMLYN (RESIDENT MANAGER), BRYAN YAP (VP), FELIPE YAP (CHAIRMAN OF THE
BOARD), AND THE NATIONAL LABOR RELATIONS COMMISSION (FIRST DIVISION),
RESPONDENTS.



DECISION

PEREZ, J.:

This petition for review on certiorari seeks a reversal of the 30 June 2006 Decision[1] of the Court of Appeals
in CA-G.R. SP No. 86073 and its Resolution[2] in the same case dated 30 May 2007.



Respondent Manila Mining Corporation (MMC) is a publicly-listed corporation engaged in large-scale mining
for gold and copper ore. MMC is required by law to maintain a tailings containment facility to store the waste
material generated by its mining operations. Consequently, MMC constructed several tailings dams to treat
and store its waste materials. One of these dams was Tailings Pond No. 7 (TP No. 7), which was constructed
in 1993 and was operated under a permit issued by the Department of Environment and Natural Resources
(DENR), through its Environmental Management Bureau (EMB) in Butuan City, Agusan del Norte.[3]



On 10 January 2000, eleven (11) rank-and-file employees of MMC, who later became complainants before
the labor arbiter, attended the organizational meeting of MMC-Makati Employees Association-Federation of
Free Workers Chapter (Union). On 3 March 2000, the Union filed with the Department of Labor and
Employment (DOLE) all the requirements for its registration. The Union acquired its legitimate registration
status on 30 March 2000. Subsequently, it submitted letters to MMC relating its intention to bargain
collectively. On 11 July 2001, the Union submitted its Collective Bargaining Agreement (CBA) proposal to
MMC.



Upon expiration of the tailings permit on 25 July 2001, DENR-EMB did not issue a permanent permit due to
the inability of MMC to secure an Environmental Compliance Certificate (ECC). An essential component of an
ECC is social acceptability or the consent of the residents in the community to allow TP No. 7 to operate,
which MMC failed to obtain.[4] Hence, it was compelled to temporarily shut down its mining operations,
resulting in the temporary lay-off of more than 400 employees in the mine site.



On 30 July 2001, MMC called for the suspension of negotiations on the CBA with the Union until resumption
of mining operations.[5]



Among the employees laid-off, complainants Samuel Zuñiga, Myrna Maquio, Doroteo Torre, Arsenio Mark
Perez, Edmundo Galvez, Diana Ruth Rellores, Jonathan Araneta, Teresita Lagman, Reynaldo Anzures,
Gerardo Opena, and Edwin Tuazon, together with the Union filed a complaint before the labor arbiter[6] on
even date praying for reinstatement, recognition of the Union as the sole and exclusive representative of its
rank-and-file employees, and payment of moral and exemplary damages and attorney's fees.[7]



In their Position Paper,[8] complainants challenged the validity of their lay-off on the averment that MMC was
not suffering from business losses. They alleged that MMC did not want to bargain collectively with the
Union, so that instead of submitting their counterproposal to the CBA, MMC decided to terminate all union
officers and active members. Petitioners questioned the timing of their lay-off, and alleged that first, there
was no showing that cost-cutting measures were taken by MMC; second, no criteria were employed in
choosing which employees to lay-off; and third, the individuals laid-off were those who signed the
attendance sheet of the union organizational meeting. Petitioners likewise claimed that they were denied
due process because they were not given a 30-day notice informing them of the lay-off. Neither was the
DOLE informed of this lay-off, as mandated by law.[9]



Respondents justified the temporary lay-off as bona fide in character and a valid management prerogative
pending the issuance of the permit to continuously operate TP No. 7.



The labor arbiter ruled in favor of MMC and held that the temporary shutdown of the mining operation, as
well as the temporary lay-off of the employees, is valid.[10]



On appeal, the National Labor Relations Commission (NLRC) modified the judgment of the labor arbiter and
ordered the payment of separation pay equivalent to one month pay for every year of service. It
ratiocinated that the temporary lay-off, which exceeded more than six (6) months, had the effect of
severance of the employer-employee relationship. The dispositive portion of the Decision read:

WHEREFORE, the assailed decision is, as it is hereby, Vacated and Set Aside and a new one entered ordering
respondent Manila Mining Corporation to pay the individual complainants their separation pay computed as
follows:

1. Samuel G. [Z]uñiga From Feb. 1, 1995 to

July 27, 2001 = 7 yrs.
P14,300/mo.
P14,300 x 7 yrs. x ½ P 50,050.00
2. Myrna Maquio From March 1992 to
July 27, 2001 = 9 yrs.
P14,000/mo.
P14,000 x 9 yrs. x ½ P 63,000.00
3. Doroteo J. Torre From July 1983 to
July 27, 2001 = 18 yrs.
P10,000/mo.
P10,000 x 18 yrs. x ½ P 90,000.00
4. Arsenio Mark M. Perez From June 1996 to
July 27, 2001 = 5 yrs.
P9,500/mo.
P9,500 x 5 yrs. x ½ P 23,750.00
5. Edmundo M. Galvez From June 1997 to
July 27, 2001 = 4 yrs.
P9,500/mo.
P9,500 x 4 yrs. x ½ P 19,000.00
 6. Jonathan Araneta From March 1992 to
July 27, 2001 = 9 yrs.
P15,500/mo.
P15,500 x 9 yrs. x ½ P 69,750.00
7. Teresita D. Lagman From August 1980 to
July 27, 2001 = 20 yrs.
P10,900/mo.
P10,900 x 20 yrs. x ½ P109,000.00
8. Gerardo Opena From October 1997 to
July 27, 2001 = 4 yrs.
P8,250/mo.
P8,250 x 4 yrs. x ½ P 16,500.00
9. Edwin Tuazon From August 1994 to
July 27, 2001 = 8 yrs.
P7,000/mo.
P7,000 x 8 yrs. x ½ P 28,000.00
GRAND TOTAL P469,050.00



In addition respondent company is hereby ordered to pay attorney's fees to complainants equivalent to
10% of the award. [11]



In an Order[12] dated 31 May 2004, the NLRC affirmed its Resolution.



Dissatisfied, both parties separately filed their petitions for certiorari with the Court of Appeals, docketed as
CA-G.R. SP No. 86073 and CA G.R. SP No. 86163.



The two petitions were consolidated upon motion by MMC in a Resolution dated 3 February 2005.



In its Decision dated 30 June 2006, the Court of Appeals modified the NLRC ruling, thus:

WHEREFORE, the instant petition is partially GRANTED and the challenged Resolution dated August 29, 2003
of public respondent National Labor Relations Commission in NLRC NCR CA No. 033111-(CA No. 033111-02)
is MODIFIED insofar as it holds MMC liable to pay the Union attorney's fees equivalent to 10% of the award,
which portion of the questioned decision is now SET ASIDE.



The monetary award of separation pay is maintained, but is MODIFIED from one (1) month pay for every
year of service to ONE-HALF (1/2) MONTH PAY for every year of service, a fraction of at least six (6) months
being considered as one (1) whole year.[13]


Both parties filed their respective motions for reconsideration but in a Resolution dated 30 May 2007, the
Court of Appeals denied the motions for lack of merit.[14]



Only the Union elevated the case to this Court via the instant petition for review on certiorari. The Union
attributes bad faith on the part of MMC in implementing the temporary lay-off resulting in the complainants'
constructive dismissal. The Union alleges that the failure to obtain a permit to operate TP No. 7 is largely
due to failure on the part of MMC to comply with the DENR-EMB's conditions.[15]



The Union claims that the temporary lay-off was effected without any proper notice to the DOLE as
mandated by Article 283 of the Labor Code. It further maintains that MMC did not observe the
jurisprudential criteria in the selection of the employees to be laid-off.[16]



The Union insists that MMC is guilty of unfair labor practice when it unilaterally suspended the negotiation
for a CBA. The Union avers that the lay-off and subsequent termination of complainants were due to the
formation of the union at MMC.[17]



MMC defends the temporary lay-off of the employees as valid and done in the exercise of management
prerogative. It concedes that upon expiration of the 6-month period, coupled with losses suffered by MMC,
the complainants were constructively dismissed. However, MMC takes exception to the application of Article
286 of the Labor Code in that the 6-month period cannot and will not apply to the instant case in order to
consider the employees terminated and to support the payment of separation pay. MMC explains that the 6-
month period does not refer to a situation where the employer does not have any control over the nature,
extent and period of the temporary suspension of operations. MMC adds that the suspension of MMC's
operations is left primarily to the discretion of the DENR-EMB, which has the authority to issue MMC's permit
to operate TP No. 7.[18]



MMC further submits that where the closure is due to serious business losses, such as in this case where the
aggregate losses amounted to over P880,000,000.00, the law does not impose any obligation upon the
employer to pay separation benefits.[19]



With respect to the charge of unfair labor practice, MMC avers that it merely deferred responding to the
Union's letter-proposal until the resumption of its mining operations. It went to claim further that the
employment relationship between the parties was suspended at the time the request to bargain was made.
[20]




The issue of MMC's temporary suspension of business operations resulting in the temporary lay-off of some
of its employees was squarely addressed by the labor tribunals and the Court of Appeals. They sustained in
unison the validity of the temporary suspension, as well as the temporary lay-off.



We agree. The lay-off is neither illegal nor can it be considered as unfair labor practice.



Despite all efforts exerted by MMC, it did not succeed in obtaining the consent of the residents of the
community where the tailings pond would operate, one of the conditions imposed by DENR-EMB in granting
its application for a permanent permit. It is precisely MMC's faultless failure to secure a permit which
caused the temporary shutdown of its mining operations. As aptly put by the Court of Appeals:

The evidence on record indeed clearly shows that MMC's suspension of its mining operations was bonafide
and the reason for such suspension was supported by substantial evidence. MMC cannot conduct mining
operations without a tailings disposal system. For this purpose, MMC operates TP No. 7 under a valid permit
from the Department of Environment and Natural Resources (DENR) through its Environmental Management
Bureau (EMB). In fact, a "Temporary Authority to Construct and Operate" was issued on January 25, 2001
in favor of MMC valid for a period of six (6) months or until July 25, 2001. The NLRC did not dispute MMC's
claim that it had timely filed an application for renewal of its permit to operate TP No. 7 but that the renewal
permit was not immediately released by the DENR-EMB, hence, MMC was compelled to temporarily
shutdown its milling and mining operations. Here, it is once apparent that the suspension of MMC's
mining operations was not due to its fault nor was it necessitated by financial reasons. Such
suspension was brought about by the non-issuance of a permit for the continued operation of TP No. 7
without which MMC cannot resume its milling and mining operations. x x x.[21] [Emphasis supplied.]


Unfair labor practice cannot be imputed to MMC since, as ruled by the Court of Appeals, the call of MMC for a
suspension of the CBA negotiations cannot be equated to "refusal to bargain."



Article 252 of the Labor Code defines the phrase "duty to bargain collectively," to wit:

ARTICLE 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 with respect to wages, hours of work and all other terms and
conditions of employment including proposals for adjusting any grievances or questions arising under such
agreements [and executing a contract incorporating such agreements] if requested by either party but such
duty does not compel any party to agree to a proposal or to make any concession.


For a charge of unfair labor practice to prosper, it must be shown that the employer was motivated by ill-will,
bad faith or fraud, or was oppressive to labor. The employer must have acted in a manner contrary to
morals, good customs, or public policy causing social humiliation, wounded feelings or grave anxiety. While
the law makes it an obligation for the employer and the employees to bargain collectively with each other,
such compulsion does not include the commitment to precipitately accept or agree to the proposals of the
other. All it contemplates is that both parties should approach the negotiation with an open mind and make
reasonable effort to reach a common ground of agreement.[22]



The Union based its contention on the letter request by MMC for the suspension of the collective bargaining
negotiations until it resumes operations.[23] Verily, it cannot be said that MMC deliberately avoided the
negotiation. It merely sought a suspension and in fact, even expressed its willingness to negotiate once the
mining operations resume. There was valid reliance on the suspension of mining operations for the
suspension, in turn, of the CBA negotiation. The Union failed to prove bad faith in MMC's actuations.



Even as we declare the validity of the lay-off, we cannot say that MMC has no obligation at all to the laid-off
employees. The validity of its act of suspending its operations does not excuse it from paying separation pay.



MMC seeks refuge in Article 286 which provides:

ART. 286. When employment not deemed terminated. ─ The bona fide suspension of the operation
of a business or undertaking for a period not exceeding six (6) months, or the fulfillment by the employee of
a military or civic duty shall not terminate employment. In all such cases, the employer shall reinstate the
employee to his former position without loss of seniority rights if he indicates his desire to resume his work
not later than one (1) month from the resumption of operations of his employer or from his relief from the
military or civic duty.


Article 286 of the Labor Code allows the bona fide suspension of operations for a period not exceeding six
(6) months. During the suspension, an employee is not deemed terminated. As a matter of fact, the
employee is entitled to be reinstated once the employer resumes operations within the 6-month period.
However, Article 286 is silent with respect to the rights of the employee if the suspension of operations lasts
for more than 6 months. Thus is bred the issue regarding the responsibility of MMC toward its employees. 



MMC subscribes to the view that for purposes of determining employer responsibility, an employment should
likewise not be deemed terminated, should the suspension of operation go beyond six (6) months as long as
the continued suspension is due, as in this case, to a cause beyond the control of the employer.



We disagree.



As correctly elucidated upon by the Court of Appeals:

We observe that MMC was forced by the circumstances, hence, it resorted to a temporary suspension of its
mining and milling operations. It is clear that MMC had no choice. It would be well to reiterate at this
juncture that the reason for such suspension cannot be attributed to DENR-EMB. It is thus, evident, that the
MMC declared temporary suspension of operations to avert further losses.[24]


The decision to suspend operation ultimately lies with the employer, who in its desire to avert possible
financial losses, declares, as here, suspension of operations.



Article 283 of the Labor Code applies to MMC and it provides:

ARTICLE 283.Closure of establishment and reduction of personnel. - The employer may also terminate the
employment of any employee due to the installation of labor-saving devices, redundancy, retrenchment to
prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing
is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers
and the Ministry of Labor and Employment at least one (1) month before the intended date thereof. In case
of termination due to the installation of labor-saving devices or redundancy, the worker affected thereby
shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1)
month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in
cases of closures or cessation of operations of establishment or undertaking not due to serious business
losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half
(1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be
considered one (1) whole year.


Said provision is emphatic that an employee, who was dismissed due to cessation of business operation, is
entitled to the separation pay equivalent to one (1) month pay or at least one-half (1/2) month pay for
every year of service, whichever is higher. And it is jurisprudential that separation pay should also be paid
to employees even if the closure or cessation of operations is not due to losses.[25]



The Court is not impressed with the claim that actual severe financial losses exempt MMC from paying
separation benefits to complainants. In the first place, MMC did not appeal the decision of the Court of
Appeals which affirmed the NLRC's award of separation pay to complainants. MMC's failure had the effect of
making the awards final so that MMC could no longer seek any other affirmative relief. In the second place,
the non-issuance of a permit forced MMC to permanently cease its business operations, as confirmed by the
Court of Appeals. Under Article 283, the employer can lawfully close shop anytime as long as cessation of or
withdrawal from business operations is bona fide in character and not impelled by a motive to defeat or
circumvent the tenurial rights of employees, and as long as he pays his employees their termination pay in
the amount corresponding to their length of service.[26] The cessation of operations, in the case at bar is of
such nature. It was proven that MMC stopped its operations precisely due to failure to secure permit to
operate a tailings pond. Separation pay must nonetheless be given to the separated employees.



Finding no cogent reason to disturb its ruling, we affirm the Decision of the Court of Appeals.



BASED ON THE FOREGOING, the petition is DENIED. The Decision of the Court of Appeals
is AFFIRMED. No costs.



SO ORDERED. 



Corona, C.J., (Chairperson), Velasco, Jr., Leonardo-De Castro, and Del Castillo, JJ., concur.
Endnotes:

[1]
Penned by Associate Justice Bienvenido I. Reyes with Associate Justices Regalado E. Maambong and
Enrico A. Lanzanas, concurring. Rollo, pp. 39-59



[2]
Id. at 61-64.



[3]
Id. at 482.



[4]
Id. at 355.



[5]
CA rollo, p. 147.



[6]
Florentino R. Darlucio.



[7]
Records, p. 74.



[8]
CA rollo, pp. 87-402.



[9]
Id. at 86-92.



[10]
Rollo, p. 73.



[11]
Id. at 117-119.



[12]
Id. at 162-163.



[13]
Id. at 59.



[14]
Id. at 63-64.



[15]
Id. at 15.



[16]
Id. at 16.



[17]
Id. at 30.



[18]
Id. at 364.



[19]
Id. at 375.



[20]
Id. at 384.



[21]
Id. at 48-49.



[22]
Union of Filipro Employer-Drug, Food and Allied Industries Unions-Kilusang Mayo Uno v. Nestle
Philippines, Incorporated, G.R. Nos. 158930-31, 3 March 2008, 547 SCRA 323, 333-334.



[23]
CA rollo, p. 147.



[24]
Rollo, pp. 53-54.



[25]
Eastridge Golf Club, Inc. v. Eastridge Golf Club, Inc. Labor Union-Super, G.R. No. 166760, 22 August
2008, 563 SCRA 93, 106-107; J.A.T. General Services v. National Labor Relations Commission, G.R. No.
148340, 26 January 2004, 421 SCRA 78, 89-90.



[26]
Industrial Timber Corporation v. Ababon, G.R. No. 164518,
 SECOND DIVISION
[G.R. NO. 176249 : November 27, 2009]
FVC LABOR UNION-PHILIPPINE TRANSPORT AND GENERAL WORKERS ORGANIZATION (FVCLU-
PTGWO), Petitioner, v. SAMA-SAMANG NAGKAKAISANG MANGGAGAWA SA FVC-SOLIDARITY OF
INDEPENDENT AND GENERAL LABOR ORGANIZATIONS (SANAMA-FVC-SIGLO),Respondent.
DECISION
BRION, J.:
We pass upon the Petition for Review on Certiorari under Rule 45 of the Rules of Court1 filed by FVC Labor
Union Philippine Transport and General Workers Organization (FVCLU-PTGWO) to challenge the Court of
Appeals' (CA) decision of July 25, 20062 and its resolution rendered on January 15, 20073 in C.A. G.R. SP
No. 83292.4
THE ANTECEDENTS
The facts are undisputed and are summarized below.
On December 22, 1997, the petitioner FVCLU-PTGWO - the recognized bargaining agent of the rank-and-file
employees of the FVC Philippines, Incorporated (company) - signed a five-year collective bargaining
agreement (CBA) with the company. The five-year CBA period was from February 1, 1998 to January 30,
2003.5 At the end of the 3rd year of the five-year term and pursuant to the CBA, FVCLU-PTGWO and the
company entered into the renegotiation of the CBA and modified, among other provisions, the CBA's
duration. Article XXV, Section 2 of the renegotiated CBA provides that "this re-negotiation agreement shall
take effect beginning February 1, 2001 and until May 31, 2003" thus extending the original five-year period
of the CBA by four (4) months.
On January 21, 2003, nine (9) days before the January 30, 2003 expiration of the originally-agreed five-year
CBA term (and four [4] months and nine [9] days away from the expiration of the amended CBA period),
the respondent Sama-Samang Nagkakaisang Manggagawa sa FVC-Solidarity of Independent and General
Labor Organizations (SANAMA-SIGLO) filed before the Department of Labor and Employment (DOLE) a
petition for certification election for the same rank-and-file unit covered by the FVCLU-PTGWO CBA. FVCLU-
PTGWO moved to dismiss the petition on the ground that the certification election petition was filed outside
the freedom period or outside of the sixty (60) days before the expiration of the CBA on May 31, 2003.
Action on the Petition and Related Incidents
On June 17, 2003, Med-Arbiter Arturo V. Cosuco dismissed the petition on the ground that it was filed
outside the 60-day period counted from the May 31, 2003 expiry date of the amended CBA.6 SANAMA-
SIGLO appealed the Med-Arbiter's Order to the DOLE Secretary, contending that the filing of the petition on
January 21, 2003 was within 60-days from the January 30, 2003 expiration of the original CBA term.
DOLE Secretary Patricia A. Sto. Tomas sustained SANAMA-SIGLO's position, thereby setting aside the
decision of the Med-Arbiter.7 She ordered the conduct of a certification election in the company. FVCLU-
PTGWO moved for the reconsideration of the Secretary's decision.
On November 6, 2003, DOLE Acting Secretary Manuel G. Imson granted the motion; he set aside the August
6, 2003 DOLE decision and dismissed the petition as the Med-Arbiter's Order of June 17, 2003 did.8 The
Acting Secretary held that the amended CBA (which extended the representation aspect of the original CBA
by four [4] months) had been ratified by members of the bargaining unit some of whom later organized
themselves as SANAMA-SIGLO, the certification election applicant. Since these SANAMA-SIGLO members
fully accepted and in fact received the benefits arising from the amendments, the Acting Secretary
rationalized that they also accepted the extended term of the CBA and cannot now file a petition for
certification election based on the original CBA expiration date.
SANAMA-SIGLO moved for the reconsideration of the Acting Secretary's Order, but Secretary Sto. Tomas
denied the motion in her Order of January 30, 2004.9
SANAMA-SIGLO sought relief from the CA through a petition for certiorari under Rule 65 of the Rules of
Court based on the grave abuse of discretion the Labor Secretary committed when she reversed her earlier
decision calling for a certification election. SANAMA-SIGLO pointed out that the Secretary's new ruling is
patently contrary to the express provision of the law and established jurisprudence.
THE CA DECISION
The CA found SANAMA-SIGLO's petition meritorious on the basis of the applicable law10 and the rules,11as
interpreted in the congressional debates. It set aside the challenged DOLE Secretary decisions and
reinstated her earlier ruling calling for a certification election. The appellate court declared:
It is clear from the foregoing that while the parties may renegotiate the other provisions (economic and non-
economic) of the CBA, this should not affect the five-year representation aspect of the original CBA. If the
duration of the renegotiated agreement does not coincide with but rather exceeds the original five-year
term, the same will not adversely affect the right of another union to challenge the majority status of the
incumbent bargaining agent within sixty (60) days before the lapse of the original five (5) year term of the
CBA. In the event a new union wins in the certification election, such union is required to honor and
administer the renegotiated CBA throughout the excess period.
FVCLU-PTGWO moved to reconsider the CA decision but the CA denied the motion in its resolution of
January 15, 2007.12 With this denial, FVCLU-PTGWO now comes before us to challenge the CA rulings.13It
argues that in light of the peculiar attendant circumstances of the case, the CA erred in strictly applying
Section 11 (11b), Rule XI, Book V of the Omnibus Rules Implementing the Labor Code, as amended by
Department Order No. 9, s. 1997.14
Apparently, the "peculiar circumstances" the FVCLU-PTGWO referred to relate to the economic and other
provisions of the February 1, 1998 to January 30, 2003 CBA that it renegotiated with the company. The
renegotiated CBA changed the CBA's remaining term from February 1, 2001 to May 31, 2003. To FVCLU-
PTGWO, this extension of the CBA term also changed the union's exclusive bargaining representation status
and effectively moved the reckoning point of the 60-day freedom period from January 30, 2003 to May 30,
2003. FVCLU-PTGWO thus moved to dismiss the petition for certification election filed on January 21, 2003
(9 days before the expiry date on January 30, 2003 of the original CBA) by SANAMA-SIGLO on the ground
that the petition was filed outside the authorized 60-day freedom period.
It also submits in its petition that the SANAMA-SIGLO is estopped from questioning the extension of the CBA
term under the amendments because its members are the very same ones who approved the amendments,
including the expiration date of the CBA, and who benefited from these amendments.
Lastly, FVCLU-PTGWO posits that the representation petition had been rendered moot by a new CBA it
entered into with the company covering the period June 1, 2003 to May 31, 2008.15 ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

Required to comment by the Court16 and to show cause for its failure to comply,17 SANAMA-SIGLO
manifested on October 10, 2007 that: since the promulgation of the CA decision on July 25, 2006 or three
years after the petition for certification election was filed, the local leaders of SANAMA-SIGLO had stopped
reporting to the federation office or attending meetings of the council of local leaders; the SANAMA-SIGLO
counsel, who is also the SIGLO national president, is no longer in the position to pursue the present case
because the local union and its leadership, who are principals of SIGLO, had given up and abandoned their
desire to contest the representative status of FVCLU-PTGWO; and a new CBA had already been signed by
FVCLU-PTGWO and the company.18 Under these circumstances, SANAMA-SIGLO contends that pursuing the
case has become futile, and accordingly simply adopted the CA decision of July 25, 2006 as its position; its
counsel likewise asked to be relieved from filing a comment in the case. We granted the request for relief
and dispensed with the filing of a comment.19
THE COURT'S RULING
While SANAMA-SIGLO has manifested its abandonment of its challenge to the exclusive bargaining
representation status of FVCLU-PTGWO, we deem it necessary in the exercise of our discretion to resolve the
question of law raised since this exclusive representation status issue will inevitably recur in the future as
workplace parties avail of opportunities to prolong workplace harmony by extending the term of CBAs
already in place.20
The legal question before us centers on the effect of the amended or extended term of the CBA on the
exclusive representation status of the collective bargaining agent and the right of another union to ask for
certification as exclusive bargaining agent. The question arises because the law allows a challenge to the
exclusive representation status of a collective bargaining agent through the filing of a certification election
petition only within 60 days from the expiration of the five-year CBA.
Article 253-A of the Labor Code covers this situation and it provides:
Terms of a collective bargaining agreement. - Any Collective Bargaining Agreement that the parties may
enter into, shall, insofar as the representation aspect is concerned, be for a term of five (5) years. No
petition questioning the majority status of the incumbent bargaining agent shall be entertained and no
certification election shall be conducted by the Department of Labor and Employment outside of the sixty
day period immediately before the date of expiry of such five-year term of the Collective Bargaining
Agreement. All other provisions of the Collective Bargaining Agreement shall be renegotiated not later than
three (3) years after its execution.
Any agreement on such other provisions of the Collective Bargaining Agreement entered into within six (6)
months from the date of expiry of the term of such other provisions as fixed in such Collective Bargaining
Agreement, shall retroact to the day immediately following such date. If any such agreement is entered into
beyond six months, the parties shall agree on the duration of retroactivity thereof. In case of a deadlock in
the renegotiation of the collective bargaining agreement, the parties may exercise their rights under this
Code.
This Labor Code provision is implemented through Book V, Rule VIII of the Rules Implementing the Labor
Code21 which states:
Sec. 14. Denial of the petition; grounds. - The Med-Arbiter may dismiss the petition on any of the following
grounds:
x x x
(b) the petition was filed before or after the freedom period of a duly registered collective bargaining
agreement; provided that the sixty-day period based on the original collective bargaining agreement shall
not be affected by any amendment, extension or renewal of the collective bargaining
agreement(underscoring supplied).
x x x
The root of the controversy can be traced to a misunderstanding of the interaction between a union's
exclusive bargaining representation status in a CBA and the term or effective period of the CBA.
FVCLU-PTGWO has taken the view that its exclusive representation status should fully be in step with the
term of the CBA and that this status can be challenged only within 60 days before the expiration of this
term. Thus, when the term of the CBA was extended, its exclusive bargaining status was similarly extended
so that the freedom period for the filing of a petition for certification election should be counted back from
the expiration of the amended CBA term.
We hold this FVCLU-PTGWO position to be correct, but only with respect to the original five-year term of the
CBA which, by law, is also the effective period of the union's exclusive bargaining representation status.
While the parties may agree to extend the CBA's original five-year term together with all other CBA
provisions, any such amendment or term in excess of five years will not carry with it a change in the union's
exclusive collective bargaining status. By express provision of the above-quoted Article 253-A, the exclusive
bargaining status cannot go beyond five years and the representation status is a legal matter not for the
workplace parties to agree upon. In other words, despite an agreement for a CBA with a life of more than
five years, either as an original provision or by amendment, the bargaining union's exclusive bargaining
status is effective only for five years and can be challenged within sixty (60) days prior to the expiration of
the CBA's first five years. As we said in San Miguel Corp. Employees Union PTGWO, et al. v. Confesor, San
Miguel Corp., Magnolia Corp. and San Miguel Foods, Inc.,22 where we cited the Memorandum of the
Secretary of Labor and Employment dated February 24, 1994:
In the event however, that the parties, by mutual agreement, enter into a renegotiated contract with a term
of three (3) years or one which does not coincide with the said five-year term and said agreement is ratified
by majority of the members in the bargaining unit, the subject contract is valid and legal and therefore,
binds the contracting parties. The same will however not adversely affect the right of another union to
challenge the majority status of the incumbent bargaining agent within sixty (60) days before the lapse of
the original five (5) year term of the CBA.
In the present case, the CBA was originally signed for a period of five years, i.e., from February 1, 1998 to
January 30, 2003, with a provision for the renegotiation of the CBA's other provisions at the end of the 3rd
year of the five-year CBA term. Thus, prior to January 30, 2001 the workplace parties sat down for
renegotiation but instead of confining themselves to the economic and non-economic CBA provisions, also
extended the life of the CBA for another four months, i.e., from the original expiry date on January 30, 2003
to May 30, 2003.
As discussed above, this negotiated extension of the CBA term has no legal effect on the FVCLU-PTGWO's
exclusive bargaining representation status which remained effective only for five years ending on the original
expiry date of January 30, 2003. Thus, sixty days prior to this date, or starting December 2, 2002, SANAMA-
SIGLO could properly file a petition for certification election. Its petition, filed on January 21, 2003 or nine
(9) days before the expiration of the CBA and of FVCLU-PTGWO's exclusive bargaining status, was
seasonably filed.
We thus find no error in the appellate court's ruling reinstating the DOLE order for the conduct of a
certification election. If this ruling cannot now be given effect, the only reason is SANAMA-SIGLO's own
desistance; we cannot disregard its manifestation that the members of SANAMA themselves are no longer
interested in contesting the exclusive collective bargaining agent status of FVCLU-PTGWO. This recognition is
fully in accord with the Labor Code's intent to foster industrial peace and harmony in the workplace.
WHEREFORE, premises considered, we AFFIRM the correctness of the challenged Decision and Resolution of
the Court of Appeals and accordingly DISMISS the petition, but nevertheless DECLARE that no certification
election, pursuant to the underlying petition for certification election filed with the Department of Labor and
Employment, can be enforced as this petition has effectively been abandoned.
SO ORDERED.
Endnotes:

!
1
Rollo, pp. 3-17.
2
Id. at 69-85. Penned by Associate Justice Mariflor P. Punzalan Castillo and concurred in by Associate Justice
Remedios A. Salazar Fernando and Associate Justice Noel G. Tijam.
3
Id. at 94-96.
4
Sama-Samang Nagkakaisang Manggagawa sa FVC-Solidarity of Independent and General Labor
Organizations (SANAMA-FVC-SIGLO) v. Hon. Patricia Sto. Tomas, Secretary of Labor and Employment, FVC
Labor Union-PTGWO and FVC Philippines.
5
Petition, Annex "A"; rollo, pp. 19-35.
6
Petition, Annex "C"; id. at 51-55.
7
Dated August 6, 2003; Petition, Annex "D"; id. at 56-60.
8
Petition, Annex "E"; id. at 61-64.
9
Petition, Annex "F"; id. at 65-67.
10
LABOR CODE, Article 253-A.
11
Omnibus Rules Implementing the Labor Code, Book V, Rule XI, Section 11(11b).
12
Supra note 3.
13
Supra note 1.
14
Supra note 11.
15
Petition, Annex "J"; rollo, pp. 97-120.
16
Resolution dated February 26, 2007; id. at 127.
17
Resolution dated July 16, 2007; id. at 138.
18
Id. at 140-142.
19
Resolution dated November 19, 2007; id. at 144-145.
20
Caneland Sugar Corporation v. Alon, et al., G.R. No. 142896, September 12, 2007, 533 SCRA 29; Manalo
v. Calderon, G.R. No. 178920, October 15, 2007, 536 SCRA 2007; See Acop v. Guingona, G.R. No. 134855,
July 2, 2002, 383 SCRA 577; 433 Phil 62 (2002).
21
Supra note 11.
22
G.R. No. 111262, September 19, 1996, 262 SCRA 81.