POWERS AND DUTIES – Part I Art 217

Art. 217. Jurisdiction of the Labor Arbiters and the Commission.

a. Except as otherwise provided under this Code, the Labor Arbiters shall have original and
exclusive jurisdiction to hear and decide, within thirty (30) calendar days after the submission
of the case by the parties for decision without extension, even in the absence of stenographic
notes, the following cases involving all workers, whether agricultural or non-agricultural:
 

1. Unfair labor practice cases;

 

2. Termination disputes;
 

3. If accompanied with a claim for reinstatement, those cases that workers may file
involving wages, rates of pay, hours of work and other terms and conditions of
employment;
 

4. Claims for actual, moral, exemplary and other forms of damages arising from the
employer-employee relations;
 

5. Cases arising from any violation of Article 264 of this Code, including questions
involving the legality of strikes and lockouts; and
 

6. Except claims for Employees Compensation, Social Security, Medicare and maternity
benefits, all other claims arising from employer-employee relations, including those of
persons in domestic or household service, involving an amount exceeding five
thousand pesos (P5,000.00) regardless of whether accompanied with a claim for
reinstatement.
 

b. The Commission shall have exclusive appellate jurisdiction over all cases decided by Labor
Arbiters.
 

c. Cases arising from the interpretation or implementation of collective bargaining agreements

and those arising from the interpretation or enforcement of company personnel policies shall
be disposed of by the Labor Arbiter by referring the same to the grievance machinery and
voluntary arbitration as may be provided in said agreements. (As amended by Section 9,
Republic Act No. 6715, March 21, 1989)
G.R. No. 117650 March 7, 1996

SULPICIO LINES, INC., petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION and JAIME CAGATAN, respondents.

KAPUNAN, J.:p

Petitioner Sulpicio Lines, Inc., owner of MV Cotabato Princess, on January 15, 1992 dismissed private
respondent Jaime Cagatan, a messman of the said vessel, allegedly for being absent without leave for a
"prolonged" period of six (6) months.

As a result of his dismissal, the private respondent filed a complaint for illegal dismissal before the
National Labor Relations Commission (NLRC) through its National Capital Region Arbitration Branch in
Manila, docketed as NLRC-NCR Case No. 00-06-3163-92.1

Responding to the said complaint, petitioner, on June 25, 1992, filed a Motion to Dismiss on the ground
of improper venue, stating, among other things, that the case for illegal dismissal should have been
lodged with the NLRC's Regional Branch No. VII (Cebu), as its main office was located in Cebu City.2

In an Order dated August 21, 1992 Labor Arbiter Arthur L. Amansec of the NLRC-NCR denied petitioner's
Motion to Dismiss, holding that:

Considering that the complainant is a ship steward, traveled on board respondent's ship along the
Manila-Enstancia-lloilo-Zamboanga-Cotabato vice-versa route, Manila Can be said to be part of the
complainant's territorial workplace.3

The aforequoted Order was seasonably appealed to the NLRC by petitioner. On February 28, 1994,
respondent NLRC found petitioner's appeal unmeritorious and sustained the Labor Arbiter's August 21,
1992 ruling, explaining that "under the New NLRC Rules, the Commission or the Labor Arbiter before
whom the case is pending may order a change of venue."4 Finding no grave abuse of discretion in the
Labor Arbiter's assailed Order, respondent NLRC emphasized that:

[T]he complainant instituted the Action in Manila where he resides. Hence, we see no grave abuse of
discretion on the part of the labor arbiter in denying the respondent's Motion to Dismiss as We find
support in the basic principle that the State shall afford protection to labor and that the NLRC is not
bound by strict technical rules of procedure.5

Undaunted, petitioner sought a reconsideration of the above Order, which the public respondent denied
in its Resolution dated July 22, 1994.6 Consequently, petitioner comes to this Court for relief, in the form
of a Special Civil Action for Certiorari under Rule 65 of the Rules of Court, contending that public
respondent NLRC acted with grave abuse of discretion amounting to lack or excess of jurisdiction when
it issued its assailed rulings.7

It is petitioner's principal contention that a ship or vessel as workplace is an extension of its homeport or
principal place of business, and that "being part of the territory of the homeport, (such) vessel is
governed to a large extent by the laws and is under the jurisdiction of the homeport.8 Based on this
submission, petitioner avers that its vessel-as-workplace is "under the territorial jurisdiction of the
Regional Arbitration branch where (its) . . . principal office is located," which is Branch VII, located in
Cebu City.9

We disagree.

As early as 1911, this Court held that the question of venue essentially relates to the trial and touches
more upon the convenience of the parties, rather than upon the substance and merits of the case.10 Our
permissive rules underlying provisions on venue are intended to assure convenience for the plaintiff and
his witnesses and to promote the ends of justice. This axiom all the more finds applicability in cases
involving labor and management because of the principle, paramount in our jurisdiction, that the State
shall afford full protection to labor.11

Even in cases where venue has been stipulated by the parties by contract, this Court has not hesitated to
set aside agreements on venue if the same would lead to a situation so grossly inconvenient to one
party as to virtually negate his claim. In Sweet Lines vs.  Teves,12 involving a contract of adhesion, we held
that:

An agreement will not be held valid where it practically negates the action of the claimants, such as the
private respondents herein. The philosophy underlying the provisions on transfer of venue of actions is
the convenience of the plaintiffs as well as his witnesses and to promote the ends of justice. Considering
the expense and trouble a passenger residing outside Cebu City would incur to prosecute a claim in the
City of Cebu, he would most probably decide not to file the action at all. The condition will thus defeat,
instead of enhance, the ends of justice. Upon the other hand, petitioner had branches or offices in the
respective ports of call of the vessels and can afford to litigate in any of these places. Hence, the filing of
the suit in the CFI of Misamis Oriental, as was done in the instant case will not cause inconvenience to,
much less prejudice petitioner.13

In the case at bench, it is not denied that while petitioner maintains its principal office in Cebu City, it
retains a major booking and shipping office in Manila from which it earns considerable revenue, and
from which it hires and trains a significant number of its workforce. Its virulent insistence on holding the
proceedings in the NLRC's regional arbitration branch in Cebu City is obviously a ploy to inconvenience
the private respondent, a mere steward who resides in Metro Manila, who would obviously not be able
to afford the frequent trips to Cebu City in order to follow up his case.

Even the provisions cited by petitioner in support of its contention that venue of the illegal dismissal
case lodged by private respondent is improperly laid, would not absolutely support his claim that
respondent NLRC acted with grave abuse of discretion in allowing the private respondent to file his case
with the NCR arbitration branch.

Section 1, Rule IV of the NLRC Rules of Procedure on Venue, provides that:

Sec. 1. Venue — (a) All cases in which Labor Arbiters have authority to hear and decide may be filed in
the Regional Arbitration Branch having jurisdiction the workplace of the complainant/petitioner.

This provision is obviously permissive, for the said section uses the word "may," allowing a different
venue when the interests of substantial justice demand a different one. In any case, as stated earlier, the
Constitutional protection accorded to labor is a paramount and compelling factor, provided the venue
chosen is not altogether oppressive to the employer.
Moreover, Section Rule IV of the 1990 NLRC Rules additionally provides that, "for purposes of venue,
workplace shall be understood as the place or locality where the employee is regularly assigned when
the cause of action arose." Since the private respondent's regular place of assignment is the vessel MV
Cotabato Princess which plies the Manila-Estancia-Iloilo-Zamboanga-Cotabato route, we are of the
opinion that Labor Arbiter Arthur L. Amansec was correct in concluding that Manila could be considered
part of the complainant's territorial workplace. Respondent NLRC, therefore, committed no grave abuse
of discretion in sustaining the labor arbiter's denial of herein petitioner's Motion to Dismiss.

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

SO ORDERED.
G.R. No. 154830             June 8, 2007

PIONEER CONCRETE PHILIPPINES, INC., PIONEER PHILIPPINES HOLDINGS, and PHILIP J.

KLEPZIG, petitioners,
vs.
ANTONIO D. TODARO, respondent.

DECISION

AUSTRIA-MARTINEZ, J.:

Before the Court is a Petition for Review on Certiorari seeking to annul and set aside the Decision1 of the
Court of Appeals (CA) dated October 31, 2000 in CA-G.R. SP No. 54155 and its Resolution2 of August 21,
2002 denying petitioners’ Motion for Reconsideration.

The factual and procedural antecedents of the case are as follows:

On January 16, 1998, herein respondent Antonio D. Todaro (Todaro) filed with the Regional Trial Court
(RTC) of Makati City, a complaint for Sum of Money and Damages with Preliminary Attachment against
Pioneer International Limited (PIL), Pioneer Concrete Philippines, Inc. (PCPI), Pioneer Philippines
Holdings, Inc. (PPHI), John G. McDonald (McDonald) and Philip J. Klepzig (Klepzig).3

In his complaint, Todaro alleged that PIL is a corporation duly organized and existing under the laws of
Australia and is principally engaged in the ready-mix concrete and concrete aggregates business; PPHI is
the company established by PIL to own and hold the stocks of its operating company in the Philippines;
PCPI is the company established by PIL to undertake its business of ready-mix concrete, concrete
aggregates and quarrying operations in the Philippines; McDonald is the Chief Executive of the
Hongkong office of PIL; and, Klepzig is the President and Managing Director of PPHI and PCPI; Todaro has
been the managing director of Betonval Readyconcrete, Inc. (Betonval), a company engaged in pre-
mixed concrete and concrete aggregate production; he resigned from Betonval in February 1996; in May
1996, PIL contacted Todaro and asked him if he was available to join them in connection with their
intention to establish a ready-mix concrete plant and other related operations in the Philippines; Todaro
informed PIL of his availability and interest to join them; subsequently, PIL and Todaro came to an
agreement wherein the former consented to engage the services of the latter as a consultant for two to
three months, after which, he would be employed as the manager of PIL's ready-mix concrete
operations should the company decide to invest in the Philippines; subsequently, PIL started its
operations in the Philippines; however, it refused to comply with its undertaking to employ Todaro on a
permanent basis.4

Instead of filing an Answer, PPHI, PCPI and Klepzig separately moved to dismiss the complaint on the
grounds that the complaint states no cause of action, that the RTC has no jurisdiction over the subject
matter of the complaint, as the same is within the jurisdiction of the NLRC, and that the complaint
should be dismissed on the basis of the doctrine of forum non conveniens.5

In its Order dated January 4, 1999, the RTC of Makati, Branch 147, denied herein petitioners' respective
motions to dismiss.6 Herein petitioners, as defendants, filed an Urgent Omnibus Motion7 for the
reconsideration of the trial court's Order of January 4, 1999 but the trial court denied it via its
Order8 dated June 3, 1999.
On August 3, 1999, herein petitioners filed a Petition for Certiorari with the CA.9 On October 31, 2000,
the CA rendered its presently assailed Decision denying herein petitioners' Petition for Certiorari.
Petitioners filed a Motion for Reconsideration but the CA denied it in its Resolution dated August 21,
2002.

Hence, herein Petition for Review on Certiorari based on the following assignment of errors:

A.

THE COURT OF APPEALS' CONCLUSION THAT THE COMPLAINT STATES A CAUSE OF ACTION AGAINST
PETITIONERS IS WITHOUT ANY LEGAL BASIS. THE ANNEXES TO THE COMPLAINT CLEARLY BELIE THE
ALLEGATION OF EXISTENCE OF AN EMPLOYMENT CONTRACT BETWEEN PRIVATE RESPONDENT AND
PETITIONERS.

B.

THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE IN A WAY NOT IN ACCORD WITH LAW
AND WITH APPLICABLE DECISIONS OF THE SUPREME COURT WHEN IT UPHELD THE JURISDICTION OF
THE TRIAL COURT DESPITE THE FACT THAT THE COMPLAINT INDUBITABLY SHOWS THAT IT IS AN ACTION
FOR AN ALLEGED BREACH OF EMPLOYMENT CONTRACT, AND HENCE, FALLS WITHIN THE EXLCUSIVE
JURISDICTION OF THE NATIONAL LABOR RELATIONS COMMISSION.

THE COURT OF APPEALS DISREGARDED AND FAILED TO CONSIDER THE PRINCIPLE OF "FORUM NON
CONVENIENS" AS A VALID GROUND FOR DISMISSING A COMPLAINT.10

In their first assigned error, petitioners contend that there was no perfected employment contract
between PIL and herein respondent. Petitioners assert that the annexes to respondent's complaint show
that PIL's offer was for respondent to be employed as the manager only of its pre-mixed concrete
operations and not as the company's managing director or CEO. Petitioners argue that when respondent
reiterated his intention to become the manager of PIL's overall business venture in the Philippines, he, in
effect did not accept PIL's offer of employment and instead made a counter-offer, which, however, was
not accepted by PIL. Petitioners also contend that under Article 1318 of the Civil Code, one of the
requisites for a contract to be perfected is the consent of the contracting parties; that under Article 1319
of the same Code, consent is manifested by the meeting of the offer and the acceptance upon the thing
and the cause which are to constitute the contract; that the offer must be certain and the acceptance
absolute; that a qualified acceptance constitutes a counter-offer. Petitioners assert that since PIL did not
accept respondent's counter-offer, there never was any employment contract that was perfected
between them.

Petitioners further argue that respondent's claim for damages based on the provisions of Articles 19 and
21 of the Civil Code is baseless because it was shown that there was no perfected employment contract.

Assuming, for the sake of argument, that PIL may be held liable for breach of employment contract,
petitioners contend that PCPI and PPHI, may not also be held liable because they are juridical entities
with personalities which are separate and distinct from PIL, even if they are subsidiary corporations of
the latter. Petitioners also aver that the annexes to respondent's complaint show that the negotiations
on the alleged employment contract took place between respondent and PIL through its office in
Hongkong. In other words, PCPI and PPHI were not privy to the negotiations between PIL and
respondent for the possible employment of the latter; and under Article 1311 of the Civil Code, a
contract is not binding upon and cannot be enforced against one who was not a party to it even if he be
aware of such contract and has acted with knowledge thereof.

Petitioners further assert that petitioner Klepzig may not be held liable because he is simply acting in his
capacity as president of PCPI and PPHI and settled is the rule that an officer of a corporation is not
personally liable for acts done in the performance of his duties and within the bounds of the authority
conferred on him. Furthermore, petitioners argue that even if PCPI and PPHI are held liable, respondent
still has no cause of action against Klepzig because PCPI and PPHI have personalities which are separate
and distinct from those acting in their behalf, such as Klepzig.

As to their second assigned error, petitioners contend that since herein respondent's claims for actual,
moral and exemplary damages are solely premised on the alleged breach of employment contract, the
present case should be considered as falling within the exclusive jurisdiction of the NLRC.

With respect to the third assigned error, petitioners assert that the principle of forum non
conveniens dictates that even where exercise of jurisidiction is authorized by law, courts may refuse to
entertain a case involving a foreign element where the matter can be better tried and decided
elsewhere, either because the main aspects of the case transpired in a foreign jurisdiction or the
material witnesses have their residence there and the plaintiff sought the forum merely to secure
procedural advantage or to annoy or harass the defendant. Petitioners also argue that one of the factors
in determining the most convenient forum for conflicts problem is the power of the court to enforce its
decision. Petitioners contend that since the majority of the defendants in the present case are not
residents of the Philippines, they are not subject to compulsory processes of the Philippine court
handling the case for purposes of requiring their attendance during trial. Even assuming that they can be
summoned, their appearance would entail excessive costs. Petitioners further assert that there is no
allegation in the complaint from which one can conclude that the evidence to be presented during the
trial can be better obtained in the Philippines. Moreover, the events which led to the present
controversy occurred outside the Philippines. Petitioners conclude that based on the foregoing factual
circumstances, the case should be dismissed under the principle of forum non conveniens.

In his Comment, respondent extensively quoted the assailed CA Decision maintaining that the factual
allegations in the complaint determine whether or not the complaint states a cause of action.

As to the question of jurisdiction, respondent contends that the complaint he filed was not based on a
contract of employment. Rather, it was based on petitioners' unwarranted breach of their contractual
obligation to employ respondent. This breach, respondent argues, gave rise to an action for damages
which is cognizable by the regular courts.

Even assuming that there was an employment contract, respondent asserts that for the NLRC to acquire
jurisdiction, the claim for damages must have a reasonable causal connection with the employer-
employee relationship of petitioners and respondent.

Respondent further argues that there is a perfected contract between him and petitioners as they both
agreed that the latter shall employ him to manage and operate their ready-mix concrete operations in
the Philippines. Even assuming that there was no perfected contract, respondent contends that his
complaint alleges an alternative cause of action which is based on the provisions of Articles 19 and 21 of
the Civil Code.

As to the applicability of the doctrine of forum non conveniens, respondent avers that the question of
whether a suit should be entertained or dismissed on the basis of the principle of forum non
conveniens depends largely upon the facts of the particular case and is addressed to the sound
discretion of the trial judge, who is in the best position to determine whether special circumstances
require that the court desist from assuming jurisdiction over the suit.

The petition lacks merit.

Section 2, Rule 2 of the Rules of Court, as amended, defines a cause of action as the act or omission by
which a party violates a right of another. A cause of action exists if the following elements are present:
(1) a right in favor of the plaintiff by whatever means and under whatever law it arises or is created; (2)
an obligation on the part of the named defendant to respect or not to violate such right; and, (3) an act
or omission on the part of such defendant violative of the right of the plaintiff or constituting a breach of
the obligation of the defendant to the plaintiff for which the latter may maintain an action for recovery
of damages.11

In Hongkong and Shanghai Banking Corporation Limited v. Catalan,12 this Court held:

The elementary test for failure to state a cause of action is whether the complaint alleges facts which if
true would justify the relief demanded. Stated otherwise, may the court render a valid judgment upon
the facts alleged therein? The inquiry is into the sufficiency, not the veracity of the material allegations.
If the allegations in the complaint furnish sufficient basis on which it can be maintained, it should not be
dismissed regardless of the defense that may be presented by the defendants.13

Moreover, the complaint does not have to establish or allege facts proving the existence of a cause of
action at the outset; this will have to be done at the trial on the merits of the case.14 To sustain a motion
to dismiss for lack of cause of action, the complaint must show that the claim for relief does not exist,
rather than that a claim has been defectively stated, or is ambiguous, indefinite or uncertain.15

Hence, in resolving whether or not the Complaint in the present case states a cause of action, the trial
court correctly limited itself to examining the sufficiency of the allegations in the Complaint as well as
the annexes thereto. It is proscribed from inquiring into the truth of the allegations in the Complaint or
the authenticity of any of the documents referred or attached to the Complaint, since these are deemed
hypothetically admitted by the respondent.

This Court has reviewed respondent’s allegations in its Complaint. In a nutshell, respondent alleged that
herein petitioners reneged on their contractual obligation to employ him on a permanent basis. This
allegation is sufficient to constitute a cause of action for damages.

The issue as to whether or not there was a perfected contract between petitioners and respondent is a
matter which is not ripe for determination in the present case; rather, this issue must be taken up during
trial, considering that its resolution would necessarily entail an examination of the veracity of the
allegations not only of herein respondent as plaintiff but also of petitioners as defendants.

The Court does not agree with petitioners' contention that they were not privy to the negotiations for
respondent's possible employment. It is evident from paragraphs 24 to 28 of the Complaint16 that, on
various occasions, Klepzig conducted negotiations with respondent regarding the latter's possible
employment. In fact, Annex "H"17 of the complaint shows that it was Klepzig who informed respondent
that his company was no longer interested in employing respondent. Hence, based on the allegations in
the Complaint and the annexes attached thereto, respondent has a cause of action against herein
petitioners.

As to the question of jurisdiction, this Court has consistently held that where no employer-employee
relationship exists between the parties and no issue is involved which may be resolved by reference to
the Labor Code, other labor statutes or any collective bargaining agreement, it is the Regional Trial Court
that has jurisdiction.18 In the present case, no employer-employee relationship exists between
petitioners and respondent. In fact, in his complaint, private respondent is not seeking any relief under
the Labor Code, but seeks payment of damages on account of petitioners' alleged breach of their
obligation under their agreement to employ him. It is settled that an action for breach of
contractual obligation is intrinsically a civil dispute.19 In the alternative, respondent seeks redress on the
basis of the provisions of Articles 19 and 21 of the Civil Code. Hence, it is clear that the present action is
within the realm of civil law, and jurisdiction over it belongs to the regular courts.20

With respect to the applicability of the principle of forum non conveniens in the present case, this
Court's ruling in Bank of America NT & SA v. Court of Appeals 21 is instructive, to wit:

The doctrine of forum non conveniens, literally meaning ‘the forum is inconvenient’, emerged in private
international law to deter the practice of global forum shopping, that is to prevent non-resident litigants
from choosing the forum or place wherein to bring their suit for malicious reasons, such as to secure
procedural advantages, to annoy and harass the defendant, to avoid overcrowded dockets, or to select a
more friendly venue. Under this doctrine, a court, in conflicts of law cases, may refuse impositions on its
jurisdiction where it is not the most "convenient" or available forum and the parties are not precluded
from seeking remedies elsewhere.

Whether a suit should be entertained or dismissed on the basis of said doctrine depends largely upon
the facts of the particular case and is addressed to the sound discretion of the trial court. In the case
of Communication Materials and Design, Inc. vs. Court of Appeals, this Court held that "xxx [a] Philippine
Court may assume jurisdiction over the case if it chooses to do so; provided, that the following requisites
are met: (1) that the Philippine Court is one to which the parties may conveniently resort to; (2) that the
Philippine Court is in a position to make an intelligent decision as to the law and the facts; and, (3) that
the Philippine Court has or is likely to have power to enforce its decision."

Moreover, this Court enunciated in Philsec. Investment Corporation vs. Court of Appeals, that the
doctrine of forum non conveniens should not be used as a ground for a motion to dismiss because Sec.
1, Rule 16 of the Rules of Court does not include said doctrine as a ground. This Court further ruled
that while it is within the discretion of the trial court to abstain from assuming jurisdiction on this
ground, it should do so only after vital facts are established, to determine whether special
circumstances require the court’s desistance; and that the propriety of dismissing a case based on this
principle of forum non conveniens requires a factual determination, hence it is more properly
considered a matter of defense.22 (emphasis supplied)
In the present case, the factual circumstances cited by petitioners which would allegedly justify the
application of the doctrine of forum non conveniens are matters of defense, the merits of which should
properly be threshed out during trial.

WHEREFORE, the instant petition is DENIED and the assailed Decision and Resolution of the Court of
Appeals are AFFIRMED.

Costs against petitioners.

SO ORDERED.
Part II  Arts. 218 – 220

Art. 218. Powers of the Commission. The Commission shall have the power and authority:

a. To promulgate rules and regulations governing the hearing and disposition of cases before it and
its regional branches, as well as those pertaining to its internal functions and such rules and
regulations as may be necessary to carry out the purposes of this Code; (As amended by Section
10, Republic Act No. 6715, March 21, 1989)
 

b. To administer oaths, summon the parties to a controversy, issue subpoenas requiring the
attendance and testimony of witnesses or the production of such books, papers, contracts,
records, statement of accounts, agreements, and others as may be material to a just
determination of the matter under investigation, and to testify in any investigation or hearing
conducted in pursuance of this Code;
 

c. To conduct investigation for the determination of a question, matter or controversy within its
jurisdiction, proceed to hear and determine the disputes in the absence of any party thereto
who has been summoned or served with notice to appear, conduct its proceedings or any part
thereof in public or in private, adjourn its hearings to any time and place, refer technical matters
or accounts to an expert and to accept his report as evidence after hearing of the parties upon
due notice, direct parties to be joined in or excluded from the proceedings, correct, amend, or
waive any error, defect or irregularity whether in substance or in form, give all such directions as
it may deem necessary or expedient in the determination of the dispute before it, and dismiss
any matter or refrain from further hearing or from determining the dispute or part thereof,
where it is trivial or where further proceedings by the Commission are not necessary or
desirable; and
 

d. To hold any person in contempt directly or indirectly and impose appropriate penalties therefor
in accordance with law.
 
A person guilty of misbehavior in the presence of or so near the Chairman or any member of the
Commission or any Labor Arbiter as to obstruct or interrupt the proceedings before the same,
including disrespect toward said officials, offensive personalities toward others, or refusal to be
sworn, or to answer as a witness or to subscribe an affidavit or deposition when lawfully
required to do so, may be summarily adjudged in direct contempt by said officials and punished
by fine not exceeding five hundred pesos (P500) or imprisonment not exceeding five (5) days, or
both, if it be the Commission, or a member thereof, or by a fine not exceeding one hundred
pesos (P100) or imprisonment not exceeding one (1) day, or both, if it be a Labor Arbiter.
 
The person adjudged in direct contempt by a Labor Arbiter may appeal to the Commission and
the execution of the judgment shall be suspended pending the resolution of the appeal upon
the filing by such person of a bond on condition that he will abide by and perform the judgment
of the Commission should the appeal be decided against him. Judgment of the Commission on
direct contempt is immediately executory and unappealable. Indirect contempt shall be dealt
 with by the Commission or Labor Arbiter in the manner prescribed under Rule 71 of the Revised
Rules of Court; and (As amended by Section 10, Republic Act No. 6715, March 21, 1989)
 

e. To enjoin or restrain any actual or threatened commission of any or all prohibited or unlawful
acts or to require the performance of a particular act in any labor dispute which, if not
restrained or performed forthwith, may cause grave or irreparable damage to any party or
render ineffectual any decision in favor of such party: Provided, That no temporary or
permanent injunction in any case involving or growing out of a labor dispute as defined in this
Code shall be issued except after hearing the testimony of witnesses, with opportunity for cross-
examination, in support of the allegations of a complaint made under oath, and testimony in
opposition thereto, if offered, and only after a finding of fact by the Commission, to the effect:
 

1. That prohibited or unlawful acts have been threatened and will be committed and will
be continued unless restrained, but no injunction or temporary restraining order shall
be issued on account of any threat, prohibited or unlawful act, except against the
person or persons, association or organization making the threat or committing the
prohibited or unlawful act or actually authorizing or ratifying the same after actual
knowledge thereof;
 

2. That substantial and irreparable injury to complainant’s property will follow;

 

3. That as to each item of relief to be granted, greater injury will be inflicted upon
complainant by the denial of relief than will be inflicted upon defendants by the
granting of relief;
 

4. That complainant has no adequate remedy at law; and

 

5. That the public officers charged with the duty to protect complainant’s property are
unable or unwilling to furnish adequate protection.
 

Such hearing shall be held after due and personal notice thereof has been served, in such manner as the
Commission shall direct, to all known persons against whom relief is sought, and also to the Chief
Executive and other public officials of the province or city within which the unlawful acts have been
threatened or committed, charged with the duty to protect complainant’s property: Provided, however,
that if a complainant shall also allege that, unless a temporary restraining order shall be issued without
notice, a substantial and irreparable injury to complainant’s property will be unavoidable, such a
temporary restraining order may be issued upon testimony under oath, sufficient, if sustained, to justify
the Commission in issuing a temporary injunction upon hearing after notice. Such a temporary
restraining order shall be effective for no longer than twenty (20) days and shall become void at the
expiration of said twenty (20) days. No such temporary restraining order or temporary injunction shall
be issued except on condition that complainant shall first file an undertaking with adequate security in
an amount to be fixed by the Commission sufficient to recompense those enjoined for any loss, expense
or damage caused by the improvident or erroneous issuance of such order or injunction, including all
reasonable costs, together with a reasonable attorney’s fee, and expense of defense against the order or
against the granting of any injunctive relief sought in the same proceeding and subsequently denied by
the Commission.
 
The undertaking herein mentioned shall be understood to constitute an agreement entered into by the
complainant and the surety upon which an order may be rendered in the same suit or proceeding
against said complainant and surety, upon a hearing to assess damages, of which hearing, complainant
and surety shall have reasonable notice, the said complainant and surety submitting themselves to the
jurisdiction of the Commission for that purpose. But nothing herein contained shall deprive any party
having a claim or cause of action under or upon such undertaking from electing to pursue his ordinary
remedy by suit at law or in equity: Provided, further, That the reception of evidence for the application
of a writ of injunction may be delegated by the Commission to any of its Labor Arbiters who shall
conduct such hearings in such places as he may determine to be accessible to the parties and their
witnesses and shall submit thereafter his recommendation to the Commission. (As amended by Section
10, Republic Act No. 6715, March 21, 1989)

Art. 219. Ocular inspection. The Chairman, any Commissioner, Labor Arbiter or their duly authorized
representatives, may, at any time during working hours, conduct an ocular inspection on any
establishment, building, ship or vessel, place or premises, including any work, material, implement,
machinery, appliance or any object therein, and ask any employee, laborer, or any person, as the case
may be, for any information or data concerning any matter or question relative to the object of the
investigation.

[ Art. 220. Compulsory arbitration. The Commission or any Labor Arbiter shall have the power to ask the
assistance of other government officials and qualified private citizens to act as compulsory arbitrators on
cases referred to them and to fix and assess the fees of such compulsory arbitrators, taking into account
the nature of the case, the time consumed in hearing the case, the professional standing of the
arbitrators, the financial capacity of the parties, and the fees provided in the Rules of Court.] (Repealed
by Section 16, Batas Pambansa Bilang 130, August 21, 1981)
EMPIRE INSURANCE GROUP AND/OR SERGIO CORPUS, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, TEODORICO L. RUIZ, as Labor Arbiter and ROGELIO R.
CORIA, respondents.

Ambrosio Padilla, Mempin & Reyes Law Offices for petitioners.

Guillermo H. Pulia for private respondent.

PARAS, J.:

This is a petition for review on certiorari of the March 14, 1985 Decision of Labor Arbiter Teodorico L.
Ruiz which held that herein private respondent Rogelio R. Coria was illegally dismissed; and of the
Resolution of the National Labor Relations Commission which dismissed petitioner's appeal on the
ground that the same was filed out of time.

In August, 1977, herein private respondent Rogelio R. Coria was hired by herein petitioner Rizal Empire
Insurance Group as a casual employee with a salary of P10.00 a day. On January 1, 1978, he was made a
regular employee, having been appointed as clerk-typist, with a monthly salary of P300.00. Being a
permanent employee, he was furnished a copy of petitioner company's "General Information, Office
Behavior and Other Rules and Regulations." In the same year, without change in his position-
designation, he was transferred to the Claims Department and his salary was increased to P450,00 a
month. In 1980, he was transferred to the Underwriting Department and his salary was increased to
P580.00 a month plus cost of living allowance, until he was transferred to the Fire Department as filing
clerk. In July, 1983, he was made an inspector of the Fire Division with a monthly salary of P685.00 plus
allowances and other benefits.

On October 15, 1983, private respondent Rogelio R. Coria was dismissed from work, allegedly, on the
grounds of tardiness and unexcused absences. Accordingly, he filed a complaint with the Ministry of
Labor and Employment (MOLE), and in a Decision dated March 14, 1985 (Record, pp. 80-87), Labor
Arbiter Teodorico L. Ruiz reinstated him to his position with back wages. Petitioner filed an appeal with
the National labor Relations Commission (NLRC) but, in a Resolution dated November 15, 1985 (Ibid, pp.
31-32), the appeal was dismissed on the ground that the same had been filed out of time. Hence, the
instant petition (Ibid,  pp. 2-22).

In compliance with the resolution of the Second Division of this Court dated April 30, 1986 (Ibid., p. 94),
private respondent filed his Comment on May 23, 1986 (Ibid.,  pp. 97-101) and public respondent on July
2, 1986 (Ibid., pp. 120-124).

On June 6, 1986, petitioners filed their Reply to private respondent's Comment (Ibid, pp. 102-105) and
on July 25, 1986, their Reply to public respondent's Comment (Ibid., pp. 126-131).

In a Resolution dated August 18, 1986, the Second Division of this Court resolved to give due course to
the petition and to require the parties to submit their respective memoranda (Ibid., P. 132).
In compliance with the above mentioned Resolution, petitioners filed the,.r memorandum on November
10, 1986; while private respondent filed his Memorandum on October 17, 1986 (Ibid,  pp. 139-144), and
public respondent on November 16, 1986 (Ibid., pp. 160-166).

Before going however, into the merits of the case, an important point to consider is whether or not it is
still within the jurisdiction of this Court to review.

Rule VIII of the Revised Rules of the National Labor Relations Commission on appeal, provides:

SECTION 1. (a) Appeal. — Decision or orders of a labor Arbiter shall be final and executory unless
appealed to the Commission by any or both of the parties within ten (10) calendar days from receipt of
notice thereof.

xxx xxx xxx

SECTION 6. No extension of period. — No motion or request for extension of the period within which to
perfect an appeal shall be entertained.

The record shows that the employer (petitioner herein) received a copy of the decision of the Labor
Arbiter on April 1, 1985. It filed a Motion for Extension of Time to File Memorandum of Appeal on April
11, 1985 and filed the Memorandum of Appeal on April 22, 1985. Pursuant to the "no extension policy"
of the National Labor Relations Commission, aforesaid motion for extension of time was denied in its
resolution dated November 15, 1985 and the appeal was dismissed for having been filed out of time
(Rollo, pp. 31-32).

Petitioners claim, among other things, that respondent Commission committed a grave abuse of
discretion amounting to lack of jurisdiction in arbitrarily dismissing petitioners' appeal on a technicality
(Rollo, p. 9). It invokes the Rules of Court provision on liberal construction of the Rules in the interest of
substantial justice.

It will be noted however, that the foregoing provision refers to the Rules of Court. On the other hand,
the Revised Rules of the National Labor Relations Commission are clear and explicit and leave no room
for interpretation.

Moreover, it is an elementary rule in administrative law that administrative regulations and policies
enacted by administrative bodies to interpret the law which they are entrusted to enforce, have the
force of law, and are entitled to great respect (Espanol v. Philippine Veterans Administration, 137 SCRA
314 [1985]).

Under the above-quoted provisions of the Revised NLRC Rules, the decision appealed from in this case
has become final and executory and can no longer be subject to appeal.

Even on the merits, the ruling of the Labor Arbiter appears to be correct; the consistent promotions in
rank and salary of the private respondent indicate he must have been a highly efficient worker, who
should be retained despite occasional lapses in punctuality and attendance. Perfection cannot after all
be demanded.

WHEREFORE, this petition is DISMISSED.

SO ORDERED.
G.R. No. 113541            November 22, 2001

THE HONGKONG AND SHANGHAI BANKING CORPORATION EMPLOYEES UNION, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION AND THE HONGKONG AND SHANGHAI BANKING
CORPORATION LIMITED, respondents.

SANDOVAL-GUTIERREZ, J.:

The instant petition for certiorari1 with prayer for a temporary restraining order assails the
Resolution2 dated January 31, 1994 of the National Labor Relations Commission in NLRC IC CASE No.
000422-93, entitled "THE HONGKONG AND SHANGHAI BANKING CORPORATION, LIMITED, versus THE
HONGKONG AND SHANGHAI BANKING CORPORATION EMPLOYEES UNION, et al."

The challenged Resolution issued by the NLRC granted the preliminary injunction prayed for by The
Hongkong and Shanghai Banking Corporation, Limited ("respondent bank") enjoining The Hongkong and
Shanghai Banking Corporation Employees Union ("petitioner union"), its agents, sympathizers or anyone
acting in its behalf from unlawfully barricading and/or obstructing the free ingress to and egress from
the respondent bank's offices in Makati City and Ortigas Center, Pasig City.

On December 22, 1993, the officers and members of petitioner union staged a strike against respondent
bank for its (1) arbitrary and unilateral reduction of the "CBA-established entry level of clerical pay
rates" and (2) whimsical refusal to bargain collectively on wage rates, among others.

The next day, December 23, 1993, respondent bank filed a petition for injunction3 with the National
Labor Relations Commission ("respondent NLRC") praying that petitioner union's acts of obstructing the
ingress to and egress from the bank's premises be enjoined and, in the interim, a temporary restraining
order be issued. Respondent bank claimed that the unlawful obstruction has caused grave and
irreparable damage to its banking activities, and that unless these acts are restrained, it will continue to
suffer greater injury.

At the initial hearing of the petition for injunction on December 28, 1993 before Labor Arbiter Jesus B.
Afable (whom respondent NLRC delegated to receive evidence thereon), petitioner union orally prayed
for the dismissal of the petition on the ground that respondent bank failed to specifically allege therein
the provisions of Article 218 (e, 3 and 4) of the Labor Code, as amended, to wit:

"ART. 218. POWERS OF THE COMMISSION. — The Commission shall have the power and authority:

xxx           xxx           xxx

(e). To enjoin or restrain any actual or threatened commission of any or all prohibited or unlawful acts or
to require the performance of a particular act in any labor dispute which, if not restrained or performed
forthwith, may cause grave or irreparable damage to any party or render ineffectual any decision in
favor of such party: Provided, That no temporary or permanent injunction in any case involving or
growing out of a labor dispute as defined in this Code shall be issued except after hearing x x x, and only
after a finding of fact by the Commission, to the effect:

xxx           xxx           xxx

(3) That as to each item of relief to be granted, greater injury will be inflicted upon complainant by the
denial of relief than will be inflicted upon defendants by the granting of relief;

(4) That complainant has no adequate remedy at law; and

x x x " (Emphasis ours)

On January 4, 1994, respondent bank filed a supplemental petition alleging that petitioner union's
officers and members continue to commit acts of intimidation, coercion, and obstruction in violation of
Article 264 (e)4 of the Labor Code.

Finding the petition and the supplemental petition to be in accordance with Article 218 of the Labor
Code, respondent NLRC issued a Resolution5 on January 6, 1994 granting a temporary restraining order
and setting the hearing of respondent bank's application for preliminary injunction, thus impliedly
denying petitioner union's oral motion to dismiss the petition.

Petitioner union then filed a motion for reconsideration of the said Resolution but was denied by
respondent NLRC in its Resolution of January 20, 1994. This Resolution also directed Labor Arbiter Afable
to conduct trial on January 24, 25 and 26, 1994. During these dates, respondent bank presented
testimonial, documentary and real evidence. Upon motion by petitioner union, the Labor Arbiter
ordered the exclusion for being immaterial, of all evidence pertaining to the events prior to the said
dates. Respondent bank then objected to this order of exclusion by filing an "Exception with Tender of
Excluded Evidence (Ex Abundante Cautelam)". After respondent bank rested its case, petitioner union
did not present evidence. Its counsel argued in open session for the dismissal of the petition, citing the
insufficiency of evidence in support of the issuance of a temporary restraining order or preliminary
injunction.

On January 31, 1994, respondent NLRC issued the questioned Resolution (1) denying petitioner union's
oral motion to dismiss the petition; (2) issuing a writ of preliminary injunction in favor of respondent
bank, and (3) directing the Labor Arbiter to conduct further hearing for the reception of additional
evidence to sustain the issuance of a writ of permanent injunction.

Without first filing a motion for reconsideration of the said Resolution, petitioner union comes to this
Court via the present petition raising the sole issue of whether or not respondent NLRC acted with grave
abuse of discretion in denying its motion to dismiss and granting respondent bank's prayer for the
issuance of a writ of preliminary injunction.

Petitioner union vigorously maintains that the petition for injunction filed by the respondent bank with
the NLRC suffers from a fatal flaw for it failed to specifically allege therein the matters set forth under
Nos. 3 and 4 of Article 218 (e) of the Labor Code. Petitioner union further alleges that it was deprived of
its right to due process because it was not given the opportunity "to cross-examine the bank's witnesses
concerning the excluded evidence relied upon by respondent Commission for its findings, and to present
testimony in opposition thereto."6

The petition is devoid of merit.

In a special civil action for certiorari, the petitioner has to show not merely a reversible error committed
by the public respondent, but that it acted with grave abuse of discretion amounting to lack or excess of
jurisdiction.7 "Grave abuse of discretion" implies such capricious and whimsical exercise of judgment as
is equivalent to lack of jurisdiction, or where the power is exercised in an arbitrary or despotic manner
by reason of passion or personal hostility which must be so patent and gross as to amount to an invasion
of positive duty or to a virtual refusal to perform the duty enjoined or to act at all in contemplation of
law.8 Mere abuse of discretion is not enough.9

Here, we see no grave abuse of discretion on the part of respondent NLRC in giving due course to the
petition for injunction filed by respondent bank. As aptly observed by the Solicitor General, it is not
necessary for the respondent bank to allege in verbatim the requisites for the issuance of the temporary
restraining order and/or writ of preliminary injunction under Article 218 (e) of the Labor Code.10 In its
original and supplemental petition for injunction, respondent bank made sufficient allegations that
members of petitioner union were unlawfully preventing or obstructing the free ingress to and egress
from the respondent bank premises; and disrupting operations, causing great and continuing damage to
the bank in terms of lost revenues. These allegations, as found by respondent NLRC, were proven by
respondent bank during the proceedings for the issuance of a writ of preliminary injunction. Incidentally,
it is not our function in this certiorari proceedings to review the findings of facts of respondent NLRC
since we are confined only to issues of jurisdiction or grave abuse of discretion.11 Indeed, this Court is
not a trier of facts; factual issues are beyond the ambit of our authority to review on certiorari.12

Anent the contention of petitioner union that it was deprived of the opportunity to cross-examine the
bank's witnesses, the same is totally unavailing. In the proceedings before respondent NLRC, petitioner
union's counsel, instead of cross-examining those witnesses, merely resorted to oral argument and
moved to dismiss the petition for insufficiency of evidence. The oral motion to dismiss was opposed,
also in open session, by respondent bank, after which, the entire incident was considered submitted for
resolution. Respondent NLRC had no recourse but to decide the motion based solely on the evidence
presented. In any event, respondent NLRC gave petitioner union the opportunity to controvert
respondent bank's evidence when it directed the Labor Arbiter to receive evidence. Clearly, respondent
NLRC, in issuing the assailed Resolution, did not commit any grave abuse of discretion.

WHEREFORE, the petition is DISMISSED.

SO ORDERED.
ILAW AT BUKLOD NG MANGGAGAWA (IBM), petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION (First Division), HON. CARMEN TALUSAN and SAN
MIGUEL CORPORATION, respondents.

Banzuela, Flores, Miralles, Raneses, Sy, Taquio & Associates for petitioner.
Jardeleza Law Offices for private respondents.

NARVASA, J.:

The controversy at bar had its origin in the "wage distortions" affecting the employees of respondent
San Miguel Corporation allegedly caused by Republic Act No. 6727, otherwise known as the Wage
Rationalization Act.

Upon the effectivity of the Act on June 5, 1989, the union known as "Ilaw at Buklod Ng Manggagawa
(IBM)" — said to represent 4,500 employees of San Miguel Corporation, more or less, "working at the
various plants, offices, and warehouses located at the National Capital Region" — presented to the
company a "demand" for correction of the "significant distortion in . . . (the workers') wages." In that
"demand," the Union explicitly invoked Section 4 (d) of RA 6727 which reads as follows:

x x x           x x x          x x x

(d) . . .

Where the application of the increases in the wage rates under this Section results in distortions as
defined under existing laws in the wage structure within an establishment and gives rise to a dispute
therein, such dispute shall first be settled voluntarily between the parties and in the event of a deadlock,
the same shall be finally resolved through compulsory arbitration by the regional branches of the
National Labor Relations Commission (NLRC) having jurisdiction over the workplace.

It shall be mandatory for the NLRC to conduct continuous hearings and decide any dispute arising under
this Section within twenty (20) calendar days from the time said dispute is formally submitted to it for
arbitration. The pendency of a dispute arising from a wage distortion shall not in any way delay the
applicability of the increase in the wage rates prescribed under this Section.

But the Union claims that "demand was ignored:1

The . . . COMPANY ignored said demand by offering a measly across-the-board wage increase of P7.00
per day, per employee, as against the proposal of the UNION of P25.00 per day, per employee. Later,
the UNION reduced its proposal to P15.00 per day, per employee by way of amicable settlement.

When the . . . COMPANY rejected the reduced proposal of the UNION the members thereof, on their
own accord, refused to render overtime services, most especially at the Beer Bottling Plants at Polo,
starting October 16, 1989.

In this connection, the workers involved issues a joint notice reading as follows:2
SAMA-SAMANG PAHAYAG: KAMING ARAWANG MANGGAGAWA NG POLO BREWERY PAWANG KASAPI
NG ILAW AT BUKLOD NG MANGGAGAWA (IBM) AY NAGKAISANG NAGPASYA NA IPATUPAD MUNA ANG
EIGHT HOURS WORK SHIFT PANSAMANTALA HABANG HINDI IPINATUTUPAD NG SMC MANAGEMENT
ANG TAMANG WAGE DISTORTION.

The Union's position (set out in the petition subsequently filed in this Court, infra) was that the workers'
refuse "to work beyond eight (8) hours everyday starting October 16, 1989" as a legitimate means of
compelling SMC to correct "the distortion in their wages brought about by the implementation of the
said laws (R.A. 6640 and R.A. 6727) to newly-hired employees.3 That decision to observe the "eight
hours work shift" was implemented on October 16, 1989 by "some 800 daily-paid workers at the Polo
Plant's production line (of San Miguel Corporation [hereafter, simply SMC]) joined by others at statistical
quality control and warehouse, all members of . . . IBM . . . "4 There ensued thereby a change in the work
schedule which had been observed by daily-paid workers at the Polo Plant for the past five (5) years, i.e.,
"ten (10) hours for the first shift and ten (10) to fourteen (14) hours for the second shift, from Mondays
to Fridays . . ; (and on) Saturdays, . . eight (8) hours for both shifts" — a work schedule which, SMC says,
the workers had "welcomed, and encouraged" because the automatic overtime built into the schedule
"gave them a steady source of extra-income," and pursuant to which it (SMC) "planned its production
targets and budgets.5

This abandonment of the long-standing schedule of work and the reversion to the eight-hour shift
apparently caused substantial losses to SMC. Its claim is that there ensued "from 16 October 1989 to 30
November 1989 alone . . work disruption and lower efficiency . . (resulting in turn, in) lost production of
2,004,105 cases of beer . . ; that (i)n "money terms, SMC lost P174,657,598 in sales and P48,904,311 in
revenues . . (and the) Government lost excise tax revenue of P42 million, computed at the rate of P21
per case collectible at the plant.6 These losses occurred despite such measures taken by SMC as
organizing "a third shift composed of regular employees and some contractuals," and appeals "to the
Union members, through letters and memoranda and dialogues with their plant delegates and shop
stewards," to adhere to the existing work schedule.

Thereafter, on October 18, 1989, SMC filed with the Arbitration Branch of the National Labor Relations
Commission a complaint against the Union and its members "to declare the strike or slowdown illegal"
and to terminate the employment of the union officers and shop stewards. The complaint was docketed
as NLRC-NCR Case No. 00-10-04917.7

Then on December 8, 1989, on the claim that its action in the Arbitration Branch had as yet "yielded no
relief," SMC filed another complaint against the Union and members thereof, this time directly with the
National labor Relations Commission, "to enjoin and restrain illegal slowdown and for damages, with
prayer for the issuance of a cease-and-desist and temporary restraining order.8 Before acting on the
application for restraining order, the NLRC's First Division first directed SMC to present evidence in
support of the application before a commissioner, Labor Arbiter Carmen Talusan. On December 19,
1989, said First Division promulgated a Resolution on the basis of "the allegations of the petitioner
(SMC) and the evidence adduced ex parte in support of their petition." The Resolution —

1) authorized the issuance of "a Temporary Restraining Order for a period of twenty (20) days . . upon . .
a cash or surety bond in the amount of P50,000.00 . . . DIRECTING the respondents to CEASE and DESIST
from further committing the acts complained about particularly their not complying with the work
schedule established and implemented by the company through the years or at the least since 1984,
which schedule appears to have been adhered to by the respondents until October 16, 1989 . . .;

2) set the incident on injunction for hearing before Labor Arbiter Carmen Talusan on 27 December
1989 . . .

The Labor Arbiter accordingly scheduled the incident for hearing on various dates: December 27 and
29,1989, January 8, 11, 16, and 19, 1990. The first two settings were cancelled on account of the
unavailability of the Union's counsel. The hearing on January 8, 1990 was postponed also at the instance
of said counsel who declared that the Union refused to recognize the NLRC's jurisdiction. The hearings
set on January 11, 16 and 19, 1990 were taken up with the cross-examination of SMC's witness on the
basis of his affidavit and supplemental affidavits. The Union thereafter asked the Hearing Officer to
schedule other hearings. SMC objected. The Hearing Officer announced she would submit a report to
the Commission relative to the extension of the temporary restraining order of December 9,
1989, supra, prayed for by SMC. Here the matter rested until February 14, 1990, when the Union filed
the petition which commenced the special civil action of certiorari and prohibition at bar.9

In its petition, the Union asserted that:

1) the "central issue . . is the application of the Eight-Hour Labor Law . . . (i.e.) (m)ay an employer force
an employee to work everyday beyond eight hours a day?

2) although the work schedule adopted by SMC with built-in automatic overtime,10 "tremendously
increased its production of beer at lesser cost," SMC had been paying its workers "wages far below the
productivity per employee," and turning a deaf ear to the Union's demands for wage increases;

3) the NLRC had issued the temporary restraining order of December 19, 1989 "with indecent haste,
based on ex parte evidence of SMC and such an order had the effect of "forcing the workers to work
beyond eight (8) hours a day, everyday!!

4) the members of the NLRC had no authority to act as Commissioners because their appointments had
not been confirmed by the Commission on Appointment; and

5) even assuming the contrary, the NLRC, as an essentially appellate body, had no jurisdiction to act on
the plea for injunction in the first instance.

The petition thus prayed:

1) for judgment (a) annulling the Resolution of December 19, 1990; (b) declaring mandatory the
confirmation by the Commission on Appointments of the appointments of National Labor Relations
Commissioners; and (c) ordering the removal "from the 201 files of employees any and all memoranda
or disciplinary action issued/imposed to the latter by reason of their refusal to render overtime work;"
and

2) pending such judgment restraining(a) the NLR Commissioners "from discharging their power and
authority under R.A. 6715 prior to their re-appointment and/or confirmation;" as well as (b) Arbiter
Talusan and the Commission from acting on the matter or rendering a decision or issuing a permanent
injunction therein, or otherwise implementing said Resolution of December 19, 1989.
In traverse of the petition, SMC filed a pleading entitled "Comment with Motion to Admit Comment as
Counter-Petition," in which it contended that:

1) the workers' abandonment of the regular work schedule and their deliberate and wilful reduction of
the Polo plant's production efficiency is a slowdown, which is an illegal and unprotected concerted
activity;

2) against such a slowdown, the NLRC has jurisdiction to issue injunctive relief in the first instance;

3) indeed, the NLRC has "the positive legal duty and statutory obligation to enjoin the slowdown
complained of and to compel the parties to arbitrate . ., (and) to effectuate the important national policy
of peaceful settlement of labor disputes through arbitration;" accordingly, said NLRC "had no legal
choice but to issue injunction to enforce the reciprocal no lockout-no slowdown and mandatory
arbitration agreement of the parties;" and

4) the NLRC "gravely abused its discretion when it refused to decide the application for injunction within
the twenty day period of its temporary restraining order, in violation of its own rules and the repeated
decisions of this . . . Court.

It is SMC's submittal that the coordinated reduction by the Union's members of the work time
theretofore willingly and consistently observed by them, thereby causing financial losses to the
employer in order to compel it to yield to the demand for correction of "wage distortions," is an illegal
and "unprotected" activity. It is, SMC argues, contrary to the law and to the collective bargaining
agreement between it and the Union. The argument is correct and will be sustained.

Among the rights guaranteed to employees by the Labor Code is that of engaging in concerted activities
in order to attain their legitimate objectives. Article 263 of the Labor Code, as amended, declares that in
line with "the policy of the State to encourage free trade unionism and free collective bargaining, . .
(w)orkers shall have the right to engage in concerted activities for purposes of collective bargaining or
for their mutual benefit and protection." A similar right to engage in concerted activities for mutual
benefit and protection is tacitly and traditionally recognized in respect of employers.

The more common of these concerted activities as far as employees are concerned are: strikes — the
temporary stoppage of work as a result of an industrial or labor dispute; picketing — the marching to
and fro at the employer's premises, usually accompanied by the display of placards and other signs
making known the facts involved in a labor dispute; and boycotts — the concerted refusal to patronize
an employer's goods or services and to persuade others to a like refusal. On the other hand, the
counterpart activity that management may licitly undertake is the lockout — the temporary refusal to
furnish work on account of a labor dispute, In this connection, the same Article 263 provides that the
"right of legitimate labor organizations to strike and picket and of employer to lockout, consistent with
the national interest, shall continue to be recognized and respected." The legality of these activities is
usually dependent on the legality of the purposes sought to be attained and the means employed
therefor.

It goes without saying that these joint or coordinated activities may be forbidden or restricted by law or
contract. In the particular instance of "distortions of the wage structure within an establishment"
resulting from "the application of any prescribed wage increase by virtue of a law or wage order,"
Section 3 of Republic Act No. 6727 prescribes a specific, detailed and comprehensive procedure for the
correction thereof, thereby implicitly excluding strikes or lockouts or other concerted activities as modes
of settlement of the issue. The provision11 states that —

. . . the employer and the union shall negotiate to correct the distort-ions. Any dispute arising from wage
distortions shall be resolved through the grievance procedure under their collective bargaining
agreement and, if it remains unresolved, through voluntary arbitration. Unless otherwise agreed by the
parties in writing, such dispute shall be decided by the voluntary arbitrator or panel of voluntary
arbitrators within ten (10) calendar days from the time said dispute was referred to voluntary
arbitration.

In cases where there are no collective agreements or recognized labor unions, the employers and
workers shall endeavor to correct such distortions. Any dispute arising therefrom shall be settled
through the National Conciliation and Mediation Board and, if it remains unresolved after ten (10)
calendar days of conciliation, shall be referred to the appropriate branch of the National Labor Relations
Commission (NLRC). It shall be mandatory for the NLRC to conduct continuous hearings and decide the
dispute within twenty (20) calendar days from the time said dispute is submitted for compulsory
arbitration.

The pendency of a dispute arising from a wage distortion shall not in any way delay the applicability of
any increase in prescribed wage rates pursuant to the provisions of law or Wage Order.

x x x           x x x          x x x

The legislative intent that solution of the problem of wage distortions shall be sought by voluntary
negotiation or abitration, and not by strikes, lockouts, or other concerted activities of the employees or
management, is made clear in the rules implementing RA 6727 issued by the Secretary of Labor and
Employment12 pursuant to the authority granted by Section 13 of the Act.13 Section 16, Chapter I of
these implementing rules, after reiterating the policy that wage distortions be first settled voluntarily by
the parties and eventually by compulsory arbitration, declares that, "Any issue involving wage distortion
shall not be a ground for a strike/lockout."

Moreover, the collective bargaining agreement between the SMC and the Union, relevant provisions of
which are quoted by the former without the latter's demurring to the accuracy of the quotation,14 also
prescribes a similar eschewal of strikes or other similar or related concerted activities as a mode of
resolving disputes or controversies, generally, said agreement clearly stating that settlement of "all
disputes, disagreements or controversies of any kind" should be achieved by the stipulated grievance
procedure and ultimately by arbitration. The provisions are as follows:

Section 1. Any and all disputes, disagreements and controversies of any kind between the COMPANY
and the UNION and/or the workers involving or relating to wages, hours of work, conditions of
employment and/or employer-employee relations arising during the effectivity of this Agreement or any
renewal thereof, shall be settled by arbitration in accordance with the procedure set out in this Article.
No dispute, disagreement or controversy which may be submitted to the grievance procedure in Article
IX shall be presented for arbitration unless all the steps of the grievance procedure are exhausted
(Article V — Arbitration).

Section 1. The UNION agrees that there shall be no strikes, walkouts, stoppage or slowdown of work,
boycotts, secondary boycotts, refusal to handle any merchandise, picketing, sit-down strikes of any kind,
sympathetic or general strikes, or any other interference with any of the operations of the COMPANY
during the terms of this agreement (Article VI).

The Union was thus prohibited to declare and hold a strike or otherwise engage in non-peaceful
concerted activities for the settlement of its controversy with SMC in respect of wage distortions, or for
that matter; any other issue "involving or relating to wages, hours of work, conditions of employment
and/or employer-employee relations." The partial strike or concerted refusal by the Union members to
follow the five-year-old work schedule which they had therefore been observing, resorted to as a means
of coercing correction of "wage distortions," was therefore forbidden by law and contract and, on this
account, illegal.

Awareness by the Union of the proscribed character of its members' collective activities, is clearly
connoted by its attempt to justify those activities as a means of protesting and obtaining redress against
said members working overtime every day from Monday to Friday (on an average of 12 hours), and
every Saturday (on 8 hour shifts),15 rather than as a measure to bring about rectification of the wage
distortions caused by RA 6727 — which was the real cause of its differences with SMC. By concealing the
real cause of their dispute with management (alleged failure of correction of wage distortion), and trying
to make it appear that the controversy involved application of the eight-hour labor law, they obviously
hoped to remove their case from the operation of the rules implementing RA 6727 that "Any issue
involving wage distortion shall not be a ground for a strike/lockout." The stratagem cannot succeed.

In the first place, that it was indeed the wage distortion issue that principally motivated the Union's
partial or limited strike is clear from the facts, The work schedule (with "built-in overtime") had not been
forced upon the workers; it had been agreed upon between SMC and its workers at the Polo Plant and
indeed, had been religiously followed with mutually beneficial results for the past five (5) years. Hence,
it could not be considered a matter of such great prejudice to the workers as to give rise to a
controversy between them and management. Furthermore, the workers never asked, nor were there
ever any negotiations at their instance, for a change in that work schedule prior to the strike. What
really bothered them, and was in fact the subject of talks between their representatives and
management, was the "wage distortion" question, a fact made even more apparent by the joint notice
circulated by them prior to the strike, i.e., that they would adopt the eight-hour work shift in the
meantime pending correction by management of the wage distortion (IPATUPAD MUNA ANG EIGHT
HOURS WORK SHIFT PANSAMANTALA HABANG HINDI IPINATUTUPAD NG SMC MANAGEMENT ANG
TAMANG WAGE DISTORTION).

In the second place, even if there were no such legal prohibition, and even assuming the controversy
really did not involve the wage distortions caused by RA 6727, the concerted activity in question would
still be illicit because contrary to the workers' explicit contractual commitment "that there shall be no
strikes, walkouts, stoppage or slowdown of work, boycotts, secondary boycotts, refusal to handle any
merchandise, picketing, sit-down strikes of any kind, sympathetic or general strikes, or any other
interference with any of the operations of the COMPANY during the term of . . . (their collective
bargaining) agreement.16

What has just been said makes unnecessary resolution of SMC's argument that the workers' concerted
refusal to adhere to the work schedule in force for the last several years, is a slowdown, an inherently
illegal activity essentially illegal even in the absence of a no-strike clause in a collective bargaining
contract, or statute or rule. The Court is in substantial agreement with the petitioner's concept of a
slowdown as a "strike on the installment plan;" as a wilfull reduction in the rate of work by concerted
action of workers for the purpose of restricting the output of the employer, in relation to a labor
dispute; as an activity by which workers, without a complete stoppage of work, retard production or
their performance of duties and functions to compel management to grant their demands.17 The Court
also agrees that such a slowdown is generally condemned as inherently illicit and unjustifiable, because
while the employees "continue to work and remain at their positions and accept the wages paid to
them," they at the same time "select what part of their allotted tasks they care to perform of their own
volition or refuse openly or secretly, to the employer's damage, to do other work;" in other words, they
"work on their own terms.18 But whether or not the workers' activity in question — their concerted
adoption of a different work schedule than that prescribed by management and adhered to for several
years — constitutes a slowdown need not, as already stated, be gone into. Suffice it to say that activity is
contrary to the law, RA 6727, and the parties' collective bargaining agreement.

The Union's claim that the restraining order is void because issued by Commissioners whose
appointments had not been duly confirmed by the Commission on Appointments should be as it is
hereby given short shift, for, as the Solicitor General points out, it is an admitted fact that the members
of the respondent Commission were actually appointed by the President of the Philippines on
November 18, 1989; there is no evidence whatever in support of the Union's bare allegation that the
appointments of said members had not been confirmed; and the familiar presumption of regularity in
appointment and in performance of official duty exists in their favor.19

Also untenable is the Union's other argument that the respondent NLRC Division had no jurisdiction to
issue the temporary restraining order or otherwise grant the preliminary injunction prayed for by SMC
and that, even assuming the contrary, the restraining order had been improperly issued. The Court finds
that the respondent Commission had acted entirely in accord with applicable provisions of the Labor
Code.

Article 254 of the Code provides that "No temporary or permanent injunction or restraining order in any
case involving or growing out of labor disputes shall be issued by any court or other entity, except as
otherwise provided in Articles 218 and 264 . . ." Article 264 lists down specific "prohibited activities"
which may be forbidden or stopped by a restraining order or injunction. Article 218 inter
alia enumerates the powers of the National Labor Relations Commission and lays down the conditions
under which a restraining order or preliminary injunction may issue, and the procedure to be followed in
issuing the same.

Among the powers expressly conferred on the Commission by Article 218 is the power to "enjoin or
restrain any actual or threatened commission of any or all prohibited or unlawful acts or to require the
performance of a particular act in any labor dispute which, if not restrained or performed forthwith,
may cause grave or irreparable damage to any party or render ineffectual any decision in favor of such
party . . ."

As a rule such restraining orders or injunctions do not issue ex parte, but only after compliance with the
following requisites, to wit:

a) a hearing held "after due and personal notice thereof has been served, in such manner as the
Commission shall direct, to all known persons against whom relief is sought, and also to the Chief
Executive and other public officials of the province or city within which the unlawful acts have been
threatened or committed charged with the duty to protect complainant's property;"

b) reception at the hearing of "testimony of witnesses, with opportunity for cross-examination, in

support of the allegations of a complaint made under oath," as well as "testimony in opposition thereto,
if offered . . .;

c) a finding of fact by the Commission, to the effect:

(1) That prohibited or unlawful acts have been threatened and will be committed and will be continued
unless restrained, but no injunction or temporary restraining order shall be issued on account of any
threat, prohibited or unlawful act, except against the person or persons, association or organization
making the threat or committing the prohibited or unlawful act or actually authorizing or ratifying the
same after actual knowledge thereof;

(2) That substantial and irreparable injury to complainant's property will follow;

(3) That as to each item of relief to be granted, greater injury will be inflicted upon complainant by the
denial of relief than will be inflicted upon defendants by the granting of relief;

(4) That complainant has no adequate remedy at law; and

(5) That the public officers charged with the duty to protect complainant's property are unable or
unwilling to furnish adequate protection.

However, a temporary restraining order may be issued ex parte under the following conditions:

a) the complainant "shall also allege that, unless a temporary restraining order shall be issued without
notice, a substantial and irreparable injury to complainant's property will be unavoidable;

b) there is "testimony under oath, sufficient, if sustained, to justify the Commission in issuing a
temporary injunction upon hearing after notice;"

c) the "complainant shall first file an undertaking with adequate security in an amount to be fixed by the
Commission sufficient to recompense those enjoined for any loss, expense or damage caused by the
improvident or erroneous issuance of such order or injunction, including all reasonable costs, together
with a reasonable attorney's fee, and expense of defense against the order or against the granting of any
injunctive relief sought in the same proceeding and subsequently denied by the Commission;" and

d) the "temporary restraining order shall be effective for no longer than twenty (20) days and shall
become void at the expiration of said twenty (20) days.

The reception of evidence "for the application of a writ of injunction may be delegated by the
Commission to any of its Labor Arbiters who shall conduct such hearings in such places as he may
determine to be accessible to the parties and their witnesses and shall submit thereafter his
recommendation to the Commission."

The record reveals that the Commission exercised the power directly and plainly granted to it by sub-
paragraph (e) Article 217 in relation to Article 254 of the Code, and that it faithfully observed the
procedure and complied with the conditions for the exercise of that power prescribed in said sub-
paragraph (e) It acted on SMC's application for immediate issuance of a temporary restraining order ex
parte on the ground that substantial and irreparable injury to its property would transpire before the
matter could be heard on notice; it, however, first direct SMC Labor Arbiter Carmen Talusan to receive
SMC's testimonial evidence in support of the application and thereafter submit her recommendation
thereon; it found SMC's evidence adequate and issued the temporary restraining order upon
bond.1âwphi1 No irregularity may thus be imputed to the respondent Commission in the issuance of
that order.

In any event, the temporary restraining order had a lifetime of only twenty (20) days and became
void ipso facto at the expired ration of that period.

In view of the foregoing factual and legal considerations, all irresistibly leading to the basic conclusion
that the concerted acts of the members of petitioner Union in question are violative of the law and their
formal agreement with the employer, the latter's submittal, in its counter-petition that there was, in the
premises, a "legal duty and obligation" on the part of the respondent Commission "to enjoin the
unlawful and prohibited acts and omissions of petitioner IBM and the workers complained of,20 — a
proposition with which, it must be said, the Office of the Solicitor General concurs, asserting that the
"failure of the respondent commission to resolve the application for a writ of injunction is an abuse of
discretion especially in the light of the fact that the restraining order it earlier issued had already
expired"21 — must perforce be conceded.

WHEREFORE, the petition is DENIED, the counter-petition is GRANTED, and the case is REMANDED to
the respondent Commission (First Division) with instructions to immediately take such action thereon as
is indicated by and is otherwise in accord with, the findings and conclusions herein set forth. Costs
against petitioner.

IT IS SO ORDERED.
G.R. No. 120567 March 20, 1998

PHILIPPINE AIRLINES, INC., petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, FERDINAND PINEDA and GOGFREDO
CABLING, respondents.

MARTINEZ, J.:

Can the National Labor Relations Commission (NLRC), even without a complaint for illegal dismissal tiled
before the labor arbiter, entertain an action for injunction and issue such writ enjoining petitioner
Philippine Airlines, inc. from enforcing its Orders of dismissal against private respondents, and ordering
petitioner to reinstate the private respondents to their previous positions?

This is the pivotal issue presented before us in this petition for certiorari under Rule 65 of the Revised
Rules of Court which seeks the nullification of the injunctive writ dated April 3, 1995 issued by the NLRC
and the Order denying petitioner's motion for reconsideration on the ground that the said Orders were
issued in excess of jurisdiction.

Private respondents are flight stewards of the petitioner. Both were dismissed from the service for their
alleged involvement in the April 3, 1993 currency smuggling in Hong Kong.

Aggrieved by said dismissal, private respondents filed with the NLRC a petition1 for injunction praying
that:

I. Upon filing of this Petition, a temporary restraining order be issued, prohibiting respondents
(petitioner herein) from effecting or enforcing the Decision dated Feb. 22, 1995, or to reinstate
petitioners temporarily while a hearing on the propriety of the issuance of a writ of preliminary
injunction is being undertaken;

II. After hearing, a writ of preliminary mandatory injunction be issued ordering respondent to reinstate
petitioners to their former positions pending the hearing of this case, or, prohibiting respondent from
enforcing its Decision dated February 22, 1995 while this case is pending adjudication;

III. After hearing, that the writ of preliminary injunction as to the reliefs sought for be made permanent,
that petitioners be awarded full backwages, moral damages of PHP 500,000.00 each and exemplary
damages of PHP 500,000.00 each, attorney's fees equivalent to ten percent of whatever amount is
awarded, and the costs of suit.

On April 3, 1995, the NLRC issued a temporary mandatory injunction 2 enjoining petitioner to cease and
desist from enforcing its February 22, 1995 Memorandum of dismissal. In granting the writ, the NLRC
considered the following facts, to wit:

. . . that almost two (2) years ago, i.e. on April 15, 1993, the petitioners were instructed to attend an
investigation by respondent's "Security and Fraud Prevention Sub-Department" regarding an April 3,
1993 incident in Hongkong at which Joseph Abaca, respondent's Avionics Mechanic in Hongkong "was
intercepted by the Hongkong Airport Police at Gate 05 . . . the ramp area of the Kai Tak International
Airport while . . . about to exit said gate carrying a . . . bag said to contain some 2.5 million pesos in
Philippine Currencies. That at the Police Station. Mr. Abaca claimed that he just found said plastic bag at
the Skybed Section of the arrival flight PR300/03 April 93," where petitioners served as flight stewards of
said flight PR300; . . the petitioners sought "a more detailed account of what this HKG incident is all
about"; but instead, the petitioners were administratively charged, "a hearing" on which "did
not push through" until almost two (2) years after, i.e, "on January 20, 1995 . . . where a confrontation
between Mr. Abaca and petitioners herein was compulsorily arranged by the respondent's disciplinary
board" at which hearing, Abaca was made to identify petitioners as co-conspirators; that despite the fact
that the procedure of identification adopted by respondent's Disciplinary Board was anomalous "as
there was no one else in the line-up (which could not be called one) but petitioners . . . Joseph Abaca
still had difficulty in identifying petitioner Pineda as his co-conspirator, and as to petitioner Cabling, he
was implicated and pointed by Abaca only after respondent's Atty. Cabatuando pressed the former to
identify petitioner Cabling as co-conspirator"; that with the hearing reset to January 25, 1995, "Mr.
Joseph Abaca finally gave exculpating statements to the board in that he cleared petitioners from any
participation or from being the owners of the currencies, and at which hearing Mr. Joseph Abaca
volunteered the information that the real owner of said money was one who frequented his
headquarters in Hongkong to which information, the Disciplinary Board Chairman, Mr. Ismael Khan,"
opined "for the need for another hearing to go to the bottom of the incident"; that from said statement,
it appeared "that Mr. Joseph Abaca was the courier, and had another mechanic in Manila who hid the
currency at the plane's skybed for Abaca to retrieve in Hongkong, which findings of how the money was
found was previously confirmed by Mr. Joseph Abaca himself when he was first investigated by the
Hongkong authorities"; that just as petitioners "thought that they were already fully cleared of the
charges, as they no longer received any summons/notices on the intended "additional hearings"
mandated by the Disciplinary Board," they were surprised to receive "on February 23, 1995. . . a
Memorandum dated February 22, 1995" terminating their services for alleged violation of respondent's
Code of Discipline "effective immediately"; that sometime . . . first week of March, 1995, petitioner
Pineda received another Memorandum from respondent Mr. Juan Paraiso, advising him of his
termination effective February 3, 1995, likewise for violation of respondent's Code of Discipline; . . .

In support of the issuance of the writ of temporary injunction, the NLRC adapted the view that: (1)
private respondents cannot be validly dismissed on the strength of petitioner's Code of Discipline which
was declared illegal by this Court in the ease at PAL, Inc. vs. NLRC, (G.R. No. 85985), promulgated August
13, 1993, for the reason that it was formulated by the petitioner without the participation of its
employees as required in R.A. 6715, amending Article 211 of the Labor Code; (2) the whimsical, baseless
and premature dismissals of private respondents which "caused them grave and irreparable injury" is
enjoinable as private respondents are left "with no speedy and adequate remedy at law" except the
issuance of a temporary mandatory injunction; (3) the NLRC is empowered under Article 218 (e) of the
Labor Code not only to restrain any actual or threatened commission of any or all prohibited or unlawful
acts but also to require the performance of a particular act in any labor dispute, which, if not restrained
or performed forthwith, may cause grave or irreparable damage to any party; and (4) the temporary
power of the NLRC was recognized by this Court in the case of Chemo-Technische Mfg., Inc.  Employees
Union, DFA, et.  al.  vs.  Chemo-Technische Mfg., Inc. [G.R. No. 107031, January 25, 1993].

On May 4, 1995, petitioner moved for reconsideration3 arguing that the NLRC erred:
1. . . . in granting a temporary injunction order when it has no jurisdiction to issue an injunction or
restraining order since this may be issued only under Article 218 of the Labor Code if the case involves or
arises from labor disputes;

2. . . . in granting a temporary injunction order when the termination of private respondents have long
been carried out;

3. . . . in ordering the reinstatement of private respondents on the basis of their mere allegations, in
violation of PAL's right to due process:

4. . . . in arrogating unto itself management prerogative to discipline its employees and divesting the
labor arbiter of its original and exclusive jurisdiction over illegal dismissal cases;

5. . . . in suspending the effects of termination when such action is exclusively within the jurisdiction of
the Secretary of Labor;

6. . . . in issuing the temporary injunction in the absence of any irreparable or substantial injury to both
private respondents.

On May 31, 1995, the NLRC denied petitioner's motion for reconsideration, ruling:

"The respondent (now petitioner), for one, cannot validly claim that we cannot exercise our injunctive
power under Article 218 (e) of the Labor Code on the pretext that what we have here is not a labor
dispute as long as it concedes that as defined by law, a" (l) "Labor Dispute" includes any controversy or
matter concerning terms or conditions of employment." If security of tenure, which has been breached
by respondent and which, precisely, is sought to be protected by our temporary mandatory injunction
(the core of controversy in this case) is not a "term or condition of employment", what then is?

x x x           x x x          x x x

Anent respondent's second argument . . . . Article 218 (e) of the Labor Code . . . empowered the
Commission not only to issue a prohibitory injunction, but a mandatory ("to require the performance")
one as well. Besides, as earlier discussed, we already exercised (on August 23, 1991) this temporary
mandatory injunctive power in the case of "Chemo-Technische Mfg., Inc. Employees Union-DFA et. al.
vs. Chemo-Technische Mfg., Inc., et. al." (supra) and effectively enjoined one (1) month old dismissals by
Chemo-Technische and that our aforesaid mandatory exercise of injunctive power, when questioned
through a petition for certiorari, was sustained by the Third Division of the Supreme court per its
Resolution dated January 25, 1993.

x x x           x x x          x x x

Respondent's fourth argument that petitioner's remedy for their dismissals is "to file an illegal dismissal
case against PAL which cases are within the original and exclusive jurisdiction of the Labor Arbiter' is
ignorant. In requiring as a condition for the issuance of a "temporary or permanent injunction" — "(4)
That complainant has no adequate remedy at law;" Article 218 (e) of the Labor Code clearly
envisioned adequacy, and not plain availability of a remedy at law as an alternative bar to the issuance
of an injunction. An illegal dismissal suit (which takes, on its expeditious side, three (3) years before it
can be disposed of) while available as a remedy under Article 217 (a) of the Labor Code, is certainly not
an "adequate; remedy at law, Ergo, it cannot as an alternative remedy, bar our exercise of that
injunctive power given us by Article 218 (e) of the Code.

x x x           x x x          x x x

Thus, Article 218 (e), as earlier discussed [which empowers this Commission "to require the
performance of a particular act" (such as our requiring respondent "to cease and desist from enforcing"
its whimsical memoranda of dismissals and "instead to reinstate petitioners to their respective position
held prior to their subject dismissals") in "any labor dispute which, if not . . . performed forthwith, may
cause grave and irreparable damage to any party"] stands as the sole "adequate remedy at law" for
petitioners here.

Finally, the respondent, in its sixth argument claims that even if its acts of dismissing petitioners "may be
great, still the same is capable of compensation", and that consequently, "injunction need not be issued
where adequate compensation at law could be obtained". Actually,
what respondent PAL argues here is that we need not interfere in its whimsical dismissals of petitioners
as, after all, it can pay the latter its backwages. . . .

But just the same, we have to stress that Article 279 does not speak alone of backwages as an
obtainable relief for illegal dismissal; that reinstatement as well is the concern of said law, enforceable
when necessary, through Article 218 (e) of the Labor Code (without need of an illegal dismissal suit
under Article 217 (a) of the Code) if such whimsical and capricious act of illegal dismissal will "cause
grave or irreparable injury to a party". . . . .4

Hence, the present recourse.

Generally, injunction is a preservative remedy for the protection of one's substantive rights or interest. It
is not a cause of action in itself but merely a provisional remedy, an adjunct to a main suit. It is resorted
to only when there is a pressing necessity to avoid injurious consequences which cannot be remedied
under any standard of compensation. The application of the injunctive writ rests upon the existence of
an emergency or of a special reason before the main case be regularly heard. The essential conditions
for granting such temporary injunctive relief are that the complaint alleges facts which appear to be
sufficient to constitute a proper basis for injunction and that on the entire showing from the contending
parties, the injunction is reasonably necessary to protect the legal rights of the plaintiff pending the
litigation.5 Injunction is also a special equitable relief granted only in cases where there is no plain,
adequate and complete remedy at law.6

In labor cases, Article 218 of the Labor Code empowers the NLRC —

(e) To enjoin or restrain any actual or threatened commission of any or all prohibited or unlawful acts or
to require the performance of a particular act in any labor dispute which, if not restrained or performed
forthwith, may cause grave or irreparable damage to any party or render ineffectual any decision in
favor of such party; . . ." (Emphasis Ours)

Complementing the above-quoted provision, Sec. 1, Rule XI of the New Rules of Procedure of the NLRC,
pertinently provides as follows:

Sec. 1. Injunction in Ordinary Labor Dispute. — A preliminary injunction or a restraining order may be
granted by the Commission through its divisions pursuant to the provisions of paragraph (e) of Article
218 of the Labor Code, as amended, when it is established on the bases of the sworn allegations in the
petition that the acts complained of, involving or arising from any labor dispute before the Commission,
which, if not restrained or performed forthwith, may cause grave or irreparable damage to any party or
render ineffectual any decision in favor of such party.

x x x           x x x          x x x

The  foregoing ancillary power may be exercised by the Labor Arbiters only as an incident to the cases
pending before them in order to preserve the rights of the parties during the pendency of the case, but
excluding labor disputes involving strikes or lockout. 7 (Emphasis Ours)

From the foregoing provisions of law, the power of the NLRC to issue an injunctive writ originates from
"any labor dispute" upon application by a party thereof, which application if not granted "may cause
grave or irreparable damage to any party or render ineffectual any decision in favor of such party."

The term "labor dispute" is defined as "any controversy or matter concerning terms and conditions of
employment or the association or representation of persons in negotiating, fixing. maintaining,
changing, or arranging the terms and conditions of employment regardless of whether or not the
disputants stand in the proximate relation of employers and employees." 8

The term "controversy" is likewise defined as "a litigated question; adversary proceeding in a court of

law; a civil action or suit, either at law or in equity; a justiciable dispute."9

A "justiciable controversy" is "one involving an active antagonistic assertion of a legal right on one side
and a denial thereof on the other concerning a real, and not a mere theoretical question or issue." 10

Taking into account the foregoing definitions, it is an essential requirement that there must first be a
labor dispute between the contending parties before the labor arbiter. In the present case, there is no
labor dispute between the petitioner and private respondents as there has yet been no complaint for
illegal dismissal filed with the labor arbiter by the private respondents against the petitioner.

The petition for injunction directly filed before the NLRC is in reality an action for illegal dismissal. This is
clear from the allegations in the petition which prays for; reinstatement of private respondents; award
of full backwages, moral and exemplary damages; and attorney's fees. As such, the petition should have
been filed with the labor arbiter who has the original and exclusive jurisdiction to hear and decide the
following cases involving all workers, whether agricultural or non-agricultural:

(1) Unfair labor practice;

(2) Termination disputes;

(3) If accompanied with a claim for reinstatement, those cases that workers may file involving wages,
rates of pay, hours of work and other terms and conditions of employment;

(4) Claims for actual, moral, exemplary and other forms of damages arising from the employer-
employee relations;

(5) Cases arising from any violation of Article 264 of this Code, including questions involving the legality
of strikes and lockouts; and
(6) Except claims for employees compensation, social security, medicare and maternity benefits, all
other claims arising from employer- employee relations, including those of persons in domestic or
household service, involving an amount exceeding five thousand pesos (P5,000.00), whether or not
accompanied with a claim for reinstatement. 11

The jurisdiction conferred by the foregoing legal provision to the labor arbiter is
both original and exclusive, meaning, no other officer or tribunal can take cognizance of, hear and
decide any of the cases therein enumerated. The only exceptions are where the Secretary of Labor and
Employment or the NLRC exercises the power of compulsory arbitration, or the parties agree to submit
the matter to voluntary arbitration pursuant to Article 263 (g) of the Labor Code, the pertinent portions
of which reads:

(g) When, in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout in an
industry indispensable to the national interest, the Secretary of Labor and Employment may assume
jurisdiction over the dispute and decide it or certify the same to the Commission for compulsory
arbitration. Such assumption or certification shall have the effect of automatically enjoining the
intended or impending strike or lockout as specified in the assumption or certification order. If one has
already taken place at the time of assumption or certification, all striking or locked out employees shall
immediately resume operations and readmit all workers under the same terms and conditions prevailing
before the strike or lockout. The Secretary of Labor and Employment or the Commission may seek the
assistance of law enforcement agencies to ensure compliance with this provision as well as with such
orders as he may issue to enforce the same.

On the other hand, the NLRC shall have exclusive appellate jurisdiction over all cases decided by labor
arbiters as provided in Article 217(b) of the Labor Code. In short, the jurisdiction of the NLRC in illegal
dismissal cases is appellate in nature and, therefore, it cannot entertain the private respondents'
petition for injunction which challenges the dismissal orders of petitioner. Article 218(e) of the Labor
Code does not provide blanket authority to the NLRC or any of its divisions to issue writs of injunction,
considering that Section 1 of Rule XI of the New Rules of Procedure of the NLRC makes injunction only
an ancillary remedy in ordinary labor disputes." 12

Thus, the NLRC exceeded its jurisdiction when it issued the assailed Order granting private respondents'
petition for injunction and ordering the petitioner to reinstate private respondents.

The argument of the NLRC in its assailed Order that to file an illegal dismissal suit with the labor arbiter
is not an "adequate" remedy since it takes three (3) years before it can be disposed of, is patently
erroneous. An "adequate" remedy at law has been defined as one "that affords relief with reference to
the matter in controversy, and which is appropriate to the particular circumstances of the case." 13 It is a
remedy which is equally, beneficial, speedy and sufficient which will promptly relieve the petitioner from
the injurious effects of the acts complained of. 14

Under the Labor Code, the ordinary and proper recourse of an illegally dismissed employee is to file a
complaint for illegal dismissal with the labor arbiter. 15 In the case at bar, private respondents
disregarded this rule and directly went to the NLRC through a petition for injunction praying that
petitioner be enjoined from enforcing its dismissal orders. In Lamb vs. Phipps, 16 we ruled that if the
remedy is specifically provided by law, it is presumed to be adequate. Moreover, the preliminary
mandatory injunction prayed for by the private respondents in their petition before the NLRC can also
be entertained by the labor arbiter who, as shown earlier, has the ancillary power to issue preliminary
injunctions or restraining orders as an incident in the cases pending before him in order to preserve
the rights of the parties during the pendency of the case. 17

Furthermore, an examination of private respondents' petition for injunction reveals that it has no
basis since there is no showing of any urgency or irreparable injury which the private respondents
might suffer. An injury is considered irreparable if it is of such constant and frequent recurrence that
no fair and reasonable redress can be had therefor in a court of law, 18 or where there is no standard
by which their amount can be measured with reasonable accuracy, that is, it is not susceptible of
mathematical computation. It is considered irreparable injury when it cannot be adequately
compensated in damages due to the nature of the injury itself or the nature of the right or property
injured or when there exists no certain pecuniary standard for the measurement of damages. 19

In the case at bar, the alleged injury which private respondents stand to suffer by reason of their
alleged illegal dismissal can be adequately compensated and therefore, there exists no "irreparable
injury," as defined above which would necessitate the issuance of the injunction sought for. Article
279 of the Labor Code provides that an employee who is unjustly dismissed from employment shall be
entitled to reinstatement, without loss of seniority rights and other privileges, and to the payment of
full backwages, inclusive of allowances, and to other benefits or their monetary equivalent computed
from the time his compensation was withheld from him up to the time of his actual reinstatement.

The ruling of the NLRC that the Supreme Court upheld its power to issue temporary mandatory
injunction orders in the case of Chemo-Technische Mfg., Inc.  Employees Union-DFA, et.  al.  vs.  Chemo-
Technische Mfg., Inc.  et. al., docketed as G.R. No. 107031, is misleading. As correctly argued by the
petitioner, no such pronouncement was made by this Court in said case. On January 25, 1993, we
issued a Minute Resolution in the subject case stating as follows:

Considering the allegations contained, the issues raised and the arguments adduced in the petition
for certiorari, as well as the comments of both public and private respondents thereon, and the reply
of the petitioners to private respondent's motion to dismiss the petition, the Court Resolved to DENY
the same for being premature.

It is clear from the above resolution that we did not in anyway sustain the action of the NLRC in
issuing such temporary mandatory injunction but rather we dismissed the petition as the NLRC had
yet to rule upon the motion for reconsideration filed by petitioner. Thus, the minute resolution
denying the petition for being prematurely filed.

Finally, an injunction, as an extraordinary remedy, is not favored in labor law considering that it
generally has not proved to be an effective means of settling labor disputes. 20 It has been the policy of
the State to encourage the parties to use the non-judicial process of negotiation and compromise,
mediation and arbitration. 21 Thus, injunctions may be issued only in cases of extreme necessity based
on legal grounds clearly established, after due consultations or hearing and when all efforts at
conciliation are exhausted which factors, however, are clearly absent in the present case.

WHEREFORE, the petition is hereby GRANTED. The assailed Orders dated April 3, 1995 and May 31,
1995, issued by the National Labor Relations Commission (First Division), in NLRC NCR IC No. 000563-
95, are hereby REVERSED and SET ASIDE.
 Part III Procedure Arts. 221 – 222

prevailing in courts of law or equity shall not be controlling and it is the spirit and intention of this Code
that the Commission and its members and the Labor Arbiters shall use every and all reasonable means
to ascertain the facts in each case speedily and objectively and without regard to technicalities of law or
procedure, all in the interest of due process. In any proceeding before the Commission or any Labor
Arbiter, the parties may be represented by legal counsel but it shall be the duty of the Chairman, any
Presiding Commissioner or Commissioner or any Labor Arbiter to exercise complete control of the
proceedings at all stages.

Any provision of law to the contrary notwithstanding, the Labor Arbiter shall exert all efforts towards
the amicable settlement of a labor dispute within his jurisdiction on or before the first hearing. The same
rule shall apply to the Commission in the exercise of its original jurisdiction. (As amended by Section 11,
Republic Act No. 6715, March 21, 1989)

Art. 222. Appearances and Fees.

a. Non-lawyers may appear before the Commission or any Labor Arbiter only:
 

1. If they represent themselves; or

 

2. If they represent their organization or members thereof.

 

b. No attorney’s fees, negotiation fees or similar charges of any kind arising from any collective
bargaining agreement shall be imposed on any individual member of the contracting union:
Provided, However, that attorney’s fees may be charged against union funds in an amount to be
agreed upon by the parties. Any contract, agreement or arrangement of any sort to the contrary
shall be null and void. (As amended by Presidential Decree No. 1691, May 1, 1980)
G.R. No. 76988 January 31, 1989

GENERAL RUBBER AND FOOTWEAR CORPORATION, petitioner,

vs.
THE HON. FRANKLIN DRILON IN HIS CAPACITY AS THE MINISTER OF LABOR & EMPLOYMENT and THE
GENERAL RUBBER WORKERS' UNION-NATU, respondents.

Paez & Pascual Law Office for petitioners.

The Solicitor General for public respondent.

Marcelino Lontok, Jr. for private respondent.

RESOLUTION

FELICIANO,  J.:

The present petition involves the question of whether or not union members who did not ratify a waiver
of accrued wage differentials are bound by the ratification made by a majority of the union members.

On 26 December 1984, Wage Order No. 6 was issued, increasing the statutory minimum wage rate (by
P2.00) and the mandatory cost of living allowance (by P3.00 for non-agricultural workers) in the private
sector, to take effect on 1 November 1984, Petitioner General Rubber and Footwear Corporation
applied to the National Wages Council ("Council") for exemption from the provisions of Wage Order No.
6. The Council, in an Order dated 4 March 1985, denied petitioner's application, stating in part that:

[Y]ou are hereby ordered to pay your covered employees the daily increase in statutory minimum wage
rate of P 2.00 and living allowance of P3.00 effective November 1, 1984. ...

This decision is final. 1 (Emphasis supplied)

Petitioner filed a Motion for Reconsideration of this Order on 27 May 1985.

On 25 May 1985, some members of respondent General Rubber Workers' Union-NATU, led by one
Leopoldo Sto. Domingo, declared a strike against petitioner. 2 Three (3) days later, on 28 May 1985,
petitioner and Sto. Domingo, the latter purporting to represent the striking workers, entered into a
Return-to-Work Agreement ("Agreement"), Article 4 of which provided:

4. The COMPANY agrees to implement in full Wage Order No. 6  effective May 30, 1985, and agrees to
withdraw the Motion for  Reconsideration which it filed with the National Wages Council in connection
with the Application for Exemption.  In consideration, the UNION, its officers and members, agrees not to
demand or ask from the COMPANY the corresponding differential pay from November 1, 1984 to May 29
1985 arising out of the non-compliance of said wage order during the said period. 3 (Emphasis supplied)

This agreement was subsequently ratified on 30 July 1985 in a document entitled "Sama-samang

Kapasyahan sa Pagpapatibay ng Return-to-Work Agreement" 4 by some two hundred and sixty-eight
(268) members of respondent union, each member signing individually the instrument of ratification.
Before the ratification of the Agreement, petitioner filed, on 5 June 1985, a Motion with the Council
withdrawing its pending Motion for Reconsideration of the Council's Order of 4 March 1985. By a letter
dated 13 June 1985, which the Council allowed the withdrawal of petitioner's Motion for
Reconsideration, which letter in part stated:

In view of your compliance with Wage Order No. 6 effective May 30, 1985  pursuant to the Return to
Work Agreement ... , this Council interposes no objection to your Motion to Withdraw ... 5 (Emphasis
supplied)

Meanwhile, there were some one hundred (100) members of the union who were unhappy over the
Agreement, who took the view that the Council's Order of 4 March 1985 had become final and
executory upon the withdrawal of petitioner's Motion for Reconsideration and who would not sign the
instrument ratifying the Agreement. On 10 July 1985, these minority union members with respondent
union acting on their behalf, applied for a writ of execution of the Council's Order. 6

Petitioner opposed the Motion for a writ of execution, contending that the Council's approval of its
deferred compliance with the implementation of the Wage Order,7 together with the majority
ratification of the Agreement by the individual workers, 8 bound the non-ratifying union members
represented by respondent union.

Respondent union countered that the Agreement — despite the majority ratification — was not binding
on the union members who had not consented thereto, upon the ground that ratification or non-
ratification of the Agreement, involving as it did money claims, was a personal right under the doctrine
of "Kaisahan ng Manggagawa sa La Campana v. Honorable Judge Ulpiano Sarmiento and La
Campana." 9

Finding for the Union members represented by respondent union, the then Ministry (now Department)
of Labor and Employment, in an order dated 20 September 1985 issued by National Capital Region
Director Severo M. Pucan, directed the issuance of a writ of execution and required petitioner to pay the
minority members of respondent union their claims for differential pay under Wage Order No. 6, which
totalled P90,090.00. 10

Petitioner then moved to quash the writ of execution upon the ground that the Council's order could
not be the subject of a writ of execution, having been superseded by the Agreement. 11 In another Order
dated 15 January 1986. Director Pucan, reversed his previous order and sustained petitioner's
contention that the minority union members represented by respondent union were bound by the
majority ratification, holding that the Council's 20 September 1985 Order sought to be enforced by writ
of execution should not have been issued. 12

Respondent union filed a Motion for Reconsideration, which was treated as an appeal to the Minister of
Labor. In a decision dated 19 December 1986, the Minister of Labor set aside the appealed Order of
Director Pucan. The Minister's decision held that:

It is undisputed that the 100 numbers did not sign and ratify the Return-to-Work Agreement and
therefore they cannot be bound by the waiver of benefits therein. This, in essence, is the ruling of the
High Tribunal in the La Campana case. Accordingly, the benefits under Wage Order No. 6 due them by
virtue of the final and executory Order of the National Wages Council dated March 4, 1985 subsists in
their favor and can be subject for execution.
xxx xxx xxx

The writ of execution dated September 20, 1985 ... was clearly based on the final Order of the National
Wages Council sought to be enforced in a Motion for Execution filed by the union. While the Return-to-
Work Agreement was mentioned in the writ, the respondent allegedly failing 'to comply with the above-
stated Agreement which had become final and executory,' we find the Agreement indeed not the basis
for the issuance of the writ.

WHEREFORE, the Order of the Director dated January 15, 1986 is hereby set aside. Let a writ of
execution be issued immediately to enforce the payment of the differential pay under Wage Order No. 6
from November 1, 1984 to May 29, 1985 of the 100 workers who did not sign any waiver, in compliance
with the final Order of the National Wages Council. The entire record is hereby remanded to the
Regional Director, National Capital Region for this purpose.

SO ORDERED . 13 (Emphasis supplied)

Not pleased with the adverse decision of the Minister, petitioner filed the instant Petition for Certiorari.

Petitioner argues once again that the National Wages Council's Order of 4 March 1985 did not become
final and executory because it had been superseded by the Return-to-Work Agreement signed by
petitioner corporation and the union. At the same time, petitioner also argues that the Return-to-Work
Agreement could not be enforced by a writ of execution, because it was a contractual document and not
the final and executory award of a public official or agency. Petitioner's contention is more clever than
substantial. The core issue is whether or not Article 4 of the Return-to-Work Agreement quoted above,
could be deemed as binding upon all members of the union, without regard to whether such members
had or had not in fact individually signed and ratified such Agreement. Article 4 of that Agreement
provided for, apparently, a quid pro quo arrangement: petitioner agreed to implement in full Wage
Order No. 6 starting 30 May 1985 (and not 1 November 1984, as provided by the terms of Wage Order
No. 6) and to withdraw its previously filed Motion for Reconsideration with the National Wages Council;
in turn, the union and its members would refrain from requiring the company to pay the differential pay
(increase in pay) due under Wage Order No. 6 corresponding to the preceding seven-month period from
1 November 1984 to 29 May 1985.

Thus, Kaisahan ng Mangagawa sa La Campana v. Sarmiento, (supra) is practically on all fours with the
instant case. In La Campana, what was at stake was the validity of a compromise agreement entered
into between the union and the company. In that compromise agreement, the union undertook to
dismiss and withdraw the case it had filed with the then Court of Industrial Relations, and waived its
right to execute any final judgment rendered in that case. The CIR had in that case, rendered a judgment
directing reinstatement of dismissed workers and payment of ten (10) years backwages. The Secretary
of Labor held that that compromise agreement was void for lack of ratification by the individual
members of the union. The Supreme Court upheld the decision of the Secretary of Labor, stating among
other things that:

Generally, a judgment on a compromise agreement puts an end to a litigation and is immediately

executory. However, the Rules [of Court] require a special authority before an attorney can compromise
the litigation of [his] clients. The authority to compromise cannot lightly be presumed and should be duly
established by evidence. (Esso Philippine, Inc. v. MME, 75 SCRA 91).
As aptly held by the Secretary of Labor, the records are bereft of showing that the individual members
consented to the said agreement. Now were the members informed of the filing of the civil case before
the Court of First Instance. If the parties to said agreement acted in good faith, why did they not furnish
the Office of the president with a copy of the agreement when they knew all the while that the labor
case was then pending appeal therein? Undoubtedly, the compromise agreement was executed to the
prejudice of the complainants who never consented thereto, hence, it is null and void. The judgment
based on such agreement does not bind the individual members or complainants who are not parties
thereto nor signatories therein.

Money claims due to laborers cannot be the object of settlement or compromise effected by a union or
counsel without the specific individual consent of each laborer concerned. The beneficiaries are the
individual complainants themselves. The union to which they belong can only assist them but cannot
decide for them. Awards in favor of laborers after long years of litigation must be attended to with
mutual openness and in the best of faith. (Danao Development Corp. v. NLRC, 81 SCRA 487-505). Only
thus can we really give meaning to the constitutional mandate of giving laborers maximum protection
and security. It is about time that the judgment in Case No. 584-V(7) be fully implemented considering
the unreasonable delay in the satisfaction thereof. This unfortunate incident may only weaken the
workingmen's faith in the judiciary's capacity to give them justice when due. 14

xxx xxx xxx

(Emphasis supplied)

In the instant case, there is no dispute that private respondents had not ratified the Return-to-Work
Agreement. It follows, and we so hold, that private respondents cannot be held bound by the Return-to-
Work Agreement. The waiver of money claims, which in this case were accrued money claims, by
workers and employees must be regarded as a personal right, that is, a right that must be personally
exercised. For a waiver thereof to be legally effective, the individual consent or ratification of the
workers or employees involved must be shown. Neither the officers nor the majority of the union had
any authority to waive the accrued rights pertaining to the dissenting minority members, even under a
collective bargaining agreement which provided for a "union shop." The same considerations of public
policy which impelled the Court to reach the conclusion it did in La Campana, are equally compelling in
the present case. The members of the union need the protective shield of this doctrine not only vis-a-
vis their employer but also, at times, vis-a-vis the management of their own union, and at other times
even against their own imprudence or impecuniousness.

It should perhaps be made clear that the Court is not here saying that accrued money claims
can  never be effectively waived by workers and employees. What the Court is saying is that, in the
present case, the private respondents never purported to waive their claims to accrued differential pay.
Assuming that private respondents had actually and individually purported to waive such claims, a
second question would then have arisen: whether such waiver could be given legal effect or whether, on
the contrary, it was violative of public policy. 15 Fortunately, we do not have to address this second
question here.

Since Article 4 of the Return-to-Work Agreement was not enforceable against the non-consenting union
members, the Order of the National Wages Council dated 4 March 1985 requiring petitioner to comply
with Wage Order No. 6 from 1 November 1984 onward must be regarded as having become final and
executory insofar as the non-consenting union members were concerned. Enforcement by writ of
execution of that Order was, therefore, proper. It follows further that the decision of 19 December 1986
of the respondent Minister of Labor, far from constituting a grave abuse of discretion or an act without
or in excess of jurisdiction, was fully in accordance with law as laid down in La Campana and here
reiterated.

WHEREFORE, the Court Resolved to DISMISS the Petition for certiorari for lack of merit. Costs against
petitioner.
G.R. No. 81390 August 29, 1989

NATHANIEL OLACAO, ALBERTO AGUILON, AMADO AGUILON, LIBERATO AGUILON, VENANCIO

AGUILON, CENON AGUILON, CESAR ALCANTARA, FRANCISCO ALERIA, FRUCTUOUSO ALERIA, PEDRO
ALERIA, IGNACIO ALMAQUIO, FRANCISCO AMONGAN, MARCELINO AREGLON, HONORIO ARANDIA,
TEODORO ASOQUE, SERGIO BAGUIO, TIRSO BAGUIO, SENANDO BAJA, VELLAJUADO BALENIA,
SIMPLICIO BANOC, FELIPE BAROLA, PEDRO BAROLA, EDILBERTO BARON, PATROCINIO BARON,
CONRADO BASTIDA, MACASAWANG BAUTE, CRESENCIO BONGCAHIG, LEONORA BUSTAMANTE,
PABLO BUSTAMANTE, CELEDONIO BUTULAN, LEOPOLDO CAGUTOM, IGMIDIO CAINGLET, GAUDENCIO
CAMELLOTES, LEONARDO CAMELLOTES, FORTUNATO CAPILITAN, FRANCISCO CAPILITAN, RAFAEL
CARAMAT, FRANCISCO CARTEGENA, NAPOLEON CASTRO, FERMIN CASTILLO, ROBERTO CATIPAY,
BERNARDO CEBUCO, ANTONIO CELOSIA, CIRILO CERO, MACARIO CERO, FERNANDO COBALES,
GABRIEL COBALES, SERGIO CONCHA, ROGELIO CONGRESO, FLORENTINO CONSIGNA, EXU-PERIO
CUBERO, ROGELIO CUBERO, TIMOTEO DAPLIN, ANTONIO DOMINGO, EBODIO DONGIS, DELFIN ECO,
RICARDO ENDRIGA, BIENVENIDO ESPINOSA, PAULINO ESTALANE, BENITO ESTREMOS, JUAN
ESTREMERA, SAMUEL FALAR, HILARIO FEJI, JR., HENRY FONTILLAS, DOMINGO GIDA, RODOLFO
GUERRA, CESAR IBANEZ, JULIAN IBANEZ, JOVENCIO INOCEDA, HONORATO IROY, DOROTEO JOVITA,
ESTELITO JUANILLO, ALMA LABANDIA, CIPRIANO LABRADOR, FELIX LAGANG, RODRIGO LARODA,
LEOPOLDO LAURENTE, SEGUNDINO LIMBAGA, CRISPIN LIPARANON, NONITO LIPARANON, ROGELIO
LOPEZ, WILLIAM LUZARAN, CIPRIANO MACLAY, GUILLERMO MADJOS, CRISPIN MADULARA, CIPRIANO
MAGLANA, LEOPOLDO MAGLANA, MARCOS MAGLANA, FLO-RENCIO MAGNO, HONESTO MAGNO,
HERMINIO MAGNO, SEVERINO MAGONCIA, TRANQUILINO MAKILING, TRANQUILINO MALAZA,
ROGELIO MALINAO, AGUSTIN MANDAWE, ARNULFO MANLIMOS, FLAVIANO MAPANO, EUNILO
MANTE, PEDRO MAPANO JR., VICTORIANO MARSADA, PEDRO MARAGANAS, GERONIMO MARILLA,
LEONARDO MARQUEDA, NICOMEDES MARQUEDA, JOSE MICABALO, TEODORICO MORATA,
FLORENTINO MORENO, PABLO MULAY, FEDERICO MULLET, DIOSDADO MURILLO, MEQUIAS MUSA,
FELICIDARIO MUYALDE, SERGIO NAYRE, EDUARDO OBANE, NAPOLEON OLACAO, CONSTANCIO
PALCONE, PATERNO PALCONE, ALEJANDRO PAYOR, ROGELIO PELICANE, CASIMIRO PEREGRINO,
FLORO POL, EUTIQUIO POMALOY, WILLIAM POMALOY, ZOSIMO PORLAS, CONSTANTINO RAMISES,
CARLITO REAMBONANCA, ARCADIO REDUCTO, LORENZO REYES, HERMOGENES RULI, NESTOR RULIDA,
BENITO SALOVERES, FLORENTINO SANICO, GREGORIO DELOS SANTOS, CATALINO SELIM, TEOGENIES
SARVIDA, FRANCISCO SENDO, CATALINO SERNA, CELSO SOLANTE, ROBERTO SOLOMON, MARIA
SUEMITH, MEMORITO TAER, SIMEON TAGBILARAN, GREGORIO TELEN, PASCUAL TELEN, JAIME
TIBALLA, CARLITO TIO, DOMINADOR TIO, JAMBO TIO, SAMSON TIO, MARTIN TIO, CANDIDO
TORREJOS, JOSE TORREON, CORCOPIO TORRES, EMERITO TUMALA, PETRONILO TUMALA, VECIO
AGUILON, LEOPOLDO CEBUCO, CRISANTO LABRADOR, DIONISIO GULFAN, TEODORO LORETO, VICENTE
TIO, BERNARDO MALUBAY, REMO CUIZON, PETRONILO LOR, EDGARDO DOMINGO, TOMAS LINGO,
ARMANDO ALTRES AND DANILA SABINO, petitioners
vs.
HON. NATIONAL LABOR RELATIONS COMMISSION, EASTCOAST DEVELOPMENT ENTERPRISES,
SPOUSES CONSTANCIO and LEODEGARIA MAGLANA, ANTONIO FLORENDO, MIRIAM MAGLANA
SANTAMARIA, MAGLANA AND SONS MANAGEMENT CORPORATION, EASTCOAST DEVELOPMENT
ENTERPRISES, INCORPORATED, AND GEORGE Q. CHOY, respondents.

Grace Lina A. Fuentes for petitioners.

Pedro S. Castillo for Eastcoast Dev't. Enterprises, Inc.

Ernesto M. Nombrado for respondents.

MELENCIO-HERRERA, J.:

Alleging grave abuse of discretion, amounting to lack of jurisdiction, petitioners numbering 170 in all,
assail the Decision of the National Labor Relations Commission (NLRC) in NLRC Case No. 402-LR- XI-81
LRD Case No. STF-314-78) entitled "Nathaniel Olacao, et als., vs. Eastcoast Development Enterprises, et
al.," promulgated on 18 September 1987, setting aside the Decision of Labor Arbiter Jose O. Libron
awarding separation pay to petitioners, and sustaining, instead, private respondents' appeal on the
ground of res judicata or, bar by prior judgment (Annex "A", Petition).

The following background facts, arranged chronologically, will put the controversy in proper perspective:

1. Petitioners were the former workers of private respondent Eastcoast Development Enterprises, then
a single proprietorship, owned, operated and managed by respondents Spouses Constancio and
Leodegaria Maglana, Antonio Florendo and Miriam Maglana Santamaria ("Eastcoast," for brevity). It
operated a logging concession at Kinablangan Baganga, Davao Oriental (p. 233, Rollo).lâwphî1.ñèt

a) On 28 November 1977, petitioners filed with the then Ministry of Labor, Region XI, a complaint
for non-payment of wages and emergency living allowance (LRD Case No. ROXIMC 857-77) entitled
Olacao and 189 others vs. Eastcoast Development Enterprises, Inc." The Complaint was later certified to
the Labor Arbitration Branch of the NLRC and docketed as NLRC Case No. 897-MC-XI-78 (hereinafter, the
"Unpaid Wages Case").

b) In December, 1977, "Eastcoast" decided to totally and permanently close its business. Thus, on 5
December 1977, Antonio Florendo, the Executive Vice-president and General Manager, filed an
application with the Regional Director of the then Ministry of Labor to formally close its business on
account of business reverses (Annex "C-2," Petition, p. 167, Rollo). This application was favorably acted
upon on 15 December 1977 by the Regional Director of the Ministry of Labor, Regional Office No. XI,
Davao City, on condition that "Eastcoast" should pay all unpaid wages and separation pay of all its
employees (Annex "C-3," ibid. p. 168, Rollo).

c) On 5 January 1978 the owners of "Eastcoast" sold all their shareholdings to private respondent,
George Q. Choy, and the company was thereafter known as Eastcoast Development Enterprises, Inc.
("Eastcoast, Inc.," for short).

d) On 21 January 1978, "Eastcoast, Inc.," under a new management, paid its 381 employees including
petitioners herein, all their unpaid wages living allowances, overtime pay and all other benefits due
them and termination pay, computed up to 30 November 1977. Upon receiving said payments,
petitioners signed sworn individual documents entitled "Receipt and Release" whereby they:

absolutely and forever release and discharge the Eastcoast Development Enterprises, its successors and
assigns, of any and all claims and liabilities whatsoever insofar as my past salaries/wages, termination
pay, overtime pay and other privileges accorded me by law and/or any other claims are concerned.
(Annex "C-4", Petition, p. 169, Rollo).
e) On 30 May 1980, Labor Arbiter Porfirio T. Reyes dismissed the "Unpaid Wages Case" (NLRC Case No.
897-MC- XI-78) for lack of merit and for being moot and academic in view of the "Receipt and Release"
documents executed by the complainant- workers.

f) On 30 September 1982, the appeal interposed by petitioners to the NLRC was dismissed by its First
Division, stating in part:

After a careful review of the entire record, we find no justification for disturbing the Labor Arbiter's
findings and conclusions. In our own view, the payment of the amounts stated in the deeds above
referred to has rendered to (sic) this case academic because the receipt by the complainants of the said
amounts is an established fact and there is no showing that their execution of the said documents was
tainted by anything that vitiates free consent. Indeed, it is difficult to believe that more than 300 people
could at the same time be forced to execute the same against their will. (p. 2, Decision, p. 240, Rollo)

2. In the meantime, on 27 November 1978, petitioners filed another Complaint against "Eastcoast, Inc."
this time for Illegal Dismissal LRD Case No. STF-314-78) with the Regional Office No. XI, Davao City, of
the then Ministry of Labor. They prayed for "reinstatement . . . with full backwages from the date of the
illegal dismissal." The Complaint was later on certified to the Arbitration Branch and docketed as NLRC
Case No. 402-LR-XI-81 (the "Illegal Dismissal" Case).

a) In its Answer (Annex "C", Petition), "Eastcoast, Inc.," denied that it had dismissed petitioners illegally
inasmuch as the total closure of its establishment was with prior clearance of the Regional Director of
Labor, Region XI, Davao City, and that pursuant to the latter's Order of 15 December 1977, its employees
including complainants, were fully compensated "all unpaid wages earned and separation pay
equivalent to 15 days for every year of service." As proof thereof, attached to the Answer was the
"Receipt and Release" sworn to by petitioner Nathaniel Olacao (Annex "C- 4").

b) On 21 April 1980 "Eastcoast, Inc." filed a Manifestation in the "Illegal Dismissal Case" to the effect that
the "Unpaid Wages Case" was still pending, and that "Eastcoast Development Enterprises" and Eastcoast
Development Enterprises, Inc., are two different entities (p. 3, Manifestation, p. 196 Rollo).

c) At that point in time, it appears that the "Unpaid Wages Case" was still on appeal with the NLRC.

d) On 30 July 1981, petitioners filed an Amended Complaint in the "Illegal Dismissal Case," impleading as
additional respondents spouses Constancio and Leodegaria Maglana, Antonio Florendo, Miriam Maglana
Santamaria, Maglana and Sons Management Corporation, Eastcoast Development Enterprises, Inc., and
George Q. Choy (Annex "L", p. 203, Rollo). The Amended Complaint alleged that the impleaded
respondents connived with one another in entering into a fictitious contract of transferring the
ownership of "Eastcoast" to George Q. Choy to effect the illegal dismissal of petitioners. Thus, all of
them should be considered jointly and severally liable for the acts complained of.

e) The newly impleaded private respondents all denied liability. In its own Answer, filed on 19 August
1981, "Eastcoast, Inc." denied any connivance with them in the dismissal of complainants (Annex "O", p.
215, Rollo).lâwphî1.ñèt

f) In the interim, the timber license of Eastcoast, Inc., was cancelled and since then up to the present it
has completely ceased operations (Memorandum for Private Respondent, pp. 4 and 8).
g) On 20 May 1986, the NLRC Regional Arbitration Branch, Branch XI, through Labor Arbiter Jose Q.
Libron, rendered a Decision in the "Illegal Dismissal Case," dismissing the charge of illegal dismissal for
lack of merit and awarding separation pay. Thus:

CONFORMABLY WITH THE FOREGOING, judgment is hereby rendered:

(1) Dismissing the charge of illegal dismissal for lack of merit, thus denying the prayer for reinstatement
and backwages;

(2) Ordering respondents Eastcoast Development Enterprises, spouses Constancio Maglana and
Leodegaria Maglana Antonio Florendo, Miriam Maglana Santamaria, Maglana and Sons Management
Corporation, Eastcoast Development Enterprises, Inc., and George Q. Choy to pay jointly and severally
the 170 complainants their separation pay equivalent to one month pay per year of service.

SO ORDERED. (Annex "Q", pp. 228-229, Rollo) (emphasis supplied)

h) On 2 July 1986, private respondents received copy of Labor Arbiter Libron's Decision.

i) On 14 July 1986, private respondents filed their Notice of Appeal and Appeal Memorandum in the
"Illegal Dismissal Case" attaching thereto, admittedly for the first time: (1) Labor Arbiter Reyes' Decision
in the "Unpaid Wages Case" LRD Case No. MC 857-77), dated 30 May 1980, dismissing the case because
payments of wages had already been made; and (2) the NLRC Decision on appeal (NLRC Case No. 897-
MC-XI-78), promulgated on 30 September 1982, affirming Labor Arbiter Reyes' Decision.

j) On 18 September 1987, respondent NLRC reversed Labor Arbiter Libron's Decision in the "Illegal
Dismissal Case," with the following findings:

. . . that sometime in November 1977, the present complainants filed a money claim against
respondents before the Labor Arbitration Branch of Regional Office No. XI, Davao City, which was
docketed as NLRC Case No. 897-MC-XI-78 LRD Case No. MC 85777); that one of the issues involved in
said case was whether the documents signed by complainants and denominated as Receipts and
Release were legally valid and binding; that the said documents show that herein complainants received
the specified amounts from respondents representing full and final payment of their salaries, wages,
allowances, overtime pay and other compensation legally due them; together with termination pay and
they forever release and discharge the respondents, its sucessors and assigns of any claims and liabilities
whatsoever; that on May 30, 1980, the Labor Arbiter rendered a decision dismissing the case for lack of
merit and being moot and academic; . . . that complanants in the above-entitled case appealed the said
decision of the Labor Arbiter to the National LaborRElations Commsission which affirmed the decision of
the Labor Arbiter, . . . .

Ordinarily, this Commission (NLRC) does not consider evidence and other pertinent documents not
submitted during the proceedings before the Arbitration level and submitted for the first time on
appeal.

However, we are constrained to consider the evidence, ANNEXES 'A' and 'B' of the appeal which are the
decision of the Labor Arbiter dated May 30, 1980 and the decision of the First Division of this
Commission promulgated on September 30, 1982 affirming the appealed decision of the Srbiter below.
It appears from the aforesaid decision of Labor Arbiter Porfirio Reyes dated May 30, 1980 which was
affirmed by the First Division of the Commisssion that complainants in the case at bar were already paid
their several maoney claims including termination pay.

We find therefore that this issue of termination pay in the cases under consideration was already
resolved and passed upon in the said Decisions. This is clear case of res judicata or barred (sic) by prior
judgement. (Annex "A", Petition, pp. 151-152, Rollo) (Emphasis supplied).

k) Petitioners' Motion for Reonsideration having been denied, they availed of the present Petition for
Cetiorari, filed on 23 January 1988.

On 23 January 1989, we resolved to give due course and required the submittal of memoranda, the last
of which was filed on 5 June 1989.

The pivotal issue for resolution is whether or not the NLRC gravely abused its discretion amounting to
lack of jurisdiction in reversing Labor Arbiter Libron's Decision on the principal ground of res judicata.

Petitioners, joined by the SOlicitor General, fault the NLRC with grave abuse of discretion. The NLRC and
private respondents, on the otherhand, negate the charge.

We uphold the NLRC.

In actual fact, the pendency of the "Unpaid Wages Case" (NLRC Case No. 897-MC-XI-78) was not raised
for the first time when the "Illegal Dismissal Case" was appealed to the NLRC. For, on 21 April 1980,
before the Decision was rendered in the "Unpaid Wages Case", "Eastcoast" had filed a Manifestation in
the "Illegal Dismissal Case," calling attention to the pendency of the "Unpaid Wages Case" "filled
sometime in the last quarter of 1977" and verified by one of the petitioners herein Nathaniel Olaca
(Annex "J", Petition). Counsel for the complainants therein was the same counsel in the present case
(ibid). Too, in "Eastcoast's" Answer (Annex "D", ibid) in the "Illegal Dismissal Case," it maaade specific
reference to the "Receipt and Release" individually executed by petitioners. It should have been no
surprise to complainants, therefore, when that matter was invoked on appeal before the NLRC. Besides,
the NLRC is empowered to take judicial notice of its own pronouncements.

Moreover, at the time said Manifestation was made on 21 April 1980, the Decision in the "Unpaid
Wages Case" had not yet been rendered having been promulgated only on 30 May 1980, which Decision
was affrimed by the NLRC, First Divisionn, only on 30 September 1982. When "Eastcoast, Inc." appealed
the "Illegal Dismissal Case" on 14 July 1986 therefore, it was only then that it could rightfully invoke the
Decision in the "Unpaid Wages Case" and the affirmance thereof by the First Division of the NLRC in
1982. It was in no position to raise the same in its Answer, dated 19 August 1981, to the Amended
Complaint. But even then, it had allownaces and other benefits granted by the New Labor Code of the
Philippines and other applicable Presidential Decrees."

Thus no grave abuse of discretion can be attributed to the NLRC for concluding that from the said
Decisions, the issue of termination pay had already been passed upon and resolved ; in other words, a
clear case of 'res judicata' or bar by former judgement. The NLRC found that complainants had already
been paid (p. 4, NLRC Resolution, September 19, 1987).lâwphî1.ñèt  Parties ought not to be permitted to
ligitate an issue more than once (Eternal Gardens Memorial Parks Corp. vs. Court of Appelas, G.R. No.
73794, 19 September 1988). The Decisions in the separatiion pay of peitioners.
But petitioners claim that the causes of action in the two cases were different — in the "Unpaid Wages
Case," money claims were involved; in the "Illegal Dismissal Case," petitioners challenged their
termination from employment. The difference, however, appears only oon the surface. In essence,
because petitioners claimed that they had been illegally dismissed, they prayed for "full backwages from
the date of illegal dismissal." In fact, it was separation pay that was awarded to them in Labor Arbiter
Libron's Decision in the "Illegal Dismissal Case," who found that "complainants' termination was effected
on a valid ground authorized by law, but considering that termination and closure was effected without
prior clearance . . . complainants should be granted separation pay" (p. 7 Decision). The charge of illegal
dismissal was dismissed for lack of merit and complainant's prayer for reinstatement and bacckwages
was denied (p. 12, ibid).

Peitioners further contend that their acceptance of separation pay does not operate as a waiver of their
claims in the "Illegal Dismissal Case." Indeed, jurisprudence exists to the effect that a deed of release or
quitclaim cannot bar an employee from demanding benefits to which he is legally entitled (Fuentes vs.
NLRC, G.R. No. 76835, November 24, 1988); that quitclaims and/or complete releases executed by the
employees do not stop them from pursuing theri claim arising from the unfair labor practice of the
employer (Garcia vs. NLRC, G.R. No. 67825, September 4, 1987, 153 SCRA 639); and that employees who
received their received their dismissal and that the acceptance of those benefits would not amount to
estoppel (Mercury Drug Co, Inc. vs. Court of Industrial Relations, G.R. No. 23357, April 30, 1974, 56 SCRA
694); De Leon vs. NLRC, G.R. No. 52056, October 30, 1980, 100 SCRA 691).

A telling difference from the cited cases, however, is the fact that the issue of the validity of the
releases, executed by petitioners under oath, was squarely raised and resolved in Labor Arbiter Reyes'
Decision in the "Unpaid Wages Case," which found categorically that:

The document relieved absolutely and forever released and discharged the Eastcoast Development
Enterprises, Inc., its sucessors and assigns, of any and all calims and liabilities whatsoever insofar as their
pastt salaries, termination pay, overtime pay and other privileges accorded them by law" (Emphasis
supplied)

That the Decision was renderd on 30 May 1980 and was affirmed by the NLRC, First Division, on 30
September 1982, which found no justification for disturbing those findings, with this additional
observation:

More than the above, the record shows that the complainants received, by virtue of the release
documents, amounts which exceeded by leaps and bounds their original claims for unpaid wages and
allowances.

The aforesaid Decisions in the "Unpaid Wages Case" had become final and executory.

It may be that private respondents' appeal was filed oin the 12th day contrary too Article 223 of the
Labor Code prescribing ten (10) calendar days as the reglemntary period of appeal. Private respondents
claim that the tenth day fell on a Saturday when offices of the NLRC were allegedly clsed sa that their
last day to appeal was Monday, July 14th. That is nort correct. Saturday is still considered a business day
and if the last day to appeal falls on a Saturday, the act is still due on that day (SM Agri and Gen.
Machineries vs. NLRC, etal., G.R. No. 74806, January 9, 1989).lâwphî1.ñèt

Nonetheless, as the NLRC had pointed out in its Comment:

True, the appeal to it was filed on the 12th day but public respondent wanted to avoid ruling on the
same issue of separation pay for that matter had been judicially settled in the other case. It merely
exercised its prerogative in relaxing its rule regarding the ten (10) calendar day period for filing appeals
(Sec. 1, Rule VIII of the Revised Rules of the NLRC) from decisions of its Labor Arbiterss, as it haaad done
so in similar cases . . . (p. 6, Comment, p. 333, Rollo)

Indeed, the perfection of an appeal wihtin the reglementary period is considered juridictional. Hoever,
ther was legal jusitifcation for the NLRC to have given due course to the appeal, namely, to obviate a
miscarriage of justice. In this proceeding, the issue of separation pay had been judicially settled, with
finality, in another case, also by the NLRC. The NLRC, therefore, had no alternative except to forestall
the grant of separation pay twice. The principle agasint unjust enrichment must be held applicable to
labor cases as well.

WHEREFORE, the challenged Decision of the National Labor Relations Commission in NLRC Case No. 402-
LR-XI-81 is hereby AFFIRMED in toto.

SO OREDERED.
G.R. No. 80500 July 5, 1989

ROBUSTA AGRO MARINE PRODUCTS, INC. and MARIO SANTOS, JR., petitioners,

vs.
BALTAZAR GOROMBALEM, NATIONAL LABOR RELATIONS COMMISSION (NLRC), Second Division,
DEPARTMENT OF LABOR AND EMPLOYMENT, Manila, and VICENTE MANZANO, Labor Arbiter, NLRC,
Arbitration Branch, Region IV, respondents.

Joaquin G. Chung, Jr. Law Offices for petitioner.

Emerito Salva for private respondent.

GANCAYCO, J.:

The principal issue in this case is whether or not administrative due process was denied the petitioners
when the respondent labor arbiter rendered a decision based on position papers filed by the parties
without conducting a trial.

The petition is erroneously captioned "Petition for Review on Certiorari." This error notwithstanding,
and in the interest of justice, the Court resolved to treat the instant petition as a special civil action
for certiorari on account of the jurisdictional issue raised herein.1

The undisputed facts are as follows:

On June 14, 1985, private respondent Baltazar C. Gorombalem filed a complaint with the Regional
Arbitration Branch of the National Labor Relations Commission (NLRC) against petitioner Robusta Agro
Marine Products, Inc., (Robusta for short), for unfair labor practice, illegal suspension, non-payment of
overtime pay and premium pay for holiday and rest day, violation of various decrees on minimum wage
and allowances, unpaid wages or commission, night shift differential pay, and separation pay. The case
was docketed as NLRC Case No. RBIV-6-1639-85.

Initial hearing was scheduled for June 27, 1985. Notice was sent by registered mail to Robusta. As there
was no appearance for both Robusta and Gorombalem, the hearing was reset. Robusta attended the
July 1, 1985 hearing which was again reset for July 9 inasmuch as Gorombalem failed to appear. On July
9 Robusta failed to appear so the hearing was reset for July 19. Both parties were represented during
the July 19 hearing. Nevertheless, the hearing was reset again to July 21 for possible amicable
settlement. On July 26, 1985, both parties were again represented. However, upon their agreement, the
hearing was reset to August 8, 1985.

In the August hearing, the parties failed to amicably settle the case. Gorombalem filed his sinumpaang
salaysay (sworn statement), with a copy furnished to Robusta. Robusta was directed by the labor arbiter
to file its answer within 10 days.

On August 20, 1985, Robusta filed a Manifestation and Urgent Motion for Extension of Time To File
Counter Affidavit Ex-Parte, requesting that it be given fifteen (15) days from said date within which to
file its counter affidavit. The labor arbiter granted the motion.
On September 4, 1985, Robusta filed a Second Motion For Extension of Further Time To File Position
Paper/Counter Affidavit, requesting another extension of fifteen days from September 4, 1985. The
labor arbiter granted the same.

On September 18,1985, Robusta filed a third Motion For Extension of Further Time To File Counter
Affidavit, ex- parte requesting a period of fifteen (15) days from September 19,1985 within which to file
evidence.

On October 4, 1985, Robusta filed an Addendum to Motion For Extension of Further Time to file Counter
Affidavit, ex-parte asking for another fifteen (15) days from October 4, 1 985. This time, the labor arbiter
in a notice sent on October 4, 1985, denied the motion for a fourth extension of time, but gave Robusta
three days (3) from receipt of notice within which to file its position paper and evidence, with a warning
that after the expiration of the three-day period, the case would be decided on the basis of the
documents submitted and that no further motion for reconsideration shall be entertained.

Robusta received the notice on October 7, 1985, and it forthwith submitted its position paper on
October 10, 1985 refuting the Sinumpaang Salaysay of Gorombalem and stating therein that the
submission is subject to Robusta's right to finally submit a more extensive supplemental position paper
and counter-affidavit of witnesses.

The Sinumpaang Salaysay submitted by Gorombalem alleges that from June 15, 1981 to August 30,
1981, he worked as a fishpond guard with Robusta in the latter's fishpond in Barangay Subay, Carmona,
Rizal with a salary of P300.00 a month plus a ration of two gantas of rice every week. As fishpond guard,
he worked from 6:00 p.m. to 6:00 a.m., Monday to Sunday. He had no rest day. He was not paid
overtime pay, holiday pay, night shift differential pay and cost of living allowance. From September 1981
to December 31, 1982, he did not report for work. On January 1, 1983, he returned to work 0and
Robusta assigned him again as fishpond guard with a monthly salary of P400.00 and a ration of
two gantas of rice every week. His tour of duty was from 6:00 p.m. to 6:00 a.m. Again, he had no rest
day, and Robusta did not pay him overtime pay, holiday pay, night shift differential pay, 13th month pay,
and cost of living allowance.

On January 1, 1985, Gorombalem was given an additional salary of P50.00 a month, but his ration of
two gantas of rice per week was reduced to one ganta of rice per week.

On June 6, 1985, private respondent inquired from Honesto Subida, Robusta's general manager, about
the reduction of his ration. Subida got angry and told him that he did not like to see his (Gorombalems)
face anymore. Subida also prohibited him from reporting for work. Thus, Gorombalem no longer
reported for work.

In its position paper Robusta, denied that Gorombalem was illegally dismissed. It claimed that
Gorombalem stopped working voluntarily because he was afraid of retaliation from a victim who
charged him with frustrated homicide before the Court of First Instance of Rizal in a case docketed as
Criminal Case No. 4457 and filed on September 1, 1981, and for which a warrant of arrest was issued
against him on September 3,1981. Robusta maintained that Gorombalem stopped working from
September 1, 1981 and that he returned to work only on January 1, 1983. Robusta also invoked
prescription against the claim for benefits from June 15,1981 to August 30,1981 and January 1, 1983 to
January 1984.
The labor arbiter rendered a decision on October 24, 1985, ordering Robusta to reinstate Gorombalem
and to pay him backwages, overtime pay, night shift differential pay, premium pay for holidays and
premium pay for rest days in the total amount of P37,393.72. 2

Robusta appealed the decision to the NLRC on the grounds that the labor arbiter committed a grave
abuse of discretion in rendering the decision as well as serious errors in the findings of fact which, if not
corrected, would cause grave or irreparable injury to Robusta. Robusta claimed it was denied a trial on
the merits which is indispensable for purposes of administrative due process. 3

In a decision promulgated on July 1, 1987, the Second Division of the NLRC 4 modified the decision of the
labor arbiter by deleting the award of overtime pay, night differential pay and premium pay for holidays
and rest days because of lack of evidence to support the claims. The NLRC affirmed the labor arbiter's
award for backwages arising from Robusta's violation of the various Wage Orders issued by the
government. 5

Gorombalem filed a motion for reconsideration of the NLRC Decision, asking that the labor arbiter's
decision be affirmed in toto. 6 Robusta also filed a motion for reconsideration of the NLRC decision on
the ground, among others, that the labor arbiter failed to afford Robusta administrative due process by
denying it a trial on the merits. 7

In a resolution promulgated on October 9, 1987, the NLRC denied Robusta's motion for reconsideration
for lack of merit and for having been filed out of time. 8

Hence, the present petition anchored on the ground that petitioner was denied administrative due
process.

The petition is devoid of merit.

What clearly appears in the record is contrary to petitioner's claim that it was denied administrative due
process. The simple meaning of procedural due process is that a party to a case must be given sufficient
opportunity to be heard. Its very essence is to allow all parties opportunity to present evidence.9

In administrative cases, the requirement of due process is the right to a hearing, including the right of
the party interested or affected to present his own case and submit evidence to support his allegation.10

The record of the case discloses that the labor arbiter gave petitioner Robusta ample opportunity to
present its side and to give evidence. It is petitioner's fault if it failed to do so. It is a well-known rule that
in proceedings before the NLRC or a labor arbiter, technical rules of procedure and evidence are not
binding.11 Even under the revised rules of the NLRC an expeditious procedure is provided for.12

Under the aforementioned rules, after the initial conference for a possible amicable settlement of the
case, the parties are required to submit their position papers accompanied by supporting documents
and affidavits of witnesses. Under Section 3 of the same Rule VII, the labor arbiter has the discretion to
determine the necessity for a formal hearing or investigation. This procedure was observed by the labor
arbiter in this case.

Simplification of procedure, without regard to technicalities of law or procedure and without sacrificing
the fundamental requisites of due process, is mandated to insure a speedy administration of social
justice. This Court construed Article 221 of the Labor Code as to allow the NLRC or a labor arbiter to
decide a case on the basis of position papers and other documents submitted without resorting to
technical rules of evidence as observed in regular courts of justice. 13

In the present case, it is crystal clear from the record, that petitioner was given several opportunities to
present evidence in its favor, but it failed to do so. At no time did petitioner ever ask that there be a trial
on the merits. All that it submitted was its position paper. It was within the competence of the labor
arbiter to determine if there was a need for a hearing. In this case, the labor arbiter did not deem it
necessary to conduct a hearing. The petitioner was never denied administrative due process.

The court also takes note of the inconsistent stand of petitioner on the matter of Gorombalem's
separation from the service. Petitioner's theory in its position paper was that the private respondent
was not illegally dismissed as he resigned voluntarily because he was afraid of retaliatory action by the
victim of a criminal incident for which he was charged. On the other hand, in its Motion for
Reconsideration of the NLRC Decision, petitioner maintained that the criminal charge against private
respondent should have been considered as a justification for the dismiss of private respondent. This
inconsistent position is an eloquent indication that the private respondent was dismissed from the
service in an irregular manner and not in accordance with law.

Indeed, if truly the private respondent committed an act which was a lawful cause or justification for his
dismissal, petitioner should have given him the opportunity to explain or present his side. There should
not be an outright termination of the services of private respondent without affording him due process.
Otherwise, it will be a violation of private respondent's right to security of tenure .14

WHEREFORE, the petition is DISMISSED for lack of merit, with costs against petitioner.

This decision is immediately executory.

SO ORDERED.
APPEALS

days from receipt of such decisions, awards, or orders. Such appeal may be entertained only on any of
the following grounds:

a. If there is prima facie evidence of abuse of discretion on the part of the Labor Arbiter;
 

b. If the decision, order or award was secured through fraud or coercion, including graft and
corruption;
 

c. If made purely on questions of law; and

 

d. If serious errors in the findings of facts are raised which would cause grave or irreparable
damage or injury to the appellant.

In case of a judgment involving a monetary award, an appeal by the employer may be perfected only
upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by
the Commission in the amount equivalent to the monetary award in the judgment appealed from.

In any event, the decision of the Labor Arbiter reinstating a dismissed or separated employee, insofar as
the reinstatement aspect is concerned, shall immediately be executory, even pending appeal. The
employee shall either be admitted back to work under the same terms and conditions prevailing prior to
his dismissal or separation or, at the option of the employer, merely reinstated in the payroll. The
posting of a bond by the employer shall not stay the execution for reinstatement provided herein.

To discourage frivolous or dilatory appeals, the Commission or the Labor Arbiter shall impose reasonable
penalty, including fines or censures, upon the erring parties.

In all cases, the appellant shall furnish a copy of the memorandum of appeal to the other party who shall
file an answer not later than ten (10) calendar days from receipt thereof.

The Commission shall decide all cases within twenty (20) calendar days from receipt of the answer of the
appellee. The decision of the Commission shall be final and executory after ten (10) calendar days from
receipt thereof by the parties.

Any law enforcement agency may be deputized by the Secretary of Labor and Employment or the
Commission in the enforcement of decisions, awards or orders. (As amended by Section 12, Republic Act
No. 6715, March 21, 1989)

Art. 224. Execution of decisions, orders or awards.

a. The Secretary of Labor and Employment or any Regional Director, the Commission or any Labor
Arbiter, or Med-Arbiter or Voluntary Arbitrator may, motu proprio or on motion of any
interested party, issue a writ of execution on a judgment within five (5) years from the date it
becomes final and executory, requiring a sheriff or a duly deputized officer to execute or enforce
final decisions, orders or awards of the Secretary of Labor and Employment or regional director,
the Commission, the Labor Arbiter or med-arbiter, or voluntary arbitrators. In any case, it shall
 be the duty of the responsible officer to separately furnish immediately the counsels of record
and the parties with copies of said decisions, orders or awards. Failure to comply with the duty
prescribed herein shall subject such responsible officer to appropriate administrative sanctions.
 

b. The Secretary of Labor and Employment, and the Chairman of the Commission may designate
special sheriffs and take any measure under existing laws to ensure compliance with their
decisions, orders or awards and those of the Labor Arbiters and voluntary arbitrators, including
the imposition of administrative fines which shall not be less than P500.00 nor more than
P10,000.00. (As amended by Section 13, Republic Act No. 6715, March 21, 1989)

Art. 225. Contempt powers of the Secrai etary of Labor. In the exercise of his powers under this Code,
the Secretary of Labor may hold any person in direct or indirect contempt and impose the appropriate
penalties therefor.

CASES:

*Case 11 missing

G.R. No. 141947       July 5, 2001

ISMAEL V. SANTOS, ALFREDO G. ARCE and HILARIO M. PASTRANA, petitioners,

vs.
COURT OF APPEALS, PEPSI COLA PRODUCTS PHILS., INC., LUIS P. LORENZO, JR. and FREDERICK
DAEL, respondents.

BELLOSILLO, J.:

This petition for review seeks to annul the Resolution1 of the Court of Appeals in CA-G.R. SP No. 54853
dated 28 September 1999 which summarily dismissed petitioners' special civil action for certiorari for
failing to execute properly the required verification and certification against forum shopping and to
specify the material dates from which the timeliness of the petition may be determined.

Private respondent Pepsi Cola Products Phils., Inc. (PEPSI) is a domestic corporation engaged in the
production, distribution and sale of beverages. At the time of their termination, petitioners Ismael V.
Santos and Alfredo G. Arce were employed by PEPSI as Complimentary Distribution Specialists (CDS)
with a monthly salary of P 7,500.00 and P10,000.00, respectively, while Hilario M. Pastrana was
employed as Route Manager with a monthly salary of P 7 ,500.00.

In a letter dated 26 December 1994,2 PEPSI informed its employees that due to poor performance of its
Metro Manila Sales Operations it would restructure and streamline certain physical and sales
distribution systems to improve its warehousing efficiency. Certain positions, including that of
petitioners, were declared redundant and abolished. Consequently, employees with affected positions
were terminated.

On 15 January 1995 petitioners left their respective positions, accepted their separation pays and
executed the corresponding releases and quitclaims. However, before the end of the year, petitioners
learned that PEPSI created new positions called Account Development Managers (ADM) with
substantially the same duties and responsibilities as the CDS. Aggrieved, on 15 Apri1 1996, petitioners
filled a complaint with the Labor Arbiter for illegal dismissal with a prayer for reinstatement, back
wages, moral and exemplary damages and attorney's fees.

In their complaint, petitioners alleged that the creation of the new positions belied PEPSI's claim of
redundancy. They further alleged that the qualifications for both the CDS and ADM positions were
similar and that the employees hired for the latter positions were even less qualified than they
were.3 Likewise taking note of possible procedural errors, they claimed that while they were notified of
their termination, PEPSI had not shown that the Department of Labor and Employment (DOLE) was also
notified as mandated by Art. 283 of the Labor Code which states-

Art. 283. Closure of Establishment and Reduction of Personnel. The employer may also terminate the
employment of any employee due to the installation of labor-saying 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
worker and the Ministry of Labor and Employment: at least one  (1) month before the intended date
thereof  xxxx (italic supplied).

PEPSI, on the other hand, maintained that termination due to redundancy was a management
prerogative the wisdom and soundness of which were beyond the discretionary review of the courts.
Thus, it had the right to manage its affairs and decide which position was no longer needed for its
operations. It further maintained that the redundancy program was made in good faith and was not
implemented to purposely force certain employees out of their employment. It also claimed that a close
perusal of the job descriptions of both the CDS and ADM positions would show that the two (2) were
very different in terms of the nature of their functions, areas of concerns, responsibilities and
qualifications.4

On 18 June 1997, Labor Arbiter Romulus S. Protacio dismissed the complaint for lack of merit.
Furthermore, he ruled that the one (1)-month written notice prior to termination required by Art. 283
was complied with.

On appeal, the National Labor Relations Commission (NLRC) affirmed the ruling of the Labor Arbiter.
However, in its Decision5  dated 5 March 1999 it found that the Establishment Termination Report  was
submitted to the DOLE only on 5 April 1995 or two "(2) months after the termination had already taken
place6 and thus effectively reversing the finding of the Labor Arbiter that the required one (1)-month
notice prior to termination was complied with. Nonetheless, the NLRC dismissed the appeal,
citing International Hardware, Inc. v. NLRC, 7  which held -

x x x x if an employee consented to his retrenchment or voluntarily applied for retrenchment with the
employer due to the installation of labor-saving devices, redundancy, closure or cessation of operation
or to prevent financial losses to the business of the employer, the required previous notice to the DOLE
is not necessary as the employee thereby acknowledged the existence of a valid cause for termination of
his employment  x x x x (italics supplied).

On 10 September 1999, petitioners filed a special civil action for certiorari with the Court of
Appeals.8 The Court of Appeals in the assailed Resolution  dismissed the petition outright for failure to
comply with a number of requirements mandated by Sec. 3, Rule 46, in relation to Sec. 1, Rule 65, of the
1997 Rules of Civil Procedure. Respondent appellate court found that the verification and certification
against forum shopping were executed merely by petitioners' counsel and not by petitioners. The
petition also failed to specify the dates of receipt of the NLRC Decision  as well as the filing of the motion
for reconsideration.9 Under the aforecited Rules, failure of petitioners to comply with any of the
requirements was sufficient ground for the dismissal of the petition.

Petitioners now present the sole issue of whether there was failure to comply with the requirements of
the Rules in filing their petition for certiorari.

We find no manifest error on the part of the Court of Appeals; hence we affirm.

It is true that insofar as verification is concerned, we have held that there is substantial compliance if the
same is executed by an attorney it being presumed that facts alleged by him are true to his knowledge
and belief.10 However the same does not apply as regards the requirement of a certification against
forum shopping. Section 3, Rule 46 of the 1997 Rules of Civil Procedure explicitly requires -

x x x x The petitioner shall also submit together with the petition a sworn certification that he has not
theretofore commenced any other action involving the same issues in the Supreme Court, the Court of
Appeals or different divisions thereof, or any other tribunal or agency; if there is such other action or
proceeding he must state the status of the same; and if he should thereafter learn that a similar action
or proceeding has been filed or is pending before the Supreme Court, the Court of Appeals, or different
divisions thereof, or any other tribunal or agency, he undertakes to promptly inform the aforesaid courts
and other tribunal or agency thereof within five (5) days therefrom x x x x

It is clear from the above-quoted provision that the certification must be made by petitioner himself and
not by counsel since it is petitioner who is in the best position to know whether he has previously
commenced any similar action involving the same issues in any other tribunal or agency.11

Petitioners argue that while it may be true that they are in the best position to know whether they have
commenced an action or not this information may be divulged to their attorney and there is nothing
anomalous or bizarre about this disclosure.12 They further maintain that they executed a Special Power
of Attorney  specifically to authorize their counsel to execute the certification on their behalf.

We are aware of our ruling in BA Savings Bank v. Sia13  that a certification against forum shopping may be
signed by an authorized lawyers who has personal knowledge of the facts required to be disclosed in
such document. However, BA Savings Bank  must be distinguished from the case at bar because in the
former, the complainant was a corporation, and hence, a juridical person. Therefore, that case made an
exception to the general rule that the certification must be made by the petitioner himself since a
corporation can only act through natural persons. In fact, physical actions, e.g., signing and delivery of
documents, may be performed on behalf of the corporate entity only by specifically authorized
individuals. In the instant case, petitioners, are all natural persons and there is no showing of any
reasonable cause to justify their failure to personally sign the certification.14 It is noteworthy that PEPSI
in its Comment stated that it was petitioners themselves who executed the verification and certification
requirements in all their previous pleadings. Counsel for petitioners argues that as a matter of policy,
a Special Power of Attorney  is executed to promptly and effectively meet any contingency relative to the
handling of a case. This argument only weakens their position since it is clear that at the outset no
justifiable reason yet existed for counsel to substitute petitioners in signing the certification. In fact, in
the case of natural persons, this policy serves no legal purpose. Convenience cannot be made the basis
for a circumvention of the Rules.

Neither are we convinced that the out-right dismissal of the petition would defeat the administration of
justice. Petitioners argue that there are very important issues such as their livelihood and the well being
and future of their families.15 Every petition filed with a judicial tribunal is sure to affect, even
tangentially, either the well being and future of petitioner himself or that of his family. Unfortunately,
this does not warrant disregarding the Rules.

Moreover, the petition failed to indicate the material dates that would show the timeliness of the filing
thereof with the Court of Appeals. There are three (3) essential dates that must be stated in a petition
for certiorari brought under Rule 65. First,  the date when notice of the judgment or final order
or Resolution  was received; second,  when a motion for new trial or reconsideration was filed;
and third,  when notice of the denial thereof was received. Petitioners failed to show the first and
second dates, namely, the date of receipt of the impugned NLRC Decision  as well as the date of filing of
their motion for reconsideration. Petitioners counter by stating that in the body of the petition for
certiorari filed in the Court of Appeals, it was explicitly stated that the, NLRC Resolution  dated 11 May
1999 was received by petitioners through counsel on 30 July 1999. They even reiterate this contention in
their Reply.

The requirement of setting forth the, three(3) dates in a petition for certiorari under Rule 65 is for the
purpose of determining its timeliness. Such a petition is required to be filed not later than sixty (60) days
from notice of the judgment, order or Resolution  sought to be assailed.16 Therefore, that the petition for
certiorari was filed forty-one (41) days from receipt of the denial of the motion for reconsideration is
hardly relevant. The Court of Appeals was not in any position to determine when this period
commenced to run and whether the motion for reconsideration itself was filed on time since the
material dates were not stated. It should not be assumed that in no event would the motion be filed
later than fifteen (15) days. Technical rules of procedure are not designed to frustrate the ends of
justice. These are provided to effect the proper and orderly disposition of cases and thus effectively
prevent the clogging of court dockets. Utter disregard of the Rules cannot justly be rationalized by
harking on the policy of liberal construction. 17

But even if these procedural lapses are dispensed with, the instant petition, on the merits, must still fail.
Petitioners impute grave abuse of discretion on the part of the NLRC for holding that the CDS and ADM
positions were dissimilar, and for concluding that the redundancy program of PEPSI was undertaken in
good faith and that the case of International Hardware  v. NLRC18  was applicable.

This Court is not a trier of facts. The question of whether the duties and responsibilities of the CDS and
ADM positions are similar is a question properly belonging to both the Labor Arbiter and the NLRC. In
fact, the NLRC merely affirmed the finding of the Labor Arbiter on this point and further elaborated on
the differences between the two (2). Thus it ruled -

x x x x We cannot subscribe to the complainants' assertions that the positions have similar job
descriptions. First CDS report to a CD Manager, whereas the ADMs do not report to the CD Manager,
leading us to believe that the organizational setup of the sales department has been changed.
Second, CDS are filed personnel who drive assigned vehicles and deliver stocks to "dealers" who, under
the job description are those who sell and deliver the same stocks to smaller retail outlets in their
assigned areas. The ADMs are not required to drive trucks and they do not physically deliver stocks to
wholesale dealers. Instead, they help "dealers" market the stocks through retail. This conclusion is borne
out by the fact (that) ADMs are tasked to ensure that the stocks are displayed in the best possible
locations in the dealer's store, that they have more shelf space and that dealers participate in
promotional activities in order to sell more products.

It is clear to us that while CDS are required to physically deliver, sell and collect payments for softdrinks,
they do so not primarily to retail outlets but to wholesale dealers who have retail customers of their
own. They are not required to assist the dealers they deliver to in selling the softdrinks more effectively
whereas ADMs sell softdrinks to big retail outlets (groceries and malls who have shelves and display
cases and who require coolers and other paraphernalia). They do not only sell but they have to
effectively market the products or put them in the best and most advantageous light so that the dealers
who sell the softdrinks retails can sell more softdrinks. The main thrust of the ADMs job is to ensure that
the softdrinks products ordered from them are marketed in a certain manner ("Pepsi-Way standards") in
keeping with the promotional thrust of the company.

Factual findings of the NLRC, particularly when they coincide with those of the Labor Arbiter, are
accorded respect, even finality, and will not be disturbed for as long as such findings are supported by
substantial evidence,19 defined as such relevant evidence as a reasonable mind might accept as
adequate to support a conclusion.20 In this case, there is no doubt that the findings of the NLRC are
supported by substantial evidence. The job descriptions submitted by PEPSI are replete with information
and is an adequate basis to compare and contrast the two (2) positions.

Therefore, the two (2) positions being different, it follows that the redundancy program instituted by
PEPSI was undertaken in good faith. Petitioners have not established that the title Account Development
Manager was created in order to maliciously terminate their employment. Nor have they shown that
PEPSI had any ill motive against them. It is therefore apparent that the restructuring and streamlining of
PEPSI's distribution and sales systems were an honest effort to make the company more efficient.

Redundancy exists when the service capability of the work force is in excess of what is reasonably
needed to meet the demands of the enterprise.21 A redundant position is one rendered superfluous by a
number of factors, such as overhiring of workers, decreased volume of business,  dropping of a particular
product line previously manufactured by the company or phasing out of a service previously undertaken
by the business.22

Based on the fact that PEPSI's Metro Manila Sales Operations were not meeting its sales targets,23 and
on the fact that new positions were subsequently created, it is evident that PEPSI wanted to restructure
its organization in order to include more complex positions that would either absorb or render
completely unnecessary the positions it had previously declared redundant. The soundness of this
business judgment of PEPSI has been assailed by petitioners, arguing that it is more logical to implement
new procedures in physical distribution, sales quotas, and other policies aimed at improving the
performance of the division rather than to reduce the number of employees and create new positions.24

This argument cannot be accepted. While it is true that management may not, under the guise of
invoking its prerogative, ease out employees and defeat their constitutional right to security of tenure,
the same must be respected if clearly undertaken in good faith and if no arbitrary or malicious action is
shown.

Similarly, in Wiltshire File Co., Inc. v. NLRC25 petitioner company effected some changes in its
organization by abolishing the position of Sales Manager and simply adding the duties previously
discharged by it to the duties of the General Manager to whom the Sales Manager used to report. In
that case, we held that the characterization of private respondent's services as no longer necessary or
sustainable, and therefore properly terminable, was an exercise of business judgment on the part of
petitioner company. The wisdom or soundness of such characterization or decision is not subject to
discretionary review on the part of the Labor Arbiter or of the NLRC so long as no violation of law or
arbitrary and malicious action is indicated.

In the case at bar, no such violation or arbitrary action was established by petitioners. The subject
matter being well beyond the discretionary review allowed by law, it behooves this Court to steer clear
of the realm properly belonging to the business experts.

We agree with the NLRC in its application of International Hardware v. NLRC that the  mandate one
(1)  month notice prior to termination given to the worker and the DOLE is rendered unnecessary by the
consent of the worker himself. Petitioners assail the voluntariness of their consent by stating that had
they known of PEPSI's bad, faith they would not have agreed to their termination, nor would they have
signed the corresponding releases and quitclaims.26 Having established private respondent's good faith
in undertaking the assailed redundancy program, there is no need to rule on this contention.

Finally, in a last ditch effort to plead their case, petitioners would want us to believe that their
termination was illegal since PEPSI did not employ fair and reasonable criteria in implementing its
redundancy program. This issue was not raised before the Labor Arbiter nor with the NLRC. As it would
be offensive to the basic rules of fair play and justice to allow a party to raise a question which has not
been passed upon by both administrative tribunals,27 it is now too late to entertain it.1âwphi1.nêt

WHEREFORE, in the absence of any reversible error on the part of the Court of Appeals, the petition
is DENIED. The assailed Resolution  dated 28 September 1999 which summarily dismissed petitioner's
special civil action for certiorari for non-compliance with Sec. 13, Rule 46, in relation to Sec. 1, Rule 65,
of the 1997 Rules of Civil Procedure is AFFIRMED.

SO ORDERED.
A.M. No. RTJ-00-1574       March 28, 2001

GORGONIO S. NOVA, complainant,
vs.
JUDGE SANCHO DAMES II, Regional Trial Court, Branch 38, Daet, Camarines Norte, respondent.

PARDO, J.:

The case is a complaint1 against Judge Sancho Dames II, presiding judge, Regional Trial Court, Camarines
Norte, Branch 38, Daet, in connection with his issuance of a temporary restraining order in Civil Case
NO. 6859, entitled "Sps. Cesar Barcelona and Vilma Jalgalado-Barcelona vs. Hon. Frustuoso T. Aurellano,
et al.", restraining NLRC Sheriff Norberto B. Meteoro from conducting the scheduled public auction of
real property of Vilma J. Barcelona levied on execution pursuant to a final decision of the NLRC in NLRC
RAB V Case NO. 05-12-00141-95, entitled Gorgonio C. Nova, complainant, vs. R. A. Broadcasting
Corporation, Vilma Jalgalado-Barcelona and Deo N. Trinidad, respondents.

The complaint alleged that, in issuing the temporary restraining order, respondent judge acted with
gross ignorance of the law because regular courts had no jurisdiction to hear and decide questions
which arose and were incidental to decisions, orders or awards rendered in labor cases.1âwphi1.nêt

The facts are as follows:

In 1995, complainant Gregorio S. Nova filed with the NLRC Regional Arbitration, Branch V, Legaspi City, a
complaint for illegal dismissal, underpayment of wages, non-payment of holiday pay, rest day, overtime
pay, 13th month pay and other allowances, backwages, separation pay and damages against the R.A.
Broadcasting Corporation/Station DZRM, represented by its Vice President for Operations Vilma J.
Barcelona and Station Manager Deo Trinidad.2

On July 31, 1996, Labor Arbiter Fructuoso T. Aurellano rendered a judgment, the dispositive portion of
which reads:

"WHEREFORE, premises considered, judgment is hereby rendered ordering R. A. BROADCASTING

CORP./DZRM, VILMA J. BARCELONA and DEO TRINIDAD to solidarily pay the complainant the total sum
of ONE HUNDRED ELEVEN THOUSAND SIX HUNDRED SIXTY-NINE PESOS and 60/100 (P111,669.60).

"SO ORDERED."

In time, respondent appealed the decision to the NLRC in Quezon City.

On October 7, 1996, the NLRC dismissed the appeal. Respondent moved for reconsideration but the
NLRC denied the motion as it was filed out of time. Aggrieved by the resolution, on March 12, 1997,
respondent filed with this Court a petition for certiorari.3 On March 17, 1997, the Court dismissed the
petition and also denied the motion for reconsideration thereafter filed.

The decision having become final, on January 7, 1998, the NLRC issued an alias writ of execution.
Pursuant thereto, on February 3, 1998, Labor Sheriff Norberto B. Meteoro levied on real property
belonging to Sps. Cesar and Vilma Barcelona and scheduled the auction sale on June 16, 1998, at 10:00
a.m.
On June 9, 1998, Vilma J. Barcelona and her husband Cesar Barcelona filed with the Regional Trial Court,
Camarines Norte, Daet a civil action for damages with temporary restraining order due to the wrongful
attachment of their property.4 This was raffled to Branch 38, presided over by respondent Judge.

On June 15, 1998, respondent Judge finding that there was extreme urgency and that irreparable injury
would result of the plaintiff before the matter can be heard on notice, issued a temporary restraining
order, restraining the NLRC Sheriff from conducting the scheduled public auction on June 16, 1998.

Hence, on January 5, 1999, complainant filed this administrative charge against Judge Sancho Dames II,
alleging that the issuance of the temporary restraining order constituted a violation of Article 254 of the
Labor Code which prohibited the issuance of temporary restraining order or preliminary injunction in a
case arising from a labor dispute. He further submitted that the regular courts had no jurisdiction to
hear and decide questions which arose and were incidental to the decisions, orders or awards rendered
in labor case.5

On April 28, 1999, the Court Administrator referred the complaint to respondent judge for comment.6

In his answer filed on June 2, 1999, respondent judge claimed that he issued the temporary restraining
order to maintain the subject of controversy in status quo until the hearing of the application for
permanent injunction; that Vilma Jalgalado-Barcelona, Vice-President for Operations, and Deo Trinidad,
the Station Manager, were ordered to solidarily pay with the defendant corporation despite the fact
that the corporation had a distinct personality from its officers; that Cesar Barcelona, not being a
judgment debtor, would lose his property via public auction for an alleged labor dispute he had nothing
to do with; that injunction will lie to prevent alienation of conjugal property; that all properties acquired
during the marriage are presumed to belong to the conjugal partnership property, thus the subject
property belonged to the conjugal partnership of spouses Cesar Barcelona and Vilma Jalgalado-
Barcelona and could not be alienated via public auction; that injunction to prevent a wrong would be
favored than a course requiring plaintiffs to wait and seek damages after the wrong had been done; and
that the instant case involved a judicial question and thus, should be dismissed.7

We referred the case to Court of Appeals Associate Justice Remedios A. Salazar-Fernando, for
investigation.8

In her report and recommendation, Justice Fernando found that respondent Judge was guilty of gross
ignorance of the law because the regular courts in that level had no jurisdiction or authority to issue
injunction or temporary restraining order in labor cases. She recommended that respondent Judge be
fined P10,000.00, with a stern warning that repetition of the same or similar acts in the future would be
dealt with more severely.

We find the recommendation of Justice Salazar-Fernando to be supported by the record and we accept
the same.

Regular courts have no jurisdiction to hear and decide questions which arise and are incidental to the
enforcement of decisions, orders or awards rendered in labor cases by appropriate officers and tribunals
of the Department of Labor and Employment.9 Corollarily, any controversy in the execution of the
judgment shall be referred to the tribunal which issued the writ of execution since it has the inherent
power to control its own processes in order to enforce its judgments and orders.10
True, an action for damages lies within the jurisdiction11 of a regional trial court.12 However, the regional
trial court has no jurisdiction to issue a temporary restraining order in labor cases. Indeed, the
respondent Judge restrained the execution of a final decision of the labor arbiter, which he can not
lawfully do.

Justice Malcolm aptly described ideal judges as "men who have a mastery of the principles of law, who
discharge their duties in accordance with law, who are permitted to perform the duties of the office
undeterred by outside influence, and who are independent and self-respecting human units in a judicial
system equal and coordinate to the other two departments of government."13 Those who wield the
judicial gavel have the duty to study the laws and their latest wrinkles. They owe it to the public to be
legally knowledgeable with basic laws and principles, for ignorance of the law is the bane of injustice.

WHEREFORE, the Court finds respondent Judge Sancho Dames II GUILTY of gross ignorance of the law
and imposes on him a FINE of Ten Thousand Pesos (P10,000.00), payable within thirty (30) days from
notice, with WARNING that a repetition of similar acts shall be dealt with more severely.1âwphi1.nêt

SO ORDERED.
G.R. No. 126322            January 16, 2002

YUPANGCO COTTON MILLS, INC., petitioner,

vs.
COURT OF APPEALS, HON. URBANO C. VICTORIO, SR., Presiding Judge, RTC Branch 50, Manila,
RODRIGO SY MENDOZA, SAMAHANG MANGGAGAWA NG ARTEX (SAMAR-ANGLO) represented by its
Local President RUSTICO CORTEZ, and WESTERN GUARANTY CORPORATION, respondents.

PARDO, J.:

The Case

The case is a petition for review on certiorari of the decision of the Court of Appeals1 dismissing the
petition ruling that petitioner was guilty of forum shopping and that the proper remedy was appeal in
due course, not certiorari or mandamus.

In its decision, the Court of Appeals sustained the trial court's ruling that the remedies granted under
Section 17, Rule 39 of the Rules of Court are not available to the petitioner because the Manual of
Instructions for Sheriffs of the NLRC does not include the remedy of an independent action by the owner
to establish his right to his property.

The Facts

The facts, as found by the Court of Appeals, are as follows:

"From the records before us and by petitioner's own allegations and admission, it has taken the
following actions in connection with its claim that a sheriff of the National Labor Relations Commission
"erroneously and unlawfully levied" upon certain properties which it claims as its own.

"1. It filed a notice of third-party claim with the Labor Arbiter on May 4, 1995.

"2. It filed an Affidavit of Adverse Claim with the National Labor Relations Commission (NLRC) on July 4,
1995, which was dismissed on August 30, 1995, by the labor Arbiter.

"3. It filed a petition for certiorari and prohibition with the Regional Trial Court of Manila, Branch 49,
docketed as Civil Case No. 95-75628 on October 6, 1995. The Regional Trial Court dismissed the case on
October 11, 1995 for lack of merit.

"4. It appealed to the NLRC the order of the Labor Arbiter dated August 13, 1995 which dismissed the
appeal for lack of merit on December 8, 1995.

"5. It filed an original petition for mandatory injunction with the NLRC on November 16, 1995. This was
docketed as Case No. NLRC-NCR-IC. 0000602-95. This case is still pending with that Commission.

"6. It filed a complaint in the Regional Trial Court in Manila which was docketed as Civil Case No. 95-
76395. The dismissal of this case by public respondent triggered the filing of the instant petition.

"In all of the foregoing actions, petitioner raised a common issue, which is that it is the owner of the
properties located in the compound and buildings of Artex Development Corporation, which were
erroneously levied upon by the sheriff of the NLRC as a consequence of the decision rendered by the
said Commission in a labor case docketed as NLRC-NCR Case No. 00-05-02960-90."2
On March 29, 1996, the Court of Appeals promulgated a decision3 dismissing the petition on the ground
of forum shopping and that petitioner's remedy was to seek relief from this Court.

On April 18, 1996, petitioner filed with the Court of Appeals a motion for reconsideration of the
decision.4 Petitioner argued that the filing of a complaint for accion reinvindicatoria with the Regional
Trial Court was proper because it is a remedy specifically granted to an owner (whose properties were
subjected to a writ of execution to enforce a decision rendered in a labor dispute in which it was not a
party) by Section 17 (now 16), Rule 39, Revised Rules of Court and by the doctrines laid down in Sy v.
Discaya,5 Santos v. Bayhon6 and Manliguez v. Court of Appeals.7

In addition, petitioner argued that the reliefs sought and the issues involved in the complaint for
recovery of property and damages filed with the Regional Trial Court of Manila, presided over by
respondent judge, were entirely distinct and separate from the reliefs sought and the issues involved in
the proceedings before the Labor Arbiter and the NLRC. Besides, petitioner pointed out that neither the
NLRC nor the Labor Arbiter is empowered to adjudicate matters involving ownership of properties.

On August 27, 1996, the Court of Appeals denied petitioner's motion for reconsideration.8

Hence, this appeal.9

The Issues

The issues raised are (1) whether the Court of Appeals erred in ruling that petitioner was guilty of forum
shopping, and (2) whether the Court of Appeals erred in dismissing the petitioner's accion
reinvindicatoria on the ground of lack of jurisdiction of the trial court.

The Court's Ruling

On the first issue raised, we rule that there was no forum shopping:

In Golangco v. Court of Appeals,10 we held:

"What is truly important to consider in determining whether forum shopping exists or not is the
vexation caused the courts and parties-litigant by a party who asks different courts and/or
administrative agencies to rule on the same on related caused and/or grant the same or substantially
the same reliefs, in the process creating possibility of conflicting decisions being rendered by the
different for a upon the same issues.

"xxx           xxx           xxx

"There is no forum-shopping where two different orders were questioned, two distinct causes of action
and issues were raised, and two objectives were sought." (Underscoring ours)

In the case at bar, there was no identity of parties, rights and causes of action and reliefs sought.

The case before the NLRC where Labor Arbiter Reyes issued a labor dispute between Artex and Samar-
Anglo. Petitioner was not a party to the case. The only issue petitioner raised before the NLRC was
whether or not the writ of execution issued by the labor arbiter could be satisfied against the property
of petitioner, not a party to the labor case.
On the other hand, the accion reinvindicatoria  filed by petitioner in the trial court was to recover the
property illegally levied upon and sold at auction. Hence, the causes of action in these cases were
different.

The rule is that "for forum-shopping to exist both actions must involve the same transactions, the same
circumstances. The actions must also raise identical causes of action, subject matter and issues.11

In Chemphil Export & Import Corporation v. Court of Appeals,12 we ruled that:

"Forum-shopping or the act of a party against whom an adverse judgment has been rendered in one
forum, of seeking another (and possible) opinion in another forum (other than by appeal or the special
civil action of certiorari), or the institution of two (2) or more actions or proceedings grounded on the
same cause on the supposition that one or the other would make a favorable disposition."

On the second issue, a third party whose property has been levied upon by a sheriff to enforce a
decision against a judgment debtor is afforded with several alternative remedies to protect its interests.
The third party may avail himself of alternative remedies cumulatively, and one will not preclude the
third party from availing himself of the other alternative remedies in the event he failed in the remedy
first availed of.

Thus, a third party may avail himself of the following alternative remedies:

a) File a third party claim with the sheriff of the Labor Arbiter, and

b) If the third party claim is denied, the third party may appeal the denial to the NLRC.13

Even if a third party claim was denied, a third party may still file a proper action with a competent court
to recover ownership of the property illegally seized by the sheriff. This finds support in Section 17 (now
16), Rule 39, Revised Rules of Court, to wit:

"SEC. 17 (now 16). Proceedings where property claimed by third person. - If property claimed by any
other person than the judgment debtor or his agent, and such person makes an affidavit of his title
thereto or right to the possession thereof, stating the grounds of such right or title, and serve the same
upon the officer making the levy, and a copy thereof upon the judgment creditor, the officer shall not be
bound to keep the property, unless such judgment creditor or his agent, on demand of the officer,
indemnify the officer against such claim by a bond in a sum not greater than the value of the property
levied on. In case of disagreement as to such value, the same shall be determined by the court issuing
the writ of execution. 1âwphi1.nêt

"The officer is not liable for damages, for the taking or keeping of the property, to any third-party
claimant unless a claim is made by the latter and unless an action for damages is brought by him against
the officer within one hundred twenty (120) days from the date of the filing of the bond. But nothing
herein contained shall prevent such claimant or any third person from vindicating his claim to the
property by any proper action.

"When the party in whose favor the writ of execution runs, is the Republic of the Philippines, or any
officer duly representing it, the filing of such bond shall not be required, and in case the sheriff or levying
officer is sued for damages as a result of the levy, he shall be represented by the Solicitor General and if
held liable therefor, the actual damages adjudged by the court shall be paid by the National Treasurer
out of such funds as may be appropriated for the purpose." (Underscoring ours)

In Sy v. Discaya,14 we ruled that:

"The right of a third-party claimant to file an independent action to vindicate his claim of ownership over
the properties seized is reserved by Section 17 (now 16), Rule 39 of the Rules of Court, x x x :

"xxx           xxx           xxx

"As held in the case of Ong v. Tating, et. al., construing the aforecited rule, a third person whose
property was seized by a sheriff to answer for the obligation of a judgment debtor may invoke the
supervisory power of the court which authorized such execution. Upon due application by the third
person and after summary hearing, the court may command that the property be released from the
mistaken levy and restored to the rightful owner or possession. What said court do in these instances,
however, is limited to a determination of whether the sheriff has acted rightful or wrongly in the
performance of his duties in the execution of judgment, more specifically, if he has indeed take hold of
property not belonging to the judgment debtor. The court does not and cannot pass upon the question
of title to the property, with any character of finality. It can treat of the matter only insofar as may be
necessary to decide if the sheriff has acted correctly or not. It can require the sheriff to restore the
property to the claimant's possession if warranted by the evidence. However, if the claimant's proof do
not persuade the court of the validity of his title or right of possession thereto, the claim will be denied.

"Independent of the above-stated recourse, a third-party claimant may also avail of the remedy known
as "terceria', provided in Section 17 (now 16), Rule 39, by serving on the officer making the levy an
affidavit of his title and a copy thereof upon the judgment creditor. The officer shall not be bound to
keep the property, unless such judgment creditor or his agent, on demand of the officer, indemnifies the
officer against such claim by a bond in a sum not greater than the value of the property levied on. An
action for damages may be brought against the sheriff within one hundred twenty (120) days from the
filing of the bond.

"The aforesaid remedies are nevertheless without prejudice to 'any proper action' that a third-party
claimant may deem suitable to vindicate 'his claim to the property.' Such a 'proper action' is, obviously,
entirely distinct from that explicitly prescribed in Section 17 of Rule 39, which is an action for damages
brought by a third-party claimant against the officer within one hundred twenty (120) days from the
date of the filing of the bond for the taking or keeping of the property subject of the 'terceria'.

"Quite obviously, too, this 'proper action' would have for its object the recovery of ownership or
possession of the property seized by the sheriff, as well as damages resulting from the allegedly
wrongful seizure and detention thereof despite the third-party claim; and it may be brought against the
sheriff and such other parties as may be alleged to have colluded with him in the supposedly wrongful
execution proceedings, such as the judgment creditor himself. Such 'proper action', as above pointed
out, is and should be an entirely separate and distinct action from that in which execution has issued, if
instituted by a stranger to the latter suit.

"The remedies above mentioned are cumulative and may be resorted to by a third-party claimant
independent of or separately from and without need of availing of the others. If a third-party claimant
opted to file a proper action to vindicate his claim of ownership, he must institute an action, distinct and
separate from that in which the judgment is being enforced, with the court of competent jurisdiction
even before or without need of filing a claim in the court which issued the writ, the latter not being a
condition sine qua non for the former. In such proper action, the validity and sufficiency of the title of
the third-party claimant will be resolved and a writ of preliminary injunction against the sheriff may be
issued." (Emphasis and underscoring ours)

In light of the above, the filing of a third party claim with the Labor Arbiter and the NLRC did not
preclude the petitioner from filing a subsequent action for recovery of property and damages with the
Regional Trial Court. And, the institution of such complaint will not make petitioner guilty of forum
shopping.15

In Santos v. Bayhon,16 wherein Labor Arbiter Ceferina Diosana rendered a decision in NLRC NCR Case No.
1-313-85 in favor of Kamapi, the NLRC affirmed the decision. Thereafter, Kamapi obtained a writ of
execution against the properties of Poly-Plastic Products or Anthony Ching. However, respondent
Priscilla Carrera filed a third-party claim alleging that Anthony Ching had sold the property to her.
Nevertheless, upon posting by the judgment creditor of an indemnity bond, the NLRC Sheriff proceeded
with the public auction sale. Consequently, respondent Carrera filed with Regional Trial Court, Manila an
action to recover the levied property and obtained a temporary restraining order against Labor Arbiter
Diosana and the NLRC Sheriff from issuing a certificate of sale over the levied property. Eventually, Labor
Arbiter Santos issued an order allowing the execution to proceed against the property of Poly-Plastic
Products. Also, Labor Arbiter Santos and the NLRC Sheriff filed a motion to dismiss the civil case
instituted by respondent Carrera on the ground that the Regional Trial Court did not have jurisdiction
over the labor case. The trial court issued an order enjoining the enforcement of the writ of execution
over the properties claimed by respondent Carrera pending the determination of the validity of the sale
made in her favor by the judgment debtor Poly-Plastic Products and Anthony Ching.

In dismissing the petition for certiorari filed by Labor Arbiter Santos, we ruled that:

"x x x. The power of the NLRC to execute its judgments extends only to properties unquestionably
belonging to the judgment debtor (Special Servicing Corp. v. Centro La Paz, 121 SCRA 748).

"The general rule that no court has the power to interfere by injunction with the judgments or decrees
of another court with concurrent or coordinate jurisdiction possessing equal power to grant injunctive
relief, applies only when no third-party claimant is involved (Traders Royal Bank v. Intermediate
Appellate Court, 133 SCRA 141 [1984]). When a third-party, or a stranger to the action, asserts a claim
over the property levied upon, the claimant may vindicate his claim by an independent action in the
proper civil court which may stop the execution of the judgment on property not belonging to the
judgment debtor." (Underscoring ours)

in Consolidated Bank and Trust Corp. v. Court of Appeals, 193 SCRA 158 [1991], we ruled that:

"The well-settled doctrine is that a 'proper levy' is indispensable to a valid sale on execution. A sale
unless preceded by a valid levy is void. Therefore, since there was no sufficient levy on the execution in
question, the private respondent did not take any title to the properties sold thereunder x x x.

"A person other than the judgment debtor who claims ownership or right over the levied properties is
not precluded, however, from taking other legal remedies." (Underscoring ours)
Jurisprudence is likewise replete with rulings that since the third-party claimant is not one of the parties
to the action, he could not, strictly speaking, appeal from the order denying his claim, but should file a
separate reinvindicatory action against the execution creditor or the purchaser of the property after the
sale at public auction, or a complaint for damages against the bond filed by the judgment creditor in
favor of the sheriff.17

And in Lorenzana v. Cayetano,18 we ruled that:

"The rights of a third-party claimant should not be decided in the action where the third-party claim has
been presented, but in a separate action to be instituted by the third person. The appeal that should be
interposed if the term 'appeal' may properly be employed, is a separate reinvidincatory action against
the execution creditor or the purchaser of the property after the sale at public auction, or complaint for
damages to be charged against the bond filed by the judgment creditor in favor of the sheriff. Such
reinvindicatory action is reserved to the third-party claimant."

A separate civil action for recovery of ownership of the property would not constitute interference with
the powers or processes of the Arbiter and the NLRC which rendered the judgment to enforce and
execute upon the levied properties. The property levied upon being that of a stranger is not subject to
levy. Thus, a separate action for recovery, upon a claim and prima-facie showing of ownership by the
petitioner, cannot be considered as interference.

The Fallo

WHEREFORE, the Court REVERSES the decision of the Court of Appeals and the resolution denying
reconsideration.19 In lieu thereof, the Court renders judgment ANNULLING the sale on execution of the
subject property conducted by NLRC Sheriff Anam Timbayan in favor of respondent SAMAR-ANGLO and
the subsequent sale of the same to Rodrigo Sy Mendoza. The Court declares the petitioner to be the
rightful owner of the property involved and remands the case to the trial court to determine the liability
of respondents SAMAR-ANGLO, Rodrigo Sy Mendoza, and WESTERN GUARANTY CORPORATION to pay
actual damages that petitioner claimed.

Costs against respondents, except the Court of Appeals.1âwphi1.nêt

SO ORDERED.
CERTIFICATION ELECTION

G.R. No. 93117 August 1, 1995

LOPEZ SUGAR CORPORATION, petitioner,

vs.
HON. SECRETARY OF LABOR AND EMPLOYMENT, NATIONAL CONGRESS OF UNIONS IN THE SUGAR
INDUSTRY OF THE PHILIPPINES (NACUSIP) and COMMERCIAL AND AGRO-INDUSTRIAL LABOR
ORGANIZATION (CAILO), respondents.

VITUG, J.:

The decision of public respondent, assailed in this petition for certiorari, is anchored on Article 257 of
the Labor Code, as amended, which provides:

Art. 257. Petitions in unorganized establishments. — In any establishment where there is no certified

bargaining agent, a certification election shall automatically be conducted by the Med-Arbiter upon the
filing of a petition by a legitimate labor organization.

The Med-Arbiter, sustained by the Secretary of Labor and Employment, has ruled that the above
provision is mandatory and gives him no other choice than to conduct a certification election upon the
receipt of the corresponding petition.

On 26 July 1989, private respondent National Congress of Unions in the Sugar Industry of the
Philippines-TUCP ("NACUSIP-TUCP") filed with the Department of Labor and Employment ("DOLE")
Regional Office No. VI, Bacolod City, a petition for direct certification or for certification election to
determine the sole and exclusive collective bargaining representative of the supervisory employees of
herein petitioner, Lopez Sugar Corporation ("LSC"), at its sugar central in Fabrica, Sagay, Negros
Occidental.

In its petition, docketed Case No. RO6-MA-021-89, NACUSIP-TUCP averred that it was a legitimate
national labor organization; that LSC was employing 55 supervisory employees, the majority of whom
were members of the union; that no other labor organization was claiming membership over the
supervisory employees; that there was no existing collective bargaining agreement covering said
employees; and that there was no legal impediment either to a direct certification of NACUSIP-TUCP or
to the holding of a certification election. 1

In its comment and opposition, dated 14 August 1989, LSC contended, among other things, that the
petition was bereft of any legal or factual basis; that the petition was nothing more than a useless scrap
of paper designed to harass the company; and that its employees above the rank-and-file category were
in truth unaware of the petition.2

On 18 August 1989, the Commercial and Agro-Industrial Labor Organization ("CAILO"), a registered labor
organization also claiming to count substantial membership among the LSC supervisory employees,
moved to intervene.3 The motion was granted.4
On 22 August 1989, NACUSIP-TUCP submitted Charter Certificate No. 003-89, dated 20 July 1989, of the
NACUSIP-TUCP Lopez Sugar Central Supervisory Chapter.5 LSC, on its part, submitted a list of its
employees above the rank-and-file status preparatory to the inclusion/exclusion proceedings.6

On 13 September 1989, one Carlos S. Gevero, asserting a right to represent the "supervisors of LSC,"
filed a motion to dismiss the petition for lack of interest on the part of the supervisory employees. 7

At the hearing of 20 September 1989, both NACUSIP-TUCP and CAILO failed to appear. Hearing was re-
set for 29 September 19898 but, again, neither NACUSIP-TUCP nor CAILO appeared. On 16 October 1989,
nonetheless, Med-Arbiter Felizardo T. Serapio issued an Order9 granting the petition. He ruled that
under Article 257 of the Labor Code, as amended, the Med-Arbiter was left with no option but to order
the conduct of a certification election immediately upon the filing of the petition, holding that the
subsequent disaffiliation or withdrawals of members did not adversely affect the standing of the
petition. The dispositive portion of his Order read:

VIEWED IN THE LIGHT OF THE FOREGOING, the petition for certification election among the supervisory
employees of the Lopez Sugar Central, filed by the NACUSIP-TUCP is, as it is hereby GRANTED with the
following choices:

1) National Congress of Unions in the Sugar Industry of the Phils. (NACUSIP-TUCP);

2) Commercial and Agro-Industrial Labor Organization (CAILO);

3) No Union.

The designated representation officer is hereby directed to call the parties to a pre-election conference
to thresh out the mechanics of the certification election, including the inclusion and exclusion of voters
and to conduct the election within twenty (20) days from receipt by the parties of this Order. The list
submitted by the Employer (LSC Employees other than rank and file) shall be used to determine the
eligible voters.

SO ORDERED. 10

LSC appealed to the DOLE and asseverated that the order was a patent nullity and that the Med-Arbiter
acted with grave abuse of discretion. 11

In denying the appeal, the Secretary of Labor, in his Decision of 06 March 1990, has likewise ruled that
the holding by the Med-Arbiter of a certification election is mandatory under Article 257 of the Labor
Code; that the subsequent withdrawals and disauthorization/disaffiliation of some supervisory
personnel in the petition for certification election could not bar its being granted; and that a certification
election is still the most appropriate means to finally settle the issue of representation. 12

Hence, this petition for certiorari; it is argued that —

Public Respondent Honorable Secretary of Labor and Employment (has) committed grave abuse of
discretion amounting to lack of jurisdiction when it refused to dismiss a petition for certification election
despite clear lack of legal and factual basis for holding the same. 13

The Solicitor General agrees with public respondent in arguing that the tenor of Article 257 (supra) of
the Labor Code is one of command. He cites paragraph 2, Section 6, Rule V, Book V, of the Implementing
Rules and Regulations of the Labor Code, to the effect that once "a petition (is) filed by a legitimate
organization involving an unorganized establishment, the Med-Arbiter shall immediately order the
conduct of a certification election," which is designed, he continues, to give substance to the workers'
right to self- organization.14 Petitioner promptly retorts that it has no quarrel with public respondent on
the objectives of the law but it points out that the application of Article 257 clearly must first be
occasioned by a genuine petition from a legitimate labor organization.

Not too long ago, the Court already had an opportunity to pass upon this very issue in Progressive
Development Corporation vs. Secretary, Department of Labor and Employment, 15 where we said:

But while Article 257 cited by the Solicitor General directs the automatic conduct of a certification
election in an unorganized establishment, it also requires that the petition for certification election must
be filed by a legitimate labor organization. Article 242 enumerates the exclusive rights of a legitimate
labor organization among which is the right to be certified as the exclusive representative of all the
employees in an appropriate collective bargaining unit for purposes of collective bargaining.

Meanwhile, Article 212(h) defines a legitimate labor organization as "any labor organization duly
registered with the DOLE and includes any branch or local thereof." (Emphasis supplied) Rule I, Section
1(j), Book V of the Implementing Rules likewise defines a legitimate labor organization as "any labor
organization duly registered with the DOLE and includes any branch, local or affiliate thereof." (Emphasis
supplied)

Indeed, the law did not reduce the Med-Arbiter to an automaton which can instantly be set to impulse
by the mere filing of a petition for certification election. He is still tasked to satisfy himself that all the
conditions of the law are met, and among the legal requirements is that the petitioning union must be a
legitimate labor organization in good standing.

The petition for certification election, in the case at bench, was filed by the NACUSIP-TUCP, a national
labor organization duly registered with the DOLE render Registration Certificate No. FED-402-6390-IP.
The legitimate status of NACUSIP-TUCP might be conceded; being merely, however, an agent for the
local organization (the NACUSIP-TUCP Lopez Sugar Central Supervisory Chapter), the federation's bona
fide  status alone would not suffice. The local chapter, as its principal, should also be a legitimate labor
organization in good standing. Accordingly, in Progressive Development, we elucidated:

In the case of union affiliation with a federation, the documentary requirements are found in Rule II,
Section 3(e), Book V of the implementing Rules, which we again quote as follows:

(c) The local or chapter of a labor federation or national union shall have and maintain a constitution
and by-laws, set of officers and books of accounts. For reporting purposes, the procedure governing the
reporting of independently registered unions, federations or national unions shall be observed. (Emphasis
supplied)

Since the "procedure governing the reporting of independently registered unions" refers to the
certification and attestation requirements contained in Article 235, paragraph 2, it follows that the
constitution and by-laws, set of officers and books of accounts submitted by the local and chapter must
likewise comply with these requirements. The same rationale for requiring the submission of duly
subscribed documents upon union registration exists in the case of union affiliation. Moreover, there is
greater reason to exact compliance with the certification and attestation requirements because, as
previously mentioned, several requirements applicable to independent union registration are no longer
required in the case of the formation of a local or chapter. The policy of the law in conferring greater
bargaining power upon labor unions must be balanced with the policy of providing preventive measures
against the commission of fraud.

A local or chapter therefore becomes a legitimate labor organization only upon submission of the
following to the BLR:

1) A charter certificate, within 30 days from its issuance by the labor federation or national union, and

2) The constitution and by-laws, a statement on the set of officers, and the books of accounts all of
which are certified under oath by the secretary or treasurer, as the case may be, of such local or
chapter, and attested to by its president.

Absent compliance with these mandatory requirements, the local or chapter does not become a
legitimate labor organization. 16

The only document extant on record to establish the legitimacy of the NACUSIP-TUCP Lopez Sugar
Central Supervisory Chapter is a charter certificate and nothing else. The instant petition, at least for
now, must thus be GRANTED.

WHEREFORE, the assailed Decision of the Secretary of Labor, dated 06 March 1990, affirming that of the
Med-Arbiter, is ANNULLED and SET ASIDE. The petition for certification election is dismissed. No costs.

SO ORDERED.
TITLE IV LABOR ORGANIZATION

G.R. No. 83190 August 4, 1992

CEBU SEAMEN'S ASSOCIATION, INC., petitioner,

vs.
HON. PURA FERRER-CALLEJA, SEAMEN'S ASSOCIATION OF THE PHILS./DOMINICA C.
NACUA, respondent.

Paterno P. Natinga for petitioner.

Romero S. Occena for Seamen's Association of the Philippines.

MEDIALDEA, J.:

This petition seeks the reversal of the resolution of the Bureau of Labor Relations 1 which affirmed the
decision of the Med-Arbiter holding that the set of officers of Seamen's Association of the Philippines
headed by Dominica C. Nacua, as president, was the lawful set of officers entitled to the release and
custody of the union dues as well as agency fees of said association. The dispositive portion of the
resolution reads:

WHEREFORE, premises considered, the Order of the Med-Arbiter dated 13 July 1987 is hereby affirmed
and the appeal therefrom DISMISSED for lack of merit. (p. 39, Rollo)

The facts surrounding the controversy in this case, as stated in the questioned resolution, is as follows:

The records show that sometime on 23 October 1950, a group of deck officers and marine engineers on
board vessels plying Cebu and other ports of the Philippines organized themselves into an association
and registered the same as a non-stock corporation known as Cebu Seamen's Association, Inc. (CSAI),
with the Securities and Exchange Commission (SEC). Later, on 23 June 1969, the same group registered
its association with this Bureau as a labor union known as the Seamen's Association of the Philippines,
Incorporated (SAPI).

SAPI has an existing collective bargaining agreement (CBA) with the Aboitiz Shipping Corporation which
will expire on 31 December 1988. In consonance with the CBA said company has been remitting
checked-off union dues to said union until February, 1987 when a group composed of members of said
union, introducing itself to be its new set of officers, went to the company and claimed that they are
entitled to the remittance and custody of such union dues. This group, headed by Manuel Gabayoyo
claims that they were elected as such on January 20, 1987 under the supervision of the SEC.

On 26 May 1987, another group headed by Dominica C. Nacua, claiming as the duly elected set of
officers of the union in an election held on 20 December 1986, filed a complaint, for and in behalf of the
union, against the Cebu Seamen's Association, Inc. (CSAI) as represented by Manuel Gabayoyo for the
security of the aforementioned CBA, seeking such relief, among others, as an order restraining the
respondent from acting on behalf of the union and directing the Aboitiz Shipping Corp. to remit the
checked-off union dues for the months of March and April 1987.
On 10 June 1987, respondent CSAI filed its Answer/Position Paper alleging that the complainant union
and CSAI are one and the same union; that Dominica C. Nacua and Atty. Prospero Paradilla who
represented the union had been expelled as members/officers as of November 1984 for lawful causes;
and, that its set of officers headed by Manuel Gabayoyo has the lawful right to the remittance and
custody of the corporate funds (otherwise known as union does) in question pursuant to the resolution
of the SEC dated 22 April 1987.

To bolster further its posture, on the following day, 11 June 1987, the respondent also filed a Motion to
Dismiss the Complaint on the grounds, among others, that the SEC, not the Med-Arbiter, has jurisdiction
over the dispute as provided under P.D. No. 902-A; that there can neither be a complainant no
respondent in the instant case as the parties involved are one and the same labor union, and that Mrs.
Dominica C. Nacua and Atty. Prospero Paradilla have no personality to represent the union as they had
already been expelled as members/officers thereof in two resolutions of the Board of Directors dated
November 1984 and January 17, 1987.

On 19 June 1987, the Med-Arbiter issued an Order denying said motion but directing the Aboitiz
Shipping Corporation to remit the already checked-off union dues to the complainant union through its
officers end to continue remitting any checked-off union dues until further notice. The Med-Arbiter also
set further hearing of the complaint on July 1, 1987.

On 19 June 1987, the respondent filed a motion for reconsideration of said order of 19 June 1987,
reiterating its previous position. Thereafter, the Med-Arbiter issued the assailed Order. . . . (pp. 34
-35, Rollo)

From the decision of the Med-Arbiter, Cebu Seamen's Association headed by Capt. Gabayoyo filed an
appeal with the Bureau of Labor Relations (BLR).

The BLR, as already stated, affirmed the decision of the Med-Arbiter in a resolution dated February 19,
1988. The Gabayoyo group appealed to the Office of the Secretary, Department of Labor, which appeal
was considered as a motion for reconsideration of the BLR's decision. The said appeal/motion for
consideration was denied for lack of merit on April 11, 1988 (p. 42, Rollo) by the BLR.

Hence, this petition.

There are three issues presented for resolution in this petition, to wit:

1 WHETHER OR NOT THE MED-ARBITER OF REGION VII HAS JURISDICTION OVER THE CASE AT BAR.

2. WHETHER OR NOT THE COMPLAINANT-APPELLEE THE SEAMEN'S ASSOCIATION OF THE PHILIPPINES

WAS REGISTERED AS A LABOR FEDERATION WITH THE BUREAU OF LABOR RELATIONS.

3 WHETHER OR NOT DOMINICA C. NACUA AND PROSPERO PARADIL(L)A HAVE (THE) PERSONALITY TO
REPRESENT THE HEREIN COMPLAINANT-APPELLEE, CONSIDERING THAT BOTH OF THEM HAVE BEEN
EXPELLED FROM THE ASSOCIATION "SEAMEN'S ASSOCIATION OF THE PHILIPPINES, INC." (FORMERLY
THE CEBU SEAMEN'S ASSOCIATION, INC.).

1. There is no doubt that the controversy between the aforesaid two sets of officers is an
intra-union dispute. Both sets of officers claim to be entitled to the release of the union
dues collected by the company with whom it had an existing CBA. The controversy
 involves claims of different members/officers to certain rights granted under the labor
code.

Article 226 of the Labor Code vests upon the Bureau of Labor Relations and Labor Relations Division the
original and exclusive authority and jurisdiction to act on all inter-union and intra-union disputes.
Therefore, the Med-Arbiter originally, and the Director on appeal, correctly assumed jurisdiction over
the controversy.

The determinative issue in this case is who is entitled to the collection and custody of the union dues?
Cebu Seamen's Association headed by Gabayoyo or Seamen's Association of the Philippines headed by
Nacua.

As stated in the findings of fact in the questioned resolution of Director Pura Ferrer-Calleja, on October
23, 1950, a group of deck officers organized the Cebu Seamen's Association, Inc., (CSAI), a non-stock
corporation and registered it with the Securities and Exchange Commission (SEC). The same group
registered the organization with the Bureau of Labor Relations (BLR) as Seamen's Association of the
Philippines (SAPI). It is the registration of the organization with the BLR are not with the SEC which made
it a legitimate labor organization with rights and privileges granted under the Labor Code.

We gathered from the records that CSAI, the corporation was already inoperational before the
controversy in this case arose. In fact, on August 24, 1984 the SEC ordered the CSAI to show cause why
its certificate of registration should not be revoked for continuous inoperation (p. 343, Rollo). There is
nothing in the records which would show that CSAI answered said show-cause order.

Also, before the controversy, private respondent Dominica Nacua was elected president of the labor
union, SAPI. It had an existing CBA with Aboitiz Shipping Corporation. Before the end of the term of
private respondent Nacua, some members of the union which included Domingo Machacon and
petitioner Manuel Gabayoyo showed signs of discontentment with the leadership of Nacua. This break-
away group revived the moribund corporation and issued an undated resolution expelling Nacua from
association (pp. 58-59, Rollo). Sometime in February, 1987, it held its own election of officers supervised
by the Securities and Exchange Commission. It also filed a case of estafa against Nacua sometime in
May, 1986 (p. 52, Rollo).

The expulsion of Nacua from the corporation, of which she denied being a member, has however, not
affected her membership with the labor union. In fact, in the elections of officers for 1987-1989, she was
re-elected as the president of the labor union. In this connections, We cannot agree with the contention
of Gabayoyo that Nacua was already expelled from the union. Whatever acts their group had done in
the corporation do not bind the labor union. Moreover, Gabayoyo cannot claim leadership of the labor
group by virtue of his having been elected as a president of the dormant corporation CSAI.

Under the principles of administrative law in force in this jurisdiction, decisions of administrative officers
shall not be disturbed by courts, except when the former acted without or in excess of their jurisdiction
or with grave abuse of discretion.

Public respondent Bureau of Labor Relations correctly ruled on the basis of the evidence presented by
the parties that SAPI, the legitimate labor union, registered with its office, is not the same association as
CSAI, the corporation, insofar as their rights under the Labor Code are concerned. Hence, the former
and not the latter association is entitled to the release and custody of union fees with Aboitiz Shipping
and other shipping companies with whom it had an existing CBA. As correctly held by public respondent:

It is undisputed from the records that the election of the so-called set of officers headed by Manuel
Gabayoyo was conducted under the supervision of the SEC, presumably in accordance with its
constitution and by-laws as well as the articles of incorporation of respondent CSAI, and the Corporation
Code. That had been so precisely on the honest belief of the participants therein that they were acting in
their capacity as members of the said corporation. That being the case, the aforementioned set of
officers is of the respondent corporation and not of the complainant union. It follows, then, that any
proceedings, and actions taken by said set of officers can not, in any manner, affect the union and its
members.

On the other hand, we rule and so hold that the other set of officers headed by Dominica C. Nacua is the
lawful set of officers of SAPI and therefore, is entitled to the release and custody of the union dues as
well as the agency fees, if any, there be. A record check with the Labor Organizations (LOD), this Bureau,
shows that SAPI has submitted to it for file the list of this new set of officers, in compliance with the
second paragraph of Article 242 (c) of the Labor Code. This list sufficiently sustains the view that said
officers were lawfully elected, in the absence of clear and convincing proof to the contrary. (pp. 9-
10, Rollo)

ACCORDINGLY, the petition is DISMISSED. The questioned resolution of the Bureau of Labor Relations is
AFFIRMED.

SO ORDERED.
G.R. No. 121084 February 19, 1997

TOYOTA MOTOR PHILIPPINES CORPORATION , petitioner,

vs.
TOYOTA MOTOR PHILIPPINES CORPORATION LABOR UNION AND THE SECRETARY OF LABOR AND
EMPLOYMENT, respondents.

KAPUNAN, J.:

On November 26, 1992, the Toyota Motor Philippines Corporation Labor Union (TMPCLU) filed a petition
for certification election with the Department of Labor, National Capital Region, for all rank-and-file
employees of the Toyota Motor Corporation.1

In response, petitioner filed a Position Paper on February 23, 1993 seeking the denial of the issuance of
an Order directing the holding of a certification election on two grounds: first, that the respondent
union, being "in the process of registration" had no legal personality to file the same as it was not a
legitimate labor organization as of the date of the filing of the petition; and second, that the union was
composed of both rank-and-file and supervisory employees in violation of law.2 Attached to the position
paper was a list of union members and their respective job classifications, indicating that many of the
signatories to the petition for certification election occupied supervisory positions and were not in fact
rank-and-file employees.3

The Med-Arbiter, Paterno D. Adap, dismissed respondent union's petition for certification election for
lack of merit. In his March 8, 1993 Order, the Med-Arbiter found that the labor organization's
membership was composed of supervisory and rank-and-file employees in violation of Article 245 of the
Labor Code,4 and that at the time of the filing of its petition, respondent union had not even acquired
legal personality yet.5

On appeal, the Office of the Secretary of Labor, in a Resolution6 dated November 9, 1993 signed by
Undersecretary Bienvenido E. Laguesma, set aside the Med-Arbiter's Order of March 3, 1993, and
directed the holding of a certification election among the regular rank.-and-file employees of Toyota
Motor Corporation. In setting aside the questioned Order, the Office of the Secretary contended that:

Contrary to the allegation of herein respondent-appellee, petitioner-appellant was already a legitimate

labor organization at the time of the filing of the petition on 26 November 1992. Records show that on
24 November 1992 or two (2) days before the filing of the said petition, it was issued a certificate of
registration.

We also agree with petitioner-appellant that the Med-Arbiter should have not dismissed the petition for
certification election based on the ground that the proposed bargaining unit is a mixture of supervisory
and rank-and-file employees, hence, violative of Article 245 of the Labor Code as amended.

A perusal of the petition and the other documents submitted by petitioner-appellant will readily show
that what the former really seeks to represent are the regular rank-and-file employees in the company
numbering about 1,800 more or less, a unit which is obviously appropriate for bargaining purposes. This
being the case, the mere allegation of respondent-appellee that there are about 42 supervisoy
employees in the proposed bargaining unit should have not caused the dismissal of the instant petition.
Said issue could very well be taken cared of during the pre-election conference where
inclusion/exclusion proceedings will be conducted to determine the list of eligible voters.7

Not satisfied with the decision of the Office of the Secretary of Labor, petitioner filed a Motion for
Reconsideration of the Resolution of March 3, 1993, reiterating its claim that as of the date of filing of
petition for certification election, respondent TMPCLU had not yet acquired the status of a legitimate
labor organization as required by the Labor Code, and that the proposed bargaining unit was
inappropriate.

Acting on petitioner's motion for reconsideration, the public respondent, on July 13, 1994 set aside its
earlier resolution and remanded the case to the Med-Arbiter concluding that the issues raised by
petitioner both on appeal and in its motion for reconsideration were factual issues requiring further
hearing and production of evidence.8 The Order stated

We carefully re-examined the records vis-a-vis the arguments raised by the movant, and we note that
movant correctly pointed out that petitioner submitted a copy of its certificate of registration  for the
first time on appeal and that in its petition, petitioner alleges that it is an independent organization
which is in the process of registration." Movant strongly argues that the foregoing only confirms what it
has been pointing out all along, that at the time the petition was filed petitioner is (sic) not yet the
holder of a registration certificate; that what was actually issued on 24 November 1992 or two (2) days
before the filing of the petition was an official receipt of payment for the application fee; and, that the
date appearing in the Registration certificate which is November 24, 1992 is not the date when
petitioner was actually registered, but the date when the registration certificate was prepared by the
processor. Movant also ratiocinates that if indeed petitioner has been in possession of the registration
certificate at the time this petition was filed on November 26, 1992, it would have attached the same to
the petition.

The foregoing issues are factual ones, the resolution of which is crucial to the petition. For if indeed it is
true that at the time of filing of the petition, the said registration certificate has not been approved yet,
then, petitioner lacks the legal personality to file the petition and the dismissal order is proper. Sadly, we
can not resolve the said questions by merely perusing the records. Further hearing and introduction of
evidence are required. Thus, there is a need to remand the case to the Med-Arbiter solely for the
purpose.

WHEREFORE, the motion is hereby granted and our Resolution is hereby set aside. Let the case be
remanded to the Med-Arbiter for the purpose aforestated.

SO ORDERED.9

Pursuant to the Order, quoted above, Med-Arbiter Brigida C. Fodrigon submitted her findings on
September 28, 1994, stating the following: 10

[T]he controvertible fact is that petitioner could not have been issued its Certificate of Registration on
November 24, 1992 when it applied for registration only on November 23, 1992 as shown by the official
receipt of payment of filing fee. As Enrique Nalus, Chief LEG, this office, would attest in his letter dated
September 8, 1994 addressed to Mr. Porfirio T. Reyes, Industrial Relations Officer of respondent
company, in response to a query posed by the latter, "It is unlikely that an application for registration is
approved on the date that it is filed or the day thereafter as the processing course has to pass thought
routing, screening, and assignment, evaluation, review and initialing, and approval/disapproval
procedure, among others, so that a 30-day period is provided for under the Labor Code for this purpose,
let alone opposition thereto by interested parties which must be also given due course.

Another evidence which petitioner presented. . . is the "Union Registration 1992 Logbook of IRD". . . and
the entry date November 25, 1992 as allegedly the date of the release of the registration certificate. . .
On the other hand, respondent company presented . . . a certified true copy of an entry on page 265 of
the Union Registration Logbook showing the pertinent facts about petitioner but which do not show the
petitioner's registration was issued on or before November 26, 1992. 11

Further citing other pieces of evidence presented before her, the Med-Arbiter concluded that
respondent TMPCLU could not have "acquire[d] legal personality at the time of the filing of (its)
petition." 12

On April 20, 1996, the public respondent issued a new Resolution, "directing the conduct of a
certification election among the regular rank-and-file employees of the Toyota Motor Philippines
Corporation. 13 Petitioner's motion for reconsideration was denied by public respondent in his Order
dated July 14, 1995.14

Hence, this special civil action for certiorari under Rule 65 of the Revised Rules of Court, where
petitioner contends that "the Secretary of Labor and Employment committed grave abuse of discretion
amounting to lack or excess of jurisdiction in reversing, contrary to law and facts the findings of the
Med-Arbiters to the effect that: 1) the inclusion of the prohibited mix of rank-and file and supervisory
employees in the roster of members and officers of the union cannot be cured by a simple inclusion-
exclusion proceeding; and that 2) the respondent union had no legal standing at the time of the filing of
its petition for certification election. 15

We grant the petition.

The purpose of every certification election is to determine the exclusive representative of employees in
an appropriate bargaining unit for the purpose of collective bargaining. A certification election for the
collective bargaining process is one of the fairest and most effective ways of determining which labor
organization can truly represent the working force. 16 In determining the labor organization which
represents the interests of the workforce, those interests must be, as far as reasonably possible,
homogeneous, so as to genuinely reach the concerns of the individual members of a labor organization.

According to Rothenberg, 17 an appropriate bargaining unit is a group of employees of a given employer,

composed of all or less than the entire body of employees, which the collective interests of all the
employees, consistent with equity to the employer indicate to be best suited to serve reciprocal rights
and duties of the parties under the collective bargaining provisions of law. In Belyca Corporation
v. Ferrer Calleja, 18 we defined the bargaining unit as "the legal collectivity for collective bargaining
purposes whose members have substantially mutual bargaining interests in terms and conditions of
employment as will assure to all employees their collective bargaining rights." This in mind, the Labor
Code has made it a clear statutory policy to prevent supervisory employees from joining labor
organizations consisting of rank-and-file employees as the concerns which involve members of either
group are normally disparate and contradictory. Article 245 provides:
Art. 245 Ineligibility of managerial employees to join any labor organization; right of supervisory
employees. — Managerial Employees are not eligible to join, assist or form any labor organization.
Supervisory employees shall not be eligible for membership in a labor organization of the rank-and-file
employees but may join, assist or form separate labor organizations of their own.

Clearly, based on this provision, a labor organization composed of both rank-and-file and supervisory
employees is no labor organization at all. It cannot, for any guise or purpose, be a legitimate labor
organization. Not being one, an organization which carries a mixture of rank-and-file and supervisory
employees cannot possess any of the rights of a legitimate labor organization, including the right to file a
petition for certification election for the purpose of collective bargaining. It becomes necessary,
therefore, anterior to the granting of an order allowing a certification election, to inquire into the
composition of any labor organization whenever the status of the labor organization is challenged on
the basis of Article 245 of the Labor Code.

It is the petitioner's contention that forty-two (42) of the respondent union's members, including three
of its officers, occupy supervisory positions 19 In its position paper dated February 22, 1993, petitioner
identified fourteen (14) union members occupying the position of Junior Group Chief 11 20 and twenty-
seven (27) members in level five positions. Their respective job-descriptions are quoted below:

LEVEL 4 (JUNIOR GROUP CHIEF II) — He is responsible for all operators and assigned stations, prepares
production reports related to daily production output. He oversees smooth flow of production, quality
of production, availability of manpower, parts and equipments. He also coordinates with other sections
in the Production Department.

LEVEL 5 — He is responsible for overseeing initial production of new models, prepares and monitors
construction schedules for new models, identifies manpower requirements for production, facilities and
equipment, and lay-out processes. He also oversees other sections in the production process (e.g.
assembly, welding, painting)." (Annex "V" of Respondent TMP's Position Paper; which is the Job
Description for an Engineer holding Level 5 position in the Production Engineering Section of the
Production Planning and Control Department).

While there may be a genuine divergence of opinion as to whether or not union members occupying
Level 4 positions are supervisory employees, it is fairly obvious, from a reading of the Labor Code's
definition of the term that those occupying Level 5 positions are unquestionably supervisory employees.
Supervisory employees, as defined above, are those who, in the interest of the employer, effectively
recommend managerial actions if the exercise of such authority is not merely routinary or clerical in
nature but require the use of independent judgment. 21 Under the job description for level five
employees, such personnel — all engineers — having a number of personnel under them, not only
oversee production of new models but also determine manpower requirements, thereby influencing
important hiring decisions at the highest levels. This determination is neither routine nor clerical but
involves the independent assessment of factors affecting production, which in turn affect decisions to
hire or transfer workers. The use of independent judgment in making the decision to hire, fire or
transfer in the identification of manpower requirements would be greatly impaired if the employee's
loyalties are torn between the interests of the union and the interests of management. A supervisory
employee occupying a level five position would therefore find it difficult to objectively identify the exact
manpower requirements dictated by production demands.
This is precisely what the Labor Code, in requiring separate unions among rank-and-file employees on
one hand, and supervisory employees on the other, seeks to avoid. The rationale behind the Code's
exclusion of supervisors from unions of rank-and-file employees is that such employees, while in the
performance of supervisory functions, become the alter ego of management in the making and the
implementing of key decisions at the sub-managerial level. Certainly, it would be difficult to find unity or
mutuality of interests in a bargaining unit consisting of a mixture of rank-and-file and supervisory
employees. And this is so because the fundamental test of a bargaining unit's acceptability is whether or
not such a unit will best advance to all employees within the unit the proper exercise of their collective
bargaining rights. 22 The Code itself has recognized this, in preventing supervisory employees from
joining unions of rank-and-file employees.

In the case at bar, as respondent union's membership list contains the names of at least twenty-seven
(27) supervisory employees in Level Five positions. the union could not, prior to purging itself of its
supervisory employee members, attain the status of a legitimate labor organization. Not being one, it
cannot possess the requisite personality to file a petition for certification election.

The foregoing discussion, therefore, renders entirely irrelevant, the technical issue raised as to whether
or not respondent union was in possession of the status of a legitimate labor organization at the time of
filing, when, as petitioner vigorously claims, the former was still at the stage of processing of its
application for recognition as a legitimate labor organization. The union's composition being in violation
of the Labor Code's Prohibition of unions composed of supervisory and rank-and-file employees, it could
not possess the requisite personality to file for recognition as a legitimate labor organization. In any
case, the factual issue, albeit ignored by the public respondent's assailed Resolution, was adequately
threshed out in the Med-Arbiter's September 28, 1994 Order

The holding of a certification election is based on clear statutory policy which cannot be
circumvented. 23 Its rules, strictly construed by this Court, are designed to eliminate fraud and
manipulation. As we emphasized in Progressive Development Corporation v. Secretary, Department of
Labor and Employment, 24 the Court's conclusion should not be interpreted as impairing any union's
right to be certified as the employees' bargaining agent in the petitioner's establishment. Workers of an
appropriate bargaining unit must be allowed to freely express their choice in an election where
everything is open to sound judgment and the possibility for fraud and misrepresentation is absent. 25

WHEREFORE, the petition is GRANTED. The assailed Resolution dated April 20, 1995 and Order dated
July 14, 1995 of respondent Secretary of Labor are hereby SET ASIDE. The Order dated September 28,
1994 of the Med-Arbiter is REINSTATED.

SO ORDERED.
G.R. No. 131374           January 26, 2000

ABBOTT LABORATORIES PHILIPPINES, INC., petitioner,

vs.
ABBOTT LABORATORIES EMPLOYEES UNION, MR. CRESENCIANO TRAJANO, in his capacity as Acting
Secretary of The Department Labor and of Employment and MR. BENEDICTO ERNESTO BITONIO, JR.,
in his capacity as Director IV of the Bureau of Labor Relations, respondents.

DAVIDE, JR., C.J.:

This special civil action for certiorari mandamus assails the action of the then Acting Secretary of Labor
and Employment Creseciano B. Trajano contained in its letter dated 19 September 1997,1 informing
petitioner Abbott Laboratories Philippines, Inc. (hereafter ABBOTT), thru its counsel that the Office of
the Secretary of Labor cannot act on ABBOTT's appeal from the decision of 31 March 19972 and the
Order of 9 July 19973 of the Bureau of Labor Relations, for lack of appellate jurisdiction.

ABBOTT is a corporation engaged in the manufacture and distribution of pharmaceutical drugs. On 22

February 1996,4 the Abbott Laboratories Employees Union (hereafter ALEU) represented by its president,
Alvin B. Buerano, filed an application for union registration in the Department of Labor and
Employment. ALEU alleged in the application that it is a labor organization with members consisting of
30 rank-and-file employees in the manufacturing unit of ABBOTT and that there was no certified
bargaining agent in the unit it sought to represent, namely, the manufacturing unit.

On 28 February 1996,5 application was approved by the Bureau of Labor Relations, which in due course
issued Certificate of Registration No. NCR-UR-2-1638-96. Consequently, ALEU became a legitimate labor
organization.

On 2 April 1996,6 ABBOTT filed a petition for cancellation of the Certificate of Registration No. NCR-UR-2-
1638-96 in the Regional Office of the Bureau of Labor Relations. This case was docketed as Case No. OD-
M-9604-006. ABBOTT assailed the certificate of registration since ALEU's application was not signed by
at least 20% of the total 286 rank-and-file employees of the entire employer unit; and that it omitted to
submit copies of its books of account.

On 21 June 1996,7 the Regional Director of the Bureau of Labor Relations decreed the cancellation of
ALEU's registration certificate No. NCR-UR-11-1585-95.8 In its decision, the Regional Director adopted
the 13 June 19969 findings and recommendations of the Med-Arbiter. It ruled that the union has failed
to show that the rank-and-file employees in the manufacturing unit of ABBOTT were bound by a
common interest to justify the formation of a bargaining unit separate from those belonging to the sales
and office staff units. There was, therefore, sufficient reason to assume that the entire membership of
the rank-and-file consisting of 286 employees or the "employer unit" make up the appropriate
bargaining unit. However, it was clear on the record that the union's application for registration was
supported by 30 signatures of its members or barely constituting 10% of the entire rank-and-file
employees of ABBOTT. Thus the Regional Director found that for ALEU's failure to satisfy the
requirements of union registration under Article 234 of the Labor Code, the cancellation of its certificate
of registration was in order.
Forthwith, on 19 August 1996,10 ALEU appealed said cancellation to the Office of the Secretary of Labor
and Employment, which referred the same to the Director of the Bureau of the Labor Relations. The said
appeal was docketed as Case No. BLR-A-10-25-96.

On 31 March 1997,11 The Bureau of Labor Relations rendered judgment reversing the 21 June 1996
decision of the Regional Director, thus:

WHEREFORE, the appeal is GRANTED and the decision of the Regional Director dated 21 June 1996 is
hereby REVERSED. Abbott Laboratories Employees Union shall remain in the roster of legitimate labor
organizations, with all the rights, privilege and obligations appurtenant thereto.12

It gave the following reasons to justify the reversal: (1) Article 234 of the Labor Code does not require an
applicant union to show proof of the "desirability of more than one bargaining unit within an employer
unit," and the absence of such proof is not a ground for the cancellation of a union's registration
pursuant to Article 239 of Book V, Rule II of the implementing rules of the Labor Code; (2) the issue
pertaining to the appropriateness of a bargaining unit cannot be raised in a cancellation proceeding but
may be treshed out in the exclusion-inclusion process during a certification election; and (3) the "one-
bargaining unit, one-employer unit policy" must not be interpreted in a manner that shall derogate the
right of the employees to self-organization and freedom of association as guaranteed by Article III,
Section 8 of the 1987 Constitution and Article II of the International Labor Organization's Convention No.
87.

Its motion to reconsider the 31 March 1997 decision of the Bureau of Labor Relations having been
denied for lack of merit in the Order13 of 9 July 1997, ABBOTT appealed to the Secretary of Labor and
Employment. However, in its letter dated 19 September 1997,14 addressed to ABBOTT's counsel, the
Secretary of Labor and Employment refused to act on ABBOTT's appeal on the ground that it has no
jurisdiction to review the decision of the Bureau of Labor Relations on appeals in cancellation cases
emanating from the Regional Offices. The decision of the Bureau of Labor Relations therein is final and
executory under Section 4, Rule III, Book V of the Rules and Regulations Implementing the Labor Code,
as amended by Department Order No. 09, s. of 1997. Finally, the Secretary stated:

It has always been the policy of this Office that pleadings denominated as appeal thereto over decisions
of the BLR in cancellation cases coming from the Regional offices are referred back to the BLR, so that
the same may be treated as motions for reconsideration and disposed of accordingly. However, since
your office has already filed a motion for reconsideration with the BLR which has been denied in its
Order dated 09 July 1997, your recourse should have been a special civil action for certiorari with the
Supreme Court.

In view of the foregoing, please be informed that the Office of the Secretary cannot act upon your
Appeal, except to cause the BLR to include it in the records of the case.

Hence, this petition. ABBOTT, premised its argument on the authority of the Secretary of Labor and
Employment to review the decision of the Bureau of Labor Relations and at the same time raised the
issue on the validity of ALEU's certificate of registration.

We find no merit in this petition.

At the outset, it is worthy to note that the present petition assails only the letter of the then Secretary of
Labor & Employment refusing to take cognizance of ABBOTT's appeal for lack of appellate jurisdiction.
Hence, in the resolution of the present petition, it is just appropriate to limit the issue on the power of
the Secretary of Labor and Employment to review the decisions of the Bureau of Labor Relations
rendered in the exercise of its appellate jurisdiction over decisions of the Regional Director in cases
involving cancellations of certificates of registration of labor unions. The issue anent the validity of
ALEU's certificate of registration is subject of the Bureau of Labor Relations decision dated 31 March
1997. However, said decision is not being assailed in the present petition; hence, we are not at liberty to
review the same.1âwphi1.nêt

Contrary to ABBOTT's contention, there has been no grave abuse of discretion on the part of the
Secretary of Labor and Employment. Its refusal to take cognizance of ALEU's appeal from the decision of
the Bureau of Labor Relations is in accordance with the provisions of Rule VIII, Book V of the Omnibus
Rules Implementing the Labor Code as amended by Department Order No. 09.15 The rule governing
petitions for cancellation of registration of any legitimate labor organization or worker association, as it
now stands, provides:

Sec. 1. Venue of Action. — If the respondent to the petition is a local/chapter, affiliate, or a workers'
association with operations limited to one region, the petition shall be filed with the Regional Office
having jurisdiction over the place where the respondent principally operates. Petitions filed against
federations, national or industry unions, trade union centers, or workers' associations operating in more
than one regional jurisdiction, shall be filed with the Bureau.

Sec. 3. Cancellation of registration; nature and grounds. — Subject to the requirements of notice and
due process, the registration of any legitimate labor organization or worker's association may be
cancelled by the Bureau or the Regional Office upon the filing of an independent petition for
cancellation based on any of the following grounds:

(a) Failure to comply with any of the requirements prescribed under Articles 234, 237 and 238 of the
Code;

(b) Violation of any of the provisions of Article 239 of the Code;

(b) Commission of any of the acts enumerated under Article 241 of the Code; provided, that no petition
for cancellation based on this ground may be granted unless supported by at least thirty percent (30%)
of all the members of the respondent labor organization or workers' association.

Sec. 4. Action on the petition; appeals. — The Regional or Bureau Director, as the case may be, shall have
thirty (30) days from submission of the case for resolution within which to resolve the petition. The
decision of the Regional or Bureau Director may be appealed to the Bureau or the Secretary, as the case
may be, within ten (10) days from receipt thereof by the aggrieved party on the ground of grave abuse
of discretion or any violation of these Rules.

The Bureau or the Secretary shall have fifteen (15) days from receipt of the records of the case within
which to decide the appeal. The decision of the Bureau or the Secretary shall be final and executory.

Clearly, the Secretary of Labor and Employment has no jurisdiction to entertain the appeal of ABBOTT.
The appellate jurisdiction of the Secretary of Labor and Employment is limited only to a review of
cancellation proceedings decided by the Bureau of labor Relations in the exercise of its exclusive and
original jurisdiction. The Secretary of Labor and Employment has no jurisdiction over decisions of the
Bureau of Labor Relations rendered in the exercise of its appellate power to review the decision of the
Regional Director in a petition to cancel the union's certificate of registration, said decisions being final
and inappealable.16 We sustain the analysis and interpretation of the OSG on this matter, to wit:

From the foregoing, the Office of the Secretary correctly maintained that it cannot take cognizance of
petitioner's appeal from the decision of BLR Director Bitonio. Sections 7 to 917 [of the implementing
Rules of the Labor Code] thus provide for two situations:

(1) The first situation involves a petition for cancellation of union registration which is filed with
a Regional Office. A decision of a Regional Office cancelling a union's certificate of registration may be
appealed to the BLR whose decision on the matter shall be final and inappealable.

(2) The second situation involves a petition for cancellation of certificate of union registration which is
filed directly with the BLR. A decision of the BLR cancelling a union's certificate of registration may be
appealed to the Secretary of Labor whose decision on the mater shall be final and inappealable.

Respondent Acting Labor Secretary's ruling — that the BLR's decision upholding the validity of
respondent union's certificate of registration is final and inappealable — is thus in accordance with
aforequoted Omnibus Rules because the petition for cancellation of union registration was filed by
petitioner with a Regional Office, specifically, with the Regional Office of the BLR, National Capital
Region (vide pp. 1-2, Annex 2, Petition). The cancellation proceedings initiated by petitioner before the
Regional Office is covered by the  first situation contemplated by Sections 7 to 9 of the Omnibus Rules.
Hence, an appeal from the decision of the Regional Office may be brought to the BLR whose decision on
the matter is final and inappealable.

In the instant case, upon the cancellation of respondent union's registration by the Regional Office,
respondent union incorrectly appealed said decision to the Office of the Secretary. Nevertheless, this
situation was immediately rectified when the Office of the Secretary motu propio referred the appeal to
the BLR. However, upon reversal by the BLR of the decision of the Regional Office cancelling registration,
petitioner should have immediately elevated the BLR decision to the Supreme Court in a special civil
action for certiorari under Rule 65 of the Rules of Court.

Under Sections 3 and 4, Rule VIII of Book V of the Rules and Regulations implementing the Labor Code,
as amended by Department Order No. 09, petitions for cancellation of union registration may be filed
with a Regional office, or directly, with the Bureau of Labor Relations. Appeals from the decision of a
Regional Director may be filed with the BLR Director whose decision shall be final and executory. On the
other hand, appeals from the decisions of the BLR may be filed with the Secretary of Labor whose
decision shall be final and executory.

Thus, under Sections 7 to 9 of the Omnibus Rules and under Sections 3 and 4 of the Implementing Rules
(as amended by Department Order No. 09), the finality of the BLR decision is dependent on whether or
not the petition for cancellation was filed with the BLR directly. Under said Rules, if the petition for
cancellation is directly filed with the BLR, its decision cancelling union registration is not yet final and
executory as it may still be appealed to the Office of the Secretary. However, if the petition for
cancellation was filed with the Regional Office, the decision of the BLR resolving an appeal of the
decision of said Regional Office is final and executory.18

It is clear then that the Secretary of Labor and Employment did not commit grave abuse of discretion in
not acting an ABBOTT's appeal. The decisions of the Bureau of Labor Relations on cases brought before
it on appeal from the Regional Director are final and executory. Hence, the remedy of the aggrieved
party is to seasonably avail of the special civil action of certiorari under Rule 65 of the Rules of Court.19

Even if we relaxed the rule and consider the present petition as a petition for certiorari not only of the
letter of the Secretary of Labor and Employment but also of the decision of the Bureau of the Labor
Relations which overruled the order of cancellation of ALEU's certificate registration, the same would
still be dismissable for being time-barred. Under Sec. 4 of Rule 65 of the 1997 Revised Rules of Court the
special civil action for certiorari should be instituted within a period of sixty (60) days from notice of the
judgment, order or resolution sought to be assailed. ABBOTT received the decision of the Bureau of
Labor Relations on 14 April 1997 and the order denying its motion for reconsideration of the said
decision on 16 July 1997. The present petition was only filed on 28 November 1997, after the lapse of
more than four months. Thus, for failure to avail of the correct remedy within the period provided by
law, the decision of the Bureau of Labor Relations has become final and executory.

WHEREFORE, the petition is DENIED. The challenged order in BLR-A-10-25-96 of the Secretary of Labor
and Employment embodied in its 19 September letter is hereby AFFIRMED.

SO ORDERED.
TITLE V  - COVERAGE AND EMPLOYEES RIGHT TO SELF ORGANIZATION

 Art. 243 – 246

G.R. No. 77231 May 31, 1989

SAN JOSE CITY ELECTRIC SERVICE COOPERATIVE, INC. (SAJELCO), petitioner,

vs.
MINISTRY OF LABOR AND EMPLOYMENT and MAGKAISA-ADLO, respondents.

MEDIALDEA, J.:

This is a petition for certiorari under Rule 65 of the Rules of Court. Petitioner San Jose City Electric
Service Cooperative, Inc. (SAJELCO, for brevity) seeks the reversal of the Order (pp. 38-40, Rollo) of Pura
Ferrer-Calleja, Director of Bureau of Labor Relations in BLR Case No. A-10-259-86 which affirmed the
Order of Med-Arbiter Antonio R. Cortez to conduct a certification election among the rank-and-file
employees of SAJELCO.

The antecedent facts of the instant case are as follows:

On July 29, 1986, private respondent Manggagawang Nagkakaisa ng SAJELCO-Association of Democratic

Labor Organization (MAGKAISA-ADLO) filed a petition (pp. 16-18, Rollo) for direct certification election
with the Regional Office No. 111 of the Department of Labor and Employment in San Fernando,
Pampanga. The petition alleged that MAGKAISA-ADLO is a legitimate labor organization duly registered
with the Ministry of Labor and Employment; that there are more or less fifty-four (54) rank and file
employees in SAJELCO; that almost 62% of the employees sought to be represented have supported the
filing of the petition; that there has been no valid certification election held in SAJELCO during the
twelve (12) month period prior to the filing of the petition and that there is no other union in the
bargaining unit.

In its answer (pp. 19-21, Rollo), SAJELCO opposed the petition for direct certification election
contending, inter alia, that the employees who sought to be represented by private respondent are
members-consumers of the Cooperative itself and at the same time composed the General Assembly
which, pursuant to the By-laws is also the final arbiter of any dispute arising in the Cooperative. Thus:

xxx

5. That some, if not most, of the employees who sought to be represented by the petitioner, are
member-consumers, and as such are members of the General or Special Assembly which is the final
arbiter on any dispute which a member and/or the Board, or the Cooperative may have, and that such
"some"of said alleged supporters, in their capacity as member-consumers, enjoy two personalities in
that as employees and/or members of the General Assembly, and therefore cannot fairly and prudently
represent such opposing personalities that merge into one juridical or natural person, and these special
and unique status or personalities of the supposed supporters cannot qualify to be represented by the
petitioner, without doing injustice, in equity and unfair status or advantage to those member-consumers
who have not that destiny or status of becoming employees;
6 No valid and lawful representation can be obtained by petitioner in behalf of the supposed supporters,
who are also member-consumer, that are bound by the Article of Incorporation, By-laws of the
respondent Cooperative and pertinent Decrees and laws, to support and defend the basic policies of the
Government on Electric Cooperatives;

7. There is no possible legal way by which to dismantle the personalities of some of the supporters of
the petitioner, as employees, from their status as consumer-members, who are, under the By-laws, part
and parcels of the General or Special Assembly that finally decides any dispute, and no reasonable or
valid scale of justice could be invoked to divide a person who, in conscience, is also the other fellow
against whom a remedy is sought for in allowing this to happen is tantamount to slaughtering a man to
his own ends;

xxx

On September 5, 1986, the Med-Arbiter who was assigned to the case issued an Order (pp. 24-26, Rollo)
granting the petition for direct certification election on the basis of the pleadings filed. The Order said
that while some of the members of petitioner union are members of the cooperative, it cannot be
denied that they are also employees within the contemplation of the Labor Code and are therefore
entitled to enjoy all the benefits of employees, including the right to self-organization (pp. 25, Rollo).
This Order was appealed by SAJELCO to the Bureau of Labor Relations.

In its appeal, (pp. 27-36, Rollo) SAJELCO reiterated its position that:

. . . upon the principle that in electric cooperative — as in the case of respondent, there is a merger  of
the consumer-members that composed of the assembly and that of the rank-and-file members of the
petitioners-into one person or juridical status thus rendering the proposed collective bargaining agent
ineffective and/or uncalled for — considering that a grievance machinery for employees and/or
member-consumers of the cooperative-has been provided for by the By-laws as a built-in over-all arbiter
involving disputes affecting said cooperative;

Respondent Director of the Bureau of Labor Relations dismissed the appeal and sustained the ruling of
the Med-Arbiter in an order dated January 5, 1987.

On February 19, 1987, SAJELCO filed the instant petition for certiorari praying that the order of
respondent Director be set aside and another one rendered denying the holding or conduct of a
certification election among the rank and file employees of SAJELCO.

In a letter dated June 20, 1987, Atty. Ricardo Soto, Jr., counsel for private respondent union, manifested
that a direct certification election was conducted in SAJELCO, there being no restraining order from this
Court enjoining the holding thereof Likewise, Atty. Soto was of the opinion that in view of the direct
certification election conducted, the petition brought before this Court by SAJELCO has become moot
and academic (p. 48, Rollo). Attached to his letter is a copy of the minutes of the certification election
held on April 13, 1987 showing that of forty three (43) employees who voted, thirty (30) voted for
respondent union and thirteen (13) voted for "no union."

In the resolution of this court (First Division) dated September 29, 1987, respondents were required to
comment on the petition. The Solicitor General filed its comment dated October 30, 1987 wherein it
took a stand contrary to that of respondent Director. To support its stand, the Solicitor General argued
firstly, that the union members who seek to be represented by the union are the very members of the
cooperative, thereby resulting in a fusion of two personalities. Thus, it will be inconsistent for the union
members to bargain with themselves. Secondly, he said that article 243 of the Labor Code; requires that
before one can form, join or assist a labor union, he must first be employed and to be an employee one
must be under hire and must have no involvement in the ownership of the firm. A labor union is formed
for purposes of collective bargaining. The duty to bargain exists only between employer and employees
and not between an employer and his co-owners. Thirdly, he also said that under the National
Electrification Decree (P.D. No. 269, August 6, 1973) members of an electric cooperative such as
petitioner, besides contributing financially to its establishments and maintenance, participate in its
management. In the latter aspect, they possess the powers and prerogatives of managerial employees
who are not eligible to join, assist or form any labor organization (pp. 4-6 of Comment; pp 43-45, Rollo).

On November 25, 1987, We required Atty. Soto, Jr. to comment on the comment of the Solicitor General
(p. 47, Rollo). However, the notices sent to him were returned and stamped "moved to an unknown
address." But respondent Director of the Bureau of Labor Relations filed a comment on the aforesaid
comment of the Solicitor General reiterating his stand that members of private respondent union fall
under the general provision of Article 244 of the Code on who are qualified to form, join or assist in the
formation of unions as they are neither managerial employees nor persons belonging to subversive
organizations. Thus, on May 25, 1988, we gave due course to the petition (p. 79, Rollo).

The only issue presented for resolution in this petition is whether or not the employees-members of an
electric cooperative can organize themselves for purposes of collective bargaining.

This Court had the occasion to rule on this issue in the consolidated cases of Batangas I-Electric
Cooperative Labor Union vs. Romeo Young, et al., G.R. No. 62386, Bulacan II- Electric Cooperative, Inc.,
vs. Hon. Eliseo A. Penaflor, et al., G.R. No. 70880 and Albay Electric Cooperative vs. Crescencio B. Trajano
et. al.,  G.R. No. 74560 (November 9, 1988), citing the case of Cooperative Rural Bank of Davao City, Inc.
vs. Pura Ferrer-Calleja, G.R. No. 77951, September 26,1988, where it was held that:

A cooperative, therefore, is by its nature different from an ordinary business concern being run either,
by persons, partnerships or corporations. Its owners and/or members are the ones who run and operate
the business while the others are its employees. As above stated, irrespective of the name of shares
owned by its members they are entitled to cast one vote each in deciding upon the affair of the
cooperative. Their share capital earn limited interests, They enjoy special privileges as — exemption
from income tax and sales taxes, preferential right to supply their products to State agencies and even
exemption from minimum wage laws.

An employee therefore of such a cooperative who is a member and co-owner thereof cannot invoke the
right to collective bargaining for certainly an owner cannot bargain with himself or his co-owners. In the
opinion of August 14, 1981 of the Solicitor General, he corectly opined that employees of cooperatives
who are themselves members of the cooperative have no right to form or join labor organizations for
purposes of collective bargaining for being themselves co-owners of the cooperative.

However, in so far as it involves cooperatives with employees who are not members or co-owners
thereof, certainly such employees are entitled to exercise the rights of all workers to organization,
collective bargaining, negotiations and others as are enshrined in the Constitution and existing laws of
the country.
In this petition, San Jose City Electric Service Cooperative, Inc. (SAJELCO) claims that its employees are
also members of the cooperative. It cited Section 17(18) of its By-laws which declares that:

The Board shall also create positions for subordinate employees and fix their duties and
remunerations. Only member-consumers or members of their immediate family shall be employed by
the cooperative  (Emphasis supplied).

The above-cited provision, however, mentions two types of employees, namely: the members-
consumers and the members of their immediate families. As regards employees of SAJELCO who are
members-consumers, the rule is settled that they are not qualified to form, join or assist labor
organizations for purposes of collective bargaining. The reason for withholding from employees of a
cooperative who are members-co-owners the right to collective bargaining is clear: an owner cannot
bargain with himself. However, employees who are not members-consumers may form, join or assist
labor organizations for purposes of collective bargaining notwithstanding the fact that employees of
SAJELCO who are not members-consumers were employed ONLY because they are members of the
immediate family of members-consumers. The fact remains that they are not themselves members-
consumers, and as such, they are entitled to exercise the rights of all workers to organization, collective
bargaining, negotiations and others as are enshrined in Section 8, Article III and Section 3, Article XIII of
the 1987 Constitution, Labor Code of the Philippines and other related laws (Cooperative Rural Bank of
Davao City, Inc., supra, p. 10).

ACCORDINGLY, the petition is GRANTED. The assailed Order of respondent Pura Ferrer-Calleja, Director
of the Bureau of Labor Relations is hereby MODIFIED to the effect that only the rank-and-file employees
of petitioner who are not its members-consumers are entitled to self-organization, collective bargaining,
and negotiations, while other employees who are members-consumers thereof cannot enjoy such right.
The direct certification election conducted on April 13, 1987 is hereby set aside. The Regional Office III of
the Department of Labor and Employment in San Fernando, Pampanga is hereby directed: (a) to
determine the number of rank and file employees of SAJELCO who are not themselves members-
consumers; (b) to resolve whether or not there is compliance with the requirements set forth in Article
257 of the Labor Code; and (c) in the affirmative, to immediately conduct a direct certification election
among the rank and file employees of SAJELCO who are not members-consumers.

SO ORDERED.
G.R. No. L-25246 September 12, 1974

BENJAMIN VICTORIANO, plaintiff-appellee,
vs.
ELIZALDE ROPE WORKERS' UNION and ELIZALDE ROPE FACTORY, INC., defendants, ELIZALDE ROPE
WORKERS' UNION, defendant-appellant.

Salonga, Ordonez, Yap, Sicat & Associates for plaintiff-appellee.

Cipriano Cid & Associates for defendant-appellant.

ZALDIVAR, J.:p

Appeal to this Court on purely questions of law from the decision of the Court of First Instance of Manila
in its Civil Case No. 58894.

The undisputed facts that spawned the instant case follow:

Benjamin Victoriano (hereinafter referred to as Appellee), a member of the religious sect known as the
"Iglesia ni Cristo", had been in the employ of the Elizalde Rope Factory, Inc. (hereinafter referred to as
Company) since 1958. As such employee, he was a member of the Elizalde Rope Workers' Union
(hereinafter referred to as Union) which had with the Company a collective bargaining agreement
containing a closed shop provision which reads as follows:

Membership in the Union shall be required as a condition of employment for all permanent employees
workers covered by this Agreement.

The collective bargaining agreement expired on March 3, 1964 but was renewed the following day,
March 4, 1964.

Under Section 4(a), paragraph 4, of Republic Act No. 875, prior to its amendment by Republic Act No.
3350, the employer was not precluded "from making an agreement with a labor organization to require
as a condition of employment membership therein, if such labor organization is the representative of
the employees." On June 18, 1961, however, Republic Act No. 3350 was enacted, introducing an
amendment to — paragraph (4) subsection (a) of section 4 of Republic Act No. 875, as follows: ... "but
such agreement shall not cover members of any religious sects which prohibit affiliation of their
members in any such labor organization".

Being a member of a religious sect that prohibits the affiliation of its members with any labor
organization, Appellee presented his resignation to appellant Union in 1962, and when no action was
taken thereon, he reiterated his resignation on September 3, 1974. Thereupon, the Union wrote a
formal letter to the Company asking the latter to separate Appellee from the service in view of the fact
that he was resigning from the Union as a member. The management of the Company in turn notified
Appellee and his counsel that unless the Appellee could achieve a satisfactory arrangement with the
Union, the Company would be constrained to dismiss him from the service. This prompted Appellee to
file an action for injunction, docketed as Civil Case No. 58894 in the Court of First Instance of Manila to
enjoin the Company and the Union from dismissing Appellee.1 In its answer, the Union invoked the
"union security clause" of the collective bargaining agreement; assailed the constitutionality of Republic
Act No. 3350; and contended that the Court had no jurisdiction over the case, pursuant to Republic Act
No. 875, Sections 24 and 9 (d) and (e).2 Upon the facts agreed upon by the parties during the pre-trial
conference, the Court a quo  rendered its decision on August 26, 1965, the dispositive portion of which
reads:

IN VIEW OF THE FOREGOING, judgment is rendered enjoining the defendant Elizalde Rope Factory, Inc.
from dismissing the plaintiff from his present employment and sentencing the defendant Elizalde Rope
Workers' Union to pay the plaintiff P500 for attorney's fees and the costs of this action.3

From this decision, the Union appealed directly to this Court on purely questions of law, assigning the
following errors:

I. That the lower court erred when it did not rule that Republic Act No. 3350 is unconstitutional.

II. That the lower court erred when it sentenced appellant herein to pay plaintiff the sum of P500 as
attorney's fees and the cost thereof.

In support of the alleged unconstitutionality of Republic Act No. 3350, the Union contented, firstly, that
the Act infringes on the fundamental right to form lawful associations; that "the very phraseology of said
Republic Act 3350, that membership in a labor organization is banned to all those belonging to such
religious sect prohibiting affiliation with any labor organization"4 , "prohibits all the members of a given
religious sect from joining any labor union if such sect prohibits affiliations of their members thereto"5 ;
and, consequently, deprives said members of their constitutional right to form or join lawful associations
or organizations guaranteed by the Bill of Rights, and thus becomes obnoxious to Article III, Section 1 (6)
of the 1935 Constitution. 6

Secondly, the Union contended that Republic Act No. 3350 is unconstitutional for impairing the
obligation of contracts in that, while the Union is obliged to comply with its collective bargaining
agreement containing a "closed shop provision," the Act relieves the employer from its reciprocal
obligation of cooperating in the maintenance of union membership as a condition of employment; and
that said Act, furthermore, impairs the Union's rights as it deprives the union of dues from members
who, under the Act, are relieved from the obligation to continue as such members.7

Thirdly, the Union contended that Republic Act No. 3350 discriminatorily favors those religious sects
which ban their members from joining labor unions, in violation of Article Ill, Section 1 (7) of the 1935
Constitution; and while said Act unduly protects certain religious sects, it leaves no rights or protection
to labor organizations.8

Fourthly, Republic Act No. 3350, asserted the Union, violates the constitutional provision that "no
religious test shall be required for the exercise of a civil right," in that the laborer's exercise of his civil
right to join associations for purposes not contrary to law has to be determined under the Act by his
affiliation with a religious sect; that conversely, if a worker has to sever his religious connection with a
sect that prohibits membership in a labor organization in order to be able to join a labor organization,
said Act would violate religious freedom.9

Fifthly, the Union contended that Republic Act No. 3350, violates the "equal protection of laws" clause
of the Constitution, it being a discriminately legislation, inasmuch as by exempting from the operation of
closed shop agreement the members of the "Iglesia ni Cristo", it has granted said members undue
advantages over their fellow workers, for while the Act exempts them from union obligation and
liability, it nevertheless entitles them at the same time to the enjoyment of all concessions, benefits and
other emoluments that the union might secure from the employer. 10

Sixthly, the Union contended that Republic Act No. 3350 violates the constitutional provision regarding
the promotion of social justice. 11

Appellant Union, furthermore, asserted that a "closed shop provision" in a collective bargaining
agreement cannot be considered violative of religious freedom, as to call for the amendment introduced
by Republic Act No. 3350; 12 and that unless Republic Act No. 3350 is declared unconstitutional, trade
unionism in this country would be wiped out as employers would prefer to hire or employ members of
the Iglesia ni Cristo in order to do away with labor organizations. 13

Appellee, assailing appellant's arguments, contended that Republic Act No. 3350 does not violate the
right to form lawful associations, for the right to join associations includes the right not to join or to
resign from a labor organization, if one's conscience does not allow his membership therein, and the Act
has given substance to such right by prohibiting the compulsion of workers to join labor
organizations; 14 that said Act does not impair the obligation of contracts for said law formed part of, and
was incorporated into, the terms of the closed shop agreement; 15 that the Act does not violate the
establishment of religion clause or separation of Church and State, for Congress, in enacting said law,
merely accommodated the religious needs of those workers whose religion prohibits its members from
joining labor unions, and balanced the collective rights of organized labor with the constitutional right of
an individual to freely exercise his chosen religion; that the constitutional right to the free exercise of
one's religion has primacy and preference over union security measures which are merely
contractual 16 ; that said Act does not violate the constitutional provision of equal protection, for the
classification of workers under the Act depending on their religious tenets is based on substantial
distinction, is germane to the purpose of the law, and applies to all the members of a given class; 17 that
said Act, finally, does not violate the social justice policy of the Constitution, for said Act was enacted
precisely to equalize employment opportunities for all citizens in the midst of the diversities of their
religious beliefs." 18

I. Before We proceed to the discussion of the first assigned error, it is necessary to premise that there
are some thoroughly established principles which must be followed in all cases where questions of
constitutionality as obtains in the instant case are involved. All presumptions are indulged in favor of
constitutionality; one who attacks a statute, alleging unconstitutionality must prove its invalidity beyond
a reasonable doubt, that a law may work hardship does not render it unconstitutional; that if any
reasonable basis may be conceived which supports the statute, it will be upheld, and the challenger
must negate all possible bases; that the courts are not concerned with the wisdom, justice, policy, or
expediency of a statute; and that a liberal interpretation of the constitution in favor of the
constitutionality of legislation should be adopted. 19

1. Appellant Union's contention that Republic Act No. 3350 prohibits  and bans the members of such
religious sects that forbid affiliation of their members with labor unions from joining labor unions
appears nowhere in the wording of Republic Act No. 3350; neither can the same be deduced by
necessary implication therefrom. It is not surprising, therefore, that appellant, having thus misread the
Act, committed the error of contending that said Act is obnoxious to the constitutional provision on
freedom of association.
Both the Constitution and Republic Act No. 875 recognize freedom of association. Section 1 (6) of Article
III of the Constitution of 1935, as well as Section 7 of Article IV of the Constitution of 1973, provide that
the right to form associations or societies for purposes not contrary to law shall not be abridged. Section
3 of Republic Act No. 875 provides that employees shall have the right to self-organization and to form,
join of assist labor organizations of their own choosing for the purpose of collective bargaining and to
engage in concerted activities for the purpose of collective bargaining and other mutual aid or
protection. What the Constitution and the Industrial Peace Act recognize and guarantee is the "right" to
form or join associations. Notwithstanding the different theories propounded by the different schools of
jurisprudence regarding the nature and contents of a "right", it can be safely said that whatever theory
one subscribes to, a right comprehends at least two broad notions, namely: first, liberty or freedom, i.e.,
the absence of legal restraint, whereby an employee may act for himself without being prevented by
law; and second, power, whereby an employee may, as he pleases, join or refrain from Joining an
association. It is, therefore, the employee who should decide for himself whether he should join or not
an association; and should he choose to join, he himself makes up his mind as to which association he
would join; and even after he has joined, he still retains the liberty and the power to leave and cancel his
membership with said organization at any time. 20 It is clear, therefore, that the right to join a union
includes the right to abstain from joining any union. 21 Inasmuch as what both the Constitution and the
Industrial Peace Act have recognized, and guaranteed to the employee, is the "right" to join associations
of his choice, it would be absurd to say that the law also imposes, in the same breath, upon the
employee the duty to join associations. The law does not enjoin an employee to sign up with any
association.

The right to refrain from joining labor organizations recognized by Section 3 of the Industrial Peace Act
is, however, limited. The legal protection granted to such right to refrain from joining is withdrawn by
operation of law, where a labor union and an employer have agreed on a closed shop, by virtue of which
the employer may employ only member of the collective bargaining union, and the employees must
continue to be members of the union for the duration of the contract in order to keep their jobs. Thus
Section 4 (a) (4) of the Industrial Peace Act, before its amendment by Republic Act No. 3350, provides
that although it would be an unfair labor practice for an employer "to discriminate in regard to hire or
tenure of employment or any term or condition of employment to encourage or discourage
membership in any labor organization" the employer is, however, not precluded "from making an
agreement with a labor organization to require as a condition of employment membership therein, if
such labor organization is the representative of the employees". By virtue, therefore, of a closed shop
agreement, before the enactment of Republic Act No. 3350, if any person, regardless of his religious
beliefs, wishes to be employed or to keep his employment, he must become a member of the collective
bargaining union. Hence, the right of said employee not to join the labor union is curtailed and
withdrawn.

To that all-embracing coverage of the closed shop arrangement, Republic Act No. 3350 introduced an
exception, when it added to Section 4 (a) (4) of the Industrial Peace Act the following proviso: "but such
agreement shall not cover members of any religious sects which prohibit affiliation of their members in
any such labor organization". Republic Act No. 3350 merely excludes ipso jure  from the application and
coverage of the closed shop agreement the employees belonging to any religious sects which prohibit
affiliation of their members with any labor organization. What the exception provides, therefore, is that
members of said religious sects cannot be compelled or coerced to join labor unions even when said
unions have closed shop agreements with the employers; that in spite of any closed shop agreement,
members of said religious sects cannot be refused employment or dismissed from their jobs on the sole
ground that they are not members of the collective bargaining union. It is clear, therefore, that the
assailed Act, far from infringing the constitutional provision on freedom of association, upholds and
reinforces it. It does not prohibit the members of said religious sects from affiliating with labor unions. It
still leaves to said members the liberty and the power to affiliate, or not to affiliate, with labor unions. If,
notwithstanding their religious beliefs, the members of said religious sects prefer to sign up with the
labor union, they can do so. If in deference and fealty to their religious faith, they refuse to sign up, they
can do so; the law does not coerce them to join; neither does the law prohibit them from joining; and
neither may the employer or labor union compel them to join. Republic Act No. 3350, therefore, does
not violate the constitutional provision on freedom of association.

2. Appellant Union also contends that the Act is unconstitutional for impairing the obligation of its
contract, specifically, the "union security clause" embodied in its Collective Bargaining Agreement with
the Company, by virtue of which "membership in the union was required as a condition for employment
for all permanent employees workers". This agreement was already in existence at the time Republic Act
No. 3350 was enacted on June 18, 1961, and it cannot, therefore, be deemed to have been incorporated
into the agreement. But by reason of this amendment, Appellee, as well as others similarly situated,
could no longer be dismissed from his job even if he should cease to be a member, or disaffiliate from
the Union, and the Company could continue employing him notwithstanding his disaffiliation from the
Union. The Act, therefore, introduced a change into the express terms of the union security clause; the
Company was partly absolved by law from the contractual obligation it had with the Union of employing
only Union members in permanent positions, It cannot be denied, therefore, that there was indeed an
impairment of said union security clause.

According to Black, any statute which introduces a change into the express terms of the contract, or its
legal construction, or its validity, or its discharge, or the remedy for its enforcement, impairs the
contract. The extent of the change is not material. It is not a question of degree or manner or cause, but
of encroaching in any respect on its obligation or dispensing with any part of its force. There is an
impairment of the contract if either party is absolved by law from its performance. 22 Impairment has
also been predicated on laws which, without destroying contracts, derogate from substantial
contractual rights. 23

It should not be overlooked, however, that the prohibition to impair the obligation of contracts is not
absolute and unqualified. The prohibition is general, affording a broad outline and requiring
construction to fill in the details. The prohibition is not to be read with literal exactness like a
mathematical formula, for it prohibits unreasonable impairment only. 24 In spite of the constitutional
prohibition, the State continues to possess authority to safeguard the vital interests of its people.
Legislation appropriate to safeguarding said interests may modify or abrogate contracts already in
effect. 25 For not only are existing laws read into contracts in order to fix the obligations as between the
parties, but the reservation of essential attributes of sovereign power is also read into contracts as a
postulate of the legal order. All contracts made with reference to any matter that is subject to regulation
under the police power must be understood as made in reference to the possible exercise of that
power. 26 Otherwise, important and valuable reforms may be precluded by the simple device of entering
into contracts for the purpose of doing that which otherwise may be prohibited. The policy of protecting
contracts against impairment presupposes the maintenance of a government by virtue of which
contractual relations are worthwhile a government which retains adequate authority to secure the
peace and good order of society. The contract clause of the Constitution must, therefore, be not only in
harmony with, but also in subordination to, in appropriate instances, the reserved power of the state to
safeguard the vital interests of the people. It follows that not all legislations, which have the effect of
impairing a contract, are obnoxious to the constitutional prohibition as to impairment, and a statute
passed in the legitimate exercise of police power, although it incidentally destroys existing contract
rights, must be upheld by the courts. This has special application to contracts regulating relations
between capital and labor which are not merely contractual, and said labor contracts, for being
impressed with public interest, must yield to the common good. 27

In several occasions this Court declared that the prohibition against impairing the obligations of
contracts has no application to statutes relating to public subjects within the domain of the general
legislative powers of the state involving public welfare. 28 Thus, this Court also held that the Blue Sunday
Law was not an infringement of the obligation of a contract that required the employer to furnish work
on Sundays to his employees, the law having been enacted to secure the well-being and happiness of
the laboring class, and being, furthermore, a legitimate exercise of the police power. 29

In order to determine whether legislation unconstitutionally impairs contract obligations, no unchanging

yardstick, applicable at all times and under all circumstances, by which the validity of each statute may
be measured or determined, has been fashioned, but every case must be determined upon its own
circumstances. Legislation impairing the obligation of contracts can be sustained when it is enacted for
the promotion of the general good of the people, and when the means adopted to secure that end are
reasonable. Both the end sought and the means adopted must be legitimate, i.e., within the scope of
the reserved power of the state construed in harmony with the constitutional limitation of that power. 30

What then was the purpose sought to be achieved by Republic Act No. 3350? Its purpose was to insure
freedom of belief and religion, and to promote the general welfare by preventing discrimination against
those members of religious sects which prohibit their members from joining labor unions, confirming
thereby their natural, statutory and constitutional right to work, the fruits of which work are usually the
only means whereby they can maintain their own life and the life of their dependents. It cannot be
gainsaid that said purpose is legitimate.

The questioned Act also provides protection to members of said religious sects against two aggregates
of group strength from which the individual needs protection. The individual employee, at various times
in his working life, is confronted by two aggregates of power — collective labor, directed by a union, and
collective capital, directed by management. The union, an institution developed to organize labor into a
collective force and thus protect the individual employee from the power of collective capital, is,
paradoxically, both the champion of employee rights, and a new source of their frustration. Moreover,
when the Union interacts with management, it produces yet a third aggregate of group strength from
which the individual also needs protection — the collective bargaining relationship. 31

The aforementioned purpose of the amendatory law is clearly seen in the Explanatory Note to House Bill
No. 5859, which later became Republic Act No. 3350, as follows:

It would be unthinkable indeed to refuse employing a person who, on account of his religious beliefs
and convictions, cannot accept membership in a labor organization although he possesses all the
qualifications for the job. This is tantamount to punishing such person for believing in a doctrine he has
a right under the law to believe in. The law would not allow discrimination to flourish to the detriment
of those whose religion discards membership in any labor organization. Likewise, the law would not
commend the deprivation of their right to work and pursue a modest means of livelihood, without in
any manner violating their religious faith and/or belief. 32

It cannot be denied, furthermore, that the means adopted by the Act to achieve that purpose —
exempting the members of said religious sects from coverage of union security agreements — is
reasonable.

It may not be amiss to point out here that the free exercise of religious profession or belief is superior to
contract rights. In case of conflict, the latter must, therefore, yield to the former. The Supreme Court of
the United States has also declared on several occasions that the rights in the First Amendment, which
include freedom of religion, enjoy a preferred position in the constitutional system. 33 Religious freedom,
although not unlimited, is a fundamental personal right and liberty, 34 and has a preferred position in the
hierarchy of values. Contractual rights, therefore, must yield to freedom of religion. It is only where
unavoidably necessary to prevent an immediate and grave danger to the security and welfare of the
community that infringement of religious freedom may be justified, and only to the smallest extent
necessary to avoid the danger.

3. In further support of its contention that Republic Act No. 3350 is unconstitutional, appellant Union
averred that said Act discriminates in favor of members of said religious sects in violation of Section 1 (7)
of Article Ill of the 1935 Constitution, and which is now Section 8 of Article IV of the 1973 Constitution,
which provides:

No law shall be made respecting an establishment of religion, or prohibiting the free exercise thereof,
and the free exercise and enjoyment of religious profession and worship, without discrimination and
preference, shall forever be allowed. No religious test shall be required for the exercise of civil or
political rights.

The constitutional provision into only prohibits legislation for the support of any religious tenets or the
modes of worship of any sect, thus forestalling compulsion by law of the acceptance of any creed or the
practice of any form of worship, 35 but also assures the free exercise of one's chosen form of religion
within limits of utmost amplitude. It has been said that the religion clauses of the Constitution are all
designed to protect the broadest possible liberty of conscience, to allow each man to believe as his
conscience directs, to profess his beliefs, and to live as he believes he ought to live, consistent with the
liberty of others and with the common good. 36 Any legislation whose effect or purpose is to impede the
observance of one or all religions, or to discriminate invidiously between the religions, is invalid, even
though the burden may be characterized as being only indirect. 37 But if the stage regulates conduct by
enacting, within its power, a general law which has for its purpose and effect to advance the state's
secular goals, the statute is valid despite its indirect burden on religious observance, unless the state can
accomplish its purpose without imposing such burden. 38

In Aglipay v. Ruiz 39 , this Court had occasion to state that the government should not be precluded from
pursuing valid objectives secular in character even if the incidental result would be favorable to a
religion or sect. It has likewise been held that the statute, in order to withstand the strictures of
constitutional prohibition, must have a secular legislative purpose and a primary effect that neither
advances nor inhibits religion. 40 Assessed by these criteria, Republic Act No. 3350 cannot be said to
violate the constitutional inhibition of the "no-establishment" (of religion) clause of the Constitution.

The purpose of Republic Act No. 3350 is secular, worldly, and temporal, not spiritual or religious or holy
and eternal. It was intended to serve the secular purpose of advancing the constitutional right to the
free exercise of religion, by averting that certain persons be refused work, or be dismissed from work, or
be dispossessed of their right to work and of being impeded to pursue a modest means of livelihood, by
reason of union security agreements. To help its citizens to find gainful employment whereby they can
make a living to support themselves and their families is a valid objective of the state. In fact, the state is
enjoined, in the 1935 Constitution, to afford protection to labor, and regulate the relations between
labor and capital and industry. 41 More so now in the 1973 Constitution where it is mandated that "the
State shall afford protection to labor, promote full employment and equality in employment, ensure
equal work opportunities regardless of sex, race or creed and regulate the relation between workers
and employers. 42

The primary effects of the exemption from closed shop agreements in favor of members of religious
sects that prohibit their members from affiliating with a labor organization, is the protection of said
employees against the aggregate force of the collective bargaining agreement, and relieving certain
citizens of a burden on their religious beliefs; and by eliminating to a certain extent economic insecurity
due to unemployment, which is a serious menace to the health, morals, and welfare of the people of the
State, the Act also promotes the well-being of society. It is our view that the exemption from the effects
of closed shop agreement does not directly advance, or diminish, the interests of any particular religion.
Although the exemption may benefit those who are members of religious sects that prohibit their
members from joining labor unions, the benefit upon the religious sects is merely incidental and
indirect. The "establishment clause" (of religion) does not ban regulation on conduct whose reason or
effect merely happens to coincide or harmonize with the tenets of some or all religions. 43 The free
exercise clause of the Constitution has been interpreted to require that religious exercise be
preferentially aided. 44

We believe that in enacting Republic Act No. 3350, Congress acted consistently with the spirit of the
constitutional provision. It acted merely to relieve the exercise of religion, by certain persons, of a
burden that is imposed by union security agreements. It was Congress itself that imposed that burden
when it enacted the Industrial Peace Act (Republic Act 875), and, certainly, Congress, if it so deems
advisable, could take away the same burden. It is certain that not every conscience can be
accommodated by all the laws of the land; but when general laws conflict with scrupples of conscience,
exemptions ought to be granted unless some "compelling state interest" intervenes. 45 In the instant
case, We see no such compelling state interest to withhold exemption.

Appellant bewails that while Republic Act No. 3350 protects members of certain religious sects, it leaves
no right to, and is silent as to the protection of, labor organizations. The purpose of Republic Act No.
3350 was not to grant rights to labor unions. The rights of labor unions are amply provided for in
Republic Act No. 875 and the new Labor Code. As to the lamented silence of the Act regarding the rights
and protection of labor unions, suffice it to say, first, that the validity of a statute is determined by its
provisions, not by its silence 46 ; and, second, the fact that the law may work hardship does not render it
unconstitutional. 47
It would not be amiss to state, regarding this matter, that to compel persons to join and remain
members of a union to keep their jobs in violation of their religious scrupples, would hurt, rather than
help, labor unions, Congress has seen it fit to exempt religious objectors lest their resistance spread to
other workers, for religious objections have contagious potentialities more than political and philosophic
objections.

Furthermore, let it be noted that coerced unity and loyalty even to the country, and a fortiori  to a labor
— union assuming that such unity and loyalty can be attained through coercion — is not a goal that is
constitutionally obtainable at the expense of religious liberty. 48 A desirable end cannot be promoted by
prohibited means.

4. Appellants' fourth contention, that Republic Act No. 3350 violates the constitutional prohibition
against requiring a religious test for the exercise of a civil right or a political right, is not well taken. The
Act does not require as a qualification, or condition, for joining any lawful association membership in
any particular religion or in any religious sect; neither does the Act require affiliation with a religious sect
that prohibits its members from joining a labor union as a condition or qualification for withdrawing
from a labor union. Joining or withdrawing from a labor union requires a positive act. Republic Act No.
3350 only exempts members with such religious affiliation from the coverage of closed shop
agreements. So, under this Act, a religious objector is not required to do a positive act — to exercise the
right to join or to resign from the union. He is exempted ipso jure  without need of any positive act on his
part. A conscientious religious objector need not perform a positive act or exercise the right of resigning
from the labor union — he is exempted from the coverage of any closed shop agreement that a labor
union may have entered into. How then can there be a religious test required for the exercise of a right
when no right need be exercised?

We have said that it was within the police power of the State to enact Republic Act No. 3350, and that
its purpose was legal and in consonance with the Constitution. It is never an illegal evasion of a
constitutional provision or prohibition to accomplish a desired result, which is lawful in itself, by
discovering or following a legal way to do it. 49

5. Appellant avers as its fifth ground that Republic Act No. 3350 is a discriminatory legislation, inasmuch
as it grants to the members of certain religious sects undue advantages over other workers, thus
violating Section 1 of Article III of the 1935 Constitution which forbids the denial to any person of the
equal protection of the laws. 50

The guaranty of equal protection of the laws is not a guaranty of equality in the application of the laws
upon all citizens of the state. It is not, therefore, a requirement, in order to avoid the constitutional
prohibition against inequality, that every man, woman and child should be affected alike by a statute.
Equality of operation of statutes does not mean indiscriminate operation on persons merely as such, but
on persons according to the circumstances surrounding them. It guarantees equality, not identity of
rights. The Constitution does not require that things which are different in fact be treated in law as
though they were the same. The equal protection clause does not forbid discrimination as to things that
are different. 51 It does not prohibit legislation which is limited either in the object to which it is directed
or by the territory within which it is to operate.

The equal protection of the laws clause of the Constitution allows classification. Classification in law, as
in the other departments of knowledge or practice, is the grouping of things in speculation or practice
because they agree with one another in certain particulars. A law is not invalid because of simple
inequality. 52 The very idea of classification is that of inequality, so that it goes without saying that the
mere fact of inequality in no manner determines the matter of constitutionality. 53 All that is required of
a valid classification is that it be reasonable, which means that the classification should be based on
substantial distinctions which make for real differences; that it must be germane to the purpose of the
law; that it must not be limited to existing conditions only; and that it must apply equally to each
member of the class. 54 This Court has held that the standard is satisfied if the classification or distinction
is based on a reasonable foundation or rational basis and is not palpably arbitrary. 55

In the exercise of its power to make classifications for the purpose of enacting laws over matters within
its jurisdiction, the state is recognized as enjoying a wide range of discretion. 56 It is not necessary that
the classification be based on scientific or marked differences of things or in their relation. 57 Neither is it
necessary that the classification be made with mathematical nicety. 58 Hence legislative classification
may in many cases properly rest on narrow distinctions, 59 for the equal protection guaranty does not
preclude the legislature from recognizing degrees of evil or harm, and legislation is addressed to evils as
they may appear.

We believe that Republic Act No. 3350 satisfies the aforementioned requirements. The Act classifies
employees and workers, as to the effect and coverage of union shop security agreements, into those
who by reason of their religious beliefs and convictions cannot sign up with a labor union, and those
whose religion does not prohibit membership in labor unions. Tile classification rests on real or
substantial, not merely imaginary or whimsical, distinctions. There is such real distinction in the beliefs,
feelings and sentiments of employees. Employees do not believe in the same religious faith and different
religions differ in their dogmas and cannons. Religious beliefs, manifestations and practices, though they
are found in all places, and in all times, take so many varied forms as to be almost beyond imagination.
There are many views that comprise the broad spectrum of religious beliefs among the people. There
are diverse manners in which beliefs, equally paramount in the lives of their possessors, may be
articulated. Today the country is far more heterogenous in religion than before, differences in religion
do exist, and these differences are important and should not be ignored.

Even from the phychological point of view, the classification is based on real and important differences.
Religious beliefs are not mere beliefs, mere ideas existing only in the mind, for they carry with them
practical consequences and are the motives of certain rules. of human conduct and the justification of
certain acts. 60 Religious sentiment makes a man view things and events in their relation to his God. It
gives to human life its distinctive character, its tone, its happiness or unhappiness its enjoyment or
irksomeness. Usually, a strong and passionate desire is involved in a religious belief. To certain persons,
no single factor of their experience is more important to them than their religion, or their not having any
religion. Because of differences in religious belief and sentiments, a very poor person may consider
himself better than the rich, and the man who even lacks the necessities of life may be more cheerful
than the one who has all possible luxuries. Due to their religious beliefs people, like the martyrs, became
resigned to the inevitable and accepted cheerfully even the most painful and excruciating pains. Because
of differences in religious beliefs, the world has witnessed turmoil, civil strife, persecution, hatred,
bloodshed and war, generated to a large extent by members of sects who were intolerant of other
religious beliefs. The classification, introduced by Republic Act No. 3350, therefore, rests on substantial
distinctions.
The classification introduced by said Act is also germane to its purpose. The purpose of the law is
precisely to avoid those who cannot, because of their religious belief, join labor unions, from being
deprived of their right to work and from being dismissed from their work because of union shop security
agreements.

Republic Act No. 3350, furthermore, is not limited in its application to conditions existing at the time of
its enactment. The law does not provide that it is to be effective for a certain period of time only. It is
intended to apply for all times as long as the conditions to which the law is applicable exist. As long as
there are closed shop agreements between an employer and a labor union, and there are employees
who are prohibited by their religion from affiliating with labor unions, their exemption from the
coverage of said agreements continues.

Finally, the Act applies equally to all members of said religious sects; this is evident from its provision.
The fact that the law grants a privilege to members of said religious sects cannot by itself render the Act
unconstitutional, for as We have adverted to, the Act only restores to them their freedom of association
which closed shop agreements have taken away, and puts them in the same plane as the other workers
who are not prohibited by their religion from joining labor unions. The circumstance, that the other
employees, because they are differently situated, are not granted the same privilege, does not render
the law unconstitutional, for every classification allowed by the Constitution by its nature involves
inequality.

The mere fact that the legislative classification may result in actual inequality is not violative of the right
to equal protection, for every classification of persons or things for regulation by law produces
inequality in some degree, but the law is not thereby rendered invalid. A classification otherwise
reasonable does not offend the constitution simply because in practice it results in some
inequality. 61 Anent this matter, it has been said that whenever it is apparent from the scope of the law
that its object is for the benefit of the public and the means by which the benefit is to be obtained are of
public character, the law will be upheld even though incidental advantage may occur to individuals
beyond those enjoyed by the general public. 62

6. Appellant's further contention that Republic Act No. 3350 violates the constitutional provision on
social justice is also baseless. Social justice is intended to promote the welfare of all the
people. 63 Republic Act No. 3350 promotes that welfare insofar as it looks after the welfare of those
who, because of their religious belief, cannot join labor unions; the Act prevents their being deprived of
work and of the means of livelihood. In determining whether any particular measure is for public
advantage, it is not necessary that the entire state be directly benefited — it is sufficient that a portion
of the state be benefited thereby.

Social justice also means the adoption by the Government of measures calculated to insure economic
stability of all component elements of society, through the maintenance of a proper economic and social
equilibrium in the inter-relations of the members of the community. 64 Republic Act No. 3350 insures
economic stability to the members of a religious sect, like the Iglesia ni Cristo, who are also component
elements of society, for it insures security in their employment, notwithstanding their failure to join a
labor union having a closed shop agreement with the employer. The Act also advances the proper
economic and social equilibrium between labor unions and employees who cannot join labor unions, for
it exempts the latter from the compelling necessity of joining labor unions that have closed shop
agreements and equalizes, in so far as opportunity to work is concerned, those whose religion prohibits
membership in labor unions with those whose religion does not prohibit said membership. Social justice
does not imply social equality, because social inequality will always exist as long as social relations
depend on personal or subjective proclivities. Social justice does not require legal equality because legal
equality, being a relative term, is necessarily premised on differentiations based on personal or natural
conditions. 65 Social justice guarantees equality of opportunity 66 , and this is precisely what Republic Act
No. 3350 proposes to accomplish — it gives laborers, irrespective of their religious scrupples, equal
opportunity for work.

7. As its last ground, appellant contends that the amendment introduced by Republic Act No. 3350 is not
called for — in other words, the Act is not proper, necessary or desirable. Anent this matter, it has been
held that a statute which is not necessary is not, for that reason, unconstitutional; that in determining
the constitutional validity of legislation, the courts are unconcerned with issues as to the necessity for
the enactment of the legislation in question. 67 Courts do inquire into the wisdom of laws. 68 Moreover,
legislatures, being chosen by the people, are presumed to understand and correctly appreciate the
needs of the people, and it may change the laws accordingly. 69 The fear is entertained by appellant that
unless the Act is declared unconstitutional, employers will prefer employing members of religious sects
that prohibit their members from joining labor unions, and thus be a fatal blow to unionism. We do not
agree. The threat to unionism will depend on the number of employees who are members of the
religious sects that control the demands of the labor market. But there is really no occasion now to go
further and anticipate problems We cannot judge with the material now before Us. At any rate, the
validity of a statute is to be determined from its general purpose and its efficacy to accomplish the end
desired, not from its effects on a particular case. 70 The essential basis for the exercise of power, and not
a mere incidental result arising from its exertion, is the criterion by which the validity of a statute is to
be measured. 71

II. We now pass on the second assignment of error, in support of which the Union argued that the
decision of the trial court ordering the Union to pay P500 for attorney's fees directly contravenes
Section 24 of Republic Act No. 875, for the instant action involves an industrial dispute wherein the
Union was a party, and said Union merely acted in the exercise of its rights under the union shop
provision of its existing collective bargaining contract with the Company; that said order also
contravenes Article 2208 of the Civil Code; that, furthermore, Appellee was never actually dismissed by
the defendant Company and did not therefore suffer any damage at all . 72

In refuting appellant Union's arguments, Appellee claimed that in the instant case there was really no
industrial dispute involved in the attempt to compel Appellee to maintain its membership in the union
under pain of dismissal, and that the Union, by its act, inflicted intentional harm on Appellee; that since
Appellee was compelled to institute an action to protect his right to work, appellant could legally be
ordered to pay attorney's fees under Articles 1704 and 2208 of the Civil Code. 73

The second paragraph of Section 24 of Republic Act No. 875 which is relied upon by appellant provides
that:

No suit, action or other proceedings shall be maintainable in any court against a labor organization or
any officer or member thereof for any act done by or on behalf of such organization in furtherance of an
industrial dispute  to which it is a party, on the ground only that such act induces some other person to
break a contract of employment or that it is in restraint of trade or interferes with the trade, business or
employment of some other person or with the right of some other person to dispose of his capital or
labor. (Emphasis supplied)

That there was a labor dispute in the instant case cannot be disputed for appellant sought the discharge
of respondent by virtue of the closed shop agreement and under Section 2 (j) of Republic Act No. 875 a
question involving tenure of employment is included in the term "labor dispute". 74 The discharge or the
act of seeking it is the labor dispute itself. It being the labor dispute itself, that very same act of the
Union in asking the employer to dismiss Appellee cannot be "an act done ... in furtherance of an
industrial dispute". The mere fact that appellant is a labor union does not necessarily mean that all its
acts are in furtherance of an industrial dispute. 75 Appellant Union, therefore, cannot invoke in its favor
Section 24 of Republic Act No. 875. This case is not intertwined with any unfair labor practice case
existing at the time when Appellee filed his complaint before the lower court.

Neither does Article 2208 of the Civil Code, invoked by the Union, serve as its shield. The article provides
that attorney's fees and expenses of litigation may be awarded "when the defendant's act or omission
has compelled the plaintiff ... to incur expenses to protect his interest"; and "in any other case where the
court deems it just and equitable that attorney's fees and expenses of litigation should be recovered". In
the instant case, it cannot be gainsaid that appellant Union's act in demanding Appellee's dismissal
caused Appellee to incur expenses to prevent his being dismissed from his job. Costs according to
Section 1, Rule 142, of the Rules of Court, shall be allowed as a matter of course to the prevailing party.

WHEREFORE, the instant appeal is dismissed, and the decision, dated August 26, 1965, of the Court of
First Instance of Manila, in its Civil Case No. 58894, appealed from is affirmed, with costs against
appellant Union. It is so ordered.
G.R. Nos. 43633-34 September 14, 1990

PABLO ARIZALA, SERGIO MARIBAO, LEONARDO JOVEN, and FELINO BULANDUS, petitioners,

vs.
THE COURT OF APPEALS and THE PEOPLE OF THE PHILIPPINES, respondents.

Januario T. Seno for petitioners.

NARVASA,  J.:

Under the Industrial Peace Act, 1 government-owned or controlled corporations had the duty to bargain
collectively and were otherwise subject to the obligations and duties of employers in the private
sector.2 The Act also prohibited supervisors to become, or continue to be, members of labor
organizations composed of rank-and-file employees, 3 and prescribed criminal sanctions for breach of
the prohibition. 4

It was under the regime of said Industrial Peace Act that the Government Service Insurance System
(GSIS, for short) became bound by a collective bargaining agreement executed between it and the labor
organization representing the majority of its employees, the GSIS Employees Association. The
agreement contained a "maintenance-of-membership" clause, 5 i.e., that all employees who, at the time
of the execution of said agreement, were members of the union or became members thereafter, were
obliged to maintain their union membership in good standing for the duration of the agreement as a
condition for their continued employment in the GSIS.

There appears to be no dispute that at that time, the petitioners occupied supervisory positions in the
GSIS. Pablo Arizala and Sergio Maribao were, respectively, the Chief of the Accounting Division, and the
Chief of the Billing Section of said Division, in the Central Visayas Regional Office of the GSIS. Leonardo
Joven and Felino Bulandus were, respectively, the Assistant Chief of the Accounting Division (sometimes
Acting Chief in the absence of the Chief) and the Assistant Chief of the Field Service and Non-Life
Insurance Division (and Acting Division Chief in the absence of the Chief), of the same Central Visayas
Regional Office of the GSIS. Demands were made on all four of them to resign from the GSIS Employees
Association, in view of their supervisory positions. They refused to do so. Consequently, two (2) criminal
cases for violation of the Industrial Peace Act were lodged against them in the City Court of Cebu: one
involving Arizala and Maribao 6 and the other, Joven and Bulandus. 7

Both criminal actions resulted in the conviction of the accused in separate decisions. 8 They were each
sentenced "to pay a fine of P 500.00 or to suffer subsidiary imprisonment in case of insolvency." They
appealed to the Court of Appeals.9 Arizala's and Maribao's appeal was docketed as CA-G.R. No. 14724-
CR; that of Joven and Bulandus, as CA-G.R. No. 14856-CR.

The appeals were consolidated on motion of the appellants, and eventuated in a judgment promulgated
on January 29, 1976 affirming the convictions of all four appellants. The appellants moved for
reconsideration. They argued that when the so called "1973 Constitution" took effect on January 17,
1973 pursuant to Proclamation No. 1104, the case of Arizala and Maribao was still pending in the Court
of Appeals and that of Joven and Bulandus, pending decision in the City Court of Cebu; that since the
provisions of that constitution and of the Labor Code subsequently promulgated (eff., November 1,
1974), repealing the Industrial Peace Act-placed employees of all categories in government-owned or
controlled corporations without distinction within the Civil Service, and provided that the terms and
conditions of their employment were to be "governed by the Civil Service Law, rules and regulations"
and hence, no longer subject of collective bargaining, the appellants ceased to fall within the coverage
of the Industrial Peace Act and should thus no longer continue to be prosecuted and exposed to
punishment for a violation thereof. They pointed out further that the criminal sanction in the Industrial
Peace Act no longer appeared in the Labor Code. The Appellate Court denied their plea for
reconsideration.

Hence, the present petition for review on  certiorari.

The crucial issue obviously is whether or not the petitioners' criminal liability for a violation of the
Industrial Peace Act may be deemed to have been obliterated in virtue of subsequent legislation and the
provisions of the 1973 and 1987 Constitutions.

The petitioners' contention that their liability had been erased is made to rest upon the following
premises:

1. Section 1, Article XII-B of the 1973 Constitution does indeed provide that the "Civil Service embraces
every branch, agency, subdivision and instrumentality of the government, including government-owned
or controlled corporations, .. administered by an independent Civil Service Commission.

2. Article 292 of the Labor Code repealed such parts and provisions of the Industrial Peace Act as were
"not adopted as part" of said Code "either directly or by reference." The Code did not adopt the
provision of the Industrial Peace Act conferring on employees of government-owned or controlled
corporations the right of self-organization and collective bargaining; in fact it made known that the
"terms and conditions of employment of all government employees, including employees of
government-owned and controlled corporations," would thenceforth no longer be fixed by collective
bargaining but "be governed by the Civil Service Law, rules and regulations." 10

3. The specific penalty for violation of the prohibition on supervisors being members in a labor
organization of employees under their supervision has disappeared.

4. The Code also modified the concept of unfair labor practice, decreeing that thenceforth, "it shall be
considered merely as an administrative offense rather than a criminal offense (and that) (u)nfair labor
practice complaints shall x x be processed like any ordinary labor disputes."11

On the other hand, in justification of the Appellate Tribunal's affirmance of the petitioners' convictions
of violations of the Industrial Peace Act, the People-

1) advert to the fact that said Labor Code also states that "all actions or claims accruing prior to ... (its)
effectivity ... shall be determined in accordance with the laws in force at the time of their accrual;" and

2) argue that the legislature cannot generally intervene and vacate the judgment of the courts, either
directly or indirectly, by the repeal of the statute under which said judgment has been rendered.

The legal principles governing the rights of self-organization and collective bargaining of rank-and-file
employees in the government- particularly as regards supervisory, and high level or managerial
employees have undergone alterations through the years.
Republic Act No. 875

As already intimated, under RA 875 (the Industry Peace Act), 12 persons "employed in proprietary
functions of the Government, including but not limited to governmental corporations," had the right of
self-organization and collective bargaining, including the right to engage in concerted activities to attain
their objectives, e.g. strikes.

But those "employed in governmental functions" were forbidden to "strike for the purpose of securing
changes or modification in their terms and conditions of employment" or join labor organizations which
imposed on their members the duty to strike. The reason obviously was that the terms and conditions of
their employment were "governed by law" and hence could not be fixed, altered or otherwise modified
by collective bargaining.

Supervisory employees were forbidden to join labor organizations composed of employees under them,
but could form their own unions. Considered "supervisors' were those 'having authority in the interest
of an employer to hire, transfer, suspend, lay-off, recall, discharge, assign, recommend, or discipline
other employees, or responsibly to direct them, and to adjust their grievance or effectively to
recommend such acts if, in connection with the foregoing, the exercise of such authority is not merely
routinary or clerical in nature but requires the use of independent judgment." 13

Republic Act No. 2260

Similar provisions were found in R.A. No. 2260, the Civil Service Act of 1959. This Act declared that the
"Philippine Civil Service ... (embraced) all branches, subdivisions and instrumentalities of the
government  including government-owned and controlled corporations." 14

It prohibited such civil service employees who were "employed in governmental functions" to belong to
any labor organization which imposed on their members "the obligation to strike or to join strikes." And
one of the first issuances of the President after the proclamation of martial law in September, 1972, was
General Order No. 5 which inter alia banned strikes in vital industries," as well as 'all rallies,
demonstrations and other forms of group actions." 15

Not so prohibited, however, were those "employed in proprietary functions of the Government
including, but not limited to, governmental corporations."16 The Act also penalized any person who
"violates, refuses or neglects to comply with any ... provisions (of the Act) or rules (thereunder
promulgated) ... by a fine not exceeding one thousand pesos or by imprisonment not exceeding six
months or both such fine and imprisonment in the discretion of the court." 17

The 1973 Constitution

The 1973 Constitution laid down the broad principle that "(t)he State shall assure the rights of workers
to self-organization, collective bargaining, security of tenure, and just and humane conditions of
work," 18 and directed that the "National Assembly shall provide for the standardization of compensation
of government officials and employees,  including those in government-owned or controlled
corporations, taking into account the nature of the responsibilities pertaining to, and the qualifications
required for, the positions concerned." 19

PD 442, The Labor Code

The Labor Code of the Philippines, Presidential Decree No. 442, enacted within a year from effectivity of
the 1973 Constitution, 20 incorporated the proposition that the "terms and conditions of employment of
all government employees, including employees of government-owned and controlled corporations ...
(are) governed by the Civil Service Law, rules and regulations." 21 It incorporated, too, the constitutional
mandate that the salaries of said employees "shall be standardized by the National Assembly."

The Labor Code, 22 however "exempted" government employees from the right to self-organization for
purposes of collective bargaining. While the Code contained provisions acknowledging the right of "all
persons employed in commercial, industrial and agricultural enterprises, including religious, medical or
educational institutions operating for profit" to "self-organization and to form, join or assist labor
organizations for purposes of collective bargaining," they "exempted from the foregoing provisions:

a) security guards;

b) government employees, including employees of government government-owned and/ or controlled

corporations;

c) managerial employees; and

d) employees of religious, charitable, medical and educational institutions not operating for profit,
provided the latter do not have existing collective agreements or recognized unions at the time of the
effectivity of the code or have voluntarily waived their exemption."23

The reason for denying to government employees the right to "self-organization and to form, join or
assist labor organizations for purposes of collective bargaining" is presumably the same as that under
the Industrial Peace Act, i.e., that the terms and conditions of government employment are fixed by law
and not by collective bargaining.

Some inconsistency appears to have arisen between the Labor Code and the Civil Service Act of 1959.
Under the Civil Service Act, persons "employed in proprietary functions of the government including, but
not limited to, governmental corporations'-not being within "the policy of the Government that the
employees therein shall not strike for the purpose of securing changes in their terms and conditions of
employment"-could legitimately bargain with their respective employers through their labor
organizations, and corollarily engage in strikes and other concerted activities in an attempt to bring
about changes in the conditions of their work. They could not however do so under the Labor Code and
its Implementing Rules and Regulations; these provided that "government employees, including
employees of government-owned and/or controlled corporations," without distinction as to function,
were "exempted" (excluded is the better term) from "the right to self-organization and to form, join or
assist labor organizations for purposes of collective bargaining," and by implication, excluded as well
from the right to engage in concerted activities, such as strikes, as coercive measures against their
employers.

Members of supervisory unions who were not managerial employees, were declared by the Labor Code
to be "eligible to join or assist the rank and file labor organization, and if none exists, to form or assist in
the forming of such rank and file organization " 24 Managerial employees, on the other hand, were
pronounced as 'not eligible to join, assist or form any labor organization." 25 A "managerial employee"
was defined as one vested with power or prerogatives to lay down and execute management policies
and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees, or to
effectively recommend such managerial actions." 26

Presidential Decree No. 807

Clarification of the matter seems to have been very shortly attempted by the Civil Service Decree of the
Philippines, Presidential Decree No. 807 (eff., Oct. 6,1975) which superseded the Civil Service Law of
1959 (RA 2260) 27 and repealed or modified "all laws, rules and regulations or parts thereof inconsistent
with the provisions" thereof. The Decree categorically described the scope and coverage of the "Civil
Service" as embracing 44 every branch, agency, subdivision, and instrumentality of the
government, including every government owned or controlled corporation whether performing
governmental or propriety function. 28 The effect was seemingly to prohibit government employees
(including those "employed in proprietary functions of the Government") to "strike for the purpose of
securing changes of their terms and conditions of employment," 29 something which, as aforestated,
they were allowed to do under the Civil Service Act of 1959.30

Be this as it may it seems clear that PD 807 (the Civil Service Decree) did not modify the declared
ineligibility of "managerial employees" from joining, assisting or forming any labor organization.

Executive Order No. 111

Executive Order No. 111, issued by President Corazon C. Aquino on December 24, 1986 in the exercise of
legislative powers under the Freedom Constitution, modified the general disqualification above
mentioned of 'government employees, including employees of government-owned and/or controlled
corporations" from "the right to self-organization and to form, join or assist labor organizations for
purposes of collective bargaining.' It granted to employees "of government corporations established
under the Corporation Code x x the right to organize and to bargain collectively with their respective
employers." 31 To all 'other employees in the civil service, ... (it granted merely) the right to form
associations for purposes not contrary to law," 32 not for "purposes of collective bargaining."

The 1987 Constitution

The provisions of the present Constitution on the matter appear to be somewhat more extensive. They
declare that the "right to self organization shall not be denied to government employees;"33 that the
State "shall guarantee the rights of  all workers to self-organization, collective bargaining and
negotiations, and peaceful concerted activities, including the right to strike in accordance with law;" and
that said workers "shall be entitled to security of tenure, humane conditions of work, and a living
wage, ... (and) also participate in policy and decision-making processes affecting their rights and benefits
as may be provided by law. 34

CSC Memorandum Circular No. 6

Memorandum Circular No. 6 of the Civil Service Commission, issued on April 21, 1987 enjoined strikes by
government officials and employees, to wit: 35

... Prior to the enactment by Congress of applicable laws concerning strike by government employees,
and considering that there are existing laws which prohibit government officials and employees from
resorting to strike, the Commission enjoins, under pain of administrative sanctions, all government
officers and employees from staging strikes, demonstrations, mass leaves, walk-outs and other forms of
mass action which will result in temporary stoppage or disruption of public services. To allow otherwise
is to undermine or prejudice the government system.

Executive Order No. 180

The scope of the constitutional right to self-organization of "government employees" above mentioned,
was defined and delineated in Executive Order No. 180 (eff. June 1, 1987). According to this Executive
Order, the right of self-organization does indeed pertain to all "employees of all branches, subdivisions,
instrumentalities and agencies of the Government, including government-owned or controlled
corporations with original charters;" 36 such employees "shall not be discriminated against in respect of
their employment by reason of their membership in employees' organizations or participation in the
normal activities of their organization x x (and their) employment shall not be subject to the condition
that they shall not join or shall relinquish their membership in the employees' organizations. 37

However, the concept of the government employees' right of self-organization differs significantly from
that of employees in the private sector. The latter's right of self-organization, i.e., "to form, join or assist
labor organizations  for purposes of collective bargaining," admittedly includes the right to deal and
negotiate with their respective employers in order to fix the terms and conditions of employment and
also, to engage in concerted activities for the attainment of their objectives, such as strikes, picketing,
boycotts. But the right of government employees to "form, join or assist employees organizations of
their own choosing" under Executive Order No. 180 is not regarded as existing or available for "purposes
of collective bargaining," but simply "for the furtherance and protection of their interests." 38

In other words, the right of Government employees to deal and negotiate with their respective
employers is not quite as extensive as that of private employees. Excluded from negotiation by
government employees are the "terms and conditions of employment ... that are fixed by law," it being
only those terms and conditions not otherwise fixed by law that "may be subject of negotiation between
the duly recognized employees' organizations and appropriate government authorities," 39 And while EO
No. 180 concedes to government employees, like their counterparts in the private sector, the right to
engage in concerted activities, including the right to strike, the executive order is quick to add that those
activities must be exercised in accordance with law, i.e. are subject both to "Civil Service Law and rules"
and "any legislation that may be enacted by Congress," 40 that "the resolution of complaints, grievances
and cases involving government employees" is not ordinarily left to collective bargaining or other
related concerted activities, but to "Civil Service Law and labor laws and procedures whenever
applicable;" and that in case "any dispute remains unresolved after exhausting all available remedies
under existing laws and procedures, the parties may jointly refer the dispute to the (Public Sector Labor-
Management) Council for appropriate action."41 What is more, the Rules and Regulations implementing
Executive Order No. 180 explicitly provide that since the "terms and conditions of employment in the
government, including any political subdivision or instrumentality thereof and government-owned and
controlled corporations with original charters are governed by law, the employees therein shall not
strike  for the purpose of securing changes thereof. 42

On the matter of limitations on membership in labor unions of government employees, Executive Order
No. 180 declares that "high level employees whose functions are normally considered as policy making
or managerial, or whose duties are of a highly confidential nature shall not be eligible to join the
organization of rank-and-file government employees. 43 A "high level employee" is one "whose functions
are normally considered policy determining, managerial or one whose duties are highly confidential in
nature. A managerial function refers to the exercise of powers such as: 1. To effectively recommend
such managerial actions; 2. To formulate or execute management policies and decisions; or 3. To hire,
transfer, suspend, lay off, recall, dismiss, assign or discipline employees. 44

Republic Act No. 6715

The rule regarding membership in labor organizations of managerial and supervisory employees just
adverted to, was clarified and refined by Republic Act No. 6715, effective on March 21, 1989, further
amending the Labor Code.

Under RA 6715 labor unions are regarded as organized either (a) "for purposes of negotiation," or (b)
"for furtherance and protection"of the members' rights. Membership in unions organized "for purposes
of negotiation" is open only to rank-and-file employees. "Supervisory employees" are ineligible "for
membership in a labor organization of the rank-and-file employees but may join, assist or form separate
labor organizations of their own," i.e., one organized "for furtherance and protection" of their rights and
interests. However, according to the Rules implementing RA 6715, "supervisory employees who
are included in an existing rank-and- file bargaining unit, upon the effectivity of Republic Act No. 6715
shall remain in that unit ..." Supervisory employees are "those who, in the interest of the employer,
effectively recommend such managerial actions 45 if the exercise of such authority is not merely
routinary or clerical in nature but requires the use of independent judgment. 46

Membership in employees' organizations formed for purposes of negotiation are open to rank-and-file
employees only, as above mentioned, and not to high level employees. 47 Indeed, "managerial
employees" or "high level employees" are, to repeat, "not eligible to join, assist or form any labor
organization" at all. 48 A managerial employee is defined as "one who is vested with powers or
prerogatives to lay down and execute, management policies and/or to hire, transfer, suspend, lay-off,
recall, discharge, assign or discipline employees."49

This is how the law now stands, particularly with respect to supervisory employees vis a vis labor
organizations of employees under them.

Now, the GSIS performs proprietary functions. It is a non-stock corporation, managed by a Board of
Trustees exercising the "usual corporate powers."50 In other words, it exercises all the powers of a
corporation under the Corporation Law in so far as they are not otherwise inconsistent with other
applicable law. 51 It is engaged essentially in insurance, a business that "is not inherently or exclusively a
governmental function, ... (but) is on the contrary, in essence and practice, of a private nature and
interest." 52

1. The petitioners contend that the right of self-organization and collectivebargaining had been
withdrawn by the Labor Code from government employees including those in government-owned and
controlled corporations- chiefly for the reason that the terms and conditions of government
employment, all embraced in civil service, may not be modified by collective bargaining because set by
law. It is therefore immaterial, they say, whether supervisors are members of rank-and-file unions or
not; after all, the possibility of the employer's control of the members of the union thru supervisors thus
rendering collective bargaining illusory, which is the main reason for the prohibition, is no longer of any
consequence.
This was true, for a time. As already discussed, both under the Labor Code and PD 807, government
employees, including those in government-owned or controlled corporations, were indeed precluded
from bargaining as regards terms and conditions of employment because these were set by law and
hence could not possibly be altered by negotiation.

But EO 111 restored the right to organize and to negotiate and bargain of employees of "government
corporations established under the Corporation Code." And EO 180, and apparently RA 6715, too,
granted to all government employees the right of collective bargaining or negotiation except as regards
those terms of their employment which were fixed by law; and as to said terms fixed by law, they were
prohibited to strike to obtain changes thereof.

2. The petitioners appear to be correct in their view of the disappearance from the law of the
prohibition on supervisors being members of labor organizations composed of employees under their
supervision. The Labor Code (PD 442) allowed supervisors (if not managerial) to join rank-and-file
unions. And under the Implementing Rules of RA 6715, supervisors who were members of existing labor
organizations on the effectivity of said RA 6715 were explicitly authorized to "remain therein."

3. The correctness of the petitioners' theory that unfair labor practices ceased to be crimes and were
deemed merely administrative offenses in virtue of the Labor Code, cannot be gainsaid. Article 250 of
the Labor Code did provide as follows:

ART. 250.  Concept of unfair labor practice.-The concept of unfair labor practice is hereby modified.
Henceforth, it shall be considered merely as an administrative offense rather than a criminal offense.
Unfair labor practice complaints shall, therefore, be processed like any ordinary labor disputes.

But unfair labor practices were declared to be crimes again by later amendments of the Labor Code
effected by Batas Pambansa Blg. 70, approved on May 1, 1980. As thus amended, the Code now
pertinently reads as follows:

ART. 248. Concept of unfair labor practice and procedure for prosecution thereof. —  Unfair labor
practices violate the 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, and hinder the promotion of healthy
and stable labor management relations. Consequently, unfair labor practices are not only violations of
the civil rights of both labor and management but are also offenses against the State which shall be
subject to prosecution and punishment as herein provided.

xxx xxx xxx

Recovery of civil liability in the administrative proceedings shall bar recovery under the Civil Code.

No criminal prosecution under this title may be instituted without a final judgment, finding that an
unfair labor practice was committed having been first obtained in the preceding paragraph. ...

The decisive consideration is that at present, supervisors who were already members of a rank-and-file
labor organization at the time of the effectivity of R.A. No. 6715, are authorized to "remain therein." It
seems plain, in other words, that the maintenance by supervisors of membership in a rank-and-file labor
organization even after the enactment of a statute imposing a prohibition on such membership, is not
only not a crime, but is explicitly allowed, under present law.
Now, in a case decided as early as 1935, People v. Tamayo, 53 where the appellants had appealed from a
judgment convicting them of a violation of a municipal -ordinance, and while their appeal was pending,
the ordinance was repealed such that the act complained of ceased to be a criminal act but became
legal, this Court dismissed the criminal proceedings, pronouncing the effects of the repeal to be as
follows:

In the leading case of the United States vs. Cuna (12 Phil. 241), and Wing vs. United States (218 U.S.
272), the doctrine was clearly established that in the Philippines repeal of a criminal act by its
reenactment, even without a saving clause would not destroy criminal liability. But not a single sentence
in either derision indicates that there was any desire to hold that a person could be prosecuted
convicted, and punished for acts no longer criminal.

There is no question that at common law and in America a much more favorable attitude towards the
accused exists relative to statutes that have been repealed than has been adopted here. Our rule is
more in conformity with the Spanish doctrine, but even in Spain, where the offense ceased to be
criminal, petition cannot be had (1 Pacheco, Commentaries, 296).

The repeal here was absolute and not a reenactment and repeal by implication. Nor was there any
saving clause. The legislative intent as shown by the action of the municipal is that such conduct,
formerly denounced, is no longer deemed criminal, and it would be illogical for this court to attempt to
sentence appellant for the offense that no longer exists.

We are therefore of the opinion that the proceedings against appellant must be dismissed.

To the same effect and in even more unmistakable language is People v. Almuete  54 where the
defendants-appellees were charged under section 39 of Republic Act No. 1199, as amended (the
Agricultural Land Tenancy Law of 1954) which penalized pre-threshing by either agricultural tenant or
his landlord. They sought and secured a dismissal on the ground, among others, that there was no law
punishing the act charged-a reference to the fact that Republic Act No. 1199 had already been
superseded by the Agricultural Land Reform Code of 1963 which instituted the leasehold system and
abolished share tenancy subject to certain conditions. On appeal by the Government, this Court upheld
the dismissal, saying:

The legislative intent not to punish anymore the tenant's act of pre-reaping and pre-threshing without
notice to the landlord is inferable from the fact that, as already noted, the Code of Agrarian Reforms did
not reenact section 39 of the Agricultural Tenancy Law and that it abolished share tenancy which is the
basis for penalizing clandestine pre-reaping and pre-threshing.

xxx xxx xxx

As held in the Adillo  case, 55 the act of pre-reaping and pre-threshing without notice to the landlord,
which is an offense under the Agricultural Tenancy Law, had ceased to be an offense under the
subsequent law, the Code of Agrarian Reforms. To prosecute it as an offense when the Code of Agrarian
Reforms is already in force would be repugnant or abhorrent to the policy and spirit of that Code and
would subvert the manifest legislative intent not to punish anymore pre-reaping and pre-threshing
without notice to the landholder.

xxx xxx xxx

The repeal of a penal law deprives the courts of jurisdiction to punish persons charged with a violation
of the old penal law prior to its repeal (People vs. Tamayo, 61 Phil. 225; People vs. Sindiong and Pastor,
77 Phil. 1000; People vs. Binuya, 61 Phil. 208; U.S. vs. Reyes, 10 Phil. 423; U.S. vs. Academia, 10 Phil. 431.
See dissent in Lagrimas vs. Director of Prisons, 57 Phil. 247, 252, 254).

The foregoing precedents dictate absolution of the appellants of the offenses imputed to them.

WHEREFORE, the judgments of conviction in CA-G.R. No. 14724-CR and CA-G.R. No. 14856-CR, subject of
the appeal, as well as those in Crim. Case No. 5275-R and Crim. Case No. 4130-R rendered by the Trial
Court, are REVERSED and the accused-appellants ACQUITTED of the charges against them, with costs de
officio.

SO ORDERED.
G.R. No. 96189 July 14, 1992

UNIVERSITY OF THE PHILIPPINES, petitioner,

vs.
HON. PURA FERRER-CALLEJA, Director of the Bureau of Labor Relations, Department of Labor and
Employment, and THE ALL U.P. WORKERS' UNION, represented by its President, Rosario del
Rosario, respondent.

NARVASA, C.J.:

In this special civil action of certiorari  the University of the Philippines seeks the nullification of the
Order dated October 30, 1990 of Director Pura Ferrer-Calleja of the Bureau of Labor Relations holding
that "professors, associate professors and assistant professors (of the University of the Philippines)
are . . rank-and-file employees . . ;" consequently, they should, together with the so-called non-
academic, non-teaching, and all other employees of the University, be represented by only one labor
organization. 1 The University is joined in this undertaking by the Solicitor General who "has taken a
position not contrary to that of petitioner and, in fact, has manifested . . that he is not opposing the
petition . . ." 2

The case 3 was initiated in the Bureau of Labor Relations by a petition filed on March 2, 1990 by a
registered labor union, the "Organization of Non-Academic Personnel of UP" (ONAPUP). 4 Claiming to
have a membership of 3,236 members — comprising more than 33% of the 9,617 persons constituting
the non-academic personnel of UP-Diliman, Los Baños, Manila, and Visayas, it sought the holding of a
certification election among all said non-academic employees of the University of the Philippines. At a
conference thereafter held on March 22, 1990 in the Bureau, the University stated that it had no
objection to the election.

On April 18, 1990, another registered labor union, the "All UP Workers' Union," 5 filed a comment, as
intervenor in the certification election proceeding. Alleging that its membership covers both academic
and non-academic personnel, and that it aims to unite all UP rank-and-file employees in one union, it
declared its assent to the holding of the election provided the appropriate organizational unit was first
clearly defined. It observed in this connection that the Research, Extension and Professional Staff (REPS),
who are academic non-teaching personnel, should not be deemed part of the organizational unit.

For its part, the University, through its General Counsel, 6 made of record its view that there should be
two (2) unions: one for academic, the other for non-academic or administrative, personnel considering
the dichotomy of interests, conditions and rules governing these employee groups.

Director Calleja ruled on the matter on August 7, 1990. 7 She declared that "the appropriate
organizational unit . . should embrace all the regular rank-and-file employees, teaching and non-
teaching, of the University of the Philippines, including all its branches" and that there was no sufficient
evidence "to justify the grouping of the non-academic or administrative personnel into an organization
unit apart and distinct from that of the academic or teaching personnel." Director Calleja adverted to
Section 9 of Executive Order No. 180,  viz.:
Sec. 9. The appropriate organizational unit shall be the employer unit consisting of rank-and-file
employees, unless circumstances otherwise require.

and Section 1, Rule IV of the Rules Implementing said EO 180 (as amended by SEC. 2, Resolution of
Public Sector Labor Management Council dated May 14, 1989, viz.:

xxx xxx xxx

For purposes of registration, an appropriate organizational unit may refer to:

xxx xxx xxx

d. State universities or colleges, government-owned or controlled corporations with original charters.

She went on to say that the general intent of EO 180 was "not to fragmentize the employer unit, as "can
be gleaned from the definition of the term "accredited employees' organization," which refers to:

. . a registered organization of the rank-and-file employees as defined in these rules recognized to

negotiate for the employees in an organizational unit headed by an officer with sufficient authority to
bind the agency, such as . . . . . . state colleges and universities.

The Director thus commanded that a certification election be "conducted among rank-and-file
employees, teaching and non-teaching" in all four autonomous campuses of the UP, and that
management appear and bring copies of the corresponding payrolls for January, June, and July, 1990 at
the "usual pre-election conference . . ."

At the pre-election conference held on March 22, 1990 at the Labor Organizational Division of the
DOLE, 8 the University sought further clarification of the coverage of the term, "rank-and-file"
personnel, asserting that not every employee could properly be embraced within both teaching and
non-teaching categories since there are those whose positions are in truth managerial and policy-
determining, and hence, excluded by law.

At a subsequent hearing (on October 4, 1990), the University filed a Manifestation seeking the exclusion
from the organizational unit of those employees holding supervisory positions among non-academic
personnel, and those in teaching staff with the rank of Assistant Professor or higher, submitting the
following as grounds therefor:

1) Certain "high-level employees" with policy-making, managerial, or confidential functions, are

ineligible to join rank-and-file employee organizations under Section 3, EO 180:

Sec. 3. High-level employees whose functions are normally considered as policy-making or managerial or
whose duties are of a highly confidential nature shall not be eligible to join the organization of rank-and
file government employees;

2) In the University hierarchy, not all teaching and non-teaching personnel belong the rank-and file: just
as there are those occupying managerial positions within the non-teaching roster, there is also a
dichotomy between various levels of the teaching or academic staff;

3) Among the non-teaching employees composed of Administrative Staff and Research personnel, only
those holding positions below Grade 18 should be regarded as rank-and-file, considering that those
holding higher grade positions, like Chiefs of Sections, perform supervisory functions including that of
effectively recommending termination of appointments or initiating appointments and promotions; and

4) Not all teaching personnel may be deemed included in the term, "rank-and-file;" only those holding
appointments at the instructor level may be so considered, because those holding appointments from
Assistant Professor to Associate Professor to full Professor take part, as members of the University
Council, a policy-making body, in the initiation of policies and rules with respect to faculty tenure and
promotion. 9

The ONAPUP quite categorically made of record its position; that it was not opposing the University's
proferred classification of rank-and file employees. On the other hand, the "All UP Workers' Union"
opposed the University's view, in a Position Paper presented by it under date of October 18, 1990.

Director Calleja subsequently promulgated an Order dated October 30, 1990, resolving the "sole issue"
of "whether or not professors, associate professors and assistant professors are included in the
definition of high-level employee(s)" in light of Rule I, Section (1) of the Implementing Guidelines of
Executive Order No. 180, defining "high level employee" as follows:

1. High Level Employee — is one whose functions are normally considered policy determining,
managerial or one whose duties are highly confidential in nature. A managerial function refers to the
exercise of powers such as:

1. To effectively recommend such managerial actions;

2. To formulate or execute management policies and decisions; or

3. To hire, transfer, suspend, lay-off, recall, dismiss, assign or discipline employees.

The Director adjudged that said teachers are rank-and-file employees "qualified to join unions and vote
in certification elections." According to her —

A careful perusal of the University Code . . shows that the policy-making powers of the Council are
limited to academic matters, namely, prescribing courses of study and rules of discipline, fixing student
admission and graduation requirements, recommending to the Board of Regents the conferment of
degrees, and disciplinary power over students. The policy-determining functions contemplated in the
definition of a high-level employee pertain to managerial, executive, or organization policies, such as
hiring, firing, and disciplining of employees, salaries, teaching/working hours, other monetary and non-
monetary benefits, and other terms and conditions of employment. They are the usual issues in
collective bargaining negotiations so that whoever wields these powers would be placed in a situation of
conflicting interests if he were allowed to join the union of rank-and-file employees.

The University seasonably moved for reconsideration, seeking to make the following points, to wit:

1) UP professors do "wield the most potent managerial powers: the power to rule on tenure, on the
creation of new programs and new jobs, and conversely, the abolition of old programs and the
attendant re-assignment of employees.

2) To say that the Council is "limited to (acting on) academic matters" is error, since academic decisions
"are the most important decisions made in a University . . (being, as it were) the heart, the core of the
University as a workplace.
3) Considering that the law regards as a "high level" employee, one who performs either policy-
determining, managerial, or confidential functions, the Director erred in applying only the "managerial
functions" test, ignoring the "policy-determining functions" test.

4) The Director's interpretation of the law would lead to absurd results, e.g.: "an administrative officer of
the College of Law is a high level employee, while a full Professor who has published several treatises
and who has distinguished himself in argument before the Supreme Court is a mere rank-and-file
employee. A dormitory manager is classified as a high level employee, while a full Professor or Political
Science with a Ph. D. and several Honorary doctorates is classified as rank-and-file." 10

The motion for reconsideration was denied by Director Calleja, by Order dated November 20, 1990.

The University would now have this Court declare void the Director's Order of October 30, 1990 as well
as that of November 20, 1990. 11 A temporary restraining order was issued by the Court, by Resolution
dated December 5, 1990 conformably to the University's application therefor.

Two issues arise from these undisputed facts. One is whether or not professors, associate professors
and assistant professors are "high-level employees" "whose functions are normally considered policy
determining, managerial or . . highly confidential in nature." The other is whether or not, they, and other
employees performing academic functions, 12 should comprise a collective bargaining unit distinct and
different from that consisting of the non-academic employees of the University, 13 considering the
dichotomy of interests, conditions and rules existing between them.

As regards the first issue, the Court is satisfied that it has been correctly resolved by the respondent
Director of Bureau Relations. In light of Executive Order No. 180 and its implementing rules, as well as
the University's charter and relevant regulations, the professors, associate professors and assistant
professors (hereafter simply referred to as professors) cannot be considered as exercising such
managerial or highly confidential functions as would justify their being categorized as "high-level
employees" of the institution.

The Academic Personnel Committees, through which the professors supposedly exercise managerial
functions, were constituted "in order to foster greater involvement of the faculty and other academic
personnel in appointments, promotions, and other personnel matters that directly affect
them." 14 Academic Personnel Committees at the departmental and college levels were organized
"consistent with, and demonstrative of the very idea of consulting the faculty and other academic
personnel on matters directly affecting them" and to allow "flexibility in the determination of guidelines
peculiar to a particular department or college." 15

Personnel actions affecting the faculty and other academic personnel should, however, "be considered
under uniform guidelines and consistent with the Resolution of the Board (of Regents) adopted during
its 789th Meeting (11-26-69) creating the University Academic Personnel Board." 16 Thus, the
Departmental Academic Personnel Committee is given the function of "assist(ing) in the review of the
recommendations initiated by the Department Chairman with regard to recruitment, selection,
performance evaluation, tenure and staff development, in accordance with the general guidelines
formulated by the University Academic Personnel Board and the implementing details laid down by the
College Academic Personnel Committee;" 17 while the College Academic Personnel Committee is
entrusted with the following functions: 18
1. Assist the Dean in setting up the details for the implementation of policies, rules, standards or general
guidelines as formulated by the University Academic Personnel Board;

2. Review the recommendation submitted by the DAPCs with regard to recruitment, selection,
performance evaluation, tenure, staff development, and promotion of the faculty and other academic
personnel of the College;

3. Establish departmental priorities in the allocation of available funds for promotion;

4. Act on cases of disagreement between the Chairman and the members of the DAPC particularly on
personnel matters covered by this Order;

5. Act on complaints and/or protests against personnel actions made by the Department Chairman
and/or the DAPC.

The University Academic Personnel Board, on the other hand, performs the following functions: 19

1. Assist the Chancellor in the review of the recommendations of the CAPC'S.

2. Act on cases of disagreement between the Dean and the CAPC.

3. Formulate policies, rules, and standards with respect to the selection, compensation, and promotion
of members of the academic staff.

4. Assist the Chancellor in the review of recommendations on academic promotions and on other
matters affecting faculty status and welfare.

From the foregoing, it is evident that it is the University Academic Personnel Committee, composed of
deans, the assistant for academic affairs and the chief of personnel, which formulates the policies, rules
and standards respecting selection, compensation and promotion of members of the academic staff. The
departmental and college academic personnel committees' functions are purely recommendatory in
nature, subject to review and evaluation by the University Academic Personnel Board. In Franklin Baker
Company of the Philippines vs. Trajano, 20 this Court reiterated the principle laid down in National
Merchandising Corp. vs. Court of Industrial Relations, 21 that the power to recommend, in order to
qualify an employee as a supervisor or managerial employee "must not only be effective  but the
exercise of such authority should not be merely of a routinary or clerical nature but should require the
use of independent judgment." Where such recommendatory powers, as in the case at bar, are subject
to evaluation, review and final action by the department heads and other higher executives of the
company, the same, although present, are not effective and not an exercise of independent judgment as
required by law.

Significantly, the personnel actions that may be recommended by the departmental and college
academic personnel committees must conform with the general guidelines drawn up by the university
personnel academic committee. This being the case, the members of the departmental and college
academic personnel committees are not unlike the chiefs of divisions and sections of the National
Waterworks and Sewerage Authority whom this Court considered as rank-and-file employees
in National Waterworks & Sewerage Authority vs. NWSA Consolidated Unions, 22 because "given ready
policies to execute and standard practices to observe for their execution, . . . they have little freedom of
action, as their main function is merely to carry out the company's orders, plans and policies."
The power or prerogative pertaining to a high-level employee "to effectively recommend such
managerial actions, to formulate or execute management policies or decisions and/or to hire, transfer,
suspend, lay-off, recall, dismiss, assign or discipline employees" 23 is exercised to a certain degree by the
university academic personnel board/committees and ultimately by the Board of Regents in accordance
with Section 6 of the University
Charter, 24 thus:

(e) To appoint, on the recommendation of the President of the University, professors, instructors,
lecturers and other employees of the University; to fix their compensation, hours of service, and such
other duties and conditions as it may deem proper; to grant them in its discretion leave of absence
under such regulations as it may promulgate, any other provision of law to the contrary
notwithstanding, and to remove them for cause after investigation and hearing shall have been had.

Another factor that militates against petitioner's espousal of managerial employment status for all its
professors through membership in the departmental and college academic personnel committees is that
not all professors are members thereof. Membership and the number of members in the committees
are provided as follows: 25

Sec. 2. Membership in Committees. — Membership in committees may be made either through

appointment, election, or by some other means as may be determined by the faculty and other
academic personnel of a particular department or college.

Sec. 3. Number of Members. — In addition to the Chairman, in the case of a department, and the Dean
in the case of a college, there shall be such number of members representing the faculty and academic
personnel as will afford a fairly representative, deliberative and manageable group that can handle
evaluation of personnel actions.

Neither can membership in the University Council elevate the professors to the status of high-level
employees. Section 6 (f) and 9 of the UP Charter respectively provide: 26

Sec. 6. The Board of Regents shall have the following powers and duties . . . ;

xxx xxx xxx

(f) To approve the courses of study and rules of discipline drawn up by the University Council as
hereinafter provided; . . .

Sec. 9. There shall be a University Council consisting of the President of the University and of all
instructors in the university holding the rank of professor, associate professor, or assistant professor.
The Council shall have the power to prescribe the courses of study and rules of discipline, subject to the
approval of the Board of Regents. It shall fix the requirements for admission to any college of the
university, as well as for graduation and the receiving of a degree. The Council alone shall have the
power to recommend students or others to be recipients of degrees. Through its president or
committees, it shall have disciplinary power over the students within the limits prescribed by the rules of
discipline approved by the Board of Regents. The powers and duties of the President of the University, in
addition to those specifically provided in this Act shall be those usually pertaining to the office of
president of a university.
It is readily apparent that the policy-determining functions of the University Council are subject to
review, evaluation and final approval by the Board of Regents. The Council's power of discipline is
likewise circumscribed by the limits imposed by the Board of Regents. What has been said about the
recommendatory powers of the departmental and college academic personnel committees applies with
equal force to the alleged policy-determining functions of the University Council.

Even assuming arguendo that UP professors discharge policy-determining functions through the

University Council, still such exercise would not qualify them as high-level employees within the context
of E.O. 180. As correctly observed by private respondent, "Executive Order No. 180 is a law concerning
public sector unionism. It must therefore be construed within that context. Within that context, the
University of the Philippines represents the government as an employer. 'Policy-determining' refers to
policy-determination in university mattes that affect those same matters that may be the subject of
negotiation between public sector management and labor. The reason why 'policy-determining' has
been laid down as a test in segregating rank-and-file from management is to ensure that those who lay
down policies in areas that are still negotiable in public sector collective bargaining do not themselves
become part of those employees who seek to change these policies for their collective welfare." 27

The policy-determining functions of the University Council refer to academic matters, i.e. those
governing the relationship between the University and its students, and not the University as an
employer and the professors as employees. It is thus evident that no conflict of interest results in the
professors being members of the University Council and being classified as rank-and-file employees.

Be that as it may, does it follow, as public respondent would propose, that all rank-and-file employees of
the university are to be organized into a single collective bargaining unit?

A "bargaining unit" has been defined as a group of employees of a given employer, comprised of all or
less than all of the entire body of employees, which the collective interest of all the employees,
consistent with equity to the employer, indicate to be the best suited to serve the reciprocal rights and
duties of the parties under the collective bargaining provisions of the law. 28

Our labor laws do not however provide the criteria for determining the proper collective bargaining unit.
Section 12 of the old law, Republic Act No. 875 otherwise known as the Industrial Peace Act, simply
reads as follows: 29

Sec. 12. Exclusive Collective Bargaining Representation for Labor Organizations. — The labor
organization designated or selected for the purpose of collective bargaining by the majority of the
employees in an appropriate collective bargaining unit shall be the exclusive representative of all the
employees in such unit for the purpose of collective bargaining in respect to rates of pay, wages, hours
of employment, or other conditions of employment; Provided, That any individual employee or group of
employees shall have the right at any time to present grievances to their employer.

Although said Section 12 of the Industrial Peace Act was subsequently incorporated into the Labor Code
with minor changes, no guidelines were included in said Code for determination of an appropriate
bargaining unit in a given case. 30 Thus, apart from the single descriptive word "appropriate," no specific
guide for determining the proper collective bargaining unit can be found in the statutes.
Even Executive Order No. 180 already adverted to is not much help. All it says, in its Section 9, is that
"(t)he appropriate organizational unit shall be the employer unit consisting of rank-and-file employees,
unless circumstances otherwise require." Case law fortunately furnishes some guidelines.

When first confronted with the task of determining the proper collective bargaining unit in a particular
controversy, the Court had perforce to rely on American jurisprudence. In Democratic Labor Association
vs. Cebu Stevedoring Company, Inc., decided on February 28, 1958, 31 the Court observed that "the issue
of how to determine the proper collective bargaining unit and what unit would be appropriate to be the
collective bargaining
agency" . . . "is novel in this jurisdiction; however, American precedents on the matter abound . . (to
which resort may be had) considering that our present Magna Carta has been patterned after the
American law on the subject." Said the Court:

. . . Under these precedents, there are various factors which must be satisfied and considered in
determining the proper constituency of a bargaining unit. No one particular factor is itself decisive of the
determination. The weight accorded to any particular factor varies in accordance with the particular
question or questions that may arise in a given case. What are these factors? Rothenberg mentions a
good number, but the most pertinent to our case are: (1) will of the employees (Globe Doctrine); (2)
affinity and unit of employees' interest, such as substantial similarity of work and duties, or similarity of
compensation and working conditions; (3) prior collective bargaining history; and (4) employment
status, such as temporary, seasonal probationary employees. . . .

xxx xxx xxx

An enlightening appraisal of the problem of defining an appropriate bargaining unit is given in the 10th
Annual Report of the National Labor Relations Board wherein it is emphasized that the factors which
said board may consider and weigh in fixing appropriate units are: the history, extent and type of
organization of employees; the history of their collective bargaining; the history, extent and type of
organization of employees in other plants of the same employer, or other employers in the same
industry; the skill, wages, work, and working conditions of the employees; the desires of the employees;
the eligibility of the employees for membership in the union or unions involved; and the relationship
between the unit or units proposed and the employer's organization, management, and operation. . . .

. . In said report, it is likewise emphasized that the basic test in determining the appropriate bargaining
unit is that a unit, to be appropriate, must affect a grouping of employees who have substantial, mutual
interests in wages, hours, working conditions and other subjects of collective bargaining (citing Smith on
Labor Laws, 316-317; Francisco, Labor Laws, 162). . . .

The Court further explained that "(t)he test of the grouping is community or mutuality of interests. And
this is so because 'the basic test of an asserted bargaining unit's acceptability is whether or not it is
fundamentally the combination which will best assure to all employees the exercise of their collective
bargaining rights' (Rothenberg on Labor Relations, 490)." Hence, in that case, the Court upheld the trial
court's conclusion that two separate bargaining units should be formed, one consisting of regular and
permanent employees and another consisting of casual laborers or stevedores.

Since then, the  "community or mutuality of interests" test has provided the standard in determining the
proper constituency of a collective bargaining unit. In Alhambra Cigar & Cigarette Manufacturing
Company, et al. vs. Alhambra Employees' Association (PAFLU),  107 Phil. 23, the Court, noting that the
employees in the administrative, sales and dispensary departments of a cigar and cigarette
manufacturing firm perform work which have nothing to do with production and maintenance, unlike
those in the raw lead (malalasi), cigar, cigarette, packing (precintera) and engineering and garage
departments, authorized the formation of the former set of employees into a separate collective
bargaining unit. The ruling in the Democratic Labor Association  case, supra, was reiterated in Philippine
Land-Air-Sea Labor Unit vs. Court of Industrial Relations, 110 Phil. 176, where casual employees were
barred from joining the union of the permanent and regular employees.

Applying the same "community or mutuality of interests" test, but resulting in the formation of only one
collective bargaining units is the case of National Association of Free Trade Unions vs. Mainit Lumber
Development Company Workers Union-United Lumber and General Workers of the Phils.,  G.R. No.
79526, December 21, 1990, 192 SCRA 598. In said case, the Court ordered the formation of a single
bargaining unit consisting of the Sawmill Division in Butuan City and the Logging Division in Zapanta
Valley, Kitcharao, Agusan Norte of the Mainit Lumber Development Company. The Court reasoned:

Certainly, there is a mutuality of interest among the employees of the Sawmill Division and the Logging
Division. Their functions mesh with one another. One group needs the other in the same way that the
company needs them both. There may be difference as to the nature of their individual assignments but
the distinctions are not enough to warrant the formation of a separate bargaining unit.

In the case at bar, the University employees may, as already suggested, quite easily be categorized into
two general classes: one, the group composed of employees whose functions are non-academic, i.e.,
janitors, messengers, typists, clerks, receptionists, carpenters, electricians, grounds-keepers, chauffeurs,
mechanics, plumbers; 32 and two, the group made up of those performing academic functions, i.e., full
professors, associate professors, assistant professors, instructors — who may be judges or government
executives — and research, extension and professorial staff. 33 Not much reflection is needed to perceive
that the community or mutuality of interests which justifies the formation of a single collective
bargaining unit is wanting between the academic and non-academic personnel of the university. It
would seem obvious that teachers would find very little in common with the University clerks and other
non-academic employees as regards responsibilities and functions, working conditions, compensation
rates, social life and interests, skills and intellectual pursuits, cultural activities, etc. On the contrary, the
dichotomy of interests, the dissimilarity in the nature of the work and duties as well as in the
compensation and working conditions of the academic and non-academic personnel dictate the
separation of these two categories of employees for purposes of collective bargaining. The formation of
two separate bargaining units, the first consisting of the rank-and-file non-academic personnel, and the
second, of the rank-and-file academic employees, is the set-up that will best assure to all the employees
the exercise of their collective bargaining rights. These special circumstances, i.e., the dichotomy of
interests and concerns as well as the dissimilarity in the nature and conditions of work, wages and
compensation between the academic and non-academic personnel, bring the case at bar within the
exception contemplated in Section 9 of Executive Order No. 180. It was grave abuse of discretion on the
part of the Labor Relations Director to have ruled otherwise, ignoring plain and patent realities.

WHEREFORE, the assailed Order of October 30, 1990 is hereby AFFIRMED in so far as it declares the
professors, associate professors and assistant professors of the University of the Philippines as rank-and-
file employees. The Order of August 7, 1990 is MODIFIED in the sense that the non-academic rank-and-
file employees of the University of the Philippines shall constitute a bargaining unit to the exclusion of
the academic employees of the institution — i.e., full professors, associate professors, assistant
professors, instructors, and the research, extension and professorial staff, who may, if so minded,
organize themselves into a separate collective bargaining unit; and that, therefore, only said non-
academic rank-and-file personnel of the University of the Philippines in Diliman, Manila, Los Baños and
the Visayas are to participate in the certification election.

SO ORDERED.
G.R. No. 122226 March 25, 1998

UNITED PEPSI-COLA SUPERVISORY UNION (UPSU), petitioner,

vs.
HON. BIENVENIDO E. LAGUESMA and PEPSI-COLA PRODUCTS, PHILIPPINES, INC. respondents.

MENDOZA, J.:

Petitioner is a union of supervisory employees. It appears that on March 20, 1995 the union filed a
petition for certification election on behalf of the route managers at Pepsi-Cola Products Philippines, Inc.
However, its petition was denied by the med-arbiter and, on appeal, by the Secretary of Labor and
Employment, on the ground that the route managers are managerial employees and, therefore,
ineligible for union membership under the first sentence of Art. 245 of the Labor Code, which provides:

Ineligibility of managerial employees to join any labor organization;  right of supervisory employees. —
Managerial employees are not eligible to join, assist or form any labor organization. Supervisory
employees shall not be eligible for membership in a labor organization of the rank-and-file employees
but may join, assist or form separate labor organizations of their own.

Petitioner brought this suit challenging the validity of the order dated August 31, 1995, as reiterated in
the order dated September 22, 1995, of the Secretary of Labor and Employment. Its petition was
dismissed by the Third Division for lack of showing that respondent committed grave abuse of
discretion. But petitioner filed a motion for reconsideration, pressing for resolution its contention that
the first sentence of Art. 245 of the Labor Code, so far as it declares managerial employees to be
ineligible to form, assist or join unions, contravenes Art. III, §8 of the Constitution which provides:

The right of the people, including those employed in the public and private sectors, to form unions,
associations, or societies for purposes not contrary to law shall not be abridged.

For this reason, the petition was referred to the Court en banc.

The Issues in this Case

Two questions are presented by the petition: (1) whether the route managers at Pepsi-Cola Products
Philippines, Inc. are managerial employees and (2) whether Art. 245, insofar as it prohibits managerial
employees from forming, joining or assisting labor unions, violates Art. III, §8 of the Constitution.

In resolving these issues it would be useful to begin by defining who are "managerial employees" and
considering the types of "managerial employees."

Types of Managerial Employees

The term "manager" generally refers to "anyone who is responsible for subordinates and other
organizational resources."1 As a class, managers constitute three levels of a pyramid:

Top management

————————
Middle

Management

——————————

First-Line

Management

(also called

Supervisor)

====================

Operatives

or

Operating

Employees

FIRST-LINE MANAGERS — The lowest level in an organization at which individuals are responsible for the
work of others is called  first-line or first-level management. First-line managers direct operating
employees only; they do not supervise other managers. Examples of first-line managers are the
"foreman" or production supervisor in a manufacturing plant, the technical supervisor in a research
department, and the clerical supervisor in a large office.  First-level managers are often called
supervisors.

MIDDLE MANAGERS — The term middle management can refer to more than one level in an
organization. Middle managers direct the activities of other managers and sometimes also those of
operating employees. Middle managers' principal responsibilities are to direct the activities that
implement their organizations' policies and to balance the demands of their superiors with the
capacities of their subordinates. A plant manager in an electronics firm is an example of a middle
manager.

TOP MANAGERS — Composed of a comparatively small group of executives, top management is

responsible for the overall management of the organization. It establishes operating policies and guides
the organization's interactions with its environment. Typical titles of top managers are "chief executive
officer," "president," and  "senior vice-president." Actual titles vary from one organization to another and
are not always a reliable guide to membership in the highest management classification.2

As can be seen from this description, a distinction exists between those who have the authority to
devise, implement and control strategic and operational policies (top and middle managers) and those
whose task is simply to ensure that such policies are carried out by the rank-and-file employees of an
organization (first-level managers/supervisors). What distinguishes them from the rank-and-file
employees is that they act in the interest of the employer in supervising such rank-and-file employees.
"Managerial employees" may therefore be said to fall into two distinct categories: the "managers"  per
se, who compose the former group described above, and the "supervisors" who form the latter group.
Whether they belong to the first or the second category, managers, vis-a-vis  employers, are, likewise,
employees.3

The first question is whether route managers are managerial employees or supervisors.

Previous Administrative Determinations of

the Question Whether Route Managers
are Managerial Employees

It appears that this question was the subject of two previous determinations by the Secretary of Labor
and Employment, in accordance with which this case was decided by the med-arbiter.

In Case No. OS-MA-10-318-91, entitled Worker's Alliance Trade Union (WATU) v.  Pepsi-Cola Products
Philippines, Inc., decided on November 13, 1991, the Secretary of Labor found:

We examined carefully the pertinent job descriptions of the subject employees and other documentary
evidence on record vis-a-vis paragraph (m), Article 212 of the Labor Code, as amended, and we find that
only those employees occupying the position of route manager and accounting manager are managerial
employees. The rest i.e. quality control manager, yard/transport manager and warehouse operations
manager are supervisory employees.

To qualify as managerial employee, there must be a clear showing of the exercise of managerial
attributes under paragraph (m), Article 212 of the Labor Code as amended. Designations or titles of
positions are not controlling. In the instant case, nothing on record will support the claim that the
quality control manager, yard/transport manager and warehouse operations manager are vested with
said attributes. The warehouse operations manager, for example, merely assists the plant finance
manager in planning, organizing, directing and controlling all activities relative to development and
implementation of an effective management control information system at the sale offices. The exercise
of authority of the quality control manager, on the other hand, needs the concurrence of the
manufacturing manager.

As to the route managers and accounting manager, we are convinced that they are managerial
employees. Their job descriptions clearly reveal so.

On July 6, 1992, this finding was reiterated in Case No. OS-A-3-71-92. entitled In Re:  Petition for Direct
Certification and/or Certification Election-Route Managers/Supervisory Employees of Pepsi-Cola Products
Phils.  Inc., as follows:

The issue brought before us is not of first impression. At one time, we had the occasion to rule upon the
status of route manager in the same company  vis a vis the issue as to whether or not it is supervisory
employee or a managerial employee. In the case of Workers Alliance Trade Unions (WATU) vs.  Pepsi
Cola Products, Phils., Inc. (OS-MA-A-10-318-91 ), 15 November 1991, we ruled that a route manager is a
managerial employee within the context of the definition of the law, and hence, ineligible to join, form
or assist a union. We have once more passed upon the logic of our Decision aforecited in the light of the
issues raised in the instant appeal, as well as the available documentary evidence on hand, and have
come to the view that there is no cogent reason to depart from our earlier holding. Route Managers are,
by the very nature of their functions and the authority they wield over their subordinates, managerial
employees. The prescription found in Art. 245 of the Labor Code, as amended therefore, clearly applies
to them.4

Citing our ruling in Nasipit Lumber Co.  v.  National Labor Relations Commission,5 however, petitioner
argues that these previous administrative determinations do not have the effect of res judicata in this
case, because "labor relations proceedings" are "non-litigious and summary in nature without regard to
legal technicalities."6 Nasipit Lumber Co. involved a clearance to dismiss an employee issued by the
Department of Labor. The question was whether in a subsequent proceeding for illegal dismissal, the
clearance was res judicata. In holding it was not, this Court made it clear that it was referring to labor
relations proceedings of a non-adversary character, thus:

The requirement of a clearance to terminate employment was a creation of the Department of labor to
carry out the Labor Code provisions on security of tenure and termination of employment. The
proceeding subsequent to the filing of an application for clearance to terminate employment was
outlined in Book V, Rule XIV of the Rules and Regulations Implementing the Labor Code. The fact that
said rule allowed a procedure for the approval of the clearance with or without the opposition of the
employee concerned (Secs. 7 & 8), demonstrates the non-litigious and summary nature of the
proceeding. The clearance requirement was therefore necessary only as an expeditious shield against
arbitrary dismissal without the knowledge and supervision of the Department of Labor. Hence, a duly
approved clearance implied that the dismissal was legal or for cause (Sec. 2).7

But the doctrine of res judicata certainly applies to adversary administrative proceedings. As early as
1956, in Brillantes v.  Castro,8 we sustained the dismissal of an action by a trial court on the basis of a
prior administrative determination of the same case by the Wage Administration Service, applying the
principle of res judicata. Recently, in Abad v.  NLRC9 we applied the related doctrine of stare decisis in
holding that the prior determination that certain jobs at the Atlantic Gulf and Pacific Co., were project
employments was binding in another case involving another group of employees of the same company.
Indeed, in Nasipit Lumber Co., this Court clarified toward the end of its opinion that "the doctrine of res
judicata applies . . . to judicial or quasi judicial  proceedings and not to the exercise of administrative
powers."10 Now proceedings for certification election, such as those involved in Case No. OS-M-A-10-
318-91 and Case No. OS-A-3-71-92, are quasi judicial in nature and, therefore, decisions rendered in
such proceedings can attain finality.11

Thus, we have in this case an expert's view that the employees concerned are managerial employees
within the purview of Art. 212 which provides:

(m) "managerial employee" is one who is vested with powers or prerogatives to lay down and execute
management policies and/or to hire, transfer, suspend, lay off, recall, discharge, assign or discipline
employees. Supervisory employees are those who, in the interest of the employer, effectively
recommend such managerial actions if the exercise of such authority is not merely routinary or clerical
in nature but requires the use of independent judgment. All employees not falling within any of the
above definitions are considered rank-and-file employees for purposes of this Book.

At the very least, the principle of finality of administrative determination compels respect for the finding
of the Secretary of Labor that route managers are managerial employees as defined by law in the
absence of anything to show that such determination is without substantial evidence to support it.
Nonetheless, the Court, concerned that employees who are otherwise supervisors may wittingly or
unwittingly be classified as managerial personnel and thus denied the right of self-organization, has
decided to review the record of this case.

DOLE's Finding that Route Managers are

Managerial Employees Supported by
Substantial Evidence in the Record

The Court now finds that the job evaluation made by the Secretary of Labor is indeed supported by
substantial evidence. The nature of the job of route managers is given in a four-page pamphlet,
prepared by the company, called "Route Manager Position Description," the pertinent parts of which
read:

A. BASIC PURPOSE

A Manager achieves objectives through others.

As a Route Manager, your purpose is to meet the sales plan; and you achieve this objective through the
skillful MANAGEMENT OF YOUR JOB AND THE MANAGEMENT OF YOUR PEOPLE.

These then are your functions as Pepsi-Cola Route Manager. Within these functions — managing your
job and managing your people — you are accountable to your District Manager for the execution and
completion of various tasks and activities which will make it possible for you to achieve your sales
objectives.

B. PRINCIPAL ACCOUNTABILITIES

1.0 MANAGING YOUR JOB

The Route Manager is accountable for the following:

1.1 SALES DEVELOPMENT

1.1.1 Achieve the sales plan.

1.1.2 Achieve all distribution and new account objectives.

1.1.3 Develop new business opportunities thru personal contacts with dealers.

1.1.4 Inspect and ensure that all merchandizing [sic] objectives are achieved in all outlets.

1.1.5 maintain and improve productivity of all cooling equipment and kiosks.

1.1.6 Execute and control all authorized promotions.

1.1.7 Develop and maintain dealer goodwill.

1.1.8 Ensure all accounts comply with company suggested retail pricing.

1.1.9 Study from time to time individual route coverage and productivity for possible adjustments to
maximize utilization of resources.

1.2 Administration
1.2.1 Ensure the proper loading of route trucks before check-out and the proper sorting of bottles
before check-in.

1.2.2 Ensure the upkeep of all route sales reports and all other related reports and forms required on an
accurate and timely basis.

1.2.3 Ensure proper implementation of the various company policies and procedures incl. but not
limited to shakedown; route shortage; progressive discipline; sorting; spoilages; credit/collection;
accident; attendance.

1.2.4 Ensure collection of receivables and delinquent accounts.

2.0 MANAGING YOUR PEOPLE

The Route Manager is accountable for the following:

2.1 Route Sales Team Development

2.1.2 Conduct route rides to train, evaluate and develop all assigned route salesmen and helpers at least
3 days a week, to be supported by required route ride documents/reports & back check/spot check at
least 2 days a week to be supported by required documents/reports.

2.1.2 Conduct sales meetings and morning huddles. Training should focus on the enhancement of
effective sales and merchandizing [sic] techniques of the salesmen and helpers. Conduct group training
at least 1 hour each week on a designated day and of specific topic.

2.2 Code of Conduct

2.2.1 Maintain the company's reputation through strict adherence to PCPPI's code of conduct and the
universal standards of unquestioned business
ethics.12

Earlier in this opinion, reference was made to the distinction between managers  per se (top managers
and middle managers) and supervisors (first-line managers). That distinction is evident in the work of the
route managers which sets them apart from supervisors in general. Unlike supervisors who basically
merely direct operating employees in line with set tasks assigned to them, route managers are
responsible for the success of the company's main line of business through management of their
respective sales teams. Such management necessarily involves the planning, direction, operation and
evaluation of their individual teams and areas which the work of supervisors does not entail.

The route managers cannot thus possibly be classified as mere supervisors because their work does not
only involve, but goes far beyond, the simple direction or supervision of operating employees to
accomplish objectives set by those above them. They are not mere functionaries with simple oversight
functions but business administrators in their own right. An idea of the role of route managers as
managers  per se can be gotten from a memo sent by the director of metro sales operations of
respondent company to one of the route managers. It reads:13

03 April 1995

To : CESAR T  .  REOLADA
From : REGGIE M.  SANTOS

Subj : SALARY INCREASE

Effective 01 April 1995, your basic monthly salary of P11,710 will be increased to P12,881 or an increase
of 10%. This represents the added managerial responsibilities you will assume due to the recent
restructuring and streamlining of Metro Sales Operations brought about by the continuous losses for the
last nine (9) months.

Let me remind you that for our operations to be profitable, we have to sustain the intensity and
momentum that your group and yourself have shown last March. You just have to deliver the desired
volume targets, better negotiated concessions, rationalized sustaining deals, eliminate or reduced
overdues, improved collections, more cash accounts, controlled operating expenses, etc. Also, based on
the agreed set targets, your monthly performance will be closely monitored.

You have proven in the past that your capable of achieving your targets thru better planning, managing
your group as a fighting team, and thru aggressive selling.  I am looking forward to your success and I
expect that you just have to exert your doubly best in turning around our operations from a losing to a
profitable one!

Happy Selling!!

(Sgd.)  R.M.  SANTOS

The plasticized card given to route managers, quoted in the separate opinion of Justice Vitug, although
entitled "RM's Job Description," is only a summary of performance standards. It does not show whether
route managers are managers  per se  or supervisors. Obviously, these performance standards have to be
related to the specific tasks given to route managers in the four-page "Route Manager Position
Description," and, when this is done, the managerial nature of their jobs is fully revealed. Indeed, if any,
the card indicates the great latitude and discretion given to route managers — from servicing and
enhancing company goodwill to supervising and auditing accounts, from trade (new business)
development to the discipline, training and monitoring of performance of their respective sales teams,
and so forth, — if they are to fulfill the company's expectations in the "key result areas."

Article 212(m) says that "supervisory employees are those who, in the interest of the employer,
effectively  recommend  such managerial actions if the exercise of such authority is not merely routinary
or clerical in nature but requires the use of independent judgment." Thus, their only power is to
recommend. Certainly, the route managers in this case more than merely recommend effective
management action. They perform operational, human resource, financial and marketing functions for
the company, all of which involve the laying down of operating policies for themselves and their teams.
For example, with respect to marketing, route managers, in accordance with B.1.1.1 to B.1.1.9 of the
Route Managers Job Description, are charged, among other things, with expanding the dealership base
of their respective sales areas, maintaining the goodwill of current dealers, and distributing the
company's various promotional items as they see fit. It is difficult to see how supervisors can be given
such responsibility when this involves not just the routine supervision of operating employees but the
protection and expansion of the company's business  vis-a-vis  its competitors.
While route managers do not appear to have the power to hire and fire people (the evidence shows that
they only "recommended" or "endorsed" the taking of disciplinary action against certain employees), this
is because this
is a function of the Human Resources or Personnel Department of the company. 14  And neither should it
be presumed that just because they are given set benchmarks to observe, they are  ipso
facto  supervisors. Adequate control methods (as embodied in such concepts as "Management by
Objectives [MBO]" and "performance appraisals") which require a delineation of the functions and
responsibilities of managers by means of ready reference cards as here, have long been recognized in
management as effective tools for keeping businesses competitive.

This brings us to the second question, whether the first sentence of Art. 245 of the Labor Code,
prohibiting managerial employees from forming, assisting or joining any labor organization, is
constitutional in light of Art. III, §8 of the Constitution which provides:

The right of the people, including those employed in the public and private sectors, to form unions,
associations, or societies for purposes not contrary to law shall not be abridged.

As already stated, whether they belong to the first category (managers  per se) or the second category
(supervisors), managers are employees. Nonetheless, in the United States, as Justice Puno's separate
opinion notes, supervisors have no right to form unions. They are excluded from the definition of the
term "employee" in §2(3) of the Labor-Management Relations Act of 1947. 15  In the Philippines, the
question whether managerial employees have a right of self-organization has arisen with respect to first-
level managers or supervisors, as shown by a review of the course of labor legislation in this country.

Right of Self-Organization of Managerial

Employees under Pre-Labor Code Laws

Before the promulgation of the Labor Code in 1974, the field of labor relations was governed by the
Industrial Peace Act (R.A. No. 875).

In accordance with the general definition above, this law defined "supervisor" as follows:

Sec. 2. . . .

(k) "Supervisor" means any person having authority in the interest of an employer, to hire, transfer,
suspend, lay-off, recall, discharge, assign, recommend, or discipline other employees, or responsibly to
direct them, and to adjust their grievances, or effectively to recommend such acts, if, in connection with
the foregoing, the exercise of such authority is not of a merely routinary or clerical nature but requires
the use of independent judgment.16

The right of supervisors to form their own organizations was affirmed:

Sec. 3.  Employees' Right to Self-Organization. — Employees shall have the right to self-organization and
to form, join or assist labor organizations of their own choosing for the purpose of collective bargaining
through representatives of their own choosing and to engage in concerted activities for the purpose of
collective bargaining and other mutual aid and protection. Individuals employed as supervisors shall not
be eligible for membership in a labor organization of employees under their supervision but may form
separate organizations of their own.17
For its part, the Supreme Court upheld in several of its decisions the right of supervisors to organize for
purposes of labor relations.18

Although it had a definition of the term "supervisor," the Industrial Peace Act did not define the term
"manager." But, using the commonly-understood concept of "manager," as above stated, it is apparent
that the law used the term "supervisors" to refer to the sub-group of "managerial employees" known as
front-line managers. The other sub-group of "managerial employees," known as managers  per se, was
not covered.

However, in  Caltex Filipino Managers and Supervisors Association v.  Court of Industrial Relations,19  the
right of all managerial employees to self-organization was upheld as a general proposition, thus:

It would be going too far to dismiss summarily the point raised by respondent Company — that of the
alleged identity of interest between the managerial staff and the employing firm. That should ordinarily
be the case, especially so where the dispute is between management and the rank and file. It does not
necessarily follow though that what binds the managerial staff to the corporation forecloses the
possibility of conflict between them. There could be a real difference between what the welfare of such
group requires and the concessions the firm is willing to grant. Their needs might not be attended to
then in the absence of any organization of their own. Nor is this to indulge in empty theorizing. The
record of respondent Company, even the very case cited by it, is proof enough of their uneasy and
troubled relationship. Certainly the impression is difficult to erase that an alien firm failed to manifest
sympathy for the claims of its Filipino executives. To predicate under such circumstances that agreement
inevitably marks their relationship, ignoring that discord would not be unusual, is to fly in the face of
reality.

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

Actually, the case involved front-line managers or supervisors only, as the plantilla of employees, quoted
in the main opinion,21  clearly indicates:

CAFIMSA members holding the following Supervisory Payroll Position Title are Recognized by the
Company

Payroll Position Title

Assistant to Mgr. — National Acct. Sales

Jr. Sales Engineer

Retail Development Asst.

Staff Asst. — 0 Marketing

Sales Supervisor

Supervisory Assistant

Jr. Supervisory Assistant

Credit Assistant

Lab. Supvr. — Pandacan

Jr. Sales Engineer B

Operations Assistant B

Field Engineer

Sr. Opers. Supvr. — MIA A/S

Purchasing Assistant

Jr. Construction Engineer

Sr. Sales Supervisor

Deport Supervisor A

Terminal Accountant B

Merchandiser

Dist. Sales Prom. Supvr.

Instr. — Merchandising

Asst. Dist. Accountant B

Sr. Opers. Supervisor

Jr. Sales Engineer A

Asst. Bulk Ter. Supt.

Sr. Opers. Supvr.

Credit Supervisor A

Asst. Stores Supvr. A

Ref. Supervisory Draftsman

Refinery Shift Supvr. B

Asst. Supvr. A — Operations (Refinery)

Refinery Shift Supvr. B

Asst. Lab. Supvr. A (Refinery)

St. Process Engineer B (Refinery)

Asst. Supvr. A — Maintenance (Refinery)

Asst. Supvr. B — Maintenance (Refinery)

Supervisory Accountant (Refinery)

Communications Supervisor (Refinery)

Finally, also deemed included are all other employees excluded from the rank and file unions but not
classified as managerial or otherwise excludable by law or applicable judicial precedents.

Right of Self-Organization of Managerial

Employees under the Labor Code

Thus, the dictum in the Caltex case which allowed at least for the theoretical unionization of top and
middle managers by assimilating them with the supervisory group under the broad phrase "managerial
personnel," provided the lynchpin for later laws denying the right of self-organization not only to top and
middle management employees but to front line managers or supervisors as well. Following the Caltex
case, the Labor Code, promulgated in 1974 under martial law, dropped the distinction between the first
and second sub-groups of managerial employees. Instead of treating the terms "supervisor" and
"manager" separately, the law lumped them together and called them "managerial employees," as
follows:

Art. 212. Definitions . . . .

(k) "Managerial Employee" is one who is vested with powers or prerogatives to lay down and execute
management policies and/or to hire, transfer, suspend, lay off, recall, discharge, assign or discipline
employees, or to effectively recommend such managerial actions. All employees not falling within this
definition are considered rank and file employees for purposes of this Book. 22

The definition shows that it is actually a combination of the commonly understood definitions of both
groups of managerial employees, grammatically joined by the phrase "and/or."

This general definition was perhaps legally necessary at that time for two reasons. First, the 1974 Code
denied supervisors their right to self-organize as theretofore guaranteed to them by the Industrial Peace
Act. Second, it stood the dictum in the Caltex case on its head by prohibiting all types of managers from
forming unions. The explicit general prohibition was contained in the then Art. 246 of the Labor Code.

The practical effect of this synthesis of legal concepts was made apparent in the Omnibus Rules
Implementing the Labor Code which the Department of Labor promulgated on January 19, 1975. Book V,
Rule II, §11 of the Rules provided:

Supervisory unions and unions of security guards to cease operation. — All existing supervisory unions
and unions of security guards shall, upon the effectivity of the Code, cease to operate as such and their
registration certificates shall be deemed automatically canceled. However, existing collective
agreements with such unions, the life of which extends beyond the date of effectivity of the Code, shall
be respected until their expiry date insofar as the economic benefits granted therein are concerned.
Members of supervisory unions who do not fall within the definition of managerial employees shall
become eligible to join or assist the rank and file labor organization, and if none exists, to form or assist
in the forming of such rank and file organization. The determination of who are managerial employees
and who are not shall be the subject of negotiation between representatives of the supervisory union
and the employer. If no agreement is reached between the parties, either or both of them may bring the
issue to the nearest Regional Office for determination.

The Department of Labor continued to use the term "supervisory unions" despite the demise of the legal
definition of "supervisor" apparently because these were the unions of front line managers which were
then allowed as a result of the statutory grant of the right of self-organization under the Industrial Peace
Act. Had the Department of Labor seen fit to similarly ban unions of top and middle managers which
may have been formed following the dictum in Caltex, it obviously would have done so. Yet it did not,
apparently because no such unions of top and middle managers really then existed.

Real Intent of the 1986 Constitutional Commission

This was the law as it stood at the time the Constitutional Commission considered the draft of Art. III, §8.
Commissioner Lerum sought to amend the draft of what was later to become Art. III, §8 of the present
Constitution:

MR. LERUM. My amendment is on Section 7, page 2, line 19, which is to insert between the words
"people" and "to" the following: WHETHER EMPLOYED BY THE STATE OR PRIVATE ESTABLISHMENTS. In
other words, the section will now read as follows: "The right of the people WHETHER EMPLOYED BY THE
STATE OR PRIVATE ESTABLISHMENTS to form associations, unions, or societies for purposes not contrary
to law shall not be abridged."23

Explaining his proposed amendment, he stated:

MR. LERUM. Under the 1935 Bill of Rights, the right to form associations is granted to all persons
whether or not they are employed in the government. Under that provision, we allow unions in the
government, in government-owned and controlled corporations and in other industries in the private
sector, such as the Philippine Government Employees' Association, unions in the GSIS, the SSS, the DBP
and other government-owned and controlled corporations.  Also, we have unions of supervisory
employees and of security guards.  But what is tragic about this is that after the 1973 Constitution was
approved and in spite of an express recognition of the right to organize in P.D.  No.  442, known as the
Labor Code, the right of government workers, supervisory employees and security guards to form unions
was abolished.

And we have been fighting against this abolition. In every tripartite conference attended by the
government, management and workers, we have always been insisting on the return of these rights.
However, both the government and employers opposed our proposal, so nothing came out of this until
this week when we approved a provision which states:

Notwithstanding any provision of this article, the right to self-organization shall not be denied to
government employees.
We are afraid that without any corresponding provision covering the private sector, the security guards,
the supervisory employees or majority employees [sic] will still be excluded, and that is the purpose of
this amendment.

I will be very glad to accept any kind of wording as long as it will amount to absolute recognition of
private sector employees, without exception, to organize.

THE PRESIDENT. What does the Committee say?

FR. BERNAS. Certainly, the sense is very acceptable, but the point raised by Commissioner Rodrigo is
well-taken. Perhaps, we can lengthen this a little bit more to read: "The right of the people WHETHER
UNEMPLOYED OR EMPLOYED BY STATE OR PRIVATE ESTABLISHMENTS.

I want to avoid also the possibility of having this interpreted as applicable only to the employed.

MR. DE LOS REYES. Will the proponent accept an amendment to the amendment, Madam President?

MR.  LERUM.  Yes, as long as it will carry the idea that the right of the employees in the private sector is
recognized.24

Lerum thus anchored his proposal on the fact that (1) government employees, supervisory employees,
and security guards, who had the right to organize under the Industrial Peace Act, had been denied this
right by the Labor Code, and (2) there was a need to reinstate the right of these employees. In
consonance with his objective to reinstate the right of government, security, and supervisory employees
to organize, Lerum then made his proposal:

MR. LERUM. Mr. Presiding Officer, after a consultation with several Members of this Commission, my
amendment will now read as follows: "The right of the people INCLUDING THOSE EMPLOYED IN THE
PUBLIC AND PRIVATE SECTORS to form associations, unions, or societies for purposes not contrary to law
shall not be abridged.  In proposing that amendment  I ask to make of record that I want the following
provisions of the Labor Code to be automatically abolished, which read:

Art. 245. Security guards and other personnel employed for the protection and security of the person,
properties and premises of the employers shall not be eligible for membership in a labor organization.

Art. 246. Managerial employees are not eligible to join, assist, and form any labor organization.

THE PRESIDING OFFICER (Mr. Bengzon). What does the Committee say?

FR. BERNAS. The Committee accepts.

THE PRESIDING OFFICER. (Mr. Bengzon) The Committee has accepted the amendment, as amended.

Is there any objection? (Silence) The Chair hears none; the amendment, as amended, is approved. 25

The question is what Commissioner Lerum meant in seeking to "automatically abolish" the then Art. 246
of the Labor Code. Did he simply want "any kind of wording as long as it will amount to absolute
recognition of private sector employees, without exception, to organize"? 26  Or, did he instead intend to
have his words taken in the context of the cause which moved him to propose the amendment in the first
place, namely, the denial of the right of supervisory employees to organize, because he said, "We are
afraid that without any corresponding provision covering the private sector, security guards, supervisory
employees or majority [of] employees will still be excluded, and that is the purpose of this amendment"?
27

It would seem that Commissioner Lerum simply meant to restore the right of supervisory employees to
organize. For even though he spoke of the need to "abolish" Art. 246 of the Labor Code which, as already
stated, prohibited "managerial employees" in general from forming unions, the fact was that in
explaining his proposal, he repeatedly referred to "supervisory employees" whose right under the
Industrial Peace Act to organize had been taken away by Art. 246. It is noteworthy that Commissioner
Lerum never referred to the then definition of "managerial employees" in Art. 212(m) of the Labor Code
which put together, under the broad phrase "managerial employees," top and middle managers and
supervisors. Instead, his repeated use of the term "supervisory employees," when such term then was no
longer in the statute books, suggests a frame of mind that remained grounded in the language of the
Industrial Peace Act.

Nor did Lerum ever refer to the dictum in Caltex recognizing the right of all managerial employees to
organize, despite the fact that the Industrial Peace Act did not expressly provide for the right of top and
middle managers to organize. If Lerum was aware of the Caltex dictum, then his insistence on the use of
the term "supervisory employees" could only mean that he was excluding other managerial employees
from his proposal. If, on the other hand, he was not aware of the Caltex statement sustaining the right to
organize to top and middle managers, then the more should his repeated use of the term "supervisory
employees" be taken at face value, as it had been defined in the then Industrial Peace Act.

At all events, that the rest of the Commissioners understood his proposal to refer solely to supervisors
and not to other managerial employees is clear from the following account of Commissioner Joaquin G.
Bernas, who writes:

In presenting the modification on the 1935 and 1973 texts, Commissioner Eulogio R. Lerum explained
that the modification included three categories of workers: (1) government employees, (2) supervisory
employees, and (3) security guards. Lerum made of record the explicit intent to repeal provisions of P.D.
442, the Labor Code. The provisions referred to were:

Art. 245. Security guards and other personnel employed for the protection and security of the person,
properties and premises of the employers shall not be eligible for membership in a labor organization.

Art. 246. Managerial employees are not eligible to join, assist, and form any labor organization. 28

Implications of the Lerum Proposal

In sum, Lerum's proposal to amend Art. III, §8 of the draft Constitution by including labor unions in the
guarantee of organizational right should be taken in the context of statements that his aim was the
removal of the statutory ban against security guards and supervisory employees joining labor
organizations. The approval by the Constitutional Commission of his proposal can only mean, therefore,
that the Commission intended the absolute right to organize of government workers, supervisory
employees, and security guards to be constitutionally guaranteed. By implication, no similar absolute
constitutional right to organize for labor purposes should be deemed to have been granted to top-level
and middle managers. As to them the right of self-organization may be regulated and even abridged
conformably to Art. III, §8.
Constitutionality of Art.  245

Finally, the question is whether the present ban against managerial employees, as embodied in Art. 245
(which superseded Art. 246) of the Labor Code, is valid. This provision reads:

Art. 245.  Ineligibility of managerial employees to join any labor organization;  right of supervisory
employees. — Managerial employees are not eligible to join, assist or form any labor organization.
Supervisory employees shall not be eligible for membership in a labor organization of the rank-and-file
employees but may join, assist or form separate labor organizations of their own. 29

This provision is the result of the amendment of the Labor Code in 1989 by R.A. No. 6715, otherwise
known as the Herrera-Veloso Law. Unlike the Industrial Peace Act or the provisions of the Labor Code
which it superseded, R.A. No. 6715 provides separate definitions of the terms "managerial" and
"supervisory employees," as follows:

Art. 212.  Definitions. . . .

(m) "managerial employee" is one who is vested with powers or prerogatives to lay down  and  execute
management policies and/or to hire transfer, suspend, lay off, recall, discharge, assign or discipline
employees. Supervisory employees are those who, in the interest of the employer, effectively recommend
such managerial actions if the exercise of such authority is not merely routinary or clerical in nature but
requires the use of independent judgment. All employees not falling within any of the above definitions
are considered rank-and-file employees for purposes of this Book.

Although the definition of "supervisory employees" seems to have been unduly restricted to the last
phrase of the definition in the Industrial Peace Act, the legal significance given to the phrase "effectively
recommends" remains the same. In fact, the distinction between top and middle managers, who set
management policy, and front-line supervisors, who are merely responsible for ensuring that such
policies are carried out by the rank and file, is articulated in the present definition. 30  When read in
relation to this definition in Art. 212(m), it will be seen that Art. 245 faithfully carries out the intent of the
Constitutional Commission in framing Art. III, §8 of the fundamental law.

Nor is the guarantee of organizational right in Art. III, §8 infringed by a ban against managerial
employees forming a union. The right guaranteed in Art. III, §8 is subject to the condition that its exercise
should be for purposes "not contrary to law." In the case of Art. 245, there is a rational basis for
prohibiting managerial employees from forming or joining labor organizations. As Justice Davide, Jr.,
himself a constitutional commissioner, said in his  ponencia  in  Philips Industrial Development,
Inc.  v.  NLRC:31

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

In  Bulletin Publishing Co.,  Inc.  v.  Hon.  Augusto  Sanchez, this Court elaborated on this rationale, thus:
. . . The rationale for this inhibition has been stated to be, because if these managerial employees would
belong to or be affiliated with a Union, the latter might not be assured of their loyalty to the Union in
view of evident conflict of interests. The Union can also become company-dominated with the presence
of managerial employees in Union membership. 32

To be sure, the Court in  Philips Industrial  was dealing with the right of confidential employees to
organize. But the same reason for denying them the right to organize justifies even more the ban on
managerial employees from forming unions. After all, those who qualify as top or middle managers are
executives who receive from their employers information that not only is confidential but also is not
generally available to the public, or to their competitors, or to other employees. It is hardly necessary to
point out that to say that the first sentence of Art. 245 is unconstitutional would be to contradict the
decision in that case.

WHEREFORE, the petition is DISMISSED.

SO ORDERED.
TITLE VI – UNFAIR LABOR PRACTICES Arts. 247- 248

G.R. No. 144315             July 17, 2006

PHILCOM EMPLOYEES UNION, petitioner,

vs.
PHILIPPINE GLOBAL COMMUNICATIONS and PHILCOM CORPORATION, respondents.

DECISION

CARPIO, J.:

The Case

This is a petition for review1 to annul the Decision2 dated 31 July 2000 of the Court of Appeals in CA-G.R.
SP No. 53989. The Court of Appeals affirmed the assailed portions of the 2 October 1998 and 27
November 1998 Orders of the Secretary of Labor and Employment in OS-AJ-0022-97.

The Facts

The facts, as summarized by the Court of Appeals, are as follows:

Upon the expiration of the Collective Bargaining Agreement (CBA) between petitioner Philcom
Employees Union (PEU or union, for brevity) and private respondent Philippine Global Communications,
Inc. (Philcom, Inc.) on June 30, 1997, the parties started negotiations for the renewal of their CBA in July
1997. While negotiations were ongoing, PEU filed on October 21, 1997 with the National Conciliation
and Mediation Board (NCMB) – National Capital Region, a Notice of Strike, docketed as NCMB-NCR-NS
No. 10-435-97, due to perceived unfair labor practice committed by the company (Annex "1", Comment,
p. 565, ibid.). In view of the filing of the Notice of Strike, the company suspended negotiations on the
CBA which moved the union to file on November 4, 1997 another Notice of Strike, docketed as NCMB-
NCR-NS No. 11-465-97, on the ground of bargaining deadlock (Annex "2", Comment, p. 566, ibid.)

On November 11, 1997, at a conciliation conference held at the NCMB-NCR office, the parties agreed to
consolidate the two (2) Notices of Strike filed by the union and to maintain the status quo during the
pendency of the proceedings (Annex "3", Comment, p. 567, ibid.).

On November 17, 1997, however, while the union and the company officers and representatives were
meeting, the remaining union officers and members staged a strike at the company premises,
barricading the entrances and egresses thereof and setting up a stationary picket at the main entrance
of the building. The following day, the company immediately filed a petition for the Secretary of Labor
and Employment to assume jurisdiction over the labor dispute in accordance with Article 263(g) of the
Labor Code.

On November 19, 1997, then Acting Labor Secretary Cresenciano B. Trajano issued an Order assuming
jurisdiction over the dispute, enjoining any strike or lockout, whether threatened or actual, directing the
parties to cease and desist from committing any act that may exacerbate the situation, directing the
striking workers to return to work within twenty-four (24) hours from receipt of the Secretary's Order
and for management to resume normal operations, as well as accept the workers back under the same
terms and conditions prior to the strike. The parties were likewise required to submit their respective
position papers and evidence within ten (10) days from receipt of said order (Annex "4", Comment, pp.
610-611, ibid.). On November 28, 1997, a second order was issued reiterating the previous directive to
all striking employees to return to work immediately.

On November 27, 1997, the union filed a Motion for Reconsideration assailing, among others, the
authority of then Acting Secretary Trajano to assume jurisdiction over the labor dispute. Said motion
was denied in an Order dated January 7, 1998.

As directed, the parties submitted their respective position papers. In its position paper, the union raised
the issue of the alleged unfair labor practice of the company hereunder enumerated as follows:

"(a) PABX transfer and contractualization of PABX service and position;

"(b) Massive contractualization;

"(c) Flexible labor and additional work/function;

"(d) Disallowance of union leave intended for union seminar;

"(e) Misimplementation and/or non-implementation of employees' benefits like shoe allowance,

rainboots, raincoats, OIC shift allowance, P450.00 monthly allowance, driving allowance, motorcycle
award and full-time physician;

"(f) Non-payment, discrimination and/or deprivation of overtime, restday work, waiting/stand by time
and staff meetings;

"(g) Economic inducement by promotion during CBA negotiation;

"(h) Disinformation scheme, surveillance and interference with union affairs;

"(i) Issuance of memorandum/notice to employees without giving copy to union, change in work
schedule at Traffic Records Section and ITTO policies; and

"(j) Inadequate transportation allowance, water and facilities."

(Annex A, Petition; pp. 110-182, ibid.)

The company, on the other hand, raised in its position paper the sole issue of the illegality of the strike
staged by the union (Annex B, Petition; pp. 302-320, ibid.).

On the premise that public respondent Labor Secretary cannot rule on the issue of the strike since there
was no petition to declare the same illegal, petitioner union filed on March 4, 1998 a
Manifestation/Motion to Strike Out Portions of & Attachments in Philcom's Position Paper for being
irrelevant, immaterial and impertinent to the issues assumed for resolution (Annex C, Petition; pp. 330-
333, ibid.).

In opposition to PEU's Manifestation/Motion, the company argued that it was precisely due to the strike
suddenly staged by the union on November 17, 1997 that the dispute was assumed by the Labor
Secretary. Hence, the case would necessarily include the issue of the legality of the strike (Opposition to
PEU'S Motion to Strike Out; Annex F, Petition; pp. 389-393, ibid.).3

On 2 October 1998, the Secretary of Labor and Employment ("Secretary") issued the first assailed order.
The pertinent parts of the Order read:
Going now to the first issue at hand, a reading of the complaints charged by the Union as unfair labor
practices would reveal that these are not so within the legal connotation of Article 248 of the Labor
Code. On the contrary, these complaints are actually mere grievances which should have been
processed through the grievance machinery or voluntary arbitration outlined under the CBA. The issues
of flexible labor and additional functions, misimplementation or non-implementation of employee
benefits, non-payment of overtime and other monetary claims and inadequate transportation
allowance, are all a matter of implementation or interpretation of the economic provisions of the CBA
subject to the grievance procedure.

Neither do these complaints amount to gross violations which, thus, may be treated as unfair labor
practices outside of the coverage of Article 261. The Union failed to convincingly show that there is
flagrant and/or malicious refusal by the Company to comply with the economic provisions stipulated in
the CBA.

With respect to the charges of contractualization and economic inducement, this Office is convinced
that the acts of said company qualify as a valid exercise of management prerogative. The act of the
Company in contracting out work or certain services being performed by Union members should not be
seen as an unfair labor practice act per se. First, the charge of massive contractualization has not been
substantiated while the contractualization of the position of PABX operator is an isolated instance.
Secondly, in the latter case, there was no proof that such contracting out interfered with, restrained or
coerced the employees in the exercise of their right to self-organization. Thus, it is not unfair labor
practice to contract out work for reason of reduction of labor cost through the acquisition of automatic
machines.

Likewise, the promotion of certain employees, who are incidentally members of the Union, to
managerial positions is a prerogative of management. A promotion which is manifestly beneficial to an
employee should not give rise to a gratuitous speculation that such a promotion was made simply to
deprive the union of the membership of the promoted employee (Bulletin Publishing Co. v. Sanchez, et.
al., G.R. No. 74425, October 7, 1986).

There remains the issue on bargaining deadlock. The Company has denied the existence of any impasse
in its CBA negotiations with the Union and instead maintains that it has been negotiating with the latter
in good faith until the strike was initiated. The Union, on the other hand, contends otherwise and
further prays that the remaining CBA proposals of the Union be declared reasonable and equitable and
thus be ordered incorporated in the new CBA to be executed.

As pointed out by the Union, there are already thirty-seven (37) items agreed upon by the parties during
the CBA negotiations even before these were suspended. Prior to this Office's assumption over the case,
the Company furnished the Union its improved CBA counter-proposal on the matter of promotional and
wage increases which however was rejected by the Union as divisive. Even as the Union has submitted
its remaining CBA proposals for resolution, the Company remains silent on the matter. In the absence of
any basis, other than the Union's position paper, on which this Office may make its determination of the
reasonableness and equitableness of these remaining CBA proposals, this Office finds it proper to defer
deciding on the matter and first allow the Company to submit its position thereon.

We now come to the question of whether or not the strike staged by the Union on November 17, 1997
is illegal. The Company claims it is, having been held on grounds which are non-strikeable, during the
pendency of preventive mediation proceedings in the NCMB, after this Office has assumed jurisdiction
over the dispute, and with the strikers committing prohibited and illegal acts. The Company further
prays for the termination of some 20 Union officers who were positively identified to have initiated the
alleged illegal strike. The Union, on the other hand, refuses to submit this issue for resolution.

Considering the precipitous nature of the sanctions sought by the Company, i.e., declaration of illegality
of the strike and the corresponding termination of the errant Union officers, this Office deems it wise to
defer the summary resolution of the same until both parties have been afforded due process. The non-
compliance of the strikers with the return-to-work orders, while it may warrant dismissal, is not by itself
conclusive to hold the strikers liable. Moreover, the Union's position on the alleged commission of illegal
acts by the strikers during the strike is still to be heard. Only after a full-blown hearing may the
respective liabilities of Union officers and members be determined. The case of Telefunken
Semiconductors Employees Union-FFW v. Secretary of Labor and Employment and Temic Telefunken
Micro-Electronics (Phils.), Inc. (G.R. No. 122743 and 127215, December 12, 1997) is instructive on this
point:

It may be true that the workers struck after the Secretary of Labor and Employment had assumed
jurisdiction over the case and that they may have failed to immediately return to work even after the
issuance of a return-to-work order, making their continued strike illegal. For, a return-to-work order is
immediately effective and executory notwithstanding the filing of a motion for reconsideration. But, the
liability of each of the union officers and the workers, if any, has yet to be determined. xxx xxx xxx.4

The dispositive portion of the Order reads:

WHEREFORE, in view of all the foregoing, judgment is hereby rendered as follows:

The Union's Manifestation/Motion to Implead Philcom Corporation is hereby granted. Let summons be
issued to respondent Philcom Corporation to appear before any hearing that may hereafter be
scheduled and to submit its position paper as may be required.

The Union's Manifestation/Motion to Strike Out Portions of and Attachments in Philcom's Position Paper
is hereby denied for lack of merit.

The Union's charges of unfair labor practice against the Company are hereby dismissed.

Pending resolution of the issues of illegal strike and bargaining deadlock which are yet to be heard, all
the striking workers are directed to return to work within twenty-four (24) hours from receipt of this
Order and Philcom and/or Philcom Corporation are hereby directed to unconditionally accept back to
work all striking Union officers and members under the same terms and conditions prior to the strike.
The parties are directed to cease and desist from committing any acts that may aggravate the situation.

Atty. Lita V. Aglibut, Officer-In-Charge of the Legal Service, this Department is hereby designated as the
Hearing Officer to hear and receive evidence on all matters and issues arising from the present labor
dispute and, thereafter, to submit a report/recommendation within twenty (20) days from the
termination of the proceedings.

The parties are further directed to file their respective position papers with Atty. Lita V. Aglibut within
ten (10) days from receipt of this Order.
SO ORDERED.5

Philcom Corporation ("Philcom") filed a motion for reconsideration. Philcom prayed for reconsideration
of the Order impleading it as party-litigant in the present case and directing it to accept back to work
unconditionally all the officers and members of the union who participated in the strike.6 Philcom also
filed a Motion to Certify Labor Dispute to the National Labor Relations Commission for Compulsory
Arbitration.7

For its part, Philcom Employees Union (PEU) filed a Motion for Partial Reconsideration. PEU asked the
Secretary to "partially reconsider" the 2 October 1998 Order insofar as it dismissed the unfair labor
practices charges against Philcom and included the illegal strike issue in the labor dispute.8

The Secretary denied both motions for reconsideration of Philcom and PEU in its assailed Order of 27
November 1998. The pertinent parts of the Order read:

The question of whether or not Philcom Corporation should be impleaded has been properly disposed of
in the assailed Order. We reiterate that neither the Company herein nor its predecessor was able to
convincingly establish that each is a separate entity in the absence of any proof that there was indeed
an actual closure and cessation of the operations of the predecessor-company. We would have
accommodated the Company for a hearing on the matter had it been willing and prepared to submit
evidence to controvert the finding that there was a mere merger. As it now stands, nothing on record
would prove that the two (2) companies are separate and distinct from each other.

Having established that what took place was a mere merger, we correspondingly conclude that the
employer-employee relations between the Company and the Union officers and members was never
severed. And in merger, the employees of the merged companies or entities are deemed absorbed by
the new company (Filipinas Port Services, Inc. v. NLRC, et. al., G.R. No. 97237, August 16, 1991).
Considering that the Company failed miserably to adduce any evidence to provide a basis for a contrary
ruling, allegations to the effect that employer-employee relations and positions previously occupied by
the workers no longer exist remain just that — mere allegations. Consequently, the Company cannot
now exempt itself from compliance with the Order. Neither can it successfully argue that the employees
were validly dismissed. As held in Telefunken Semiconductor Employees Union-FFW v. Secretary of
Labor and Employment (G.R. Nos. 122743 and 122715, December 12, 1997), to exclude the workers
without first ascertaining the extent of their individual participation in the strike or non-compliance with
the return-to-work orders will be tantamount to dismissal without due process of law.

With respect to the unfair labor practice charges against the Company, we have carefully reviewed the
records and found no reason to depart from the findings previously rendered. The issues now being
raised by the Union are the same issues discussed and passed upon in our earlier Order.

Finally, it is our determination that the issue of the legality of the strike is well within the jurisdiction of
this Office. The same has been properly submitted and assumed jurisdiction by the Office for resolution.9

The dispositive portion of the Order reads:

WHEREFORE, there being no merit in the remaining Motions for Reconsideration filed by both parties,
the same are hereby DENIED. Our 2 October 1998 Order STANDS. To expedite the resolution of the
Motion to Certify Labor Dispute to the NLRC for Compulsory Arbitration, Philcom Employees Union is
hereby directed to submit its Opposition thereto within ten (10) days from receipt of the copy of this
Order.

SO ORDERED.10

PEU filed with this Court a petition for certiorari and prohibition under Rule 65 of the Rules of Court
assailing the Secretary's Orders of 2 October 1998 and 27 November 1998. This Court, in accordance
with its Decision of 10 March 1999 in G.R. No. 123426 entitled National Federation of Labor (NFL) vs.
Hon. Bienvenido E. Laguesma, Undersecretary of the Department of Labor and Employment, and
Alliance of Nationalist Genuine Labor Organization, Kilusang Mayo Uno (ANGLO-KMU),11 referred the
case to the Court of Appeals.12

The Ruling of the Court of Appeals

On 31 July 2000, the Court of Appeals rendered judgment as follows:

WHEREFORE, PREMISES CONSIDERED, this petition is hereby DENIED. The assailed portions of the
Orders of the Secretary of Labor and Employment dated October 2, 1998 and November 27, 1998 are
AFFIRMED.

SO ORDERED.13

The Court of Appeals ruled that, contrary to PEU's view, the Secretary could take cognizance of an issue,
even only incidental to the labor dispute, provided the issue must be involved in the labor dispute itself
or otherwise submitted to him for resolution.

The Court of Appeals pointed out that the Secretary assumed jurisdiction over the labor dispute upon
Philcom's petition as a consequence of the strike that PEU had declared and not because of the notices
of strike that PEU filed with the National Conciliation and Mediation Board (NCMB).

The Court of Appeals stated that the reason of the Secretary's assumption of jurisdiction over the labor
dispute was the staging of the strike. Consequently, any issue regarding the strike is not merely
incidental to the labor dispute between PEU and Philcom, but also part of the labor dispute itself. Thus,
the Court of Appeals held that it was proper for the Secretary to take cognizance of the issue on the
legality of the strike.

The Court of Appeals also ruled that for an employee to claim an unfair labor practice by the employer,
the employee must show that the act charged as unfair labor practice falls under Article 248 of the
Labor Code. The Court of Appeals held that the acts enumerated in Article 248 relate to the workers'
right to self-organization. The Court of Appeals stated that if the act complained of has nothing to do
with the acts enumerated in Article 248, there is no unfair labor practice.

The Court of Appeals held that Philcom's acts, which PEU complained of as unfair labor practices, were
not in any way related to the workers' right to self-organization under Article 248 of the Labor Code. The
Court of Appeals held that PEU's complaint constitutes an enumeration of mere grievances which should
have been threshed out through the grievance machinery or voluntary arbitration outlined in the
Collective Bargaining Agreement (CBA).

The Court of Appeals also held that even if by Philcom's acts, Philcom had violated the provisions of the
CBA, still those acts do not constitute unfair labor practices under Article 248 of the Labor Code. The
Court of Appeals held that PEU failed to show that those violations were gross or that there was flagrant
or malicious refusal on the part of Philcom to comply with the economic provisions of the CBA.

The Court of Appeals stated that as of 21 March 1989, as held in PAL vs. NLRC,14 violations of CBAs will
no longer be deemed unfair labor practices, except those gross in character. Violations of CBAs, except
those gross in character, are mere grievances resolvable through the appropriate grievance machinery
or voluntary arbitration as provided in the CBAs.

Hence, this petition.

The Issues

In assailing the Decision of the Court of Appeals, petitioner contends that:

1. The Honorable Court of Appeals has failed to faithfully adhere with the decisions of the Supreme
Court when it affirmed the order/resolution of the Secretary of Labor denying the Union's
Manifestation/Motion to Strike Out Portions of & Attachments in Philcom's Position Paper and including
the issue of illegal strike notwithstanding the absence of any petition to declare the strike illegal.

2. The Honorable Court of Appeals has decided a question of substance in a way not in accord with law
and jurisprudence when it affirmed the order/resolution of the Secretary of Labor dismissing the Union's
charges of unfair labor practices.

3. The Honorable Court of Appeals has departed from the edict of applicable law and jurisprudence
when it failed to issue such order mandating/directing the issuance of a writ of execution directing the
Company to unconditionally accept back to work the Union officers and members under the same terms
and conditions prior to the strike and as well as to pay their salaries/backwages and the monetary
equivalent of their other benefits from October 6, 1998 to date.15

The Ruling of the Court

The petition must fail.

PEU contends that the Secretary should not have taken cognizance of the issue on the alleged illegal
strike because it was not properly submitted to the Secretary for resolution. PEU asserts that after
Philcom submitted its position paper where it raised the issue of the legality of the strike, PEU
immediately opposed the same by filing its Manifestation/Motion to Strike Out Portions of and
Attachments in Philcom's Position Paper. PEU asserts that it stated in its Manifestation/Motion that
certain portions of Philcom's position paper and some of its attachments were "irrelevant, immaterial
and impertinent to the issues assumed for resolution." Thus, PEU asserts that the Court of Appeals
should not have affirmed the Secretary's order denying PEU's Manifestation/Motion.

PEU also contends that, contrary to the findings of the Court of Appeals, the Secretary's assumption of
jurisdiction over the labor dispute was based on the two notices of strike that PEU filed with the NCMB.
PEU asserts that only the issues on unfair labor practice and bargaining deadlock should be resolved in
the present case.

PEU insists that to include the issue on the legality of the strike despite its opposition would convert the
case into a petition to declare the strike illegal.
PEU's contentions are untenable.

The Secretary properly took cognizance of the issue on the legality of the strike. As the Court of Appeals
correctly pointed out, since the very reason of the Secretary's assumption of jurisdiction was PEU's
declaration of the strike, any issue regarding the strike is not merely incidental to, but is essentially
involved in, the labor dispute itself.

Article 263(g) of the Labor Code provides:

When, in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout in an
industry indispensable to the national interest, the Secretary of Labor and Employment may assume
jurisdiction over the dispute and decide it or certify the same to the Commission for compulsory
arbitration. Such assumption or certification shall have the effect of automatically enjoining the
intended or impending strike or lockout as specified in the assumption or certification order. If one has
already taken place at the time of assumption or certification, all striking or locked out employees shall
immediately return to work and the employer shall immediately resume operations and readmit all
workers under the same terms and conditions prevailing before the strike or lockout. The Secretary of
Labor and Employment or the Commission may seek the assistance of law enforcement agencies to
ensure the compliance with this provision as well as with such orders as he may issue to enforce the
same.

x x x x.

The powers granted to the Secretary under Article 263(g) of the Labor Code have been characterized as
an exercise of the police power of the State, with the aim of promoting public good.16 When the
Secretary exercises these powers, he is granted "great breadth of discretion" in order to find a solution
to a labor dispute. The most obvious of these powers is the automatic enjoining of an impending strike
or lockout or its lifting if one has already taken place.17

In this case, the Secretary assumed jurisdiction over the dispute because it falls in an industry
indispensable to the national interest. As noted by the Secretary.

[T]he Company has been a vital part of the telecommunications industry for 73 years. It is particularly
noted for its expertise and dominance in the area of international telecommunications. Thus, it
performs a vital role in providing critical services indispensable to the national interest. It is for this very
reason that this Office strongly opines that any concerted action, particularly a prolonged work stoppage
is fraught with dire consequences. Surely, the on-going strike will adversely affect not only the livelihood
of workers and their dependents, but also the company's suppliers and dealers, both in the public and
private sectors who depend on the company's facilities in the day-to-day operations of their businesses
and commercial transactions. The operational viability of the company is likewise adversely affected,
especially its expansion program for which it has incurred debts in the approximate amount of P2 Billion.
Any prolonged work stoppage will also bring about substantial losses in terms of lost tax revenue for the
government and would surely pose a serious set back in the company's modernization program.

At this critical time when government is working to sustain the economic gains already achieved, it is the
paramount concern of this Office to avert any unnecessary work stoppage and, if one has already
occurred, to minimize its deleterious effect on the workers, the company, the industry and national
economy as a whole.18
It is of no moment that PEU never acquiesced to the submission for resolution of the issue on the
legality of the strike. PEU cannot prevent resolution of the legality of the strike by merely refusing to
submit the issue for resolution. It is also immaterial that this issue, as PEU asserts, was not properly
submitted for resolution of the Secretary.

The authority of the Secretary to assume jurisdiction over a labor dispute causing or likely to cause a
strike or lockout in an industry indispensable to national interest includes and extends to all questions
and controversies arising from such labor dispute. The power is plenary and discretionary in nature to
enable him to effectively and efficiently dispose of the dispute.19

Besides, it was upon Philcom's petition that the Secretary immediately assumed jurisdiction over the
labor dispute on 19 November 1997.20 If petitioner's notices of strike filed on 21 October and 4
November 1997 were what prompted the assumption of jurisdiction, the Secretary would have issued
the assumption order as early as those dates.

Moreover, after an examination of the position paper21 Philcom submitted to the Secretary, we see no
reason to strike out those portions which PEU seek to expunge from the records. A careful study of all
the facts alleged, issues raised, and arguments presented in the position paper leads us to hold that the
portions PEU seek to expunge are necessary in the resolution of the present case.

On the documents attached to Philcom's position paper, except for Annexes MM-2 to MM-22
inclusive22 which deal with the supposed consolidation of Philippine Global Communications, Inc. and
Philcom Corporation, we find the other annexes relevant and material in the resolution of the issues
that have emerged in this case.

PEU also claims that Philcom has committed several unfair labor practices. PEU asserts that there are
"factual and evidentiary bases" for the charge of unfair labor practices against Philcom.

On unfair labor practices of employers, Article 248 of the Labor Code provides:

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

(a) To interfere with, restrain or coerce employees in the exercise of their right to self-organization;

(b) To require as a condition of employment that a person or an employee shall not join a labor
organization or shall withdraw from one to which he belongs;

(c) To contract out services or functions being performed by union members when such will interfere
with, restrain or coerce employees in the exercise of their rights to self-organization;

(d) To initiate, dominate, assist or otherwise interfere with the formation or administration of any labor
organization, including the giving of financial or other support to it or its organizers or supporters;

(e) To discriminate in regard to wages, hours of work, and other terms and conditions of employment in
order to encourage or discourage membership in any labor organization. x x x

(f) To dismiss, discharge, or otherwise prejudice or discriminate against an employee for having given or
being about to give testimony under this Code;

(g) To violate the duty to bargain collectively as prescribed by this Code;

(h) To pay negotiation or attorney's fees to the union or its officers or agents as part of the settlement of
any issue in collective bargaining or any other dispute; or

(i) To violate a collective bargaining agreement.

Unfair labor practice refers to acts that violate the workers' right to organize. The prohibited acts are
related to the workers' right to self-organization and to the observance of a CBA. Without that element,
the acts, no matter how unfair, are not unfair labor practices.23 The only exception is Article 248(f),
which in any case is not one of the acts specified in PEU's charge of unfair labor practice.

A review of the acts complained of as unfair labor practices of Philcom convinces us that they do not fall
under any of the prohibited acts defined and enumerated in Article 248 of the Labor Code. The issues of
misimplementation or non-implementation of employee benefits, non-payment of overtime and other
monetary claims, inadequate transportation allowance, water, and other facilities, are all a matter of
implementation or interpretation of the economic provisions of the CBA between Philcom and PEU
subject to the grievance procedure.

We find it pertinent to quote certain portions of the assailed Decision, thus —

A reading of private respondent's justification for the acts complained of would reveal that they were
actually legitimate reasons and not in anyway related to union busting. Hence, as to compelling
employees to render flexible labor and additional work without additional compensation, it is the
company's explanation that the employees themselves voluntarily took on work pertaining to other
assignments but closely related to their job description when there was slack in the business which
caused them to be idle. This was the case of the International Telephone Operators who tried
telemarketing when they found themselves with so much free time due to the slowdown in the demand
for international line services. With respect to the Senior Combination Technician at the Cebu branch
who was allegedly made to do all around work, the same happened only once when the lineman was
absent and the lineman's duty was his ultimate concern. Moreover, the new assignment of the
technicians at CTSS who were promoted to QCE were based on the job description of QCE, while those
of the other technicians were merely temporary due to the promotion of several technicians to QCE
(pars. 9-12, Philcom's Reply to PEU's Position Paper; Annex "E", Petition; pp. 350-351, ibid.).

On the alleged misimplementation and/or non-implementation of employees' benefits, such as shoe

allowance, rainboots, raincoats, OIC shift allowance, P450.00 monthly allowance, driving allowance,
motorcycle award and full-time physician, the company gave the following explanation which this Court
finds plausible, to wit:

16. The employees at CTSS were given One Thousand Pesos (P1,000.00) cash or its equivalent in
purchase orders because it was their own demand that they be given the option to buy the pair of
leather boots they want. For the Cebu branch, the employees themselves failed to include these
benefits in the list of their demands during the preparation of the budget for the year 1997 despite the
instruction given to them by the branch manager. According to the employees, they were not aware
that they were entitled to these benefits. They thought that because they have been provided with two
vans to get to their respective assignments, these benefits are available only to collectors, messengers
and technicians in motorcycles.
17. The P450.00 monthly allowance was provided by the CBA to be given to counter clerks. However,
the position of counter clerks had been abolished in accordance with the reorganization plan
undertaken by the company in April 1995, with the full knowledge of the Union membership. As a result
of the abolition of the position of counter clerks, there was no more reason for granting the subject
allowance.

18. The company more than satisfied the provision in the CBA to engage the services of a physician and
provided adequate medical services. Aside from a part time physician who reports for duty everyday,
the company has secured the services of Prolab Diagnostics, which has complete medical facilities and
personnel, to serve the medical needs of the employees. x x x

19. The Union demands that a full-time physician to be assigned at the Head Office. This practice, is not
provided in the CBA and, moreover is too costly to maintain. The medical services offered by Prolab
[D]iagnostics are even better and more comprehensive than any full time physician can give. It places at
the employees' disposal numerous specialists in various fields of medicine. It is beyond understanding
why the Union would insist on having a full-time physician when they could avail of better services from
Prolab Diagnostics.

(Philcom's Reply to PEU's Position Paper, pp.352, 354, ibid.)

On the issue of non-payment, discrimination and/or deprivation of overtime, restday work,

waiting/stand by time and staff meeting allowance, suffice it to state that there is nothing on record to
prove the same. Petitioner did not present evidence substantial enough to support its claim.

As to the alleged inadequate transportation allowance and facilities, the company posits that:

30. The transportation allowances given to the Dasmarinas and Pinugay employees are more than
adequate to defray their daily transportation cost. Hence, there is absolutely no justification for an
increase in the said allowance. In fact, said employees at Dasmarinas and Pinugay, who are only residing
in areas near their place of work, are more privileged as they receive transportation expenses while the
rest of the company workers do not.

31. As to the demand for clean drinking water, the company has installed sufficient and potable water
inside the Head Office even before the strike was staged by the Union. Any person who visits the Makati
Head Office can attest to this fact.

(Philcom's Reply to PEU's Position Paper, p. 357, ibid.)

Anent the allegation of PABX transfer and contractualization of PABX service and position, these were
done in anticipation of the company to switch to an automatic PABX machine which requires no
operator. This cannot be treated as ULP since management is at liberty, absent any malice on its part, to
abolish positions which it deems no longer necessary (Arrieta vs. National Labor Relations Commission,
279 SCRA 326, 332). Besides, at the time the company hired a temporary employee to man the machine
during daytime, the subject position was vacant while the assumption of the function by the company
guard during nighttime was only for a brief period.

With respect to the perceived massive contractualization of the company, said charge cannot be
considered as ULP since the hiring of contractual workers did not threaten the security of tenure of
regular employees or union members. That only 160 employees out of 400 employees in the company's
payroll were considered rank and file does not of itself indicate unfair labor practice since this is but a
company prerogative in connection with its business concerns.

Likewise, the offer or promotions to a few union members is neither unlawful nor an economic
inducement. These offers were made in accordance with the legitimate need of the company for the
services of these employees to fill positions left vacant by either retirement or resignation of other
employees. Besides, a promotion is part of the career growth of employees found competent in their
work. Thus, in Bulletin Publishing Corporation vs. Sanchez (144 SCRA 628, 641), the Supreme Court held
that "(T)he promotion of employees to managerial or executive positions rests upon the discretion of
management. Managerial positions are offices which can only be held by persons who have the trust of
the corporation and its officers. It is the prerogative of management to promote any individual working
within the company to a higher position. It should not be inhibited or prevented from doing so. A
promotion which is manifestly beneficial to an employee should not give rise to a gratuitous speculation
that such a promotion was made simply to deprive the union of the membership of the promoted
employee, who after all appears to have accepted his promotion."

That the promotions were made near or around the time when CBA negotiations were about to be held
does not make the company's action an unfair labor practice. As explained by the company, these
promotions were based on the availability of the position and the qualification of the employees
promoted (p. 6, Annex "4", Philcom's Reply to PEU's Position Paper; p. 380, ibid.)

On the union's charge that management disallowed leave of union officers and members to attend
union seminar, this is belied by the evidence submitted by the union itself. In a letter to PEU's President,
the company granted the leave of several union officers and members to attend a seminar
notwithstanding that its request to be given more details about the affair was left unheeded by the
union (Annex "Y", PEU's Position Paper; p. 222, ibid.). Those who were denied leave were urgently
needed for the operation of the company.

On the ULP issue of disinformation scheme, surveillance and interference with union affairs, these are
mere allegations unsupported by facts. The charge of "black propaganda" allegedly committed by the
company when it supposedly posted two (2) letters addressed to the Union President is totally baseless.
Petitioner presents no proof that it was the company which was behind the incident. On the purported
disallowance of union members to observe the July 27, 1997 CBA meeting, the company explained that
it only allowed one (1) employee from ITTO, instead of two (2), as it would adversely affect the
operation of the group. It also took into consideration the fact that ITTO members represent only 20% of
the union. Other union members from other departments of the company should have equal
representation (Annex "L", Position Paper for the Union; pp. 205-206, ibid.). As to the alleged
surveillance of the company guards during a union seminar, We find the idea of sending guards to spy
on a mere union seminar quite preposterous. It is thus not likely for the company which can gain
nothing from it to waste its resources in such a scheme.

On the issuance of memorandum/notice to employees without giving copy to union, change in work
schedule at Traffic Records Section and ITTO policies, the company has sufficiently rebutted the same,
thus:

27. The Union also whines about the failure of the company to furnish copies of memoranda or notices
sent to employees and change of work schedules at the Traffic Records Section and ITTO policies. The
CBA, however, does not obligate the Company to give the Union a copy of each and every memorandum
or notice sent to employees. This would be unreasonable and impractical. Neither did the Union
demand that they be furnished copies of the same. This is clearly a non-issue as copies of all memoranda
or notices issued by management are readily available upon request by any employee or the Union.

28. Contrary to the allegations of the Union, the rationale and mechanics for the abolishment of the
midnight schedule at the Traffic Record Services had been thoroughly and adequately discussed with the
Union's President, Robert Benosa, and the staff of Traffic Record Services in the meeting held on May 9,
1997. The midnight services were abolished for purely economic reasons. The company realized that the
midnight work can be handled in the morning without hampering normal operations. At the same time,
the company will be able to save on cost. For this objective, the employees concerned agreed to create
a manning and shifting schedule starting at 6:00 a.m. up to 10:00 p.m., with each employee rendering
only eight hours of work every day without violating any provision of the labor laws or the CBA.24

The Court has always respected a company's exercise of its prerogative to devise means to improve its
operations. Thus, we have held that management is free to regulate, according to its own discretion and
judgment, all aspects of employment, including hiring, work assignments, supervision and transfer of
employees, working methods, time, place and manner of work.25

This is so because the law on unfair labor practices is not intended to deprive employers of their
fundamental right to prescribe and enforce such rules as they honestly believe to be necessary to the
proper, productive and profitable operation of their business.26

Even assuming arguendo that Philcom had violated some provisions in the CBA, there was no showing
that the same was a flagrant or malicious refusal to comply with its economic provisions. The law
mandates that such violations should not be treated as unfair labor practices.27

PEU also asserts that the Court of Appeals should have issued an order directing the issuance of a writ of
execution ordering Philcom to accept back to work unconditionally the striking union officers and
members under the same terms and conditions prevailing before the strike. PEU asserts that the union
officers and members should be paid their salaries or backwages and monetary equivalent of other
benefits beginning 6 October 1998 when PEU received a copy of the Secretary's 2 October 1998 return-
to-work order.

PEU claims that even if the "issue of illegal strike can be included in the assailed orders and that the
union officers and members have been terminated as a result of the alleged illegal strike, still, the
Secretary has to rule on the illegality of the strike and the liability of each striker." PEU asserts that the
union officers and members should first be accepted back to work because a return-to-work order is
immediately executory.28

We rule on the legality of the strike if only to put an end to this protracted labor dispute. The facts
necessary to resolve the legality of the strike are not in dispute.

The strike and the strike activities that PEU had undertaken were patently illegal for the following
reasons:

1. Philcom is engaged in a vital industry protected by Presidential Decree No. 823 (PD 823), as amended
by Presidential Decree No. 849, from strikes and lockouts. PD 823, as amended, provides:
Sec. 1. It is the policy of the State to encourage free trade unionism and free collective bargaining within
the framework of compulsory and voluntary arbitration. Therefore, all forms of strikes, picketings and
lockouts are hereby strictly prohibited in vital industries, such as in public utilities, including
transportation and communications, x x x. (Emphasis supplied)

Enumerating the industries considered as vital, Letter of Instruction No. 368 provides:

For the guidance of workers and employers, some of whom have been led into filing notices of strikes
and lockouts even in vital industries, you are hereby instructed to consider the following as vital
industries and companies or firms under PD 823 as amended:

1. Public Utilities:

xxxx

B. Communications:

1) Wire or wireless telecommunications such as telephone, telegraph, telex, and cable companies or
firms; (Emphasis supplied)

xxxx

It is therefore clear that the striking employees violated the no-strike policy of the State in regard to vital
industries.

2. The Secretary had already assumed jurisdiction over the dispute. Despite the issuance of the return-
to-work orders dated 19 November and 28 November 1997, the striking employees failed to return to
work and continued with their strike.

Regardless of their motives, or the validity of their claims, the striking employees should have ceased or
desisted from all acts that would undermine the authority given the Secretary under Article 263(g) of
the Labor Code. They could not defy the return-to-work orders by citing Philcom's alleged unfair labor
practices to justify such defiance.29

PEU could not have validly anchored its defiance to the return-to-work orders on the motion for
reconsideration that it had filed on the assumption of jurisdiction order. A return-to-work order is
immediately effective and executory despite the filing of a motion for reconsideration. It must be
strictly complied with even during the pendency of any petition questioning its validity.30

The records show that on 22 November 1997, Philcom published in the Philippine Daily Inquirer a notice
to striking employees to return to work.31 These employees did not report back to work but continued
their mass action. In fact, they lifted their picket lines only on 22 December 1997.32 Philcom formally
notified twice these employees to explain in writing why they should not be dismissed for defying the
return-to-work order.33 Philcom held administrative hearings on these disciplinary cases.34 Thereafter,
Philcom dismissed these employees for abandonment of work in defiance of the return-to-work order.35

A return-to-work order imposes a duty that must be discharged more than it confers a right that may be
waived. While the workers may choose not to obey, they do so at the risk of severing their relationship
with their employer.36

The following provision of the Labor Code governs the effects of defying a return-to-work order:
ART. 264. Prohibited activities. ─ (a) x x x x

No strike or lockout shall be declared after assumption of jurisdiction by the President or the
Minister or after certification or submission of the dispute to compulsory or voluntary arbitration or
during the pendency of cases involving the same grounds for the strike or lockout x x x x

Any union officer who knowingly participates in illegal strike and any worker or union officer who
knowingly participates in the commission of illegal acts during a strike may be declared to have lost
his employment status: Provided, That mere participation of a worker in a lawful strike, shall not
constitute sufficient ground for termination of his employment, even if a replacement had been hired by
the employer during such lawful strike. (Emphasis supplied)

A strike undertaken despite the Secretary's issuance of an assumption or certification order becomes
a prohibited activity, and thus, illegal, under Article 264(a) of the Labor Code. The union officers who
knowingly participate in the illegal strike are deemed to have lost their employment status. The union
members, including union officers, who commit specific illegal acts or who knowingly defy a return-to-
work order are also deemed to have lost their employment status.37 Otherwise, the workers will simply
refuse to return to their work and cause a standstill in the company operations while retaining the
positions they refuse to discharge and preventing management to fill up their positions.38

Hence, the failure of PEU's officers and members to comply immediately with the return-to-work orders
dated 19 November and 28 November 1997 cannot be condoned. Defiance of the return-to-work
orders of the Secretary constitutes a valid ground for dismissal.39

3. PEU staged the strike using unlawful means and methods.

Even if the strike in the present case was not illegal per se, the strike activities that PEU had undertaken,
especially the establishment of human barricades at all entrances to and egresses from the company
premises and the use of coercive methods to prevent company officials and other personnel from
leaving the company premises, were definitely illegal.40 PEU is deemed to have admitted that its officers
and members had committed these illegal acts, as it never disputed Philcom's assertions of PEU's
unlawful strike activities in all the pleadings that PEU submitted to the Secretary and to this Court.

PEU's picketing officers and members prohibited other tenants at the Philcom building from entering
and leaving the premises. Leonida S. Rabe, Country Manager of Societe Internationale De
Telecommunications Aeronautiques (SITA), a tenant at the Philcom building, wrote two letters addressed
to PEU President Roberto B. Benosa. She told Benosa that PEU's act of obstructing the free ingress to
and egress from the company premises "has badly disrupted normal operations of their organization."41

The right to strike, while constitutionally recognized, is not without legal constrictions. Article 264(e) of
the Labor Code, on prohibited activities, provides:

No person engaged in picketing shall commit any act of violence, coercion or intimidation or obstruct
the free ingress to or egress from the employer's premises for lawful purposes, or obstruct public
thoroughfares.

The Labor Code is emphatic against the use of violence, coercion, and intimidation during a strike and to
this end prohibits the obstruction of free passage to and from the employer's premises for lawful
purposes. A picketing labor union has no right to prevent employees of another company from getting in
and out of its rented premises, otherwise, it will be held liable for damages for its acts against an
innocent by-stander.42

The sanction provided in Article 264(a) is so severe that any worker or union officer who knowingly
participates in the commission of illegal acts during a strike may be declared to have lost his
employment status.43

By insisting on staging the prohibited strike and defiantly picketing Philcom's premises to prevent the
resumption of company operations, the striking employees have forfeited their right to be readmitted.44

4. PEU declared the strike during the pendency of preventive mediation proceedings at the NCMB.

On 17 November 1997, while a conciliation meeting was being held at the NCMB in NCMB-NCR-NS 10-
435-97, PEU went on strike. It should be noted that in their meeting on 11 November 1997, both
Philcom and PEU were even "advised to maintain the status quo."45 Such disregard of the mediation
proceedings was a blatant violation of Section 6, Book V, Rule XXII of the Omnibus Rules Implementing
the Labor Code, which explicitly obliges the parties to bargain collectively in good faith and prohibits
them from impeding or disrupting the proceedings.46 The relevant provision of the Implementing Rules
provides:

Section 6. Conciliation. ─ x x x x

During the proceedings, the parties shall not do any act which may disrupt or impede the early
settlement of dispute. They are obliged, as part of their duty, to bargain collectively in good faith, to
participate fully and promptly in the conciliation meetings called by the regional branch of the Board. x x
xx

Article 264(a) of the Labor Code also considers it a prohibited activity to declare a strike "during the
pendency of cases involving the same grounds for the same strike."

Lamentably, PEU defiantly proceeded with their strike during the pendency of the conciliation
proceedings.

5. PEU staged the strike in utter disregard of the grievance procedure established in the CBA.

By PEU's own admission, "the Union's complaints to the management began in June 1997 even before
the start of the 1997 CBA renegotiations."47 Their CBA expired on 30 June 1997.48 PEU could have just
taken up their grievances in their negotiations for the new CBA. This is what a Philcom officer had
suggested to the Dasmariñas staff when the latter requested on 16 June 1997 for an increase in
transportation allowance.49 In fact, when PEU declared the strike, Philcom and PEU had already agreed
on 37 items in their negotiations for the new CBA.50

The bottom line is that PEU should have immediately resorted to the grievance machinery provided for
in the CBA.51 In disregarding this procedure, the union leaders who knowingly participated in the strike
have acted unreasonably. The law cannot interpose its hand to protect them from the consequences of
their illegal acts.52

A strike declared on the basis of grievances which have not been submitted to the grievance committee
as stipulated in the CBA of the parties is premature and illegal.53
Having held the strike illegal and having found that PEU's officers and members have committed illegal
acts during the strike, we hold that no writ of execution should issue for the return to work of PEU
officers who participated in the illegal strike, and PEU members who committed illegal acts or who
defied the return-to-work orders that the Secretary issued on 19 November 1997 and 28 November
1997. The issue of who participated in the illegal strike, committed illegal acts, or defied the return-to-
work orders is a question of fact that must be resolved in the appropriate proceedings before the
Secretary of Labor.

WHEREFORE, we DISMISS the petition and AFFIRM the Decision of the Court of Appeals in CA-G.R. SP

No. 53989, with the MODIFICATION that the Secretary of Labor is directed to determine who among the
Philcom Employees Union officers participated in the illegal strike, and who among the union members
committed illegal acts or defied the return-to-work orders of 19 November 1997 and 28 November
1997. No pronouncement as to costs.

SO ORDERED.

G.R. No. L-12429             February 27, 1961

ERMIDIA A. MARIANO, plaintiff-appellee,
vs.
THE ROYAL INTEROCEAN LINES (Keninkijke Java-China-Pakitvaart Lijnen N. V. Amsterdam) and J. V.
KAMERLING, defendants-appellants.
Emilio Javier for plaintiff-appellee.
Manuel V. San Jose for defendants-appellants.

PADILLA, J.:

This is an appeal from a judgment rendered by the Court of First Instance of Manila holding that the
dismissal of the plaintiff by the defendants "was summary, unreasonable and arbitrary," and ordering
the latter to pay to the former the Sum of P13,222.58, which represents the plaintiff's basic salary, high
costs of living allowance, Christmas bonuses and automatic increases in salary, as computed by her
pursuant to the defendant company's rules and regulations (Exhibit W), from 24 October 1953, the date
she was dismissed from the service, to 21 August 1955, the date she would have retired upon reaching
the age of 55 years;1 P20,000 for moral damages and P10,000 as attorney's fee (civil No. 21888).

The following appears from the stipulation of facts entered into by and between the parties and the
documents attached thereto and made an integral part thereof. The appellee was employed by the
appellant Royal Interocean Lines as stenographer-typist and filing clerk from 5 January 1932 until the
outbreak of the war on 8 December 1941, when the employment was interrupted, and from March
1948 until 23 October 1953, when she was dismissed from the service (par. 2, stipulation of facts, p. 48,
rec. on app.). At the time of her dismissal, the appellee was receiving a basic salary of P312 and a high
cost of living allowance of P206, or a total of P518 a month (par. 5 stipulation of facts, pp. 48-49, rec. on
app.). On 5 October 1953 the appellee sent a letter to the managing directors of the appellant company
in Hongkong, coursed through its manager for the Philippines, the appellant J. V. Kamerling, complaining
against the latter's "inconsiderate and untactful attitude" towards the employees under him and the
clients of the appellant company in the Philippines (par. 5 stipulation of facts, p. 49, rec. on app.;
Annexes A & B, pp. 10, 11-16, rec on app.). On 19 October 1953 the appellant manager advised the
appellee that her letter of 5 October 1953 had been forwarded to the managing directors of the
appellant company in Hongkong; that in view of the contents and tenor of her letter, the managing
directors believed with the appellant manager that it was impossible to maintain her further in the
service of the company; that despite the fact that they were justified in dismissing her from the service
and that she was not entitled to any compensation, out of generosity and in consideration of her length
of service, the appellant company ,as willing to grant her a sum equivalent to three months' salary; that
in order not to adversely affect her chances of future employment with other firms, it was suggested
that she hand in a formal letter of resignation effective 31 October 1953, otherwise the appellants
would dismiss her; and that should they not hear from her in writing until noon of 23 October 1953, she
would be considered dismissed from the service (par. 6, stipulation of facts, pp. 49-50, rec. on app.;
Annex D, pp. 17-18, rec. on app.) On 23 October 1953 the appellee sent a letter to the appellants by
messenger, stating that she was "compelled to hand this letter of resignation severing my services from
the Royal Interocean Lines effective October 31st, 1953, much to my dislike and disappointment after
being in their employment for almost twenty-two (22) years" (par. 7, stipulation of facts, p. 50, rec. on
app.; Annex E, P. 19, rec. on app.). However, the appellants refused acceptance of her, letter and on the
same date, 23 October, 1953, sent to the appellee a letter by registered mail dismissing her from the
service, which she received on 27 October 1953, (par. 7, stipulation of facts, p. 50, rec. on app.; Annex F,
pp. 19-20, rec. on app.). The appellee sought reconsideration of her dismissal from the managing
directors of the appellant company in Hongkong but received no answer to any of her five letters (par. 9,
stipulation of facts, p. 51, rec. on app.). On 19 December 1953 the appellants finally tendered to the
appellant) an offer of compromise settlement whereby she would be paid the sum of P3,108 equivalent
to six months salary, provided that she would sign a quit claim embodying a provision that she would
release the appellants and any of their officers or employees from any civil or criminal liability and from
any other liability and from any other liability arising from her employment (par. 10, stipulation of facts,
p.51, rec., on app.; Annexes J & K-Stipulation, pp. 30-31, 122-124, rec. on app.). Not satisfied with the
offer of compromise, on 2 February 1954 the appellee brought this action for recovery of damages in
the total sum of P107,002.58 and for other just and equitable relief (pp. 1-10, rec. on app.) .

It appears further on the record that on 25 May 1955, the acting chief prosecutor of the Court of
Industrial Relations, at the appellee's instance, filed a complaint dated 24 May 1955 in the Court of
Industrial Relations, charging the appellants with unfair labor practice for having dismissed her from the
service "for the reason that on October 5, 1953 she wrote a letter to the Managing Directors in
Hongkong which was sent through said Kamerling, complaining against the latter's attitude and behavior
to her (Miss Mariano) and other employees," and for refusing to reinstate her to her former position
(Exhibit 4); that after the appellant company had filed its answer (Exhibit 5) to the complaint and the
Court had conducted a hearing, the latter rendered judgment holding that the appellants were guilty of
unfair labor practice and ordering them to reinstate the appellee to her former position with backpay
from the date of dismissal to the date of reinstatement; and that the appellants had filed in this Court a
petition for certiorari to review the judgment of the Court of Industrial Relations (G.R. No. L-11745). On
31 October, 1960, this Court, deciding the case under review, found and held as follows: .

The issue involved is whether or not the petitioner was guilty of unfair labor practice in having dismissed
the respondent because the latter had filed charges against Kamerling not connected with or necessarily
arising from union activities. The pertinent legal provision is section 4(a), sub-section 5, of Republic Act
No. 875 which reads as follows: "Sec. 4 Unfair Labor Practice, (a) It shall be unfair labor practice for an
employer: . . . (5) To dismiss, discharge, or otherwise prejudice or discriminate against an employee, for
having filed charges or for having given or being about to give testimony under this Act." .

xxx     xxx     xxx

Considering the policy behind the enactment of the statute, it is readily discoverable that the provisions
of sections 1 and 3 are the bases for the protection of the laborer's right to self- organization, and the
enumeration in section 4 (of unfair labor practices), are nothing more than a detailed description of an
employer's acts that may interfere with the right to self-organization and collective bargaining.

xxx     xxx     xxx

Despite the employees' right to self-organization, the employer therefore still retains his inherent right
to discipline his employees, his normal prerogative to hire or dismiss them. The prohibition is directed
only against the use of the right to employ or discharge as an instrument of discrimination, interference
or oppression because of one's labor or union activities.; (See Rotenberg on Labor Relations, pp. 398-
399.) Even from a liberal and grammatical point of view, the provision in dispute has to be interpreted in
the sense that the charges, the filing, of which is the cause of the dismissal of the employee, must be
related to his right to self-organization, in order to give rise to unfair labor practice on the part of the
employer. (Under subsection 5 of section 4(a), the employee's (1) having filed charges or (2) having
given testimony or (3) being about to give testimony, are modified by "under this Act" appearing after
the last item. In other words, the three acts must have reference to the employee's right to self-
organization and collective bargaining, because the element of unfair labor practice is interference in
such right. It would be redundant to repeat "under this Act" after each enumeration connected by the
disjunctive conjunction "or." .

As the respondent's dismissal has no relation to union activities and the charges filed by her against the
petitioner had nothing to do with or did not arise from her union activities, the appealed decision is
hereby reversed and the directive for the respondent's reinstatement with backpay revoked.

The notice of appeal to this Court was filed on 2 May 1957 and the record on appeal allowed on 29 May
1957 before the approval of Republic Act No. 2613 on 1 August 1959. The amount involved in this
appeal not being more than P200,000, it would have been certified to the Court of Appeals. However,
there being a stipulation of facts and no dispute as to such facts, this Court proceeds to render judgment
thereon.

Considering that the appellee's dismissal by the appellants, because of charges preferred against the
appellant manager with the managing directors of the appellant company in Hongkong, "not connected
with or necessarily arising from union activities," did not constitute unfair labor practice; that this is the
same cause of action upon which her claim for recovery of damages in the ewe at bar is predicated; and
that despite the employees' right to self-organization, the employer still retains his inherent right to
discipline his employees, "his normal prerogative to hire or dismiss them," the appellee has no cause of
action against the appellants. Nevertheless, as the dismissal of the appellee was without cause, because
her inefficiency as the ground or reason for her dismissal as claimed by the appellants is belied by the
successive increases of her compensation, the amount of P3,108 for six monthly salary, as offend by the
appellants, should be paid to her.

The judgment appealed from is modified as above stated. The appellants are ordered to pay the
appellee the sum of P3,108, without interest. No special pronouncement as to costs.

G.R. No. 80737 September 29, 1988

PHILIPPINE GRAPHIC ARTS INC., IGMIDIO R. SILVERIO AND CARLOS CABAL, petitioners,

vs.
NATIONAL LABOR RELATIONS COMMISSION, ROSALINA M. PULPULAAN AND EMELITA
SALONGA, respondents.
George L. Howard for petitioners.

The Office of the Solicitor General for public respondent.

Raul E. Espinosa for private respondents.

GUTIERREZ, JR., J.:

In October, 1984, the petitioner corporation was forced by economic circumstances to require its
workers to go on mandatory vacation leave in batches of seven or nine for periods ranging from 15, 30,
to 45 days. The workers were paid while on leave but the pay was charged against their respective
earned leaves.

As a result, the private respondents filed complaints for unfair labor practice and discrimination.

On April 9, 1986, the Labor Arbiter rendered a decision the dispositive portion of which reads:

Wherefore, for lack of merit, the complaint for unfair labor practice on grounds of discrimination, forced
leave and reduction of working days is hereby, DISMISSED. Respondent is hereby ordered to restore and
grant to all its employees the company policy regarding groceries previously enjoyed by them. (p. 27,
Rollo)

The private respondents filed a "partial appeal" with the National Labor Relations Commission (NLRC)
questioning the Labor Arbiter's dismissal of their complaint for unfair labor practice and the resultant
forced vacation leaves which were actually without pay.

On June 19,1986, the NLRC affirmed the arbiter's decision with modification as follows:

Be that as it may, since as intimated at the outset, the vacation leave forced upon the complainants was
visited with arbitrariness not amounting to unfair labor practice, a refund of the amount equivalent to
the earned leave of each of the complainants treated as their pay during their vacation is believed in
order.

WHEREFORE, modified as above indicated, the decision appealed from is hereby AFFIRMED. (PARTIAL
APPEAL TO THE NATIONAL LABOR RELATIONS COMMISSION, p. 1) (p. 60, Rollo)

The petitioners raise two issues in their petition, namely:

A. PUBLIC RESPONDENT COMMITTED A GRAVE ABUSE OF DISCRETION IN RENDERING A RESOLUTION ON

AN ISSUE INVOLVING A MONEY CLAIM, WHICH WAS NOT A SUBJECT OF AN APPEAL NOR ASSIGNED AS
AN ERROR.

B. PUBLIC RESPONDENT COMMITTED A GRAVE ABUSE OF DISCRETION IN RENDERING A RESOLUTION IN

FAVOR OF THE UNION AND/OR 23 OTHER EMPLOYEES WHO ARE NOT REAL PARTIES IN THE CASE, NOR
IN THE PARTIAL APPEAL. (pp. 17 & 22, Rollo)

After considering the petition and treating the comments of the private respondents and the Solicitor
General as Answers, the Court resolved to give due course to the petition and decide it on the basic
merits.
The principal issue now before the Court is the forced vacation leave without pay whether or not it is
unfair labor practice and if not an unfair labor practice, whether or not it was tainted with arbitrariness.

The Court is convinced from the records now before it, that there was no unfair labor practice. As found
by the NLRC, the private respondents themselves never questioned the existence of an economic crisis
but, in fact, admitted its existence. There is basis for the petitioner's contentions that the reduction of
work schedule was temporary, that it was taken only after notice and consultations with the workers
and supervisors, that a consensus was reached on how to deal with deteriorating economic conditions
and reduced sales and that the temporary reduction of working days was a more humane solution
instead of a retrenchment and reduction of personnel. The petitioner further points out that this is in
consonance with the collective bargaining agreement between the employer and its employees. The
Court, therefore, agrees with the Solicitor General in his submission that:

There is also no showing that the imposition of forced leave was exercised for the purpose of defeating
or circumventing the rights of employees under special laws or under valid agreements. As the records
show, petitioners instituted the forced leave due to economic crisis, which private respondents do not
even question. (Position Paper [Private Respondents'], dated July 1985, p. 2)

Likewise the forced leave was enforced neither in a malicious, harsh, oppressive, vindictive nor wanton
manner, or out of malice or spite. Apart from private respondents concurrence that the forced leave
was implemented due to economic crisis, what only "hurts" (ibid.) them "is that said management's plan
was not even discussed in the grievance procedure so that the Union members thereof may well be
apprised of the reason therefor." (Ibid.)

However, to rule that petitioners' failure to bring the question of necessity in the imposition of forced
leave and the distribution of work availability before the grievance machinery, as a prior requisite for
the implementation of the forced leave scheme, constitutes arbitrariness is erroneous. (Rollo, pp. 63-64)

The decision to resort to forced leaves was, under the circumstances, a management prerogative. The
workers' claim of non-resort. to the grievance machinery is negated by their failure to initiate steps for
its employment.

As stressed by the Solicitor General:

The statutory law on grievance procedure provides that:

ART. 261. Grievance machinery. Whenever a grievance arises from the interpretation or implementation
of a collective agreement, including disciplinary actions imposed on members of the bargaining unit, the
employer and the bargaining representative shall meet to adjust the grievance. Where the grievance
procedure as provided herein does not apply, grievances shall be subject to negotiation, conciliation or
arbitration as provided elsewhere in this Code (Labor Code (Emphasis supplied)

As the law stands, both employers and bargaining representative of the employees are required to go
through the grievance machinery in case a grievance arises. And though the law does not provide who,
as between labor and capital, should initiate that said grievance be brought first to the, grievance
machinery, it is only logical, just and equitable that whoever is aggrieved should initiate settlement of
the grievance through the grievance machinery. To impose the compulsory procedure on employers
alone would be oppressive of capital, notwithstanding the fact that in most cases the grievance is of the
employees.

In the case at bar, when petitioners sent notice to complainants, no grievance between petitioners and
private respondents that need be threshed out before the grievance machinery has yet materialized. But
then, private respondents, who received such notice and being aggrieved thereof, instituted a case
before the Labor Arbiter for unfair labor practices and discrimination, prior to any referral to the
grievance machinery, which they are equally mandated to go through and under the circumstances they
were better situated to initiate; likewise, petitioners even prayed before the Labor Arbiter that the
complaint be dismissed and/or referred to the grievance machinery. (Position Paper (Petitioners'), dated
24 July 1985, p. 7) Thus, petitioner should not be faulted if the grievance machinery was in any way by-
passed. (Rollo, pp. 64-66)

WHEREFORE, the petition is hereby GRANTED. The June 19, 1987 resolution of the National Labor
Relations Commission is set aside and the April 9, 1986 decision of the Labor Arbiter is REINSTATED.

SO ORDERED.

G.R. No. L-45402 April 30, 1987

ROMEO DABUET, GAMIK BARTOLOME, SALVADOR ABESAMIS and MARIANO MALONZO, and ROCHE
PRODUCTS LABOR UNION, petitioners,
vs.
ROCHE PHARMACEUTICALS, INC., ERIC MENTHA, REYNALDO FORMELOZA, and the OFFICE OF THE
PRESIDENT, respondents.

PADILLA, J.:

This is a petition for review of the decision of the Office of the President in NLRC Case No. C-5190,
ordering the respondent Roche Pharmaceuticals, Inc. to pay the individual petitioners separation pay, in
lieu of reinstatement with back wages.

The facts of the case which led to the filing of this petition are, as follows:

On 1 March 1973, herein individual petitioners who were an officers of the Roche Products Labor Union,
the labor organization existing in the firm, and with whom the respondent company had a collective
bargaining agreement which was due for re-negotiation that month, wrote the respondent company
expressing the grievances of the union and seeking a formal conference with management regarding the
previous dismissal of the union's president and vice-president. A meeting was, accordingly, arranged and
set for 12 March 1973. At said meeting, however, instead of discussing the problems affecting the labor
union and management, Mr. Eric Mentha, the company's general manager, allegedly berated the
petitioners for writing said letter and called the letter and the person who prepared it as "stupid."

Feeling that he was the one alluded to, since he had prepared the letter, counsel for the labor union
filed a case for grave slander against Mr. Mentha. The charge was based on the affidavit executed by the
petitioners. The company and Mentha, in turn, filed a complaint for perjury against petitioners alleging
that their affidavit contained false statements.

The respondent company, furthermore, construed the execution by petitioners of the affidavit as an act
of breach of trust and confidence and inimical to the interest of the company, for which they were
suspended. Subsequently, the respondent company filed with the NLRC a petition for clearance to
terminate their employment. The petitioners filed an opposition thereto and, at the same time, filed
charges of unfair labor practice, union busting, and harassment against the company, Eric Mentha, and
Reynaldo Formeloza, the company's Finance/Administrative Manager. 1

After due proceedings, the compulsory arbitrator found that the petitioners' dismissal was without
justifiable cause, but that there was no unfair labor practice committed and directed that petitioners be
paid separation pay. 2

Petitioners filed a motion for reconsideration and/or appeal to the NLRC which agreed with the findings
of the arbitrator that the petitioners' dismissal was without just and valid cause. However, it disagreed
with the arbitrator on the relief granted. The NLRC ordered the reinstatement of the petitioners with
two (2) months salary as back wages. 3

Both parties appealed to the Secretary of Labor who set aside the decision of the NLRC and entered
another one ordering the payment of severance pay only. 4

The petitioners appealed to the Office of the President, and on 27 April 1976, the latter rendered a
decision finding the respondents guilty of unfair labor practice and directing the reinstatement of the
petitioners with back wages from the time of their suspension until actually reinstated, without loss of
seniority rights. The respondent company was, likewise, ordered to extend to the petitioners all fringe
benefits to which they are entitled had they not been dismissed. 5 The respondent company filed a
motion for reconsideration of the decision, and on 16 November 1976, the Office of the President
granted the motion and reversed its previous decision of 27 April 1976. It ruled that, while the
petitioners' dismissal was not for just and valid cause, no unfair labor practice had been committed.
Consequently, it directed that petitioners be paid only separation pay in an amount double those
awarded by the compulsory arbitrator and Secretary of Labor.6

Hence, the present recourse to this Court.

The determinative issue raised in the petition is whether or not the respondent company, in terminating
the employment of the petitioners without just and lawful cause, committed an unfair labor practice.

We have carefully examined the records of the case and we are convinced that the respondent company
had committed unfair labor practice in dismissing the petitioners without just and valid cause.

In Republic Savings Bank vs. CIR,7 where the dismissed employees had written a letter decried by the
Bank as patently libelous for alleging immorality, nepotism and favoritism on the part of the Bank
president, thus amounting to behavior necessitating their dismissal, the Court declared:

... Assuming that the workers acted in their individual capacities when they wrote the letter-charge they
were nonetheless protected for they were engaged in concerted activity, in the exercise of their right to
self-organization that includes concerted activity for mutual aid and protection, interference with which
constitutes an unfair labor practice under section 4(a) (1). This is the view of some members of this
Court. For, as has been aptly stated, the joining in protests or demands, even by a small group of
employees, if in furtherance of their interests as such, is a concerted activity protected by the Industrial
Peace Act. It is not necessary that union activity be involved or that collective bargaining be
contemplated.

Where, as in this case, the letter written by and for the union addressed to management referred to
employee grievances and/or, labor-management issues and the employees concerned were all officers
of the union, then seeking a renegotiation of the collective bargaining agreement, a fact which
respondent company does not deny, there should, all the more, be a recognition of such letter as an act
for the mutual aid, protection and benefit of the employees concerned. This recognition, in turn, should
extend to petitioners' execution of an affidavit in support of the charge of slander against private
respondent, Eric Mentha, for calling the union's lawyer, who prepared the letter, and the contents
thereof as "stupid."

Breach of trust and confidence, the grounds alleged for herein petitioners' dismissal, "must not be
indiscriminately used as a shield to dismiss an employee arbitrarily. For who can stop the employer from
filing an the charges in the books for the simple exercise of it, and then hide behind the pretext of loss of
confidence which can be proved by mere preponderance of evidence." 8 Besides, there is nothing in the
record to show that the charge of perjury filed by private respondents against the petitioners has
prospered in any conclusive manner.

We, thus, hold that respondent company's act in dismissing the Petitioners, who then constituted the
remaining and entire officialdom of the Roche Products Labor Union, after the union's president and
vice-president had been earlier dismiss and when the collective bargaining agreement in the company
was about to be renegotiated, was an unfair labor practice under Sec. 4(a) (1) of the Industrial Peace
Act. Their dismissal, under the circumstances, amounted to interference with, and restraint or coercion
of, the petitioners in the exercise of their right to engage in concerted activities for their mutual aid and
protection

As the respondent company was guilty of unfair labor practice, reinstatement of the dismissed
employees should follow as a matter of right. It is an established rule that an employer who commits an
unfair labor practice may be required to reinstate, with full back wages, the workers affected by such
act, the amount not to exceed back wages for three (3) years. 9

The respondents claim however, that the Supreme Court has no jurisdiction to take cognizance of the
instant petition. They contend that pursuant to Art. 222, (should be Art. 223) of the Labor Code. the
Office of the President is the final appellate authority within the adjudicative machinery for handling
labor disputes and no law, order or regulation provides for any appeal therefrom to the Supreme Court.

To be sure, Art. 223 of the Labor Code. while providing ex.pressly that decisions of the Secretary of
Labor may be appealed to the Office of the president, does not provide for review of the decisions Of
the Office of the President by the Supreme Court. This does not mean, however, that the power Of
judicial review does not extend to decisions of the Office of the President. In San Miguel Corp. vs.
Secretary of Labor, 10 where the same issue was the Court categorically decisive that there is an
underlying power in the courts to scrutinize the acts of agencies exercising quasi-judicial or legislative
power on questions of law and jurisdiction even though no right of review is given by the statute. The
Court therein said:

Yanglay raised a jurisdictional question which was not brought up by respondent public officials. He
contends that this Court has no jurisdiction to review the decisions of the NLRC and the Secretary of
labor 'under the principle of separation of powers' and that judicial review is not provided for in
Presidential Decree No. 21.

That contention is a flagrant error. "It is generally understood that as to administrative agencies
exercising quasi-judicial or legislative power there is an underlying power in the courts to scrutinize the
acts of such agencies on questions of law and jurisdiction even though no right of review is given by
statute" (73 C.J.S. 506, note 56).

The purpose of judicial review is to keep the administrative agency within its jurisdiction and protect
substantial rights of parties affected by its decisions' (73 C.J.S. 504, Sec. 166). It is part of the system of
checks and balances which restricts the separation of powers and forestalls arbitrary and unjust
adjudications.

Judicial review is proper in case of lack of jurisdiction, grave abuse of discretion, error of law, fraud or
collusion (Timbancaya vs. Vicente, 62 O.G. 9424; Macatangay vs. Secretary of Public Works and
Communications, 63 O.G. 11236; Ortua vs. Singson Encarnacion, 59 Phil. 440).

In Macailing vs. Andrada, 11 the Court also ruled that judicial review of administrative decisions is
available even if the statute does not provide for judicial review. The Court said:

In the matter of judicial review of administrative decisions, some statutes especially provide for such
judicial review; others are silent. Mere silence, however, does not necessarily imply that judicial review
is unavailable. Modes of judicial review vary according to the statutes; appeal petition for review or a
writ of certiorari No general rule applies to all the various administrative agencies. Where the law stands
mute, the accepted view is that the extraordinary remedies in the Rules of Court are still available.

Accordingly, we restate that this Court, in the exercise of its power of judicial review, may review
decisions of the Office of the President on questions of law and jurisdiction, when properly raised. This
does not mean judicial supremacy over the Office of the President but the performance by this Court of
a duty specifically enjoined upon it by the Constitution, 12 as part of a system of checks and balances.

The checkered circumstances under which the decisions in this case were made, notably, that two
varying rulings were rendered by different officials of the Office of the President, within a short period of
time, also constrained us to review the case on a question of law.

WHEREFORE, the judgment appealed from should be, as it is, hereby reversed and set aside and another
one entered, ordering the respondent company to reinstate the petitioners to their former positions,
with three (3) years back wages and without loss of seniority rights. The respondent company is further
directed to extend to said petitioners fringe benefits they are entitled to had they not been dismissed. In
the event that reinstatement is no longer feasible, the respondent company should pay, in addition,
severance pay of one (1) month for every year of service based upon the highest salary eceived.

SO ORDERED.

CHAPTER III – UNFAIR LABOR PRACTICES OF LABOR ORGANIZATIONS Art. 249

G.R. No. L-39546 November 29, 1977

PROGRESSIVE DEVELOPMENT CORPORATION, JORGE L. ARANETA, JUDY A. ROXAS, MANUEL B. JOVER ,
RAMON LLORENTE and PROGRESSIVE EMPLOYEES UNION, petitioners,
vs.
COURT OF INDUSTRIAL RELATIONS and ARANETA COLISEUM EMPLOYEES ASSOCIATION, respondents.

Emilio S. Torres, Jr. for petitioners.

Jose D. Iglesias for petitioner Union.

Liver B. Gesmundo for private respondents.

FERNANDEZ, J.:

This is a petition for review the decision of the Court of Industrial Relations in Case No. 3304-ULP
entitled "Araneta Coliseum Employees Association. complainant. versus Progressive Corporation. et al.,
respondents". the dispositive part of which reads:

WHEREFORE, all of the foregoing considered, and as so recommended, the respondents in this case
should be, as they are hereby declared GUILTY of having committed the unfair labor practice acts
complained of, and, as a consequence thereof, are therefore ordered to cease and desist from further
committing the same or similar acts and to reinstate the individual complainants to their former or
substantially equivalent employment in respondent corporation, without loss of seniority status and
other benefits and/or with back wages from the time of their dismissal up to April 11, 1972 when this
case was considered submitted for Decision, considering the delay encountered in the disposition of this
case.

The Chief of the Examining Division of this Court, or his duly authorized representative, is hereby
directed to proceed to the premises of the respondent corporation to examine its pertinent payrolls,
vouchers and other books of accounts necessary to compute the monetary liability of respondents in
line with this Decision, and to submit immediately thereafter his Report on the results of such
computation for further disposition of the Court.

SO ORDERED.

Manila, Philippines, March 15, 1914.

(SGD.) ALBERTO S. VELOSO

Associate Judge 1

The motion for reconsideration of the aforementioned decision was denied in a resolution en bane
dated October 10, 1974. 2

In September 1962, Araneta Coliseum Employees Association (ACEA) a legitimate labor organization in
behalf of forty-eight (48) members, instituted Case No. 3304-ULP for unfair labor practice in the Court of
Industrial Relations against Progressive Development Corporation (PDC), a domestic business entity
operating the Araneta Coliseum, Jorge Araneta, Judy A. Roxas, Manuel B. Jover and Ramon Llorente, as
officers of the corporation PDC and Progressive Employees Union (PEU), a labor organization existing in
the PDC.
The complaint alleged that the PDC, through its officers, initiated a move to disauthorize the counsel of
the complainant ACEA from appearing in a union conference with the respondents, petitioners herein;
that the supervisors of PDC encouraged, and assisted in, the formation of the Progressive Employees
Union (PEU) and coerced the employees, particularly the individual complainants, to disaffiliate from the
complainant union and to affiliate with the PEU; that in July and August 1962 the respondents,
petitioners herein, discriminated against the individual complainants by either not giving them their
working schedules, lessening their number of working days and eventually dismissing them from their
employment, because of their refusal to disaffiliate from their union and join the Progressive Employees
Union; and the individual complainants are:

1. Antonio Buluran

2. Mario Bagaybayan

3. Bonifacio Cendanio

4. Eduardo Evangelista

5. Juan Cumiran

6. Antonio Martin

7. Arthur Melbielb

8. Amando Reyes, Jr.

9. Jaime Serrano

10. Dominador Semon

11. Azarcon Roberto

12. Jaime Villazo

13. Pedro Estabello

14. Garcia Edilberto

15. Rodolfo Macalino

16. Eduardo Misa

17. Bernardo Orquia

18. Florentino Ricardo

19. Jorge Buan

20. Restituto Makilala

21. Gregorio Viray

22. Carlos Celistino

23. Federico Bola

24. Jose Dueñas

25. Aida Avenia

26. Mira Divinagracia

27. Amaparo Fernandez

28. Rose Haguisan

29. Aurora Reyes

30. Remedios Berdanea

31. Felisa Siason

32. Luz Caquiela

33. Benodian Nieva

34. Dimarocot Aquino

35. Domingo Malate

36. Reynaldo Asis

37. Feliciano Cabuang

38. Carmencita Anakan

39. Welhelmina Basco

40. Corazon Feliciano

41. Florecerfina Guerra

42. Antonio Jalla

43. Rosa de delos Santos

44. Ida Velasquez

45. Erlando Martin

46. Solidad Fernando

47. Margie Osorio

48. Sulpicio Makali 3

Said individual complainants prayed that after declaring the respondents, petitioners herein, guilty of
unfair labor practice acts, the complainants be ordered reinstated to their former positions with back
wages and all the rights and privileges formerly appertaining thereto.

The respondents, corporation PDC, Jorge L. Araneta, Judy A. Roxas and Manuel B. Jover claimed in their
answer that the individual complainants were merely casuals or temporary employees and their services
depended on the availability of work as ushers, usherettes, guards and janitors when there were shows,
performances or exhibits at the Araneta Coliseum. They alleged that they did not interfere with the
complainant union and in fact they met and conferred with said union's counsel; that they did not
initiate nor assist the PEU; that they did not discriminate against the individual complainants nor dismiss
them as said complainants were only casuals or temporary employees; that the services of complainant
Gregorio Viray were terminated because the office to which he was assigned was closed and that
complainant Reynaldo Asis was dismissed for collecting his salary without actually rendering the
corresponding services. 4

The Progressive Employees Union (PEU) denied that the officers and supervisors of the corporation PDC
initiated and assisted in its formation and claimed that its organization is the joint efforts of the
overwhelming majority of the employees and laborers of the corporation PDC, free from any undue
influence, interference and/or intimidation from any party. The PEU claimed that the institution of the
unfair labor practice case by the complainants is a desperate attempt to unduly delay the proceedings in
Case No. 1054-MC for certification election. 5 Ramon Llorente denied all imputations against him in the
complaint and alleged that Gregorio Viray, a casual janitor, was separated when his office was closed.
Llorente claimed that he severed his employment with the PDC in June 1962 and could not have
committed the acts complained of against him in July and August 1962. 6

The Court of Industrial Relations found the following facts to be established by the evidence of record:

From the evidence on record, the following facts are established, to wit:

1. That the complainant union was registered in the Department of Labor with Registration No. 3367-IP,
dated September 11, 1961, and that the individual complainants are members thereof;

2. That the Progressive Development Corporation (PDC) is a domestic entity engaged in show business
and operates the Araneta Coliseum, with respondents Jorge Araneta, Judy A. Roxas, Manuel B. Jover and
Ramon Llorente as its officers;

3. That, on September 19, 1961, the complainant union formally informed the management of its
existence (Exh. 'KK-1' and the management acknowledged the same on October 25, 1961 (Exh. 'B', 'B-1'
& 'B-2');

4. That, on January 6, 1962, a 24-item proposal was sent by the complainant union to the management
thru respondent Jorge Araneta (Exh. 'C'), which was only received by respondent Ramon Llorente (Exh.
'C-l');

5. That, on February 19, 1962, thru Nicolas Santiago, the management answered the said proposals (Exh.
'D');

6. That, on February 23, 1962, relative to the management's answer b 19, 1962), the complainant union
requested the management for a negotiation conference on February 21, 1962 (Exh. 'E'), but Mr.
Santiago requested them that the same be postponed to March 1, 1962, (Exh. 'E-l');

7. That, on February 28, 1962, Mr. Nicolas Santiago requested for the cancellation of the projected
conference of March 1, 1962, alleging as reason therefor the 'hurried departure of the managing
Director, Mr. Jorge Araneta for the United States' (Exh. 'F) and requested for a later date, which he will
inform the union;
8. That, on April 21, 1962, the complainant union reminded Mr. Nicolas Santiago that, in view of the fact
that Mr. Jorge Araneta had already arrived, they requested for a conference (Exh. 'M', 'H', & 'I'), which
was set for June 14, 1962 at the office of the Araneta Enterprises Bldg., Cubao, Quezon City (Exh. 'J');

9. That, on June 13, 1962, respondent Ramon Llorente requested the President of the complainant
union Antonio (Tony) Buluran to him in his residence to take up with him the agenda for tomorrow's
meeting (June 14, 1962) (Exh. 'E').

It was this meeting, as well as the circumstances that preceded the same, which the union claims started
the management's exertion of all efforts to discourage membership in the complainant union, and which
eventually culminated in the formation of the respondent union, The Progressive Employees Union
(PEU), allegedly formed purportedly to bust the complainant union. 7

The Progressive Development Corporation and its officers assumed the following errors:

THE RESPONDENT INDUSTRIAL COURT ERRED IN FINDING THE PETITIONERS GUILTY OF UNFAIR LABOR
PRACTICE IN SPITE OF- PETITIONERS' CONTENTION THAT THE INDIVIDUAL COMPLAINANTS WHO WERE
HIRED AS USHERS, USHERETTES, JANITORS OR ATTENDANTS WERE MERELY CASUALS AND THAT THEIR
HIRINGS DEPENDED ENTIRELY ON ACTUAL SHOWS OR PERFORMANCES IN THE ARANETA COLISEUM.

II

THE RESPONDENT INDUSTRIAL COURT ERRED IN FINDING THE PETITIONERS GUILTY OF UNFAIR LABOR
PRACTICE IN DISMISSING INDIVIDUAL COMPLAINANT GREGORIO VIRAY FOR HIS ALLEGED UNION
MEMBERSHIP WITH THE RESPONDENT UNION ARANETA COLISEUM EMPLOYEES ASSOCIATION, FOR
SHORT, ACEA, DESPITE PETITIONERS' CONTENTION THAT SAID GREGORIO VIRAY WAS MERELY A CASUAL
WORKER FROM MARCH 1962 UP TO JUNE 1962, AND WHOSE DISMISSAL WAS DUE TO THE ABOLITION
OF THE OFFICE WHERE HE WAS ASSIGNED.

III

THE RESPONDENT INDUSTRIAL COURT ERRED IN FINDING THAT INDIVIDUAL COMPLAINANT REYNALDO
ASIS A SECURITY GUARD WAS ALLEGEDLY DISCHARGED DUE TO HIS UNION ACTIVITIES AND THEREFORE
CONSTITUTE UNFAIR LABOR PRACTICE ON THE PART OF THE PETITIONERS DESPITE PETITIONERS'
CONTENTION THAT THE SAID SECURITY GUARD REYNALDO ASIS WAS DISCHARGED FOR CAUSE
FOLLOWING HIS OWN ADMISSION THAT HE PUNCHED HIS TIME CARD AND COLLECTED HIS SALARY
WITHOUT RENDERING THE CORRESPONDING SERVICES. 8

The Progressive Employees Union filed a separate brief and contended that the Court of Industrial
Relations committed as following errors:

RESPONDENT COURT OF INDUSTRIAL RELATIONS ERRED IN DECLARING PARTICULARLY PROGRESSIVE

EMPLOYEES UNION GUILTY O HAVING COMMITTED THE UNFAIR LABOR PRACTICE ACTS COMPLAINED
OF.

II
RESPONDENT COURT OF INDUSTRIAL RELATIONS ERRED IN HOLDING THAT INDIVIDUAL COMPLAINANTS
WERE SUBJECT OF DISCRIMINATIONS AND DISMISSAL FROM THEIR WORK THEREBY ENTITLED TO
REINSTATEMENT

WITH BACK WAGES. 9

It is contended by the petitioners that in view of the irregularity of actual promotions and performances
held in Araneta Coliseum, the individual complainants and members of the respondent ACEA were
naturally hired by the petitioner company only as casuals, extras or replacements in various positions of
ushers, usherettes, Porters, attendants and/or janitors, and all in rotation basis only because of the
numerous other applicants for accommodation, hence there was no basis for petitioners to have
dismissed with discrimination the individual complainants and members of the respondent ACEA
because of petitioners' practice of hiring by rotation. 10 This contention is without merit. As testified to
by Jose Generoso, Jr., President of the Progressive Employees Union, their members were also casual
employees but are now regulars. This fact shows that the casual status of the members of ACEA could
not have been the cause of their dismissals. Moreover, as testified to by Concordia Araiza, a witness for
petitioners, it was the Personnel Manager, Ramon Llorente, who was in charge of assigning ushers and
usherettes every time there were scheduled shows; and that while the Araneta Coliseum maintained
only such number of ushers, usherettes and janitors, if their services were needed, every time there was
a scheduled show or during show days, the Coliseum hired additional personnel. 11 It is, therefore, clear
that the services of the members of the ACEA were also needed, their casual status notwithstanding.

It appears that the individual complainants, during show days, were always scheduled to work until June
1962 when they were not included in the schedule anymore.12 This virtually amounted to dismissal,
without prior notice. Their not being included in the list of schedule since June 1962 could only be the
result of petitioners' earlier threat of dismissal should said complainants refuse to heed petitioners'
admonition for them to resign from the ACEA.

There is reason to believe that had the individual complainants agreed to resign from the ACEA and to
transfer to the PEU, they would not have been separated from their work and would even have been
made permanent employees. Thus, a Mrs. Concordia Araiza who was a casual employee of the
petitioner corporation, upon her suspension for four (4) hours on representation of the ACEA, became a
permanent employee after she handed her resignation from the ACEA Union personally to Jose E.
Belmonte, the General Manager of the Progressive Development Corporation. 13

From the facts of record, it is clear that the individual complainants were dismissed because they
refused to resign from the Araneta Coliseum Employees Association and to affiliate with the Progressive
Employees Union which was being aided and abetted by the Progressive Development Corporation.

The assertion of the petitioner Progressive Development Corporation and its officials that they have
nothing to do with the formation of the Progressive Employees Union is not supported by the facts of
record.

The President then of the Progressive Employees Union was Jose Generoso, Jr., Stage Manager of the
Progressive Development Corporation. The stage Manager, Generoso, has supervisory power over the
twenty-two (22) employees under him. Generoso was then the No. 2 man in the Araneta Coliseum,
being an assistant of the Director of said Coliseum. While the Progressive Employees Union was
allegedly organized on June 26, 1962, it was only on July 11, 1962 that its existence was publicly
announced when the management of the petitioner corporation refused to meet with the Araneta
Coliseum Employees Association. The Progressive Employees Union never collected dues from its
members and all their members are now regular employees and are still working in the construction unit
of the Philippine Development Corporation. There is evidence that the Progressive Employees Union
became inactive after the death of Atty. Reonista the former counsel of the Progressive Development
Corporation. 14 This shows that the Progressive Employees Union was organized to camouflage the
petitioner corporation's dislike for the Araneta Coliseum Employees Association and to stave off the
latter's recognition.

It is also a fact that the Progressive Employees Union, after exerting efforts to win in the Certification
Election, Case No. 1054-MC, did not conclude and enter into a collective bargaining agreement with the
management. According to Generoso, the Progressive Employees Union was already disbanded. 15

As regards Gregorio Viray, it is not refuted that he was an active member of the ACEA and that he was in
charge of around eighteen (18) janitors. There can be no other reason for dismissal except his active
membership with the Araneta Coliseum Employees Association because the office where he was
working was not closed. After Ramon Llorente with whom Viray was assigned had resigned, his position
was taken over by Alicia Nonado Iglesias. 16

The contention of the petitioner that Reynaldo Asis collected his salary without actually rendering
corresponding services is not supported by the following facts found by the Court of Industrial Relation:

In the case of Gregorio Viray, it is on record that, while assigned in the office of Mr. Llorente, he was
sent to Aida Aveña and Carmencita Anacan for them to sign the disauthorization of Atty. Rino, ACEA's
Counsel. Since the two refused to sign, another letter was again sent to Aida Aveña who again refused to
sign. Infuriated by said refusal, Llorente got mad and said that those who cannot follow instructions
were not needed by him (tsn. pp. 32-33, June 4, 1964). And this obviously included Viray himself.

It is not refuted that Gregorio Viray was an active member of ACEA and that he as in charge of around
eighteen (18) janitors. If, as argued Ii is dismissal was due to the abolition of the office where he was
assigned, it puzzles us to note why he, alone, of the rest of the janitors was singled out for dismissal. And
the fact that, after the separation of Mr. Ramon Llorente, with whom Viray was assigned, Mrs. Alicia
Nonada Iglesias took over the position of Llorente (it is not Mrs. Iglesias who is in charge of the schedule
of ushers and usherettes) completely belie respondents' allegation that Viray was dismissed because the
office where he was working was already close This being the case, there can be no other reason for his
dismissal except his undisputed active membership with complainant. 17

The evidence shows that Reynaldo Asis, like the other individual complainants, was dismissed because
he refused to join the Progressive Employees Union.

The petitioners were correctly found to have committed acts constituting unfair labor practice.

In view of the length of time that has passed since the individual complainants were dismissed in 1962.
there is need to apply the formula adopted by this Court in Davao Free Workers Front vs. CIR and other
cases. 18
Under the circumstances and equity of the case, and considering the length of time and the union-
busting activities of petitioner, the individual complainants are granted back wages for five (5) years
without qualification or deduction.

WHEREFORE, the decision appealed from is hereby affirmed with the modification that the Progressive
Development Corporation is ordered to reinstate the individual complainants to their former or
substantially equivalent positions with the same rank and compensation and without loss of seniority
and other privileges within fifteen (15) days from the promulgation of this decision and said Progressive
Development Corporation is further ordered to pay the individual complainants back wages equivalent
to five (5) years without qualification or deduction, with costs against the petitioners. This decision is
declared immediately executory.

SO ORDERED.

G.R. No. L-59012-13 October 12, 1989

RIZAL-MEMORIAL COLLEGES FACULTY UNION-DAVAO WORKERS UNION (RMCFU-DWU), NENY

ARGUNA HELEN BASUG, PAZ BAYQUEN RODOLFO BRAGA, GLADYS CAYOT, RAQUEL DANGO AURORA
DIZON, FELICIANO VILLANUEVA, FELICIDAD ESPINO, SHIELA BUOT, LINDA ESTEMBER, AMELIA FERIDO,
ANTONIO FULIGA, SOFIA GUNDRAN, PATROCINIA DE JESUS, ZENIA LACUESTA, CARMEN LAURICIO,
FRANCISCA LIMSIACO, LINDA LOGAN, LORETA MAGPANTAY, JOSE MAJADUCON, ARNALDO
MASIGLAT, EMMA MATEO, FILOMENA MORALES, ANICETO DANGO, SYLVIA RELOPEZ, ELENA DE LOS
REYES, DULCE SAAVEDRA, CARMENCITA SOSMENA, LUVIMIN TABAY, ANGELINA TIPACE, LILIA
VILLANUEVA, AMADA VINAS, and MERLINDA YAP, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, LEOPOLDO ABELLERA, RIZAL MEMORIAL COLLEGES and
RIZAL MEMORIAL COLLEGES FACULTY UNION,** respondents.

Delante & Associates for petitioners.

Cesar E. Nitorreda for private respondents.

REGALADO, J.:

This decision provides the denouement to the dispute between the contending parties herein which
started almost two decades ago under the aegis of Republic Act No. 875, otherwise known as the Magna
Carta of Labor, and culminated in the unfair labor practice case subject of the petition at bar. Petitioner
Rizal Memorial Colleges Faculty Union (RMCFU, for short), a legitimate labor organization affiliated with
the Davao Worker's Union (DWU, for brevity), together with the other individual petitioners who are
members thereof, charge their employer, respondent Rizal Memorial Colleges (hereinafter called RMC)
and its correspondents for allegedly having committed acts of interference with said workers' right to
organization.

On January 15,1970, Rodolfo Braga and Dionisio B. Jaboni presidents of RMCFU and DWU, respectively,
sent a letter to the board of trustees of respondent college asking for direct recognition and collective
bargaining. Respondent Leopoldo M. Abellera, as president of the school, replied on January 20,1970
that the letter would be presented to the board of trustees at its meeting on February 14,1970. Abellera
further informed them of the receipt of another letter from respondent Rizal Memorial Colleges Faculty
League (hereafter RMCFL) likewise requesting recognition and demanding collective bargaining. 1

On January 26,1970, RMCFU filed a petition for direct certification, as the sole and exclusive bargaining
representative, with the then Court of Industrial Relations claiming that it was the only union in the
bargaining unit and its members constituted the majority of the faculty of RMC. RMCFL intervened in
said proceedings on February 9, 1970, alleging that it had already filed an application for registration as
a labor union with the Department of Labor, further claiming that its members constituted the majority
of the teachers and instructors in RMC who were eligible to vote in a certification election, and
contending that the majority of the members of petitioner union were not legally qualified to be union
members since they were stockholders of RMC . 2

On March 17, 1970 RMCFU staged a strike, having theretofore filed a notice thereof on the ninth of the
same month . 3 In a complaint dated March 14, 1970, petitioner filed with the then Court of Industrial
Relations an unfair labor practice case, docketed as ULP Case No. 282, alleging that "Leopoldo M.
Abellera has initiated, dominated, assisted or contributed to the organization of the so-called Rizal
Memorial Colleges Faculty League which is composed of few teachers or instructors employed with the
respondent school for the primary purpose of busting the FACULTY UNION and delaying its recognition
by the management," and that the president of the petitioner union, Rodolfo D. Braga, had been
subjected to discrimination by respondent Abellera in regard to the terms and conditions of his
employment . 4
What ensued thereafter, according to petitioner, was the holding of a meeting on April 4, 1970 between
the striking teachers and Abellera wherein the picketing teachers allegedly agreed to return to their
classrooms, with respondent Abellera having made, inter alia, the following commitments substantially
embodied on April 6, 1970 in a "return to work agreement," 5 viz:

a) That the employer will not take any retaliatory measures against the members of the striking union by
reason of any union activities;

b) That the employer shall not dismiss any member of the striking union by reason of union activities
and that there would be no hiring of new teachers, unless the present teachers cannot cope up (sic)
with the work;

c) That job security shall be extended to the striking members of the union; and

d) That the striking members shall be paid completely their salary during the entire duration of the
strike. 6

Petitioners, however, claim that the picket lines were thereafter lifted and the teachers returned to
work, but when the aforesaid agreement was presented to Abellera and the board of trustees, they
refused to affix their signatures thereto. 7

Significantly, while the public respondent agrees with the foregoing statement of facts, private
respondents vigorously deny that on April 4, 1970 there was such a conference about the strike. They
claim that "it was purely a faculty meeting that was held on that date which dealt exclusively on the
rules and regulations of the Bureau of Private Schools and of the Rizal Memorial Colleges itself," hence
no agreement could be said to have been arrived at. 8

Likewise controverted by private respondents is the claim of petitioners that Abellera again promised
that he would take in all the striking teachers after the second strike of the teachers commenced on
June. 20, 1970. The reason advanced by the teachers for staging this second strike was the dismissal of
Abelardo Posadas, Jr., Lilia Villanueva, Feliciano Villanueva, Abelardo Celestial and Jose Majaducon.
Petitioners aver that they lifted the strike on July 6, 1970 to show their good faith to Abellera who met
with their union leader and one of their lawyers, in which meeting specific issues which could lead to the
settlement of the strike were discussed. It was also during this meeting when Abellera was supposed to
have promised to reinstate all teachers who had struck anew. 9

It is not sufficiently apparent from the records as to whether such agreements were actually made nor
can we make definite findings thereon at this late stage. What is adequately clear to us, however, is that
a dispute between the parties resulted in the filing by the petitioners on August 1, 1970, of Unfair Labor
Practice Case No. 296 with the former Court of Industrial Relations based on the following grounds: (1)
refusal to recognize and bargain with the complainant RMCFU; (2) dismissal, harassment, discrimination
and intimidation of RMCFU members by Abellera; and (3) the RMC Faculty League is dominated and
assisted by the employer. 10

With the advent of the Labor Code and the resultant abolition of the Court of Industrial Relations, the
aforesaid cases were transferred to Regional Office No. XI, Davao City, of respondent National Labor
Relations Commission as NLRC Cases Nos. 70-ULP-XI-77 and 71- ULP-XI-77. On December 5, 1978,
Assistant Regional Director Magno C. Cruz rendered a decision in said cases, the decretal portion of
which reads:

RESPONSIVE TO ALL THE FOREGOING, judgment is hereby rendered:

1. Declaring respondents Rizal Memorial Colleges and Leopoldo Abellera guilty of unfair labor practice
for refusal to renew the teaching contracts of Felicidad Espino, Patrocinia de Jesus, Francisca Limsianco
(sic), Dulce Saavedra, Raquel Dango, Sylvia Relopez, Loreta Magpantay, Carmen Lauricio, Angelina
Magpantay, Helen Basug and Amelita Ferido for no other reason than their union activities;

2. Ordering respondents Rizal Memorial Colleges and Leopoldo Abellera to reinstate the above-
enumerated teachers to their former positions but fixing their teaching loads in accordance with Item 78
of the Manual of Instructions for Private Schools or, in lieu thereof, to pay the termination pay of the
above-enumerated teachers in an amount equivalent to one-half (1/2) month for every year of service,
computed on the basis of their earnings immediately prior to their separation from the service;

xxx

5. Finding the non-renewal of the teaching contracts of part-time teachers to be valid and legal; and

6. Ordering the Rizal Memorial Colleges and Leopoldo Abellera to cease and desist from further
committing the unfair labor practice acts complained of. 11

The assistant director found that the refusal of therein respondents to recognize and negotiate with
RMCFU during the pendency of the petition for certification election was legal because to do so would
be unfair labor practice against RMCFL. He consequently ruled that unless and until RMCFU is certified
as the sole and exclusive bargaining representative of the faculty members, the employer could not be
compelled to confer with RMCFU for the execution of a collective bargaining agreement. Additionally, he
found that there was insufficient proof to support the contention that RMCFL was dominated and
assisted by RMC and Abellera. 12

Applying the provisions of Sections 3 and 4 of Republic Act No. 875, as amended by Republic Act No.
3350, which was then the governing legislation, the charge of unfair labor practice was upheld but only
because of the illegal dismissal of the eleven (11) teachers named therein. Their dismissal, according to
the assistant director, was for no other reason than their union activities. This finding was made on the
basis of a letter written by Abellera of the following tenor:

1. We have definitely refused to renew our contract with the following because of their propensity to
create intrigues in the school, to instigate others to abandine (sic) their classes and for other school
violations. If we renew their contracts, WE ARE SURE OF HAVING ANOTHER STRIKE IN OUR SCHOOL THIS
SEMESTER:

1. Mrs. Felicidad Espino

2. Mrs. Patrocinia de Jesus

3. Mrs. Francisca Limsiaco

4. Mr. Arnaldo Masiglat

5. Atty. Jose Majaducon

6. Mrs. Dulce Saavedra

7. Mrs. Raquel Dango

8. Mrs. Sylvia Relopez

9. Mrs. Loreta Magpantay

10. Mrs. Carmen Lauricio

11. Mrs. Angelina Magpantay

12. Miss Amelita Ferido

13. Miss Helen Lasug 13

With respect to the non-renewal of the contracts of Majaducon and Masiglat who were also included in
the above list, no unfair labor practice was said to have been committed. The assistant director accepted
Abellera's explanation that Majaducon's separation from the service was due to his decision to quit
teaching and appear as collaborating counsel in a damage suit against former Mayor Elias B. Lopez of
Davao City.

Arnaldo Masiglat, on the other hand, was one of the faculty members who received a letter from
Abellera advising them that their teaching contracts with the school expired at the end of school year
1969-1970 and that they were within the three-year probationary period provided by law. Abellera
stated in said letter that if they were still interested in teaching in the same school the following school
year, they could apply therefor, attaching certain documents to their applications. Aside from Masiglat,
the group included Pedro Pangan, Merlinda Yap, Gladys Cayot, Valeria Mata, Paz Bayquen, Marietta
Gilay, Lucita Racaza ,Erlinda Pinero, Amada Viñas and Filomena Morales. 14 As held in said decision, the
records of the cases failed to show that the above-enumerated complainants had rendered at least
three (3) years of continuous services as teachers, hence they could not be considered permanent
employees pursuant to Item 75 of the Manual of Regulations for Private Schools.

The other petitioners who were part-time teachers were also held to have been legally terminated and
validly replaced with full-time teachers, in accordance with Item 76 of the same manual which expresses
the desirability of employing only full-time teachers. A full-time teacher was described therein as one
whose total working day is devoted to the school, has no other regular remunerative employment, and
is paid on a regular monthly basis regardless of the number of teaching hours. 15

It was found that Virginia Aquino, Leticia Arkoncel Josefina Avanzado, Lydia Capili, Alberto Celestial, Sr.,
Linda Logan and Susan Medalla were part-time teachers of RMC but full-time teachers in other schools.
On the other hand, Antonio Fuliga was an employee of the City Engineer's Office and Nena Arguna was
an employee of the Bureau of Internal Revenue. Paz Bayquen left her job when she was called to teach
in a public school; Mila Macalinao and Angel Alvaro transferred to Cebu City; Feliciano Villanueva left for
the United States while Edgardo Buhay, a bank employee, was transferred to General Santos City.
Rodolfo Braga went to Manila to review for the Bar examinations; Shiela Buot (nee Espino) did not
report for duty on the first day of classes because she got married a few weeks before and went on her
honeymoon; and Abelardo Posadas, Jr. and Lilia Villanueva were not qualified to teach as reflected in
their transcripts of records. The aforesaid considerations were submitted as the reasons for the non-
renewal of the teaching contracts of the aforesaid persons. 16

No unfair labor practice was found when the respective teaching loads of the rest of the petitioners
were reduced. The assistant director did not consider the same as harassment, relying on Item 78 of the
aforesaid manual which provides as follows:

No instruction can be efficiently carried on over a considerable period of time if the teachers carry an
unusually heavy teaching load and/or excessive number of subject preparations. Elementary teachers
shall be assigned to no more than full charge of one class and where departmental teaching is observed,
to an equivalent load. Secondary teachers shall be assigned to not more than six daily forty minute
periods of instruction. In college, the normal teaching load of a full-time instructor shall be eighteen
hours a week. The teaching load of part-time instructors who are full-time employees outside teaching
shall not exceed twelve hours a week. 17

Definitely, no unfair labor practice was committed with respect to Sofia Gundran who was named as a
complainant in the said cases and as a petitioner herein. The petitioner union did not deny Abellera's
allegation that she was never dismissed. Abellera claimed that she was one of the teachers whom he
rated very highly for efficiency and she was eventually appointed as acting dean of the College of
Commerce. 18 This fact was reiterated by Abellera and RMC in their "Statement in Compliance with
Resolution of 8 February 1988" where they stated that Sofia Gundran now holds the position of assistant
dean of the College of Commerce of RMC. Incidentally, in the same statement, respondents claim that
Rodolfo Braga is now a full-time teacher with respondent RMC. 19

Both parties not being satisfied with said decision, separate appeals were filed with the National Labor
Relations Commission. On July 31, 1980, respondent commission promulgated a decision modifying the
appealed decision by completely absolving RMC and Abellera from any liability for unfair labor practice.
Public respondent, holding that there was no sufficient basis for holding the employer guilty of such
illegal, observed that:

Considering that the teachers mentioned in the letter of Abellera were the ones who led the earlier
strike, which was even flayed by the Assistant Director in his decision, the refusal of the respondent
Abellera to renew their contracts was motivated by a desire to safeguard the rights of the school and its
students. Moreover, there is no actual strike wherein it could be said that the respondent-appellants
interfered with or prevented the right of the teachers concerned from participating therein. For this
reason, we rule that there was no sufficient basis for holding respondents-appellants guilty of an unfair
labor practice act. However, being permanent employees, by the non-renewal of their contracts, which
is admitted by respondents, the teachers concerned were deemed constructively dismissed without just
cause. Under the law then enforced, Republic Act 1052 as amended, otherwise known as the
Termination Pay Law, they are entitled to separation pay equivalent to one-month salary or one-half
month pay for every year of service, whichever is higher, a fraction of six months or more being
considered as one year. 20

Petitioners now seek the reversal of said decision of respondent commission in the present petition
for certiorari. Specifically, it is prayed that "the decision under review be reconsidered and set aside and
another one be entered declaring respondents RMC and ABELLERA guilty of unfair labor practice acts,
ordering the reinstatement of petitioners and ordering further that they be paid back wages of three
years and that said respondents should cease and desist from committing unfair labor practice acts in
the respondent school." 21

A careful review of the entire records of these cases sustains the findings that unfair labor practice was
actually committed, hence respondent commission erred in modifying the appealed decision of the
assistant director on that score. The finding of unfair labor practice due to the employer's refusal to
renew the teaching contracts of the eleven (11) faculty members referred to in the letter of Abellera
should not have been disturbed by public respondent. It was established that said teachers were
permanent employees who had rendered six (6) to twenty (20) years of service. 22 Their permanent
status notwithstanding, they were dismissed because Abellera feared that if their contracts were
renewed, there would be a strike in the school the following semester. This is indisputably an
unwarranted interference with the right of workers to self-organization and to engage in concerted
activities. An apprehension that there might be a future strike in the school is not a ground for dismissal
of the workers. While a strike may result in hardships or prejudice to the school and the studentry, the
employer is not without recourse. If the employer feels that the action is tainted with illegality, the law
provides the employer with ample remedies to protect his interests. Decidedly, dismissal of employees
in anticipation of an exercise of a constitutionally protected right is not one of them.

Neither can we accept respondent commission's theory, considering the positive factual findings
thereon, that there was no actual strike hence it supposedly could not be said that the respondent
school interfered with or prevented the right of the teachers concerned from participating therein.
Furthermore, the existence of a strike was not of such pervasive significance because it is indubitable
that the employees concerned were dismissed by reason of their union activities. No other reason is
suggested by the facts of these cases which would support a contrary conclusion, especially if we
consider that the teachers concerned were the ones who led the earlier strike.

The finding that unfair labor practice was committed should also cover the case of Majaducon whose
contract was not renewed. Not only was he listed in the letter of Abellera which, as earlier stated, was
the basis for the finding of unfair labor practice, but no sufficient ground to validly dismiss him was
established. Abellera claimed that Majaducon stopped teaching on his own volition supposedly because
when he discovered that Majaducon was appearing as collaborating lawyer in a case against the former
mayor, Majaducon was reminded that the school owed favors to the city government and the city
mayor hence the school had to maintain cordial relations with them. Eventually, Majaducon was asked
to make a choice whether to continue as a faculty member or to withdraw as a lawyer against the
mayor. Such compulsion to make an unnecessary choice placed undue and unjustified pressure on the
employee who otherwise would not have thought of leaving his employment as a teacher. There was no
showing whatsoever that Majaducon's work as counsel interfered with his duties as a teacher.
Majaducon's cessation from employment could not, therefore, be considered as voluntary on his part
and was in the nature of a contrivance to effect a dismissal without cause.

The case of Arnaldo Masiglat is different. Although he was one of the teachers listed in the aforesaid
letter of Abellera, the ground for dismissing him appears to be tenable. He was one of those teachers
who were advised by Abellera of the expiration of their teaching contracts hence it was within the
discretion of the school to terminate his services. No proof establishing his permanent status appears
from the records, hence the termination of his employment was not due to dismissal but because of the
expiration of his contract.
With respect to the other petitioners who were allegedly illegally dismissed, the records do not reveal
any act of unfair labor practice. No countervailing evidence was presented to rebut the proof submitted
by respondent RMC showing lawful causes for dismissing them. Neither was there any substantial
evidence that they were dismissed for their union activities. The suspicion that they were dismissed for
such reasons, when coupled with other facts which in themselves might have been inadequate to
support an adverse finding against the employer, may suffice to sustain a finding that the employer
violated the provisions of the law. 23 Such other complementary circumstances are, however, absent
with respect to them.

Since, as a rule applicable to these cases, the Court cannot take cognizance of factual issues, and
generally the findings of the administrative bodies which decided these cases are binding on us, no
evidence to prove the other allegations of the parties can be adduced or accepted in the present
posture of this proceeding. Thus, we cannot pass on the contention that RMC was guilty of unfair labor
practice for dealing with the teachers "one by one during the existence of the labor dispute and
discouraging their union activities by publishing letters of union members who resigned." 24 For the same
reason, we desist from making any pronouncement on the claim that Abellera was assisting RMCFL,
allegedly a company dominated union.

IN VIEW OF THE FOREGOING, the decision of respondent commission is MODIFIED and respondents
Rizal Memorial Colleges and Leopoldo Abellera are declared to have committed unfair labor practices.
Petitioners Felicidad Espino, Patrocinia de Jesus, Francisca Limsiaco, Dulce Saavedra, Raquel Dango,
Sylvia Relopez, Loreta Magpantay, Carmen Lauricio, Angelina Magpantay, Helen Basug, Amelita Ferido
and Jose Majaducon are hereby ORDERED reinstated to the same or equivalent positions without loss of
seniority rights, with backwages from the time of their termination. However, pursuant to our current
jurisprudential policy, such backwages shall not exceed three (3) years, without any qualification and to
be computed on the basis of their salary immediately before dismissal from employment. If supervening
events have rendered the reinstatement of said petitioners impracticable, respondent Rizal Memorial
Colleges is hereby ORDERED to pay the aforesaid petitioners separation pay equivalent to one (1) month
salary, computed on the same basis, for every year of service respectively rendered by them.

This decision is immediately executory.

SO ORDERED.

TITLE VII – COLLECTIVE BARGAINING AND ADMINISTRATION OF AGREEMENT  Art. 250-254

Part II – Art. 255 -259

TITLE VIII – STRIKES AND LOCK OUTS  AND FOREIGN INVOLVEMENT IN TRADE UNION ACTIVITIES

Art. 263- 265 / 266

1. Strike
 2. Lock out

3. slow down

4. boycott

5. deadlock

Cases:

G. R. No. 160303               September 13, 2007

G & S TRANSPORT CORPORATION, Petitioner,

vs.
TITO S. INFANTE, MELOR VELASCO, JR., JJ. BORBO, and DANILO CASTAÑEDA, Respondents.

DECISION

TINGA, J.:

This petition for review seeks the reversal of the decision1 and resolution2 of the Court of Appeals in CA-
G.R. SP No. 71472 dated 27 June 2003 and 8 October 2003, respectively. The assailed judgment reversed
and set aside the decision3 of the National Labor Relations Commission (NLRC) which affirmed in toto
the decision of the Acting Executive Labor Arbiter for Adjudication Melquiades Sol D. Del Rosario (Labor
Arbiter) dated 31 May 1999. The Labor Arbiter had ordered G & S Transport Corporation (petitioner) to
pay respondents Tito Infante (Infante), Melor Borbo (Borbo) and Danilo Castañeda (Castañeda)
separation pay in lieu of reinstatement without backwages.

Petitioner was the exclusive coupon taxi concessionaire at the Ninoy Aquino International Airport (NAIA)
from 1 February 1989 to 31 January 1994 by virtue of a five-year concession contract awarded by the
Manila International Airport Authority. Under the terms of the contract, the coupon taxi units assigned
to service arriving plane passengers would be dispatched from the garage located at the Duty Free
Compound opposite NAIA, whereas units assigned to service departing plane passengers would be given
their assignment by the garage dispatcher via a two-way radio system on their way back to the garage
after taking arriving passengers to their destination.4

Respondents in the employ of petitioner had been drivers since 1 February 1989. At the time of their
dismissal, they were assigned at the Domestic Airport from 16 to 31 May 1990 on two (2) the shifts:
morning shift which starts from 7:00 a.m. to 4:00 p.m. and the afternoon shift from 4:00 p.m. to 1:00
a.m. Castañeda was assigned to the morning shift5 while Infante and Borbo were assigned to the
afternoon shift.6

On 5 May 1990, petitioner claimed to have received from the NAIA Airport Taxi Service Employees
Union-TUPAS (Union) a letter-memorandum demanding the dismissal from employment of Ricardo
Gonzales (Gonzales) and Ephraim Alzaga (Alzaga), both drivers of petitioner on the ground that they
were found guilty of committing acts of disloyalty, conduct unbecoming of a union member and acts
inimical to the interest of the Union. The Union based its action on a petition filed by said employees
calling for a local election.7 On 9 May 1990, the two employees were terminated by petitioner.8
Upon learning of the incident, several drivers of petitioner stopped driving their taxi cabs apparently in
sympathy with their dismissed colleagues. Petitioner alleged that the work stoppage constituted an
illegal strike at the work premises. Furthermore, petitioner averred that various illegal acts, such as
stopping, barring and intimidating other employees wishing to enter the work premises, were
committed by the said drivers that resulted in the paralyzation of petitioner’s business operation.9

Petitioner ordered the striking workers to return to work but some of the drivers, including respondents,
refused to do so. On 22 May 1990, petitioner filed an action for illegal strike before the Labor Arbiter
against thirty-seven (37) drivers. Two days later, said drivers filed a case for illegal dismissal against
petitioner.

In a Joint Affidavit dated 18 October 1990, Infante and Borbo denied joining the alleged strike. They
narrated that they reported to work at the domestic airport on 16 May 1990 before 4:00 p.m. but did
not find their taxi in the area. They proceeded to the garage at the Duty Free shop. The dispatcher and
the counter sales clerk were likewise not around. Thereafter, they learned about the protest of their co-
workers over the dismissal of Gonzales and Alzaga. They soon found out that the management had
stopped company operation that afternoon but they stayed on until 1:00 a.m. They did not report for
work on the following day because it was their day-off. On 18 May 1990, they did report for work but
were refused entry by the guard because their names did not appear on the list of drivers allowed by
petitioner to work on that day. They soon received a copy of the complaint filed by petitioner charging
them with illegal strike.10

Castañeda, in his Affidavit dated 17 March 1995, stated that he was on sick leave from 11 to 15 May
1990. He reported for work on 16 May 1990 but was not able to perform his duties because of the
protest staged by his co-workers. He reported back to work on the following day but he was not allowed
entry by the guard for having allegedly participated in the illegal strike.11

Out of the 37 complaining drivers, only seven remained as complainants when the case reached the
Labor Arbiter, namely: Gener Mendoza (Mendoza), Eduardo Dacanay (Dacanay), Norman Sabiniano
(Sabiniano), Mario Daramayo (Daramayo), Borbo, Infante, and Castañeda. Others executed their
respective affidavits of desistance and filed the corresponding motion to dismiss.12 On 31 May 1999, the
Labor Arbiter declared respondents’ concerted action as a form of an illegal strike, thus:

Anent the issue of illegal strike, the records show that there was a stoppage of work on May 16, 1990 at
the premises of the garage of G & S Transport located at the Duty Free Shop just fronting the Ninoy
Aquino International Airport (NAIA), brought about primarily by the dismissal of Messrs. Gonzales and
Alzaga, on the account of acts of [sic] [inimical] to the interest of G & S union. As pointed out by
complainant G & S Transport, its Taxi drivers undertook those collective action without filing any notice
of strike and taking a strike vote, and in violation of no strike-no lockout clause embodied in the CBA
thus making their action as illegal activity.

xxxx

Actually when the stoppage of work occurred, there seemed to be no labor disputes but merely a
protest of the dismissal of respondent’s leaders. Under Article 212 (D) "any temporary stoppage of work
by the concerted action of employees must be a result of an industrial or labor dispute." No industrial or
labor dispute, however, was existing on May 16, 1990, since there was no pending case in any legal
forum then.13

However, finding that Mendoza, Dacanay and Sabiniano had not participated in the strike, the Labor
Arbiter declared their dismissal as illegal and ordered petitioner to pay them backwages and separation
pay, in lieu of reinstatement, since petitioner had already stopped its operations on 31 January 1995. On
the other hand, respondents Daramayo, Borbo, Infante and Castañeda, though found to have
participated in the illegal strike, were not meted out the penalty of dismissal; instead, petitioner was
ordered to pay them separation pay in lieu of reinstatement but without backwages.14

On appeal, the NLRC affirmed in toto the ruling of the Labor Arbiter.

In a petition for certiorari before the Court of Appeals, respondents assailed the NLRC decision affirming
the Labor Arbiter’s findings: (1) that respondents had joined the illegal strike; (2) that petitioner was no
longer in operation and hence, reinstatement could not be ordered; and (3) that respondents were not
illegally dismissed, but were not entitled to reinstatement and backwages.15

On 27 June 2003, the Court of Appeals reversed the decisions of the NLRC and the Labor Arbiter, the
dispositive portion of which reads:

WHEREFORE, based on the foregoing, the petition is GIVEN DUE COURSE. The assailed Resolution and
Order of the National Labor Relations Commission are ANNULLED and SET ASIDE. The matter is
remanded to the Labor Arbiter for the computation of backwages and such other monetary benefits
awarded in accordance with this Decision.16

The appellate court scored the Labor Arbiter because the latter failed to categorically rule on the validity
of respondents’ dismissal and instead stood content in simply stating that respondents should not have
been meted out the severest penalty of dismissal for their inadequacies and wrongful actions.17 The
appellate court went on to declare respondents’ dismissal as illegal.

Relying on a certification from the Securities and Exchange Commission (SEC) that petitioner was then
still operational, the Court of Appeals further held that the Labor Arbiter and the NLRC gravely abused
their discretion in ordering the grant of separation pay instead of reinstatement.18

Dissatisfied, petitioner filed a motion for reconsideration of the said decision. On 8 October 2003, the
Court of Appeals issued a resolution denying said motion for lack of merit. 19

In the instant petition, petitioner contends that the Court of Appeals erred when it acted as a trier of
facts and ordered the reinstatement of respondents and payment of backwages.20 Petitioner insists that
the appellate court erroneously substituted its decision with that of the Labor Arbiter, whose finding
and conclusion are in accordance with judicial precedents.21 Petitioner reiterates that extensive trial on
the merits was held before the Labor Arbiter wherein the parties had been afforded the opportunity to
present their respective witnesses and documentary evidence. Petitioner stresses that findings of the
Labor Arbiter, therefore, were all based on facts and substantial evidence.22

Respondents, for their part, argue that by virtue of the Court’s pronouncement in St. Martin Funeral
Homes v. NLRC,23 the Court of Appeals is clothed with plenary authority to reverse the factual findings of
the NLRC or other quasi-judicial bodies particularly when the latter’s judgment is based on a
misapprehension of facts when it manifestly overlooked certain relevant facts, which if properly
considered would justify a different conclusion, or when it erroneously misapplied a law as is obtaining
in the case at bar.24

A petition for certiorari is available when any tribunal, board or officer exercising judicial or quasi-judicial
functions has acted without or in excess of its or his jurisdiction, or with grave abuse of discretion
amounting to lack or excess of jurisdiction. As a general rule, factual issues are not proper subjects for
certiorari which is limited to the issue of jurisdiction and grave abuse of discretion.25 It does not include
an inquiry into the correctness of the evaluation of evidence which was the basis of the labor agency in
reaching its conclusion. Neither is it for the Court of Appeals nor this Court to re-examine conflicting
evidence, re-evaluate the credibility of witnesses or substitute the findings of fact of an administrative
body which has gained expertise in its specialized field.26

One question therefore arises—did the NLRC commit grave abuse of discretion when it affirmed the
findings of the Executive Labor Arbiter? While only questions of law may be entertained by this Court
through a petition for review on certiorari, there are, however, well-recognized exceptions such as the
instant case where the factual findings of the NLRC and the Court of Appeals are contradictory. A re-
evaluation of the records of this case is necessary for its proper resolution.27

The issues presented before the Executive Labor Arbiter and the NLRC are the very same issues
proffered by the parties before this Court, which may be summed up as follows: (1) whether
respondents participated in the illegal strike and (2) whether the order for the payment of separation
pay, in lieu of reinstatement without backwages, is proper.

Petitioner maintains that respondents knowingly and deliberately participated in the illegal activities in
the course of an illegal strike by the mere fact that they resolutely defied the order directing them to
report back to work and continued to stay outside the premises, barricading the gates, heckling and
intimidating employees who were returning to work.28

Respondents however aver that there was no iota of evidence that would show that they have trooped
the line of the illegal strikers.29 Assuming arguendo that they participated in the illegal strike,
respondents argue that they should not be dismissed because there was no proof that they committed
illegal acts during the strike.30

In its Reply, petitioner refutes respondents’ argument and submits that evidence, such as photographs,
affidavits of witnesses, and memoranda/telegrams, were presented during trial to prove that
respondents joined the illegal strike.

Article 212 of the Labor Code defines strike as any temporary stoppage of work by the concerted action
of employees as a result of an industrial or labor dispute. A valid strike therefore presupposes the
existence of a labor dispute. The strike undertaken by respondents took the form of a sit-down strike, or
more aptly termed as a sympathetic strike, where the striking employees have no demands or
grievances of their own, but they strike for the purpose of directly or indirectly aiding others, without
direct relation to the advancement of the interest of the strikers.31 It is indubitable that an illegal strike
in the form of a sit-down strike occurred in petitioner’s premises, as a show of sympathy to the two
employees who were dismissed by petitioner. Apart from the allegations in its complaint for illegal strike
filed before the Labor Arbiter, petitioner presented the affidavits and testimonies of their other
employees which confirm the participation of respondents in the illegal strike. Petitioner has sufficiently
established that respondents remained in the work premises in the guise of waiting for orders from
management to resume operations when, in fact, they were actively participating in the illegal strike.

The office telegram sent to individual respondents informing them to return to work went unheeded.
Respondents failed to satisfactorily explain their conspicuous absence following the day of the
purported illegal strike. No record whatsoever was presented by Borbo and Infante to prove that 17
May 1990 was their day-off. It was convenient to pass the buck on petitioner by alleging that proof of
their alibi is in petitioner’s file.32 Castañeda could not even present a sick leave form to attest to his
absence from 11-15 May 1990.33 Moreover, the NLRC and the Court of Appeals appeared unanimous in
sustaining the findings of the Labor Arbiter with respect to respondents’ participation in the illegal
strike. The appellate court’s decision dwelt on the fact that no illegal activities were committed by
respondents in the course of the illegal strike, hence, reinstatement is proper.

Respondents’ participation in the illegal strike having been established, we shall now determine the
effects of their proscribed acts.

Article 264 of the Labor Code, in providing for the consequences of an illegal strike, makes a distinction
between union officers and members who participated therein. Thus, knowingly participating in an
illegal strike is a valid ground for termination of employment of a union officer. The law, however, treats
differently mere union members. Mere participation in an illegal strike is not a sufficient ground for
termination of the services of the union members.

The Labor Code protects an ordinary, rank-and-file union member who participated in such a strike from
losing his job, provided that he did not commit an illegal act during the strike.34 It can be gleaned from
the aforecited provision of law in point, however, that an ordinary striking employee cannot be
terminated for mere participation in an illegal strike. There must be proof that he committed illegal acts
during the strike and the striker who participated in the commission of illegal act must be identified.
Proof beyond reasonable doubt is not required. Substantial evidence available under the attendant
circumstances, which may justify the imposition of the penalty of dismissal, may suffice.35

In the case at bar, this Court is not convinced that the affidavits of petitioner’s witnesses constitute
substantial evidence to establish that illegal acts were committed by respondents. Nowhere in their
affidavits did these witnesses cite the particular illegal acts committed by each individual respondent
during the strike. Notably, no questions during the hearing were asked relative to the supposed illegal
acts.

Interestingly, the Labor Arbiter, the proximate trier of fact, also made no mention of the supposed illegal
acts in his decision, thus:

As adverted to earlier, no matter by what term the respondents complainants used in describing their
concerted action, i.e. [,] protest, sympathy or mere expression, their joint action have successfully
paralyzed the operations of G & S Transport, and this is considered a strike.

If at all, what mitigates respondent action is their honest albeit wrong belief that the course of action
they have taken is correct because this is the only way they can show their oneness with their dismissed
leaders. But as already held, their action is not the correct remedy because they failed to execute their
course
of action within the ambit and parameters of the law. Respondents complainants should not have been
meted out the severest penalty of dismissal for their inadequacies and wrongful action. Had G & S
[T]ransport been still operational[,] the four respondents, namely[:] Melo Borbo, Tito Infante, Mario
Daramayo and Danilo Castañeda, would have been ord[e]red to return to work sans backwages (the
period of time that lapse without wages being considered as penalty).1âwphi1 But since, the company is
no longer operational, then in lieu of reinstatement, said complainants respondents should be paid a
months salary per year of service, a fraction of six (6) months being considered one year.36

It can now therefore be concluded that the acts of respondents do not merit their dismissal from
employment because it has not been substantially proven that they committed any illegal act while
participating in the illegal strike. Petitioner, however, disavows that it terminated respondents’
employment. It explained that by filing a complaint for illegal strike before the NLRC, it was merely
seeking a declaration that respondents have lost their employment status.37

Respondents’ dismissal from work could not be any clearer than the refusal of petitioner to admit them
back as they signified their intention to go back to work. In fact, this very act of petitioner precipitated
respondents’ filing of a complaint for illegal dismissal with a prayer for reinstatement.

With respect to backwages, the principle of a "fair day’s wage for a fair day’s labor" remains as the basic
factor in determining the award thereof. If there is no work performed by the employee there

can be no wage or pay unless, of course, the laborer was able, willing and ready to work but was illegally
locked out, suspended or dismissed or otherwise illegally prevented from working. While it was found
that respondents expressed their intention to report back to work, the latter exception cannot apply in
this case. In Philippine Marine Officers’ Guild v. Compañia Maritima,38 as affirmed in Philippine Diamond
Hotel and Resort v. Manila Diamond Hotel Employees Union,39 the Court stressed that for this exception
to apply, it is required that the strike be legal, a situation that does not obtain in the case at bar.

Under the circumstances, respondents’ reinstatement without backwages suffices for the appropriate
relief. If reinstatement is no longer possible, given the lapse of considerable time from the occurrence of
the strike, the award of separation pay of one (1) month salary for each year of service, in lieu of
reinstatement, is in order.

The Court of Appeals, in ordering reinstatement, relied on the SEC certification that petitioner was then
still operational, viz:

Petitioners in this petition attached a certification from the Securities and Exchange Commission that
private respondent is still operational as of August 6, 1999. Private respondent did not deny the
certification. Since petitioners’ employment with private

respondent was not conditional on private respondents’ concession at the NAIA, it is grave abuse of
discretion for the Labor Arbiter and the NLRC to order the grant of separation pay instead of
reinstatement.40

Petitioner asserts that the "belated" certification issued by the SEC bears no value to respondents’
reinstatement because the employment of respondents was conditioned on the subsistence of
petitioner’s concession with NAIA but which had already been terminated in 1995.41
Respondents counter that petitioner and Avis Coupon Taxi are one and the same company and that it is
of public knowledge that Avis Coupon Taxi still continues to be the exclusive concessionaire of NAIA at
that time. Moreover, respondents deny that their employment was conditioned on petitioner’s
concession with NAIA.

The SEC has certified that G & S Transport Corporation was registered on 5 January 1972 for a period of
fifty (50) years and as of 6 August 1999, no document showing its dissolution had been
filed.42 Furthermore, the personnel manager of petitioner verified that Avis Coupon Taxi and G & S
Transport Corporation are one and the same.43 These documents pointedly indicate that petitioner has
not ceased operations. Petitioner cannot seek refuge behind the mere

assertion that respondents’ employment is conditioned on the five-year concession with NAIA. No
employment contract was presented to support such fact. Petitioner in fact even admitted that it
obtained another concession from NAIA in 2000.

It is of no moment that petitioner’s concession was no longer exclusive. No evidence exists that the
employment of respondents was in any way conditioned on petitioner’s obstention of an exclusive
contract from NAIA. The fact remains that petitioner still operates a taxi concession in NAIA and that
logically requires the service of taxi drivers, the same position held by respondents back in 1990. Section
4, Rule I of the Rules Implementing Book VI of the Labor Code provides:

SEC. 4. Reinstatement to former position.—(a) An employee who is separated from work without just
cause shall be reinstated to his former position, unless such position no longer exists at the time of his
reinstatement, in which case he shall be given a substantially equivalent position in the same
establishment without loss of seniority rights.

The above-quoted rule enunciates reinstatement as the standard relief. However, in this case,
seventeen (17) years have elapsed since respondents were illegally dismissed. In Association of
Independent Unions in the Philippines v. NLRC 44 , where more than eight (8) years have passed since the
petitioners therein staged an illegal strike and were found to have been unlawfully terminated, an
award of separation pay equivalent to one (1) month pay for every year of service, in lieu of
reinstatement, was deemed more practical and appropriate to all the parties concerned. We adopt the
same tack in this case.

In sum, the resolution and order of the NLRC, which adopted the findings of the Labor Arbiter, are in
accordance with law and jurisprudence. Consequently, the Court of Appeals erred in granting
respondents’ petition for certiorari, there being no grave abuse of discretion on the part of the NLRC.

WHEREFORE, the petition is GRANTED. The challenged Decision dated 27 June 2003 and Resolution
dated 8 October 2003 of the Court of Appeals in CA-G.R. SP No. 71472 are REVERSED AND SET ASIDE.
The Decision dated 15 October 2001 of the NLRC, which affirmed that of the Labor Arbiter, is
REINSTATED.

SO ORDERED.
G.R. No. 113907           February 28, 2000

MALAYANG SAMAHAN NG MGA MANGGAGAWA SA M. GREENFIELD (MSMG-UWP), ITS PRESIDENT

BEDA MAGDALENA VILLANUEVA, MARIO DAGANIO, DONATO GUERRERO, BELLA P. SANCHEZ, ELENA
TOBIS, RHODA TAMAYO, LIWAYWAY MALLILIN, ELOISA SANTOS, DOMINADOR REBULLO, JOSE
IRLAND, TEOFILA QUEJADA, VICENTE SAMONTINA, FELICITAS DURIAN, ANTONIO POLDO, ANGELINA
TUGNA, SALVADOR PENALOSA, LUZVIMINDA TUBIG, ILUMINADA RIVERA, ROMULO SUMILANG,
NENITA BARBELONIA, LEVI BASILIA, RICARDO PALAGA, MERCY ROBLES, LEODEGARIO GARIN,
DOMINGO ECLARINAL, MELCHOR GALLARDO, MARCELO GARIN, ROSALINA BAUTISTA, MARY ANN
TALIGATOS, ALEJANDRO SANTOS, ANTONIO FRAGA, LUZ GAPULTOS, MAGDALENA URSUA, EUGENIO
ORDAN, LIGAYA MANALO, PEPITO DELA PAZ, PERLITA DIMAQUIAT, MYRNA VASQUEZ, FLORENTINA
SAMPAGA, ARACELI FRAGA, MAXIMINA FAUSTINO, MARINA TAN, OLIGARIO LOMO, PRECILA
EUSEBIO, SUSAN ABOGANO, CAROLINA MANINANG, GINA GLIFONIA, OSCAR SOTTO, CELEDONA
MALIGAYA, EFREN VELASQUEZ, DELIA ANOVER, JOSEPHINE TALIMORO, MAGDALENA TABOR,
NARCISA SARMIENTO, SUSAN MACASIEB, FELICIDAD SISON, PRICELA CARTA, MILA MACAHILIG,
CORAZON NUNALA, VISITACION ELAMBRE, ELIZABETH INOFRE, VIOLETA BARTE, LUZVIMINDA
VILLOSA, NORMA SALVADOR, ELIZABETH BOGATE, MERLYN BALBOA, EUFRECINA SARMIENTO,
SIMPLICIA SIMPLICIA BORLEO, MATERNIDAD DAVID, LAILA JOP, POTENCIANA CULALA, LUCIVITA
NAVARRO, ROLANDO BOTIN, AMELITA MAGALONA, AGNES CENA, NOLI BARTOLAY, DANTE AQUINO,
HERMINIA RILLON, CANDIDA APARIJADO, LYDIA JIMENEZ, ELIZABETH ANOCHE, ALDA MURO, TERESA
VILLANUEVA, TERESITA RECUENCO, ELIZA SERRANO, ESTELLA POLINAR, GERTRUDES NUNEZ, FELIPE
BADIOLA, ROSLYN FERNANDEZ, OSCAR PAGUTA, NATIVIDAD BALIWAS, ELIZABETH BARCIBAL,
CYNTHIA ESTELLER, TEODORA SANTOS, ALICIA PILAR, MILA PATENO, GLORIA CATRIZ, MILA
MACAHILIG, ADELAIDA DE LEON, ROSENDO EDILO, ARSENIA ESPIRITU, NUMERIANO CABRERA,
CONCEPSION ARRIOLA, PAULINA DIMAPASOK, ANGELA SANGCO, PRESILA ARIAS, ZENAIDA NUNES,
EDITHA IGNACIO, ROSA GUIRON, TERESITA CANETA, ALICIA ARRO, TEOFILO RUWETAS, CARLING
AGCAOILI, ROSA NOLASCO, GERLIE PALALON, CLAUDIO DIRAS, LETICIA ALBOS, AURORA ALUBOG,
LOLITA ACALEN, GREGORIO ALIVIO, GUILLERMO ANICETA, ANGELIE ANDRADA, SUSAN ANGELES,
ISABELITA AURIN, MANUELA AVELINA, CARLING AGCAOILI, TERESITA ALANO, LOLITA AURIN,
EMMABETH ARCIAGA, CRESENCIA ACUNA, LUZVIMINDA ABINES, FLORENCIA ADALID, OLIVIA
AGUSTIN, EVANGELINE ALCORAN, ROSALINA ALFERES, LORNA AMANTE, FLORENTINA AMBITO,
JULIETA AMANONCO, CARMEN AMARILLO, JOSEFINA AMBAGAN, ZENAIDA ANAYA, MARIA ANGLO,
EDITHA ANTA ZO, MARY JANE ANTE, ANDREA AQUINO, ROWENA ARABIT, MARIETA ARAGON,
REBECCA ARCENA, LYDIA ARCIDO, FERNANDO ARENAS, GREGORIO ARGUELLES, EDITHA ARRIOLA,
EMMA ATIENZA, EMMA ATIENZA, TEODY ATIENZA, ELIZABETH AUSTRIA, DIOSA AZARES, SOLIDA
AZAINA, MILAGROS BUAG, MARIA BANADERA, EDNALYN BRAGA, OFELIA BITANGA, FREDISMINDA
BUGUIS, VIOLETA BALLESTEROS, ROSARIO BALLADJAY, BETTY BORIO, ROMANA BAUTISTA, SUSARA
BRAVO, LILIA BAHINGTING, ENIETA BALDOZA, DAMIANA BANGCORE, HERMINIA BARIL, PETRONA
BARRIOS, MILAGROS BARRAMEDA, PERLA BAUTISTA, CLARITA BAUTISTA, ROSALINA BAUTISTA,
ADELINA BELGA, CONSOLACION BENAS, MARIA BEREZO, MERCEDES BEREBER, VIOLETA BISCOCHO,
ERNESTO BRIONES, ALVINA BROSOTO, AGUSTINA BUNYI, CARMEN BUGNOT, ERLINDA BUENAFLOR,
LITA BAQUIN, CONSEJO BABOL, CRISANTA BACOLOD, CELIA DE BACTAT, MAZIMA BAGA, ELENA
BALADAD, ROSARIO BALADJAY, AMALIA BALAGTAS, ANITA BALAGTAS, MARIA BALAKIT, RUFINA
BALATAN, REBECCA BALDERAMA, AMELIA BALLESTER, BELEN BARQUIO, BERNANDITA BASILIDES,
HELEN BATO, HELEN BAUTISTA, ROMANA BAUTISTA, ALMEDA BAYTA, AVELINA BELAYON, NORMA DE
BELEN, THELMA DE BELEN, JOCELYN BELTRAN, ELENA BENITEZ, VIRGINIA BERNARDINO, MERLINA
BINUYAG, LINA BINUYA, BLESILDA BISNAR, SHIRLEY BOLIVAR, CRESENTACION MEDLO, JOCELYN
BONIFACIO, AMELIA BORBE, AMALIA BOROMEO, ZENAIDA BRAVO, RODRIGO BEULDA, TERESITA
MENDEZ, ELENA CAMAN, LALIANE CANDELARIA, MARRY CARUJANO, REVELINA CORANES, MARITESS
CABRERA, JUSTINA CLAZADA, APOLONIA DELA CRUZ, VICTORIA CRUZ, JOSEFINA DELA CRUZ,
MARITESS CATANGHAL, EDNA CRUZ, LUCIA DE CASTRO, JOSIE CARIASO, OFELIA CERVANTES, MEDITA
CORTADO, AMALIA CASAJEROS, LUCINA CASTILIO, EMMA CARPIO, ANACORITA CABALES, YOLANDA
CAMO, MILA CAMAZUELA, ANITA CANTO, ESTELA CANCERAN, FEMENCIA CANCIO, CYNTHIA CAPALAD,
MERLE CASTILLO, JESUSA CASTRO, CECILIA CASTILLO, SILVERITA CASTRODES, VIVIAN CELLANO,
NORMA CELINO, TERESITA CELSO, GLORIA COLINA, EFIPANIA CONSTANTINO, SALVACION CONSULTA,
MEDITA CORTADO, AIDA CRUZ, MARISSA DELA CRUZ, EDITO CORCILLES, JELYNE CRUZ, ROSA CORPOS,
ROSITA CUGONA, ELSIE CABELLES, EMMA CADUT, VICTORIA CALANZA, BARBARA CALATA, IMELDA
CALDERON, CRISTINA CALIDGUID, EMMALINDA CAMALON, MARIA CAMERINO, CARMENCITA CAMPO,
CONNIE CANEZO, LOURDES CAPANANG, MA. MILAGROS CAPILI, MYRNA T. CAPIRAL, FLOR SAMPAGA,
SUSAN B. CARINO, ROSARIO CARIZON, VIRGINIA DEL CARMEN, EMMA CARPIO, PRESCILA CARTA, FE
CASERO, LUZ DE CASTRO, ANNA CATARONGAN, JOSEFINA CASTISIMO, JOY MANALO, EMMIE
CAWALING, JOVITA CARA, MARINA CERBITO, MARY CAREJANO, ESTELA R. CHAVEZ, CONCEPCION
PARAJA, GINA CLAUDIO, FLORDELIZA CORALES, EDITO CORCIELER, ROSA C. CORROS, AMELIA CRUZ,
JELYNE CRUZ, WILFREDO DELA CRUZ, REINA CUEVAS, MARILOU DEJECES, JOSEPHINE DESACULA,
EDITHA DEE, EDITHA DIAZ, VIRGIE DOMONDON, CELSA DOROPAW, VIOLETA DUMELINA, MARIBEL
DIMATATAC, ELBERTO DAGANIO, LETECIA DAGOHOY, DINDO DALUZ, ANGELITA DANTES, GLORIA
DAYO, LUCIA DE CASTRO, CARLITA DE GUZMAN, CARMEN DELA CRUZ, MERCY DE LEON, MARY DELOS
REYES, MARIETA DEPILO, MATILDE DIBLAS, JULIETA DIMAYUGA, TEODORA DIMAYUGA, YOLANDA
DOMDOM, LUCITA DONATO, NELMA DORADO, RITA DORADO, SUSAN DUNTON, HERMINIA SAN
ESTEBAN, AMALI EUGENIO, OLIVIA EUSOYA, ERNESTO ESCOBIN, EVELYN ESCUREL, LYDIA ESCOBIN,
VICENTE E. ELOIDA. ELENA EGAR, GLORIA ERENO, NORMA ESPIRIDION, ARSENIA ESPIRITU, AURORA
ESTACIO, DEMETRIA ESTONELO, MILAGROS FONSEGA, LYDIA FLORENTINO, JULIA FARABIER, TRINIDAD
FATALLA, IMELDA FLORES, JESSINA FRANCO, MA. CRISTINA FRIJAS, ESPECTACION FERRER, BERDENA
FLORES, LEONILA FRANCISCO, BERNARDA FAUSTINO, DOLORES FACUNDO, CRETITA FAMILARAN,
EMELITA FIGUERAS, MA. VIRGINIA FLORENDO, AURORA FRANCISCO, MA. JESUSA FRANCISCO, NENITA
FUENTES, MARILOU GOLINGAN, JUANITA GUERRERO, LYDIA GUEVARRA, SOCORRO GONZAGA,
PATRICIA GOMEO, ROSALINDA GALAPIN, CARMELITA GALVEZ, TERESA GLE, SONIA GONZALES,
PRIMITA GOMEZ, THERESA GALUA, JOSEFINA GELUA, BRENDA GONZAGA, FLORA GALLARDO,
LUCINDA GRACILLA, VICTORIA GOZUM, NENITA GAMAO, EDNA GARCIA, DANILO GARCIA, ROSARIO
GIRAY, ARACELI GOMEZ, JOEMARIE GONZAGA, NELIA GONZAGA, MARY GRANCE GOZON, CARMEN
GONZALES, MERLITA GREGORIO, HERMINIA GONZALES, CARLITA DE GUZMAN, MODESTA
GABRENTINA, EDITHA GADDI, SALVACIO GALIAS, MERLINDA GALIDO, MELINDA GAMIT, JULIETA
GARCIA, EMELITA GAVINO, CHARITO GILLIA, GENERA GONEDA, CRESTITA GONZALES, FRANCISCA
GUILING, JULIAN HERNANDEZ, HERRADURA, SUSANA HIPOLITO, NERISSA HAZ, SUSAN HERNAEZ,
APOLONIA ISON, SUSAN IBARRA, LUDIVINA IGNACIO, CHOLITA INFANTE, JULIETA ITURRIOS, ANITA
IBO, MIRASOL INGALLA, JULIO JARDINIANO, MERLITA JULAO, JULIETA JULIAN, MARIBETH DE JOSE,
JOSEPHINE JENER, IMELDA JATAP, JULIETA JAVIER, SALOME JAVIER, VICTORIA JAVIER, SALVACION
JOMOLO, EDNA JARNE, LYDIA JIMENEZ, TERESITA DE JUAN, MARILYN LUARCA, ROSITA LOSITO,
ROSALINA LUMAYAG, LORNA LARGA, CRESTETA DE LEON, ZENAIDA LEGASPI, ADELAIDA LEON,
IMELDA DE LEON, MELITINA LUMABI, LYDIA LUMABI, ASUNCION LUMACANG, REGINA LAPIADRIO,
MELANIA LUBUGUAN, EVANGELINE LACAP, PELAGIA LACSI, LORNA LAGUI, VIRGIE LAITAN, VIRGINIA
LEE, CRESTELITA DE LEON, FELICISIMA LEONERO, DIOSA LOPE, ANGELITA LOPEZ, TERESITA LORICA,
JUANITA MENDIETA, JUANITA MARANQUEZ, JANET MALIFERO, INAS MORADOS, MELANIE MANING,
LUCENA MABANGLO, CLARITA MEJIA, IRENE MENDOZA, LILIA MORTA, VIGINIA MARAY, CHARITO
MASINAHON, FILMA MALAYA, LILIA MORTA, VIRGINIA MARAY, CHARITO MASINAHON, FILMA
MALAYA, LILIA MORTA, ROSITA MATIBAG, LORENZA MLINA, SABINA DEL MUNDO, EDITHA MUYCO,
NARCISA MABEZA, MA. FE MACATANGAY, CONCEPCION MAGDARAOG, IMELDA MAHIYA, ELSA
MALLARI, LIGAYA MANAHAN, SOLEDA MANLAPAS, VIRGINIA MAPA, JOSEI MARCOS, LIBRADA
MARQUEZ, VIRGINIA MAZA, JULIANITA MENDIETA, EDILBERTA MENDOZA, IRENE MERCADO, HELEN
MEROY, CRISTINA MEJARES, CECILIA MILLET, EMELITA MINON, JOSEPHINE MIRANA, PERLITA
MIRANO, EVANGELINE MISBAL, ELEANOR MORALES, TERESITA MORILLA, LYDIA NUDO, MYRIAM
NAVAL, CAROLINA NOLIA, ALICIA NUNEZ, MAGDALENA NAGUIDA, ELSA NICOL, LILIA NACIONALES,
MA. LIZA MABO, REMEDIOS NIEVES, MARGARITA NUYLAN, TERESITA NIEVES, PORFERIA NARAG,
RHODORA NUCASA, CORAZON OCRAY, LILIA OLIMPO, VERONA OVERENCIA, FERMIN OSENA,
FLORENCIA OLIVAROS, SOLEDAD OBEAS, NARISSA OLIVEROS, PELAGIA ORTEGA, SUSAN ORTEGA,
CRISTINA PRENCIPE, PURITA PENGSON, REBECCA PACERAN, EDNA PARINA, MARIETA PINAT, EPIFANIA
PAJERLAN, ROSALINA PASIBE, CECILIA DELA PAZ, LORETA PENA, APOLONIA PALCONIT, FRANCISCO
PAGUIO, LYDIA PAMINTAHON, ELSIE PACALDO, TERESITA PADILLA, MYRNA PINEDA, MERCEIDTA
PEREZ, NOVENA PORLUCAS, TERESITA PODPOD, ADORACION PORNOBI, ALICIA PERILLO, HELEN JOY
PENDAL, LOURDES PACHECO, LUZVIMINDA PAGALA, LORETA PAGAPULAN, FRANCISCO PAGUIO,
PRISCO PALACA, FLORA PAMINTUAN, NOEMI PARISALES, JOSEPHINE PATRICIO, CRISTINA PE BENITO,
ANGELA PECO, ANGELITA PENA, ESTER PENONES, NORMA PEREZ, MAURA PERSEVERANCIA, MARINA
PETILLA, JOSIE PIA, ZULVILITA PIODO, REBECCA PACERAN, CLARITA POLICARPIO, MAXIMO POTENTO,
PORFIRIO POTENTO, FLORDELIZA PUMARAS, FERNANDO QUEVEDO, JULIANA QUINDOZA, CHARITO
QUIROZ, CARMELITA ROSINO, RODELIA RAYONDOYON, FLORENCIA RAGOS, REBECCA ROSALES,
ROSALYN RIVERO, FRANCISCO RUIZ, FRANCIA ROSERO, EMELY RUBIO, EDILBERTO RUIO, JUANA RUBY,
RAQUEL REYES, MERCY ROBLES, ESTELA RELANO, ROSITA REYES NIMFA RENDON, EPIFANIO RAMIRO,
MURIEL REALCO, BERNARDITA RED, LEONITA RODIL, BENITA REBOLA, DELMA REGALARIO, LENY
REDILLAS, JULIETA DELA ROSA, FELICITAS DELA ROSA, SUSAN RAFALLO, ELENA RONDINA, NORMA
RACELIS, JOSEPHINE RAGEL, ESPERANZA RAMIREZ, LUZVIMINDA RANADA, CRISTINA RAPINSAN,
JOCELYN RED, ORLANDO REYES, TERESITA REYES, ANGELITA ROBERTO, DELIA ROCHA, EDLTRUDES
ROMERO, MELECIA ROSALES, ZENAIDA ROTAO, BELEN RUBIS, FE RUEDA, SYLVIA SONGCAYAWON,
CRISTINA SANANO, NERCISA SARMIENTO, HELEN SIBAL, ESTELITA SANTOS, NORMA SILVESTRE,
DARLITA SINGSON, EUFROCINA SARMIENTO, MYRNA SAMSON, EMERLINA SADIA, LORNA SALAZAR,
AVELINA SALVADOR, NACIFORA SALAZAR, TITA SEUS, MARIFE SANTOS, GRACIA SARMIENTO,
ANGELITA SUMANGIL, ELIZABETH SICAT, MA. VICTORIA SIDELA, ANALITA SALVADOR, MARITES
SANTOS, VIRGINIA SANTOS, THELMA SARONG, NILDA SAYAT, FANCITA SEGUNDO, FYNAIDA SAGUI,
EDITHA SALAZAR, EDNA SALZAR, EMMA SALENDARIO, SOLEDAD SAMSON, EDNA SAN DIEGO,
TERESITA SAN GABRIEL, GERTRUDES SAN JOSE, EGLECERIA OSANCHEZ, ESTRELLA SANCHEZ, CECILIA
DELOS SANTOS, LUISA SEGOVIA, JOCELYN SENDING, ELENA SONGALIA, FELICITAS SORIANO, OFELIA
TIBAYAN, AIDA TIRNIDA, MONICA TIBAYAN, CRISTETA TAMBARAN, GLORIA TACDA, NENVINA, FELINA
TEVES, ANTONINA DELA TORRE, MAXIMA TANILON, NENA TABAT, ZOSIMA TOLOSA, MARITA TENOSO,
IMELDA TANIO, LUZ TANIO, EVANGELINE TAYO, JOSEFINA TINGTING, ARSENIA TISOY, MAGDALENA
TRAJANO, JOSEFINA UBALDE, GINA UMALI, IRMA VALENZUELA, FELY VALDEZ, PAULINA VALEZ,
ROSELITA VALLENTE, LOURDES VELASCO, AIDA VILLA, FRANCISCA VILLARITO, ZENAIDA VISMONTE,
DELIA VILLAMIEL, NENITA VASQUEZ, JOCELYN VILLASIS, FERMARGARITA VARGAS, CELIA VALLE, MILA
CONCEPCION VIRAY, DOMINGA VALDEZ, LUZVIMINDA VOCINA, MADELINE VIVERO, RUFINA VELASCO,
AUREA VIDALEON, GLORIA DEL VALLE, THELMA VALLOYAS, CYNTHIA DELA VEGA, ADELA VILLAGOMEZ,
TERESITA VINLUAN, EUFEMIA VITAN, GLORIA VILLAFLORES, EDORACION VALDEZ, ANGELITA VALDEZ,
ILUMINADA VALENCI, MYRNA VASQUEZ, EVELNYN VEJERAMO, TEODORA VELASQUEZ, EDAN
VILLANUEVA, PURITA VILLASENOR, SALVADOR WILSON, EMELINA YU, ADELFA YU, ANA ABRIGUE,
VIRGINIA ADOBAS, VICTORIA ANTIPUESTO, MERCEDITA CASTILLO, JOCELYN CASTRO, CREMENIA DELA
CRUZ, JOSEPHINE IGNACIO, MELITA ILILANGOS, LIGAYA LUMAYAT, DELIA LUMBES, ROSITA LIBRADO,
DELIA LAGRAMADA, GEMMA MAGPANTAY, EMILY MENDOZA, FIDELA PANGANIBAN, LEONOR
RIZALDO, ILUMINDA RIVERA, DIVINA SAMBAYAN, ELMERITA SOLAYAO, NANCY SAMALA, JOSIE
SUMARAN, LUZVIMINDA ABINES, ALMA ACOL, ROBERTO ADRIATICO, GLORIA AGUINALDO, ROSARIO
ALEYO, CRISTETA ALEJANDRO, LILIA ALMOGUERA, CARMEN AMARILLO, TRINIDAD ARDANIEL, CERINA
AVENTAJADO, ZENAIDA AVAYA, LOLITA ARABIS, MARIA ARSENIA, SOFIA AGUINALDO, SALVE ABAD,
JOSEFINA AMBANGAN EMILIA AQUINO, JOSEFINA AQUINO, JULIANA AUSAN, AMERCIANA ACOSTA,
CONCEPCION ALEROZA, DIANA ADOVOS, FELY ADVINCULA, SEOMINTA ARIAS, JOSEPHINE ARCEDE,
NORMA AMISTOSO, PRESENTACION ALONOS, EMMA ATIENZA, LEONIDA AQUINO, ANITA ARILLON,
ADELAIDA ARELLANO, NORMA AMISTOSO, JOSEPHINE ARCEDE, SEMIONITA ARIAS, JOSEFINA
BANTUG, LOLITA BARTE, HERMINIA BASCO, MARGARITA BOTARDO, RUFINO BUGNOT, LOLITA
BUSTILLO, ISABEL BALAKIT, ROSARIO BARRERO, TESSIE BALBOS, NORMA BENISANO, GUILLERMA
BRUGES, BERNADETTE BARTOLOME, SHIRLEY BELMONTE, MERONA BELZA, AZUCENA BERNALES, JOSE
BASCO, NIMPHA BANTOG, BENILDA BUBAN, REGINA BUBAN, SALOME BARRAMEDA, IRENE BISCO,
FELICITAS BAUTISTA, VIOLETA BURA, LINA BINUYA, BIBIANA BAARDE, ELSA BAES, ANASTACIA
BELONZO, SONIA BENOYO, ELIZABETH BACUNGAN, PATRICIA BARRAMEDA, ERLINDA BARCELONA,
EMMA BANICO, APOLONIA BUNAO, LUCITA BOLEA, PACIFICA BARCELONA, EDITHA BASIJAN, RENITA
BADAMA, ELENA BALADAD, CRESENCIA BAJO, BERNADITA BASILID, MELINDA BEATO, YOLANDA
BATANES, EDITHA BORILLA, ANITA BAS, ELSA CALIPUNDAN, MARIA CAMERINO,VIRGINIA
CAMPOSANO, MILAGROS CAPILI, CARINA CARINO, EUFEMIA CASIHAN, NENITA CASTRO, FLORENCIA
CASUBUAN, GIRLIE CENTENO, MARIANITA CHIQUITO, IMELDA DELA CRUZ, TEODOSIA GONG, TEOFILA
CARACOL, TERESITA CANTA, IRENEA CUNANAN, JULITA CANDILOSAS, VIOLETA CIERES, MILAGROS
DELA CRUZ, FLOREPES CAPULONG, CARMENCITA CAMPO, MARILYN CARILLO, RUTH DELA CRUZ, RITA
CIJAS, LYDIA CASTOR, VIRGIE CALUBAD, EMELITA CABERA, CRISTETA CRUZ, ERLINDA COGADAS,
IMELDA CALDERON, SUSIE LUZ CEZAR, ESTELA CHAVEZ, NORMA CABRERA, ELDA DAGATAN, LEONISA
DIMACUNA, ERNA DUGTONG, FLORDELISA DIGMA, VIRGILIO DADIOS, LOLITA DAGTA, ADELAIDA
DORADO, CELSA DATUMANONG, VIRGINIA DOCTOLERO, EDNA SAN DIEGO, JULIETA DANG, JULIETA
DORANTINAO, LOLITA DAGANO, JUDITH DIAZ, MARIA ENICANE, MARITA ESCARDE, ENRIMITA
ESMAYOR, ROSARIO EPIRITU, REMEDIOS EMBOLTORIO, IRENE ESTUITA, TERESITA ERESE, ERMELINDA
ELEZO, MARIA ESTAREJA, MERLITA ESQUERRA, YOLANDA FELICITAS, FRUTO FRANCIA, MARTHA
FRUTO, LILIA FLORES, SALVACION FORTALESA, JUDITH FAJARDO, SUSANA FERNANDO, EDWIN
FRANCISCO, NENITA GREGORY, ROSA CAMILO, MARIVIC GERRARDO, CHARITA GOREMBALEM,
NORMA GRANDE, DOLORES GUTIERREZ, CHARLIE GARCIA, LUZ GALVEZ, ADELAIDA GAMILLA, LUZ
GAPULTOS, ERLINDA GARCIA, HELEN GARCIA, ERLINDA GAUDIA, FRANCISCA GUILING, MINTA
HERRERA, ASUNCION HONOA, JUAN HERNANDEZ, LUCERIA ANNA MAE HERNANDEZ, JULIANA
HERNANDEZ, EDITHA IGNACIO, ANITA INOCENCIO, EULALIA INSORIO, ESTELITA IRLANDA, MILAGROS
IGNACIO, LINDA JABONILLO, ADELIMA JAEL, ROWENA JARABJO, ROBERT JAVILINAR, CLARITA JOSE,
CARMENCITA JUNDEZ, SOFIA LALUCIS, GLORIA LABITORIA, ANGELITA LODES, ERLINDA LATOGA,
EVELYN LEGASPI, ROMEO LIMCHOCO, JESUS LARA, ESTRELLA DE LUNA, LORETA LAREZA, JOSEPHINE
ALSCO, MERCY DE LEON, CONSOLACION LIBAO, MARILYN LIWAG, TERESITA LIZAZO, LILIA
MACAPAGAL, SALVACION MACAREZA, AMALIA MADO, TERESITA MADRIAGA, JOVITA MAGNAYE,
JEAN MALABAD, FRANCISCA MENDOZA, NELCITA MANGANTANG, TERESITA NELLA, GENEROZA
MERCADO, CRISTETA MOJANA, BERNARDA MONGADO, LYDIA MIRANDA, ELISA MADRILEJOS, LOIDA
MAGSINO, AMELIA MALTO, JULITA MAHIBA, MYRNA MAYORES, LUISA MARAIG, FLORENCIA MARAIG,
EMMA MONZON, IMELDA MAGDANGAN, VICTORIA MARTIN, NOEMI MANGUILLO, BASILIZA MEDINA,
VICTORIO MERCADO, ESTELA MAYPA, EMILIA MENDOZA, LINA MAGPANTAY, FELICIANA MANLOLO,
ELENA MANACOP, WILMA MORENO, JUANA MENDOZA, EVELYN DEL MUNDO, ROSIE MATUTINA,
MATILDE MANALO, TERESITA MENDEZ, FELIPINA MAGONCIA, MARIA MANZANO, LIGAYA MANALO,
LETICIA MARCHA, MARINA MANDIGMA, LETICIA MANDASOC, PRESCILLA MARTINEZ, JULIA MENDOZA,
PACITA MAGALLANES, ANGELINA MARJES, SHIRLEY MELIGRITO, IRENE MERCADO, ELISA
MAATUBANG, MARCELINA NICOLAS, AGUSTINA NICOLAS, ROSA NOLASCO, WILMA NILAYE, VIOLETA
ORACION, ANGELA OSTAYA, JUANITA OSAYOS, MAGDALENA OCAMPO, MARDIANA OCTA, ROSELA
OPAO, LIBRADA OCAMPO, YOLANDA OLIVER, MARCIA ORLANDA, PAGDUNAN, RITA PABILONA, MYRA
PALACA, BETHLEHEM PALINES, GINA PALIGAR, NORMA PALIGAR, DELMA PEREZ, CLAUDIA PRADO,
JULIE PUTONG, LUDIVINA PAGSALINGAN, MERLYN PANALIGAN, VIOLETA PANAMBITAN, NOREN PAR,
ERLINDA PARAGAS, MILA PARINO, REBECCA PENAFLOR, IMELDA PENAMORA, JERMICILLIN PERALTA,
REBECCA PIAPES, EDITHA PILAR, MAROBETH PILLADO, DIOSCORO PIMENTEL, AURORA LAS PINAS,
EVANGELINA PINON, MA. NITA PONDOC, MA. MERCEDES PODPOD, ANGELITO PANDEZ, LIGAYA
PIGTAIN, LEONILA QUIAMBAO, ELENA QUINO, MARITESS QUIJANO, CHOLITA REBUENO, LOLITA
REYES, JOCELYN RAMOS, ROSITA RAMIREZ, ELINORA RAMOS, ISABEL RAMOS, ANNABELLE
RESURRECCION, EMMA REYES, ALILY ROXAS, MARY GRACE DELOS REYES, JOCELYN DEL ROSARIO,
JOSEFINA RABUSA, ANGELITA ROTAIRO, SAMCETA ROSETA, EDERLINA RUIZ, ZENAIDA ROSARIO,
BENITA REBOLA, ROSITA REVILLA, ROSITA SANTOS, ROWENA SALAZAR, EMILYN SARMIENTO, ANA
SENIS, ELOISA SANTOS, NARCISA SONGLIAD, ELMA SONGALIA, AMPARA SABIO, JESSIE SANCHEZ,
VIVIAN SAMILO, GLORIA SUMALINOG, ROSALINA DELOS SANTOS, MARIETA SOMBRERO, HELEN
SERRETARIO, TEODORO SULIT, BELLA SONGUINES, LINDA SARANTAN, ESTELLA SALABAR, MILAGROS
SISON, GLORIA TALIDAGA, CECILIA TEODORO, ROMILLA TUAZON, AMELITA TABULAO, MACARIA
TORRES, LUTGARDA TUSI, ESTELLA TORREJOS, VICTORIA TAN, MERLITA DELA VEGA, WEVINA
ORENCIA, REMEDIOS BALECHA, TERESITA TIBAR, LACHICA LEONORA, JULITA YBUT, JOSEFINA ZABALA,
WINNIE ZALDARIAGA, BENHUR ANTENERO, MARCELINA ANTENERO, ANTONINA ALAPAN, EDITHA
ANTOZO, ROWENA ARABIT, ANDRA AQUINO, TERESITA ANGULO, MARIA ANGLO, MYRNA ALBOS,
ELENITA AUSTRIA, ANNA ABRIGUE, VIRGINIA ADOBAS, VICTORIA ANTIPUESTO, REMEDIOS BOLECHE,
MACARIA BARRIOS, THELMA BELEN, ESTELLA BARRETTO, JOCELYN CHAVEZ, VIRGINIA CAPISTRANO,
BENEDICTA CINCO, YOLLY CATPANG, REINA CUEVAS, VICTORIA CALANZA, FE CASERO, ROBERTA
CATALBAS, LOURDES CAPANANG, CLEMENCIA CRUZ, JOCELYN COSTO, MERCEDITA CASTILLO, EDITHA
DEE, LUCITA DONATO NORMA ESPIRIDION, LORETA FERNANDEZ, AURORA FRANCISCO, VILMA
FAJARDO, MODESTA GABRENTINA, TERESITA GABRIEL, SALVACION GAMBOA, JOSEPHINE IGNACIO,
SUSAN IBARRA, ESPERANZA JABSON, OSCAR JAMBARO, ROSANNA JARDIN, CORAZON JALOCON,
ZENAIDA LEGASPI, DELLA LAGRAMADA, ROSITA LIBRANDO, LIGAYA LUMAYOT, DELIA LUMBIS,
LEONORA LANCHICA, RELAGIA LACSI, JOSEFINA LUMBO, VIOLETA DE LUNA, EVELYN MADRID,
TERESITA MORILLA, GEMMA MAGPANTAY, EMILY MENDOZA, IRENEA MEDINA, NARCISA MABEZA,
ROSANNA MEDINA, DELIA MARTINEZ, ROSARIO MAG-ISA, EDITHA MENDOZA, EDILBERTA MENDOZA,
FIDELA PANGANIBAN, OFELIA PANGANIBAN, AZUCENA POSTGO, LOURDES PACHECO, LILIA PADILLA,
MARISSA PEREZ, FLORDELIZA PUMARES, LUZ REYES, NORMA RACELIS, LEONOR RIZALDO, JOSIE
SUMASAR, NANCY SAMALA, EMERLITA SOLAYAO, MERCEDITA SAMANIEGO, BLANDINA SIMBULAN,
JOCELYN SENDING, LUISITA TABERRERO, TERESITA TIBAR, ESTERLINA VALDEZ, GLORIA VEJERANO,
ILUMINADA VALENCIA, MERLITA DELA VEGA, VIRGIE LAITAN, JULIET VILLARAMA, LUISISTA OCAMPO,
NARIO ANDRES, ANSELMA TULFO, GLORIA MATEO, FLANIA MENDOZA, CONNIE CANGO, EDITHA
SALAZAR, MYRNA DELOS SANTOS, TERESITA SERGIO, CHARITO GILLA, FLORENTINA HERNAEZ,
BERNARDINO VIRGINIA, AMPO ANACORITA, SYLVIA POASADAS, ESTRELLA ESPIRITU, CONCORDIA
LUZURIAGA, MARINA CERBITO, EMMA REYES, NOEMI PENISALES, CLARITA POLICARPIO, BELEN
BANGUIO, HERMINIA ADVINCULA, LILIA MORTA, REGINA LAPIDARIO, LORNA LARGA, TERESITA
VINLUAN, MARITA TENOSO, NILDS SAYAT, THELMA SARONG, DELMA REGALIS, SUSAN RAFAULO,
ELENA RONDINA, MYRNA PIENDA, VIOLETA DUMELINA, FLORENCIA ADALID, FILMA MELAYA, ERLINDA
DE BAUTISTA, MATILDE DE BLAS, DOLORES FACUNDO, REBECCA LEDAMA, MA. FE MACATANGAY,
EMELITA MINON, NORMA PAGUIO, ELIZA VASQUEZ, GLORIA VILLARINO, MA. JESUS FRANCISCO,
TERESITA GURPIDO, LIGAYA MANALO, FE PINEDA, MIRIAM OCMAR, LUISA SEGOVIA, TEODY ATIENZA,
SOLEDA AZCURE, CARMEN DELA CRUZ, DMETRIA ESTONELO, MA. FLORIDA LOAZNO, IMELDA MAHIYA,
EDILBERTA MENDOZA, SYLVIA POSADAS, SUSANA ORTEGA, JOSEPHINE D. TALIMORO, TERESITA
LORECA, ARSENIA TISOY, LIGAYA MANALO, TERESITA GURPIO, FE PINEDA, and MARIA JESUS
FRANCISCO, petitioners,
vs.
HON. CRESENCIO J. RAMOS, NATIONAL LABOR RELATIONS COMMISSION, M. GREENFIELD (B), INC.,
SAUL TAWIL, CARLOS T. JAVELOSA, RENATO C. PUANGCO, WINCEL LIGOT, MARCIANO HALOG,
GODOFREDO PACENO, SR., GERVACIO CASILLANO, LORENZO ITAOC, ATTY. GODOFREDO PACENO, JR.,
MARGARITO CABRERA, GAUDENCIO RACHO, SANTIAGO IBANEZ, AND RODRIGO
AGUILING, respondents.

PURISIMA, J.:

At bar is a Petition for Certiorari under Rule 65 of the Revised Rules of Court to annul the decision of the
National Labor Relations Commission in an unfair labor practice case instituted by a local union against
its employer company and the officers of its national federation.

The petitioner, Malayang Samahan ng mga Manggagawa sa M. Greenfield, Inc., (B) (MSMG), hereinafter
referred to as the "local union", is an affiliate of the private respondent, United Lumber and General
Workers of the Philippines (ULGWP), referred to as the "federation". The collective bargaining
agreement between MSMG and M. Greenfield, Inc., names the parties as follows:

This agreement made and entered into by and between:

M. GREENFIELD, INC. (B) a corporation duly organized in accordance with the laws of the Republic of the
Philippines with office address at Km. 14, Merville Road, Parañaque, Metro Manila, represented in this
act by its General manager, Mr. Carlos T. Javelosa, hereinafter referred to as the Company;

-and-

MALAYANG SAMAHAN NG MGA MANGGAGAWA SA M. GREENFIELD (B) (MSMG)/UNITED LUMBER AND

GENERAL WORKERS OF THE PHILIPPINES (ULGWP), a legitimate labor organization with address at Suite
404, Trinity Building, T. M. Kalaw Street, Manila, represented in this act by a Negotiating Committee
headed by its National President, Mr. Godofredo Paceno, Sr., referred to in this Agreement as the
UNION.1

The CBA includes, among others, the following pertinent provisions:

Art. II-Union Security

Sec. 1. Coverage and Scope. All employees who are covered by this Agreement and presently members
of the UNION shall remain members of the UNION for the duration of this Agreement as a condition
precedent to continued employment with the COMPANY.
xxx     xxx     xxx

Sec. 4. Dismissal. Any such employee mentioned in Section 2 hereof, who fails to maintain his
membership in the UNION for non-payment of UNION dues, for resignation and for violation of UNION's
Constitution and By-Laws and any new employee as defined in Section 2 of this Article shall upon written
notice of such failure to join or to maintain membership in the UNION and upon written
recommendation to the COMPANY by the UNION, be dismissed from the employment by the
COMPANY;  provided, however, that the UNION shall hold the COMPANY free and blameless from any
and all liabilities that may arise should the dismissed employee question, in any manner, his
dismissal; provided, further that the matter of the employee's dismissal under this Article may be
submitted as a grievance under Article XIII and,  provided, finally, that no such written recommendation
shall be made upon the COMPANY nor shall COMPANY be compelled to act upon any such
recommendation within the period of sixty (60) days prior to the expiry date of this Agreement
conformably to law.

Art. IX

Sec. 4. Program Fund — The Company shall provide the amount of P10,000.00 a month for a continuing
labor education program which shall be remitted to the Federation . . .2

On September 12, 1986, a local union election was held under the auspices of the ULGWP wherein the
herein petitioner, Beda Magdalena Villanueva, and the other union officers were proclaimed as winners.
Minutes of the said election were duly filed with the Bureau of Labor Relations on September 29, 1986.

On March 21, 1987, a Petition for Impeachment was filed with the national federation ULGWP by the
defeated candidates in the aforementioned election.

On June 16, 1987, the federation conducted an audit of the local union funds. The investigation did not
yield any unfavorable result and the local union officers were cleared of the charges of anomaly in the
custody, handling and disposition of the union funds.1âwphi1.nêt

The 14 defeated candidates filed a Petition for Impeachment/Expulsion of the local union officers with
the DOLE NCR on November 5, 1987, docketed as NCR-OD-M-11-780-87. However, the same was
dismissed on March 2, 1988, by Med-Arbiter Renato Parungo for failure to substantiate the charges and
to present evidence in support of the allegations.

On April 17, 1988, the local union held a general membership meeting at the Caruncho Complex in
Pasig. Several union members failed to attend the meeting, prompting the Executive Board to create a
committee tasked to investigate the non-attendance of several union members in the said assembly,
pursuant to Sections 4 and 5, Article V of the Constitution and By-Laws of the union, which read:

Seksyon 4. Ang mga kinukusang hindi pagdalo o hindi paglahok sa lahat ng hakbangin ng unyon ng
sinumang kasapi o pinuno ay maaaring maging sanhi ng pagtitiwalag o pagpapataw ng multa ng hindi
hihigit sa P50.00 sa bawat araw na nagkulang.

Seksyon 5. Ang sinumang dadalo na aalis ng hindi pa natatapos ang pulong ay ituturing na pagliban at
maparusahan itong alinsunod sa Article V, Seksyong 4 ng Saligang Batas na ito. Sino mang kasapi o
pisyales na mahuli and dating sa takdang oras ng di lalampas sa isang oras ay magmumulta ng P25.00 at
babawasin sa sahod sa pamamagitan ng salary deduction at higit sa isang oras ng pagdating ng huli ay
ituturing na pagliban.3

On June 27, 1988, the local union wrote respondent company a letter requesting it to deduct the union
fines from the wages/salaries of those union members who failed to attend the general membership
meeting. A portion of the said letter stated:

xxx     xxx     xxx

In connection with Section 4 Article II of our existing Collective Bargaining Agreement, please deduct the
amount of P50.00 from each of the union members named in said annexes on the payroll of July 2-8,
1988 as fine for their failure to attend said general membership meeting.4

In a Memorandum dated July 3, 1988, the Secretary General of the national federation, Godofredo
Paceño, Jr. disapproved the resolution of the local union imposing the P50.00 fine. The union officers
protested such action by the Federation in a Reply dated July 4, 1988.

On July 11, 1988, the Federation wrote respondent company a letter advising the latter not to deduct
the fifty-peso fine from the salaries of the union members requesting that:

. . . any and all future representations by MSMG affecting a number of members be first cleared from
the federation before corresponding action by the Company.5

The following day, respondent company sent a reply to petitioner union's request in a letter, stating that
it cannot deduct fines from the employees' salary without going against certain laws. The company
suggested that the union refer the matter to the proper government office for resolution in order to
avoid placing the company in the middle of the issue.

The imposition of P50.00 fine became the subject of bitter disagreement between the Federation and
the local union culminating in the latter's declaration of general autonomy from the former through
Resolution No. 10 passed by the local executive board and ratified by the general membership on July
16, 1988.

In retaliation, the national federation asked respondent company to stop the remittance of the local
union's share in the education funds effective August 1988. This was objected to by the local union
which demanded that the education fund be remitted to it in full.

The company was thus constrained to file a Complaint for Interpleader with a Petition for Declaratory
Relief with the Med-Arbitration Branch of the Department of Labor and Employment, docketed as Case
No. OD-M-8-435-88. This was resolved on October 28, 1988, by Med-Arbiter Anastacio Bactin in an
Order, disposing thus:

WHEREFORE, premises considered, it is hereby ordered:

1. That the United Lumber and General Workers of the Philippines (ULGWP) through its local union
officers shall administer the collective bargaining agreement (CBA).

2. That petitioner company shall remit the P10,000.00 monthly labor education program fund to the
ULGWP subject to the condition that it shall use the said amount for its intended purpose.
3. That the Treasurer of the MSMG shall be authorized to collect from the 356 union members the
amount of P50.00 as penalty for their failure to attend the general membership assembly on April 17,
1988.

However, if the MSMG Officers could present the individual written authorizations of the 356 union
members, then the company is obliged to deduct from the salaries of the 356 union members the
P50.00 fine.6

On appeal, Director Pura-Ferrer Calleja issued a Resolution dated February 7, 1989, which modified in
part the earlier disposition, to wit:

WHEREFORE, premises considered, the appealed portion is hereby modified to the extent that the
company should remit the amount of five thousand pesos (P5,000.00) of the P10,000.00 monthly labor
education program fund to ULGWP and the other P5,000.00 to MSMG, both unions to use the same for
its intended purpose.7

Meanwhile, on September 2, 1988, several local unions (Top Form, M. Greenfield, Grosby, Triumph
International, General Milling, and Vander Hons chapters) filed a Petition for Audit and Examination of
the federation and education funds of ULGWP which was granted by Med-Arbiter Rasidali Abdullah on
December 25, 1988 in an Order which directed the audit and examination of the books of account of
ULGWP.

On September 30, 1988, the officials of ULGWP called a Special National Executive Board Meeting at
Nasipit, Agusan del Norte where a Resolution was passed placing the MSMG under trusteeship and
appointing respondent Cesar Clarete as administrator.

On October 27, 1988, the said administrator wrote the respondent company informing the latter of its
designation of a certain Alfredo Kalingking as local union president and "disauthorizing" the incumbent
union officers from representing the employees. This action by the national federation was protested by
the petitioners in a letter to respondent company dated November 11, 1988.

On November 13, 1988, the petitioner union officers received identical letters from the administrator
requiring them to explain within 72 hours why they should not be removed from their office and
expelled from union membership.

On November 26, 1988, petitioners replied:

(a) Questioning the validity of the alleged National Executive Board Resolution placing their union under
trusteeship;

(b) Justifying the action of their union in declaring a general autonomy from ULGWP due to the latter's
inability to give proper educational, organizational and legal services to its affiliates and the pendency of
the audit of the federation funds;

(c) Advising that their union did not commit any act of disloyalty as it has remained an affiliate of
ULGWP;

(d) Giving ULGWP a period of five (5) days to cease and desist from further committing acts of coercion,
intimidation and harassment.8
However, as early as November 21, 1988, the officers were expelled from the ULGWP. The termination
letter read:

Effective today, November 21, 1988, you are hereby expelled from UNITED LUMBER AND GENERAL
WORKERS OF THE PHILIPPINES (ULGWP) for committing acts of disloyalty and/or acts inimical to the
interest and violative to the Constitution and by-laws of your federation.

You failed and/or refused to offer an explanation inspite of the time granted to you.

Since you are no longer a member of good standing, ULGWP is constrained to recommend for your
termination from your employment, and provided in Article II Section 4, known as UNION SECURITY, in
the Collective Bargaining agreement.9

On the same day, the federation advised respondent company of the expulsion of the 30 union officers
and demanded their separation from employment pursuant to the Union Security Clause in their
collective bargaining agreement. This demand was reiterated twice, through letters dated February 21
and March 4, 1989, respectively, to respondent company.

Thereafter, the Federation filed a Notice of Strike with the National Conciliation and Mediation Board to
compel the company to effect the immediate termination of the expelled union officers.

On March 7, 1989, under the pressure of a threatened strike, respondent company terminated the 30
union officers from employment, serving them identical copies of the termination letter reproduced
below:

We received a demand letter dated 21 November 1988 from the United Lumber and General Workers of
the Philippines (ULGWP) demanding for your dismissal from employment pursuant to the provisions of
Article II, Section 4 of the existing Collective Bargaining Agreement (CBA). In the said demand letter,
ULGWP informed us that as of November 21, 1988, you were expelled from the said federation "for
committing acts of disloyalty and/or acts inimical to the interest of ULGWP and violative to its
Constitution and By-laws particularly Article V, Section 6, 9, and 12, Article XIII, Section 8.

In subsequent letters dated 21 February and 4 March 1989, the ULGWP reiterated its demand for your
dismissal, pointing out that notwithstanding your expulsion from the federation, you have continued in
your employment with the company in violation of Sec. 1 and 4 of Article II of our CBA, and of existing
provisions of law.

In view thereof, we are left with no alternative but to comply with the provisions of the Union Security
Clause of our CBA. Accordingly, we hereby serve notice upon you that we are dismissing you from your
employment with M. Greenfield, Inc., pursuant to Sections 1 and 4, Article II of the CBA effective
immediately.10

On that same day, the expelled union officers assigned in the first shift were physically or bodily brought
out of the company premises by the company's security guards. Likewise, those assigned to the second
shift were not allowed to report for work. This provoked some of the members of the local union to
demonstrate their protest for the dismissal of the said union officers. Some union members left their
work posts and walked out of the company premises.
On the other hand, the Federation, having achieved its objective, withdrew the Notice of Strike filed
with the NCMB.

On March 8, 1989, the petitioners filed a Notice of Strike with the NCMB, DOLE, Manila, docketed as
Case No. NCMB-NCR-NS-03-216-89, alleging the following grounds for the strike:

(a) Discrimination

(b) Interference in union activities

(c) Mass dismissal of union officers and shop stewards

(d) Threats, coercion and intimidation

(e) Union busting

The following day, March 9, 1989, a strike vote referendum was conducted and out of 2, 103 union
members who cast their votes, 2,086 members voted to declare a strike.

On March 10, 1989, the thirty (30) dismissed union officers filed an urgent petition, docketed as Case
No. NCMB-NCR-NS-03-216-89, with the Office of the Secretary of the Department of Labor and
Employment praying for the suspension of the effects of their termination from employment. However,
the petition was dismissed by then Secretary Franklin Drilon on April 11, 1989, the pertinent portion of
which stated as follows:

At this point in time, it is clear that the dispute at M. Greenfield is purely an intra-union matter. No mass
lay-off is evident as the terminations have been limited to those allegedly leading the secessionist group
leaving MSMG-ULGWP to form a union under the KMU. . . .

xxx     xxx     xxx

WHEREFORE, finding no sufficient jurisdiction to warrant the exercise of our extraordinary authority
under Article 277 (b) of the Labor Code, as amended, the instant Petition is hereby DISMISSED for lack of
merit.

SO ORDERED.11

On March 13 and 14, 1989, a total of 78 union shop stewards were placed under preventive suspension
by respondent company. This prompted the union members to again stage a walk-out and resulted in
the official declaration of strike at around 3:30 in the afternoon of March 14, 1989. The strike was
attended with violence, force and intimidation on both sides resulting to physical injuries to several
employees, both striking and non-striking, and damage to company properties.

The employees who participated in the strike and allegedly figured in the violent incident were placed
under preventive suspension by respondent company. The company also sent return-to-work notices to
the home addresses of the striking employees thrice successively, on March 27, April 8 and April 31,
1989, respectively. However, respondent company admitted that only 261 employees were eventually
accepted back to work. Those who did not respond to the return-to-work notice were sent termination
letters dated May 17, 1989, reproduced below:

M. Greenfield Inc., (B)

Km. 14, Merville Rd., Parañaque, M.M.

May 17, 1989

xxx     xxx     xxx

On March 14, 1989, without justifiable cause and without due notice, you left your work assignment at
the prejudice of the Company's operations. On March 27, April 11, and April 21, 1989, we sent you
notices to report to the Company. Inspite of your receipt of said notices, we have not heard from you up
to this date.

Accordingly, for your failure to report, it is construed that you have effectively abandoned your
employment and the Company is, therefore, constrained to dismiss you for said cause.

Very truly yours,

M. GREENFIELD, INC., (B)

By:

WENZEL STEPHEN LIGOT

Asst. HRD Manager12

On August 7, 1989, the petitioners filed a verified complaint with the Arbitration Branch, National
Capital Region, DOLE, Manila, docketed as Case No. NCR-00-09-04199-89, charging private respondents
of unfair labor practice which consists of union busting, illegal dismissal, illegal suspension, interference
in union activities, discrimination, threats, intimidation, coercion, violence, and oppression.

After the filing of the complaint, the lease contracts on the respondent company's office and factory at
Merville Subdivision, Parañaque expired and were not renewed. Upon demand of the owners of the
premises, the company was compelled to vacate its office and factory.

Thereafter, the company transferred its administration and account/client servicing department at AFP-
RSBS Industrial Park in Taguig, Metro Manila. For failure to find a suitable place in Metro Manila for
relocation of its factory and manufacturing operations, the company was constrained to move the said
departments to Tacloban, Leyte. Hence, on April 16, 1990, respondent company accordingly notified its
employees of a temporary shutdown in operations. Employees who were interested in relocating to
Tacloban were advised to enlist on or before April 23, 1990.

The complaint for unfair labor practice was assigned to Labor Arbiter Manuel Asuncion but was
thereafter reassigned to Labor Arbiter Cresencio Ramos when respondents moved to inhibit him from
acting on the case.

On December 15, 1992, finding the termination to be valid in compliance with the union security clause
of the collective bargaining agreement, Labor Arbiter Cresencio Ramos dismissed the complaint.

Petitioners then appealed to the NLRC. During its pendency, Commissioner Romeo Putong retired from
the service, leaving only two commissioners, Commissioner Vicente Veloso III and Hon. Chairman
Bartolome Carale in the First Division. When Commissioner Veloso inhibited himself from the case,
Commissioner Joaquin Tanodra of the Third Division was temporarily designated to sit in the First
Division for the proper disposition of the case.
The First Division affirmed the Labor Arbiter's disposition. With the denial of their motion for
reconsideration on January 28, 1994, petitioners elevated the case to this Court, attributing grave abuse
of discretion to public respondent NLRC in:

I. UPHOLDING THE DISMISSAL OF THE UNION OFFICERS BY RESPONDENT COMPANY AS VALID;

II. HOLDING THAT THE STRIKE STAGED BY THE PETITIONERS AS ILLEGAL;

III. HOLDING THAT THE PETITIONER EMPLOYEES WERE DEEMED TO HAVE ABANDONED THEIR WORK
AND HENCE, VALIDLY DISMISSED BY RESPONDENT COMPANY; AND

IV. NOT FINDING RESPONDENT COMPANY AND RESPONDENT FEDERATION OFFICERS GUILTY OF ACTS
OF UNFAIR LABOR PRACTICE.

Notwithstanding the several issues raised by the petitioners and respondents in the voluminous
pleadings presented before the NLRC and this Court, they revolve around and proceed from the issue of
whether or not respondent company was justified in dismissing petitioner employees merely upon the
labor federation's demand for the enforcement of the union security clause embodied in their collective
bargaining agreement.

Before delving into the main issue, the procedural flaw pointed out by the petitioners should first be
resolved.

Petitioners contend that the decision rendered by the First Division of the NLRC is not valid because
Commissioner Tanodra, who is from the Third Division, did not have any lawful authority to sit, much
less write the  ponencia, on a case pending before the First Division. It is claimed that a commissioner
from one division of the NLRC cannot be assigned or temporarily designated to another division because
each division is assigned a particular territorial jurisdiction. Thus, the decision rendered did not have any
legal effect at all for being irregularly issued.

Petitioners' argument is misplaced. Article 213 of the Labor Code in enumerating the powers of the
Chairman of the National Labor Relations Commission provides that:

The concurrence of two (2) Commissioners of a division shall be necessary for the pronouncement of a
judgment or resolution. Whenever the required membership in a division is not complete and the
concurrence of two (2) commissioners to arrive at a judgment or resolution cannot be obtained, the
Chairman shall designate such number of additional Commissioners from the other divisions as may be
necessary.

It must be remembered that during the pendency of the case in the First Division of the NLRC, one of the
three commissioners, Commissioner Romeo Putong, retired, leaving Chairman Bartolome Carale and
Commissioner Vicente Veloso III. Subsequently, Commissioner Veloso inhibited himself from the case
because the counsel for the petitioners was his former classmate in law school. The First Division was
thus left with only one commissioner. Since the law requires the concurrence of two commissioners to
arrive at a judgment or resolution, the Commission was constrained to temporarily designate a
commissioner from another division to complete the First Division. There is nothing irregular at all in
such a temporary designation for the law empowers the Chairman to make temporary assignments
whenever the required concurrence is not met. The law does not say that a commissioner from the first
division cannot be temporarily assigned to the second or third division to fill the gap or vice versa. The
territorial divisions do not confer exclusive jurisdiction to each division and are merely designed for
administrative efficiency.

Going into the merits of the case, the court finds that the Complaint for unfair labor practice filed by the
petitioners against respondent company which charges union busting, illegal dismissal, illegal
suspension, interference in union activities, discrimination, threats, intimidation, coercion, violence, and
oppression actually proceeds from one main issue which is the termination of several employees by
respondent company upon the demand of the labor federation pursuant to the union security clause
embodied in their collective bargaining agreement.

Petitioners contend that their dismissal from work was effected in an arbitrary, hasty, capricious and
illegal manner because it was undertaken by the respondent company without any prior administrative
investigation; that, had respondent company conducted prior independent investigation it would have
found that their expulsion from the union was unlawful similarly for lack of prior administrative
investigation; that the federation cannot recommend the dismissal of the union officers because it was
not a principal party to the collective bargaining agreement between the company and the union; that
public respondents acted with grave abuse of discretion when they declared petitioners' dismissals as
valid and the union strike as illegal and in not declaring that respondents were guilty of unfair labor
practice.

Private respondents, on the other hand, maintain that the thirty dismissed employees who were former
officers of the federation have no cause of action against the company, the termination of their
employment having been made upon the demand of the federation pursuant to the union security
clause of the CBA; the expelled officers of the local union were accorded due process of law prior to
their expulsion from their federation; that the strike conducted by the petitioners was illegal for
noncompliance with the requirements; that the employees who participated in the illegal strike and in
the commission of violence thereof were validly terminated from work; that petitioners were deemed to
have abandoned their employment when they did not respond to the three return to work notices sent
to them; that petitioner labor union has no legal personality to file and prosecute the case for and on
behalf of the individual employees as the right to do so is personal to the latter; and that, the officers of
respondent company cannot be liable because as mere corporate officers, they acted within the scope
of their authority.

Public respondent, through the Labor Arbiter, ruled that the dismissed union officers were validly and
legally terminated because the dismissal was effected in compliance with the union security clause of
the CBA which is the law between the parties. And this was affirmed by the Commission on appeal.
Moreover, the Labor Arbiter declared that notwithstanding the lack of a prior administrative
investigation by respondent company, under the union security clause provision in the CBA, the
company cannot look into the legality or illegality of the recommendation to dismiss by the union nd the
obligation to dismiss is ministerial on the part of the company.13

This ruling of the NLRC is erroneous. Although this Court has ruled that union security clauses embodied
in the collective bargaining agreement may be validly enforced and that dismissals pursuant thereto
may likewise be valid, this does not erode the fundamental requirement of due process. The reason
behind the enforcement of union security clauses which is the sanctity and inviolability of
contracts14 cannot override one's right to due process.
In the case of Cariño vs. National Labor Relations Commission,15 this Court pronounced that while the
company, under a maintenance of membership provision of the collective bargaining agreement, is
bound to dismiss any employee expelled by the union for disloyalty upon its written request, this
undertaking should not be done hastily and summarily. The company acts in bad faith in dismissing a
worker without giving him the benefit of a hearing.

The power to dismiss is a normal prerogative of the employer. However, this is not without limitation.
The employer is bound to exercise caution in terminating the services of his employees especially so
when it is made upon the request of a labor union pursuant to the Collective Bargaining Agreement, . . .
Dismissals must not be arbitrary and capricious. Due process must be observed in dismissing an
employee because it affects not only his position but also his means of livelihood. Employers should
respect and protect the rights of their employees, which include the right to labor.

In the case under scrutiny, petitioner union officers were expelled by the federation for allegedly
committing acts of disloyalty and/or inimical to the interest of ULGWP and in violation of its Constitution
and By-laws. Upon demand of the federation, the company terminated the petitioners without
conducting a separate and independent investigation. Respondent company did not inquire into the
cause of the expulsion and whether or not the federation had sufficient grounds to effect the same.
Relying merely upon the federation's allegations, respondent company terminated petitioners from
employment when a separate inquiry could have revealed if the federation had acted arbitrarily and
capriciously in expelling the union officers. Respondent company's allegation that petitioners were
accorded due process is belied by the termination letters received by the petitioners which state that
the dismissal shall be immediately effective.

As held in the aforecited case of Cariño, "the right of an employee to be informed of the charges against
him and to reasonable opportunity to present his side in a controversy with either the company or his
own union is not wiped away by a union security clause or a union shop clause in a collective bargaining
agreement. An employee is entitled to be protected not only from a company which disregards his rights
but also from his own union the leadership of which could yield to the temptation of swift and arbitrary
expulsion from membership and mere dismissal from his job.

While respondent company may validly dismiss the employees expelled by the union for disloyalty
under the union security clause of the collective bargaining agreement upon the recommendation by
the union, this dismissal should not be done hastily and summarily thereby eroding the employees' right
to due process, self-organization and security of tenure. The enforcement of union security clauses is
authorized by law provided such enforcement is not characterized by arbitrariness, and always with due
process.16 Even on the assumption that the federation had valid grounds to expel the union officers, due
process requires that these union officers be accorded a separate hearing by respondent company.

In its decision, public respondent also declared that if complainants (herein petitioners) have any
recourse in law, their right of action is against the federation and not against the company or its officers,
relying on the findings of the Labor Secretary that the issue of expulsion of petitioner union officers by
the federation is a purely intra-union matter.

Again, such a contention is untenable. While it is true that the issue of expulsion of the local union
officers is originally between the local union and the federation, hence, intra-union in character, the
issue was later on converted into a termination dispute when the company dismissed the petitioners
from work without the benefit of a separate notice and hearing. As a matter of fact, the records reveal
that the termination was effective on the same day that the termination notice was served on the
petitioners.

In the case of Liberty Cotton Mills Workers Union vs. Liberty Cotton Mills, Inc.17, the Court held the
company liable for the payment of backwages for having acted in bad faith in effecting the dismissal of
the employees.

. . . Bad faith on the part of the respondent company may be gleaned from the fact that the petitioner
workers were dismissed hastily and summarily. At best, it was guilty of a tortious act, for which it must
assume solidary liability, since it apparently chose to summarily dismiss the workers at the union's
instance secure in the union's contractual undertaking that the union would hold it "free from any
liability" arising from such dismissal.

Thus, notwithstanding the fact that the dismissal was at the instance of the federation and that it
undertook to hold the company free from any liability resulting from such a dismissal, the company may
still be held liable if it was remiss in its duty to accord the would-be dismissed employees their right to
be heard on the matter.

Anent petitioners contention that the federation was not a principal party to the collective bargaining
agreement between the company and the union, suffice it to say that the matter was already ruled upon
in the Interpleader case filed by respondent company. Med-Arbiter Anastacio Bactin thus ruled:

After a careful examination of the facts and evidences presented by the parties, this Officer hereby
renders its decision as follows:

1.) It appears on record that in Collective Bargaining Agreement (CBA) which took effect on July 1, 1986,
the contracting parties are M. Greenfield, Inc. (B) and Malayang Samahan ng Mga Manggagawa sa M.
Greenfield, Inc. (B) (MSMG)/United Lumber and General Workers of the Philippines (ULGWP). However,
MSMG was not yet registered labor organization at the time of the signing of the CBA. Hence, the union
referred to in the CBA is the ULGWP.18

Likewise on appeal, Director Pura Ferrer-Calleja put the issue to rest as follows:

It is undisputed that ULGWP is the certified sole and exclusive collective bargaining agent of all the
regular rank-and-file workers of the company, M. Greenfield, Inc. (pages 31-32 of the records).

It has been established also that the company and ULGWP signed a 3-year collective bargaining
agreement effective July 1, 1986 up to June 30, 1989.19

Although the issue of whether or not the federation had reasonable grounds to expel the petitioner
union officers is properly within the original and exclusive jurisdiction of the Bureau of Labor Relations,
being an intra-union conflict, this Court deems it justifiable that such issue be nonetheless ruled upon,
as the Labor Arbiter did, for to remand the same to the Bureau of Labor Relations would be to
intolerably delay the case.

The Labor Arbiter found that petitioner union officers were justifiably expelled from the federation for
committing acts of disloyalty when it "undertook to disaffiliate from the federation by charging ULGWP
with failure to provide any legal, educational or organizational support to the local. . . . and declared
autonomy, wherein they prohibit the federation from interfering in any internal and external affairs of
the local union."20

It is well-settled that findings of facts of the NLRC are entitled to great respect and are generally binding
on this Court, but it is equally well-settled that the Court will not uphold erroneous conclusions of the
NLRC as when the Court finds insufficient or insubstantial evidence on record to support those factual
findings. The same holds true when it is perceived that far too much is concluded, inferred or deduced
from the bare or incomplete facts appearing of record.21

In its decision, the Labor Arbiter declared that the act of disaffiliation and declaration of autonomy by
the local union was part of its "plan to take over the respondent federation." This is purely conjecture
and speculation on the part of public respondent, totally unsupported by the evidence.

A local union has the right to disaffiliate from its mother union or declare its autonomy. A local union,
being a separate and voluntary association, is free to serve the interests of all its members including the
freedom to disaffiliate or declare its autonomy from the federation to which it belongs when
circumstances warrant, in accordance with the constitutional guarantee of freedom of association.22

The purpose of affiliation by a local union with a mother union or a federation.

. . . is to increase by collective action the bargaining power in respect of the terms and conditions of
labor. Yet the locals remained the basic units of association, free to serve their own and the common
interest of all, subject to the restraints imposed by the Constitution and By-Laws of the Association, and
free also to renounce the affiliation for mutual welfare upon the terms laid down in the agreement
which brought it into existence.23

Thus, a local union which has affiliated itself with a federation is free to sever such affiliation anytime
and such disaffiliation cannot be considered disloyalty. In the absence of specific provisions in the
federation's constitution prohibiting disaffiliation or the declaration of autonomy of a local union, a local
may dissociate with its parent union.24

The evidence on hand does not show that there is such a provision in ULGWP's constitution.
Respondents' reliance upon Article V, Section 6, of the federation's constitution is not right because said
section, in fact, bolsters the petitioner union's claim of its right to declare autonomy:

Sec. 6. The autonomy of a local union affiliated with ULGWP shall be respected insofar as it pertains to
its internal affairs, except as provided elsewhere in this Constitution.

There is no disloyalty to speak of, neither is there any violation of the federation's constitution because
there is nothing in the said constitution which specifically prohibits disaffiliation or declaration of
autonomy. Hence, there cannot be any valid dismissal because Article II, Section 4 of the union security
clause in the CBA limits the dismissal to only three (3) grounds, to wit: failure to maintain membership in
the union (1) for non-payment of union dues, (2) for resignation; and (3) for violation of the union's
Constitution and By-Laws.

To support the finding of disloyalty, the Labor Arbiter gave weight to the fact that on February 26, 1989,
the petitioners declared as vacant all the responsible positions of ULGWP, filled these vacancies through
an election and filed a petition for the registration of UWP as a national federation. It should be pointed
out, however, that these occurred after the federation had already expelled the union officers. The
expulsion was effective November 21, 1988. Therefore, the act of establishing a different federation,
entirely separate from the federation which expelled them, is but a normal retaliatory reaction to their
expulsion.

With regard to the issue of the legality or illegality of the strike, the Labor Arbiter held that the strike
was illegal for the following reasons: (1) it was based on an intra-union dispute which cannot properly
be the subject of a strike, the right to strike being limited to cases of bargaining deadlocks and unfair
labor practice (2) it was made in violation of the "no strike, no lock-out" clause in the CBA, and (3) it was
attended with violence, force and intimidation upon the persons of the company officials, other
employees reporting for work and third persons having legitimate business with the company, resulting
to serious physical injuries to several employees and damage to company property.

On the submission that the strike was illegal for being grounded on a non-strikeable issue, that is, the
intra-union conflict between the federation and the local union, it bears reiterating that when
respondent company dismissed the union officers, the issue was transformed into a termination dispute
and brought respondent company into the picture. Petitioners believed in good faith that in dismissing
them upon request by the federation, respondent company was guilty of unfair labor practice in that it
violated the petitioner's right to self-organization. The strike was staged to protest respondent
company's act of dismissing the union officers. Even if the allegations of unfair labor practice are
subsequently found out to be untrue, the presumption of legality of the strike prevails.25

Another reason why the Labor Arbiter declared the strike illegal is due to the existence of a no strike no
lockout provision in the CBA. Again, such a ruling is erroneous. A no strike, no lock out provision can only
be invoked when the strike is economic in nature, i.e. to force wage or other concessions from the
employer which he is not required by law to grant.26 Such a provision cannot be used to assail the
legality of a strike which is grounded on unfair labor practice, as was the honest belief of herein
petitioners. Again, whether or not there was indeed unfair labor practice does not affect the strike.

On the allegation of violence committed in the course of the strike, it must be remembered that the
Labor Arbiter and the Commission found that "the parties are agreed that there were violent
incidents . . . resulting to injuries to both sides, the union and management."27 The evidence on record
show that the violence cannot be attributed to the striking employees alone for the company itself
employed hired men to pacify the strikers. With violence committed on both sides, the management
and the employees, such violence cannot be a ground for declaring the strike as illegal.

With respect to the dismissal of individual petitioners, the Labor Arbiter declared that their refusal to
heed respondent's recall to work notice is a clear indication that they were no longer interested in
continuing their employment and is deemed abandonment. It is admitted that three return to work
notices were sent by respondent company to the striking employees on March 27, April 11, and April 21,
1989 and that 261 employees who responded to the notice were admitted back to work.

However, jurisprudence holds that for abandonment of work to exist, it is essential (1) that the
employee must have failed to report for work or must have been absent without valid or justifiable
reason; and (2) that there must have been a clear intention to sever the employer-employee
relationship manifested by some overt acts.28 Deliberate and unjustified refusal on the part of the
employee to go back to his work post amd resume his employment must be established. Absence must
be accompanied by overt acts unerringly pointing to the fact that the employee simply does not want to
work anymore.29 And the burden of proof to show that there was unjustified refusal to go back to work
rests on the employer.

In the present case, respondents failed to prove that there was a clear intention on the part of the
striking employees to sever their employer-employee relationship. Although admittedly the company
sent three return to work notices to them, it has not been substantially proven that these notices were
actually sent and received by the employees. As a matter of fact, some employees deny that they ever
received such notices. Others alleged that they were refused entry to the company premises by the
security guards and were advised to secure a clearance from ULGWP and to sign a waiver. Some
employees who responded to the notice were allegedly told to wait for further notice from respondent
company as there was lack of work.

Furthermore, this Court has ruled that an employee who took steps to protest his lay-off cannot be said
to have abandoned his work.30 The filing of a complaint for illegal dismissal is inconsistent with the
allegation of abandonment. In the case under consideration, the petitioners did, in fact, file a complaint
when they were refused reinstatement by respondent company.

Anent public respondent's finding that there was no unfair labor practice on the part of respondent
company and federation officers, the Court sustains the same. As earlier discussed, union security
clauses in collective bargaining agreements, if freely and voluntarily entered into, are valid and binding.
Corollary, dismissals pursuant to union security clauses are valid and legal subject only to the
requirement of due process, that is, notice and hearing prior to dismissal. Thus, the dismissal of an
employee by the company pursuant to a labor union's demand in accordance with a union security
agreement does not constitute unfair labor practice.31

However, the dismissal was invalidated in this case because of respondent company's failure to accord
petitioners with due process, that is, notice and hearing prior to their termination. Also, said dismissal
was invalidated because the reason relied upon by respondent Federation was not valid. Nonetheless,
the dismissal still does not constitute unfair labor practice.

Lastly, the Court is of the opinion, and so holds, that respondent company officials cannot be held
personally liable for damages on account of the employees' dismissal because the employer corporation
has a personality separate and distinct from its officers who merely acted as its agents.

It has come to the attention of this Court that the 30-day prior notice requirement for the dismissal of
employees has been repeatedly violated and the sanction imposed for such violation enunciated
in Wenphil Corporation vs. NLRC32 has become an ineffective deterrent. Thus, the Court recently
promulgated a decision to reinforce and make more effective the requirement of notice and hearing, a
procedure that must be observed before termination of employment can be legally effected.

In Ruben Serrano vs. NLRC and Isetann Department Store (G.R. No. 117040, January 27, 2000), the Court
ruled that an employee who is dismissed, whether or not for just or authorized cause but without prior
notice of his termination, is entitled to full backwages from the time he was terminated until the
decision in his case becomes final, when the dismissal was for cause; and in case the dismissal was
without just or valid cause, the backwages shall be computed from the time of his dismissal until his
actual reinstatement. In the case at bar, where the requirement of notice and hearing was not complied
with, the aforecited doctrine laid down in the Serrano case applies.
WHEREFORE, the Petition is GRANTED; the decision of the National Labor Relations Commission in Case
No. NCR-00-09-04199-89 is REVERSED and SET ASIDE; and the respondent company is hereby ordered to
immediately reinstate the petitioners to their respective positions. Should reinstatement be not feasible,
respondent company shall pay separation pay of one month salary for every year of service. Since
petitioners were terminated without the requisite written notice at least 30 days prior to their
termination, following the recent ruling in the case of Ruben Serrano vs. National Labor Relations
Commission and Isetann Department Store, the respondent company is hereby ordered to pay full
backwages to petitioner-employees while the Federation is also ordered to pay full backwages to
petitioner-union officers who were dismissed upon its instigation. Since the dismissal of petitioners was
without cause, backwages shall be computed from the time the herein petitioner employees and union
officers were dismissed until their actual reinstatement. Should reinstatement be not feasible, their
backwages shall be computed from the time petitioners were terminated until the finality of this
decision. Costs against the respondent company.1âwphi1.nêt

SO ORDERED.

G.R. No. 88210             January 23, 1991

PHILIPPINE AIRLINES, INC., petitioner,

vs.
SECRETARY OF LABOR AND EMPLOYMENT, FRANKLIN M. DRILON, and PHILIPPINE AIRLINES
EMPLOYEES ASSOCIATION (PALEA), respondents.

Ricardo V. Puno, Jr., Caesar R. Dulay, Solon, R. Garcia, Rene B. Gorospe & Bienvenido T. Jamoralinz, Jr.
for petitioner.
E.N.A. Cruz, Entero & Associates for PALEA.

GRIÑO-AQUINO, J.:

In issue in this case is the authority of the Secretary of Labor to order the petitioner Philippine Airlines,
Inc. to reinstate officers and members of the union who participated in an illegal strike and to desist
from taking any disciplinary or retaliatory action against them.
The 1986-1989 Collective Bargaining Agreement (CBA) between the Philippine Airlines (PAL) and the
Philippine Airlines Employees Association (PALEA) provided for pay increases for various categories of
employees in Section 1, Article V entitled "PAY SCALE." Besides the pay increases, the CBA also provided
for the formation of a PAL/PALEA Payscale Panel —

(f) . . . to undertake the study, review, correction, updating, complete overhaul, re-classification or re-
grouping of positions as may be required of the payscale and position classification to evolve updated
payscales as soon as possible. (p. 76, Rollo.)

and that

(iii) . . . the Payscale Panel shall exert all reasonable efforts to complete its studies so as to evolve new
updated payscale and position classification by January 01, 1988, (p. 76, Rollo.)

As agreed by the parties, the PAL/PALEA Payscale Panel was formed in due time and went to work. By
July, 1988, the Job Evaluation Committee of the panel had finished the reconciliation and initial
evaluation of positions in all departments within PAL.

In November, 1988, the PALEA members of the panel proposed the amount of PHP 3,349 as the
minimum salary entry level for the lowest job classification (Job Grade 1), while the PAL panel members
proposed PHP 2,310 and a PHP 200 across-the-board increase for employees who could not avail of the
payscale adjustments. The panel conferences continued but there was no meeting of minds. PALEA
would not accept less than the amount it proposed, while the PAL panel members alleged that they had
no authority to offer more.

PALEA accused PAL of bargaining in bad faith.

On December 29, 1988, PALEA filed with the National Conciliation and Mediation Board (NCMB) a notice
of strike on account of: (1) bargaining deadlock; and (2) unfair labor practice by bargaining in bad faith.

On January 3, 1989, PAL filed with the NCMB a motion to dismiss PALEA's notice of strike for being
premature as the issues raised were not strikeable since there still existed a PAL-PALEA CBA which
would not yet expire until September 30, 1989 or with nine (9) more months to run.

During the conciliation meeting, the following evolved as the real issues:

1. determination of the minimum entry rate

2. wage adjustment due to payscale study

3. retroactive pay as a consequence of the upgraded payscale or goodwill bonus. (p. 38, Rollo.)

On January 6, 1989, Attorney Jesus C. Sebastian, NCMB-NCR Executive Conciliator/Mediator, advised

PALEA president, George Pulido, that the issues raised in the notice of strike were "appropriate only
for  preventive mediation," hence, not valid grounds for a lawful strike. However, when subsequently a
representative of NCMB supervised the conduct of PALEA'S strike vote, PAL's counsel was baffled for it
was inconsistent with the NCMB order treating the strike notice as  preventive mediation case No. PM-
01-007-89. PAL's counsel sought clarification from NCMB'S Sebastian. He assured PAL that the NCMB
representatives could not certify the strike vote.
On January 12, 1989, PALEA submitted the strike vote results to the NCMB. The next day, January 13,
1989, PAL petitioned Secretary of Labor Franklin Drilon to immediately assume jurisdiction over the
dispute in order to avert the impending strike. The reasons for PAL's petition were, as stated by the
Secretary himself:

The Philippine Airlines, Inc. is a corporation where the government has substantial equity holding. It is
engaged in an industry imbued with national interest. It is the flag carrier of the Republic of the
Philippines. Being the sole airline that services domestic routes, a prolonged work stoppage will push
back the national economic recovery program of the government and consequently result to enormous
damage to the economy of the country. Hundreds of thousands of people directly and indirectly
dependent on the continued operations of the firm including the huge work force of the company will
likewise be prejudiced. The viability of the firm will also be endangered. These considerations have in
the past guided this Office in consistently exercising its powers under Article 263(g) of the Labor Code,
as amended, in handling labor disputes in the Company. The current situation is no exception to this
rule. This Office is of the view that the present work stoppage at Philippine Airlines, Inc. will adversely
affect the national interest. Thus, this Office hereby assumes jurisdiction over the instant dispute. (pp.
38-39, Rollo.)

Inexplicably, the Secretary failed to act promptly on PAL's petition for his assumption of jurisdiction.

Seven (7) days passed with no reaction from Secretary Drilon. On January 20, 1989, PALEA declared a
strike paralyzing PAL's entire operations the next day, January 21, 1989, and resulting in serious
inconvenience to thousands of passengers who were stranded in 43 airports throughout the country,
and the loss of millions of pesos in unearned revenue for PAL. Late in the day, at 7:50 P.M., Secretary
Drilon issued an order assuming jurisdiction over the labor dispute which had already exploded into a
full-blown strike, ordering the strikers to lift their pickets and return to work, directing management to
accept all returning employees, and resolving the issues subject of the strike, by awarding the following
monetary benefits to the strikers, while prohibiting the company from taking retaliatory action against
them:

. . . to resolve the impasse between the herein parties, this Office finds the following award just and
reasonable:

1. As far as the issue of minimum entry level is concerned, the company is directed to adjust the same to
P2,500.00 from its present level effective January 1, 1989.

2. The company is ordered to grant the amount of P3.3 million per month to cover across-the-board
increases of covered regular employees subject to the distribution of the union as embodied in their
proposed scheme but in no instance should the lowest adjustment be less than P300.00. In line with
this, the scheme proposed by the union and submitted to NCMB on January 20,1989 is herein adopted.

It is understood, however, that in items 1 and 2 above, the amount which is higher should be granted.

3. A goodwill bonus in the amount of P3,000.00 to be paid in four equal pay period installments
beginning February 15 and up to March 31, 1989 is hereby awarded. (p. 39, Rollo.)

Declaring the strike valid, the Secretary stated:

Except for the fact that the Union's notice of strike was treated as a preventive mediation case (at the
instance of NCMB), it should be noted that the Union complied with all the requirements for a valid
strike. It observed the cooling-off periods required and submitted the necessary strike vote. If ever there
is any ground to discipline the Union officers for non-compliance with the law, it would be based on the
"non-filing" of the strike notice, which "non-filing" was a consequence of the NCMB'S efforts to create
the appropriate atmosphere to resolve the dispute by treating the notice of strike as a preventive
mediation case. Otherwise put, the strike would have been legal in all respects had not the NCMB, in its
good faith effort to settle the dispute, treated the notice of strike as a case for preventive mediation.
Under these circumstances, and in the interest of industrial peace and the promotion of the concept of
preventive mediation, the parties are directed to desist from committing any retaliatory act as a result of
the work stoppage. The UNION, however, is hereby warned that in the future this office will not tolerate
such conduct and will apply the full force of the law. (pp. 3-4, Rollo.)

The petitioner filed a motion for reconsideration. The Secretary denied it in a minute resolution on May
8, 1989 or three months later.

In this petition for review, PAL avers that the Secretary of Labor gravely abused his discretion amounting
to excess or lack of jurisdiction:

1. in ruling on the legality of the strike;

2. in directing PAL to desist from taking retaliatory action against the officers and members of the Union
responsible for the illegal strike; and

3. in failing to seasonably exercise his authority to avert the illegal strike and protect the rights and
interests of PAL whose business is affected with public interest.

Under Art. 263 of the Labor Code, the Labor Secretary's authority to resolve a labor dispute within 30
days from the date of assumption of jurisdiction, encompasses only the issues in the dispute, not the
legality or illegality of any strike that may have been resorted to in the meantine (Binamira vs. Ogan-
Occena, 148 SCRA 677, 685 [1987]). Indeed, as found by the Labor Secretary in his Order of January 21,
1989, the only issues involved in the dispute were:

1. determination of the minimum entry rate

2. wage adjustment due to payscale study

3. retroactive pay as a consequence of the upgraded payscale or goodwill bonus.

The legality or illegality of the strike was not submitted to the Secretary of Labor for resolution.

The jurisdiction to decide the legality of strikes and lock-outs is vested in Labor Arbiters, not in the
Secretary of Labor. Art. 217, par. a, subpar. 5 of the Labor Code provides:

Art. 217. Jurisdiction of Labor Arbiters and the Commission.

(a) The Labor Arbiters shall have the original and exclusive jurisdiction to hear and decide within thirty
(30) working days after submission of the case by the parties for decision, the following cases involving
all workers, whether agricultural or non- agricultural.

x x x           x x x          x x x
5. Cases arising from any violation of Article 265 of this code, including questions involving the legality of
strikes and lock-outs. (Emphasis supplied.)

In ruling on the legality of the PALEA strike, the Secretary of Labor acted without or in excess of his
jurisdiction.

There is merit in PAL's contention that the Labor Secretary erred in declaring the strike valid and in
prohibiting PAL from taking retaliatory or disciplinary action against the strikers for the damages
suffered by the Airline as a result of the illegal work stoppage.

PALEA's strike on January 20, 1989 was illegal for three (3) reasons:

1. It was premature for there was an existing CBA which still had nine (9) months to run, i.e., up to
September 30, 1989. The law expressly provides that neither party to a collective bargaining agreement
shall terminate nor modify such agreement during its lifetime. While either party can serve a written
notice to terminate or modify the agreement at least sixty (60) days prior to its expiration date (known
as the "freedom period") it shall nevertheless 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 freedom
period and/or until a new agreement is reached by them (Art. 253, Labor Code).

2. It violated the no-strike provision of the CBA, to wit:

The Association agrees that there shall be no strikes, walk outs, stoppage, or slowdown of work, or any
other form of interference with any of the operations of the Company during the period between the
signing of the Agreement up to September 30, 1989. (Emphasis supplied, p-118, Rollo.)

3. The NCMB had declared the notice of strike as "appropriate for preventive mediation." The effect of
that declaration (which PALEA did not ask to be reconsidered or set aside) was to drop the case from the
docket of notice of strikes, as provided in Rule 41 of the NCMB Rules, as if there was no notice of strike.
During the pendency of preventive mediation proceedings no strike could be legally declared. The
Secretary must have thought so too, that is why he failed to act, for a period of seven (7) days, on PAL's
petition for him to assume jurisdiction over the labor dispute. The strike which the union mounted,
while preventive mediation proceedings were ongoing, was aptly described by the petitioner as "an
ambush" (p. 2, Rollo).

Since the strike was illegal, the company has a right to take disciplinary action against the union officers
who participated in it, and against any union members who committed illegal acts during the strike, Art.
264 of the Labor Code provides:

Art. 264. Prohibited activities.—. . .

x x x           x x x          x x x

Any worker whose employment has been terminated as a consequence of an unlawful lockout shall be
entitled to reinstatement with full back wages. Any union officer who knowingly participates in an illegal
strike and any worker or union officer who knowingly participates in the commission of illegal acts
during a strike may be declared to have lost his employment status: Provided, That mere participation of
a worker in a lawful strike shall not constitute sufficient ground for termination of his employment, even
if a replacement had been hired by the employer during such lawful strike. (Emphasis supplied.)
The Labor Secretary exceeded his jurisdiction when he restrained PAL from taking disciplinary action
against its guilty employees, for, under Art. 263 of the Labor Code, all that the Secretary may enjoin is
the holding of the strike, but not the company's right to take action against union officers who
participated in the illegal strike and committed illegal acts. The prohibition which the Secretary issued to
PAL constitutes an unlawful deprivation of property and denial of due process for it prevents PAL from
seeking redress for the huge property losses that it suffered as a result of the union's illegal mass action.

The Secretary may have realized that he was partly to blame for PAL's damages because of his failure to
act promptly and use his authority to avert the illegal strike under Article 263(g) of the Labor Code.

Nevertheless, the Secretary's delay does not excuse the reckless and irresponsible action of the union in
declaring the illegal strike. The liability of the union for that is primary and exclusive.

WHEREFORE, the petition for certiorari is granted. The orders dated January 21, 1989 and May 8, 1989
of the Secretary of Labor in NCMB NCR Case No. PM-01-007-89 are set aside and nullified insofar as the
said orders declare valid the PALEA strike of January 20-21, 1989 and restrain the petitioner from taking
appropriate legal action against PALEA's officers who led the illegal strike, and any union members who
may have committed illegal acts during said strike. The monetary benefits awarded to the union in the
said orders are, however, affirmed. Costs against respondent PALEA.

SO ORDERED.

G.R. No. 169632             March 28, 2006

UNIVERSITY OF SAN AGUSTIN EMPLOYEES’ UNION-FFW (USAEU-FFW), and individual union officers
THEODORE NEIL LASOLA, MERLYN JARA, JULIUS MARIO, FLAVIANO MANALO, RENE CABALUM,
HERMINIGILDO CALZADO, MA. LUZ CALZADO, RAY ANTHONY ZUÑIGA, RIZALENE VILLANUEVA,
RUDANTE DOLAR, ROVER JOHN TAVARRO, RENA LETE, ALFREDO GORIONA, RAMON VACANTE and
MAXIMO MONTERO, Petitioners,
vs.
THE COURT OF APPEALS and UNIVERSITY OF SAN AGUSTIN, Respondents.

DECISION

GARCIA, J.:

By this petition for review on certiorari, petitioners University of San Agustin Employees’ Union-FFW
(Union) and its officers seek to reverse and set aside the Partially Amended Decision1 of the Court of
Appeals (CA) dated August 23, 2005 in CA-G.R.SP No. 85317, reversing the Decision and Resolution of
the Secretary of Labor and Employment (SOLE) dated April 6, 2004 and May 24, 2004, respectively. The
assailed CA decision declared the strike conducted by the petitioner Union, illegal, and consequently,
the co-petitioner union officers were deemed to have lost their employment status. It further vacated
the SOLE’s resolution of the economic issues involved in the case and directed the parties to resort to
voluntary arbitration in accordance with the grievance machinery as embodied in their existing
collective bargaining agreement (CBA).

The facts:

Respondent University of San Agustin (University) is a non-stock, non-profit educational institution

which offers both basic and higher education courses. Petitioner Union is the duly recognized collective
bargaining unit for teaching and non-teaching rank-and-file personnel of the University while the other
individual petitioners are its officers.

On July 27, 2000, the parties entered into a 5-year CBA2 which, among other things, provided that the
economic provisions thereof shall have a period of three (3) years or up to 2003. Complementary to said
provisions is Section 3 of Article VIII of the CBA providing for salary increases for School Years (SY) 2000-
2003, such increase to take the form of either a lump sum or a percentage of the tuition incremental
proceeds (TIP).

The CBA contained a "no strike, no lockout" clause and a grievance machinery procedure to resolve
management-labor disputes, including a voluntary arbitration mechanism should the grievance
committee fail to satisfactorily settle such disputes.

Pursuant to the CBA, the parties commenced negotiations for the economic provisions for the remaining
two years, i.e., SY2003-2004 and SY2004-2005. During the negotiations, the parties could not agree on
the manner of computing the TIP, thus the need to undergo preventive mediation proceedings before
the National Conciliation and Mediation Board (NCMB), Iloilo City.

The impasse respecting the computation of TIP was not resolved. This development prompted the Union
to declare a bargaining deadlock grounded on the parties’ failure to arrive at a mutually acceptable
position on the manner of computing the seventy percent (70%) of the net TIP to be allotted for salary
and other benefits for SY2003-2004 and SY2004-2005.

Thereafter, the Union filed a Notice of Strike before the NCMB which was expectedly opposed by the
University in a Motion to Strike Out Notice of Strike and to Refer the Dispute to Voluntary
Arbitration,3 invoking the "No strike, no lockout" clause4 of the parties’ CBA. The NCMB, however, failed
to resolve the University’s motion.

The parties then made a joint request for the SOLE to assume jurisdiction over the dispute. The labor
dispute was docketed as OS-AJ-0032-2003. On September 18, 2003, an Assumption of Jurisdiction
Order5 (AJO) was issued by the SOLE, thus:

WHEREFORE, this Office hereby ASSUMES JURISDICTION over the labor dispute at the UNIVERSITY OF
SAN AGUSTIN, pursuant to Article 263(g) of the Labor Code, as amended.

ACCORDINGLY, any strike or lockout whether actual or intended, is hereby strictly enjoined and the
parties are directed to cease and desist from committing any act that might exacerbate the situation.

Finally, to expedite resolution of the dispute, the parties are directed to submit their respective position
papers and evidence to this Office within TEN (10) calendar days from receipt hereof, with proof of
service to the other party. REPLY thereto shall be submitted with proof of service to the other party,
within five (5) calendar days from receipt of the other party’s POSITION PAPER.
On September 19, 2003, the Union staged a strike. At 6:45 a.m. of the same day, Sheriffs Francisco L.
Reyes and Rocky M. Francisco had arrived at San Agustin University to serve the AJO on the Union. At
the main entrance of the University, the sheriffs saw some elements of the Union at the early stages of
the strike. There they met Merlyn Jara, the Union’s vice president, upon whom the sheriffs tried to serve
the AJO, but who, after reading it, refused to receive the same, citing Union Board Resolution No. 3
naming the union president as the only person authorized to do so. The sheriffs explained to Ms. Jara
that even if she refused to acknowledge receipt of the AJO, the same would be considered served.
Sheriff Reyes further informed the Union that once the sheriffs post the AJO, it would be considered
received by the Union.6

At approximately 8:45 a.m., the sheriffs posted copies of the AJO at the main gate of San Agustin
University, at the main entrance of its buildings and at the Union’s office inside the campus. At 9:20
a.m., the sheriffs served the AJO on the University.

Notwithstanding the sheriffs’ advice as to the legal implication of the Union’s refusal to be served with
the AJO, the Union went ahead with the strike.

At around 5:25 p.m., the Union president arrived at the respondent University’s premises and received
the AJO from the sheriffs.

On September 24, 2003, the University filed a Petition to Declare Illegal Strike and Loss of Employment
Status7 at the National Labor Relations Commission (NLRC) Sub-regional Arbitration Branch No. VI in
Iloilo City. The case was docketed as NLRC SRAB Case No. 06-09-50370-03, which the University later on
requested to be consolidated with OS-AJ-0032-2003 pending before the SOLE. The motion for
consolidation was granted by the Labor Arbiter in an Order dated November 7, 2003.8

On April 6, 2004, the SOLE rendered a Decision9 resolving the various economic issues over which the
parties had a deadlock in the collective bargaining, including the issue of legality/illegality of the
September 19, 2003 strike. Dispositively, the decision reads:

WHEREFORE, the parties are hereby directed to conclude a memorandum of agreement embodying the
foregoing dispositions to be appended to the current CBA. The petition to declare the strike illegal is
hereby DISMISSED for want of legal and factual basis. Consequently, there is no basis whatsoever to
declare loss of employment status on the part of any of the striking union members.

SO ORDERED.

The University moved for a reconsideration of the said decision but its motion was denied by the SOLE in
a Resolution10 of May 24, 2004.

In time, the University elevated the matter to the CA by way of a petition for certiorari, thereat docketed
as CA-G.R. SP No. 85317.

On March 4, 2005, the CA rendered a Decision11 partially granting the University’s petition. While the CA
affirmed the rest of the SOLE’s decision on the economic issues, particularly the formula to be used in
computing the share of the employees in the tuition fee increase for Academic Year 2003-2004, it,
however, reversed the SOLE’s ruling as to the legality of the September 19, 2003 strike, to wit:
WHEREFORE, the foregoing premises considered, the petition is hereby partially GRANTED. The assailed
Decision of the public respondent SOLE is hereby MODIFIED to the effect that the strike held by the
[petitioners] on September 19, 2003 is illegal. Hence, the union officers are deemed to have lost their
employment status.

The assailed Decision however, is AFFIRMED in all other respects.

SO ORDERED. (Word in bracket added).

Both parties filed their respective motions for partial reconsideration of the aforestated decision, the
University excepting from the CA’s decision insofar as the latter affirmed the SOLE’s resolution of the
economic issues. On the other hand, the Union sought reconsideration of the CA’s finding of illegality of
the September 19, 2003 strike.

In the meantime, on April 7, 2005, the University served notices of termination to the union officers who
were declared by the CA as deemed to have lost their employment status.

On the same day – April 7, 2005 – in response to the University’s action, the Union filed with the NCMB
a second notice of strike, this time on ground of alleged union busting.

On April 22, 2005, the parties again took initial steps to negotiate the new CBA but said attempts proved
futile. Hence, on April 25, 2005, the Union went on strike. In reaction, the University notified the Union
that it was pulling out of the negotiations because of the strike.

On August 23, 2005, the CA, acting on the parties’ respective motions for reconsideration, promulgated
the herein challenged Partially Amended Decision.12 Finding merit in the respondent University’s motion
for partial reconsideration, the CA ruled that the SOLE abused its discretion in resolving the economic
issues on the ground that said issues were proper subject of the grievance machinery as embodied in
the parties’ CBA. Consequently, the CA directed the parties to refer the economic issues of the CBA to
voluntary arbitration. The CA, however, stood firm in its finding that the strike conducted by the
petitioner Union was illegal and its officers were deemed to have lost their employment status.
Dispositively, the decision reads:

WHEREFORE, in view of all the foregoing premises, an amended judgment is hereby rendered by us
GRANTING the petition for certiorari, SETTING ASIDE our original decision in this case which was
promulgated on March 4, 2005, SETTING ASIDE also the Decision rendered by the public respondent
SOLE on April 6, 2004 and DECLARING the strike held on September 19, 2003 by the [petitioner] Union
as ILLEGAL. The union officers are therefore deemed to have lost their employment status.

The parties are hereby DIRECTED to refer the economic issues of the CBA to VOLUNTARY ARBITRATION,
where the computation and determination of the TIP shall be in the manner directed in the body of this
Decision.

SO ORDERED.

On September 20, 2005, the Union and its dismissed officers filed the instant petition raising the
following basic issues:

I
THE HONORABLE COURT OF APPEALS GRAVELY ERRED AND COMMITTED GRAVE ABUSE OF DISCRETION
IN DECLARING ILLEGAL THE STRIKE OF THE PETITIONERS ON SEPTEMBER 19, 2003 AND IN DECLARING
THE UNION OFFICERS AS DEEMED TO HAVE LOST THEIR EMPLOYMENT STATUS FOR THE ALLEGED
FAILURE OF THE PETITIONERS TO IMMEDIATELY RETURN TO THEIR WORK WHEN THE ASSUMPTION OF
JURISDICTION ORDER WAS DEEMED SERVED UPON THEM BY THE DOLE SHERIFFS AS OF 8:45 IN THE
MORNING OF THAT DATE, WHEN, IN CASES WHERE THE STRIKE HAS ALREADY COMMENCED, THE
SECRETARY OF LABOR AND EMPLOYMENT (SOLE) ALWAYS GIVES TWENTY-FOUR HOURS TO THE
STRIKING WORKERS WITHIN WHICH TO RETURN TO WORK, AND TAKING INTO CONSIDERATION THE
TOTALITY OF THE CONDUCT OF THE STRIKERS, AS WHAT THE SOLE HAD DONE, THE PETITIONERS HAVE
NOT MANIFESTED NAKED DISPLAY OF RECALCITRANCE NOR SHOWN BAD FAITH TO THE RESPONDENT
UNIVERSITY.

II

THE HONORABLE COURT OF APPEALS GRAVELY ERRED AND COMMITTED GRAVE ABUSE OF DISCRETION
IN DIRECTING TO REFER THE ECONOMIC ISSUES OF THE LABOR DISPUTE TO VOLUNTARY ARBITRATION
WHEN IT IS SETTLED BY JURISPRUDENCE THAT "THE LABOR SECRETARY’S AUTHORITY TO ASSUME
JURISDICTION OVER A LABOR DISPUTE MUST INCLUDE AND EXTEND TO ALL QUESTIONS AND
CONTROVERSIES ARISING THEREFROM, EVEN INCLUDING CASES OVER WHICH THE LABOR ARBITER HAS
EXCLUSIVE JURISDICTION."

Prefatorily, we restate the time-honored principle that in petitions for review under Rule 45 of the Rules
of Court, only questions of law may be raised. It is not our function to analyze or weigh all over again
evidence already considered in the proceedings below, our jurisdiction being limited to reviewing only
errors of law that may have been committed by the lower court.13 The resolution of factual issues is the
function of lower courts, whose findings on these matters are received with respect. A question of law
which we may pass upon must not involve an examination of the probative value of the evidence
presented by the litigants.14

Here, however, the findings of fact of the CA are not in accord with the conclusions made by the SOLE
regarding the legality of the subject strike. Consequently, we are compelled to make our own
assessment of the evidence on record insofar as the strike issue is concerned.

We find the CA’s conclusions to be well supported by evidence, particularly the Sheriff’s Report.15 As we
see it, the SOLE was remiss in disregarding the sheriff’s report. It bears stressing that said report is an
official statement by the sheriff of his acts under the writs and processes issued by the court, in this
case, the SOLE, in obedience to its directive and in conformity with law. In the absence of contrary
evidence, a presumption exists that a sheriff has regularly performed his official duty. To controvert the
presumption arising therefrom, there must be clear and convincing evidence.

The sheriff’s report unequivocally stated the union officers’ refusal to receive the AJO when served on
them in the morning of September 19, 2003. The September 16, 2003 Union’s Board Resolution No. 3
which gave sole authority to its president to receive the AJO must not be allowed to circumvent the
standard operating procedure of the Office of the Undersecretary for Labor Relations which considers
AJOs as duly served upon posting of copies thereof on designated places. The procedure was adopted in
order to prevent the thwarting of AJOs by the simple expedient of refusal of the parties to receive the
same, as in this case. The Union cannot feign ignorance of this procedure because its counsel Atty. Mae
M. Gellecanao-Laserna was a former Regional Director of the Department of Labor and Employment
(DOLE).

To be sure, the Union was not able to sufficiently dispute the truth of the narration of facts contained in
the sheriff’s report. Hence, it was not unreasonable for the CA to conclude that there was a deliberate
intent by the Union and its officers to disregard the AJO and proceed with their strike, which, by their act
of disregarding said AJO made said strike illegal. The AJO was issued by the SOLE pursuant to Article
263(g) of the Labor Code, which reads:

Art. 263. Strikes, picketing, and lockouts. - … (g) When, in his opinion, there exists a labor dispute
causing or likely to cause a strike or lockout in an industry indispensable to the national interest, the
Secretary of Labor and Employment may assume jurisdiction over the dispute and decide it or certify the
same to the Commission for compulsory arbitration. Such assumption or certification shall have the
effect of automatically enjoining the intended or impending strike or lockout as specified in the
assumption or certification order. If one has already taken place at the time of assumption or
certification, all striking or locked out employees shall immediately return to work and the employer
shall immediately resume operations and readmit all workers under the same terms and conditions
prevailing before the strike or lockout. The Secretary of Labor and Employment or the Commission may
seek the assistance of law enforcement agencies to ensure compliance with this provision as well as
with such orders as he may issue to enforce the same. (Emphasis supplied).

Conclusively, when the SOLE assumes jurisdiction over a labor dispute in an industry indispensable to
national interest or certifies the same to the NLRC for compulsory arbitration, such assumption or
certification shall have the effect of automatically enjoining the intended or impending strike or lockout.
Moreover, if one had already taken place, all striking workers shall immediately return to work and the
employer shall immediately resume operations and readmit all workers under the same terms and
conditions prevailing before the strike or lockout. In Trans-Asia Shipping Lines, Inc., et al. vs. CA, et
al.,16 the Court declared that when the Secretary exercises these powers, he is granted great breadth of
discretion in order to find a solution to a labor dispute. The most obvious of these powers is the
automatic enjoining of an impending strike or lockout or the lifting thereof if one has already taken
place. Assumption of jurisdiction over a labor dispute, or the certification of the same to the NLRC for
compulsory arbitration, always co-exists with an order for workers to return to work immediately and
for employers to readmit all workers under the same terms and conditions prevailing before the strike
or lockout.

In this case, the AJO was served at 8:45 a.m. of September 19, 2003. The strikers then should have
returned to work immediately. However, they persisted with their refusal to receive the AJO and waited
for their union president to receive the same at 5:25 p.m. The Union’s defiance of the AJO was evident
in the sheriff’s report:

We went back to the main gate of the University and there NCMB Director Dadivas introduced us to the
Union lawyer, Atty. Mae Lacerna a former DOLE Regional Director. Atty. Lacerna however refused to be
officially served the Order again pointing to Board Resolution No. 3 passed by the Union officers. Atty.
Lacerna then informed the undersigned Sheriffs that the Union president will accept the Order at
around 5:00 o’clock in the afternoon. Atty. Lacerna told the undersigned Sheriff that only when the
Union president receives the Order at 5:00 p.m. shall the Union recognize the Secretary of Labor as
having assumed jurisdiction over the labor dispute.17
Thus, we see no reversible error in the CA’s finding that the strike of September 19, 2003 was illegal.
Consequently, the Union officers were deemed to have lost their employment status for having
knowingly participated in said illegal act.

The Union’s assertion of a well settled practice that the SOLE always gives twenty-four hours (24) to the
striking workers within which to return to work, offers no refuge. Aside from the fact that this alleged
well settled practice has no basis in law and jurisprudence, Article 263(g) of the Labor Code, supra, is
explicit that if a strike has already taken place at the time of assumption of jurisdiction or certification,
all striking or locked out employees shall immediately return to work and the employer shall
immediately resume operations and readmit all workers under the same terms and conditions prevailing
before the strike or lock-out. This is compounded further by this Court’s rulings which have never
interpreted the phrase "immediately return to work" found in Article 263(g) to mean "within twenty
four (24) hours." On the other hand, the tenor of these ponencias18 indicates an almost instantaneous or
automatic compliance for a striker to return to work once an AJO has been duly served.

We likewise find logic in the CA’s directive for the herein parties to proceed with voluntary arbitration as
provided in their CBA. As we see it, the issue as to the economic benefits, which included the issue on
the formula in computing the TIP share of the employees, is one that arises from the interpretation or
implementation of the CBA. To be sure, the parties’ CBA provides for a grievance machinery to resolve
any "complaint or dissatisfaction arising from the interpretation or implementation of the CBA and
those arising from the interpretation or enforcement of company personnel policies."19 Moreover, the
same CBA provides that should the grievance machinery fail to resolve the grievance or dispute, the
same shall be "referred to a Voluntary Arbitrator for arbitration and final resolution."20 However,
through no fault of the University these processes were not exhausted. It must be recalled that while
undergoing preventive mediation proceedings before the NCMB, the Union declared a bargaining
deadlock, filed a notice of strike and thereafter, went on strike. The University filed a Motion to Strike
Out Notice of Strike and to Refer the Dispute to Voluntary Arbitration21 but the motion was not acted
upon by the NCMB. As borne by the records, the University has been consistent in its position that the
Union must exhaust the grievance machinery provisions of the CBA which ends in voluntary arbitration.

The University’s stance is consistent with Articles 261 and 262 of the Labor Code, as amended which
respectively 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.

The grievance machinery and no strike, no lockout22 provisions of the CBA forged by the University and
the Union are founded on Articles 261 and 262 quoted above. The parties agreed that practically all
disputes – including bargaining deadlocks – shall be referred to the grievance machinery which ends in
voluntary arbitration. Moreover, no strike or no lockout shall ensue while the matter is being resolved.

The University filed a Motion to Strike Out Notice of Strike and Refer the Dispute to Voluntary
Arbitration23 precisely to call the attention of the NCMB and the Union to the fact that the CBA provides
for a grievance machinery and the parties’ obligation to exhaust and honor said mechanism.
Accordingly, the NCMB should have directed the Union to honor its agreement with the University to
exhaust administrative grievance measures and bring the alleged deadlock to voluntary arbitration.
Unfortunately, the NCMB did not resolve the University’s motion thus paving the way for the strike on
September 19, 2003 and the deliberate circumvention of the CBA’s grievance machinery and voluntary
arbitration provisions.

As we see it, the failure or refusal of the NCMB and thereafter the SOLE to recognize, honor and enforce
the grievance machinery and voluntary arbitration provisions of the parties’ CBA unwittingly rendered
said provisions, as well as, Articles 261 and 262 of the Labor Code, useless and inoperative. As here, a
union can easily circumvent the grievance machinery and a previous agreement to resolve differences or
conflicts through voluntary arbitration through the simple expedient of filing a notice of strike. On the
other hand, management can avoid the grievance machinery and voluntary arbitration provisions of its
CBA by simply filing a notice of lockout.

In Liberal Labor Union vs. Philippine Can Company,24 the Court viewed that the main purpose of
management and labor in adopting a procedure in the settlement of their disputes is to prevent a strike
or lockout. Thus, this procedure must be followed in its entirety if it is to achieve its objective.
Accordingly, the Court in said case held:

The authorities are numerous which hold that strikes held in violation of the terms contained in a
collective bargaining agreement are illegal, specially when they provide for conclusive arbitration
clauses. These agreements must be strictly adhered to and respected if their ends have to be achieved.

It is noteworthy that in Liberal, management refused to submit names in connection with the formation
of the grievance committee. Yet, the Court ruled in that case that labor still had no right to declare a
strike, for its duty is to exhaust all available means within its reach before resorting to force. In the case
at bench, the University, in filing its Motion to Strike Out Notice of Strike and to Refer the Dispute to
Voluntary Arbitration before the NCMB, was insisting that the Union abide by the parties’ CBA’s
grievance machinery and voluntary arbitration provisions. With all the more reasons then should the
Union be directed to proceed to voluntary arbitration.

We are not unmindful of the Court’s ruling in International Pharmaceuticals, Inc. vs. Secretary of Labor,
et al.,25 that the SOLE’ s jurisdiction over labor disputes must include and extend to all questions and
controversies arising therefrom, including cases over which the Labor Arbiter has exclusive jurisdiction.
However, we are inclined to treat the present case as an exception to that holding. For, the NCMB’s
inaction on the University’s motion to refer the dispute to voluntary arbitration veritably forced the
hand of the University to seek and accordingly submit to the jurisdiction of the SOLE. Considering that
the CBA contained a no strike, no lockout and grievance machinery and voluntary arbitration clauses,
the NCMB, under its very own Manual of Procedures in the Settlement and Disposition of Conciliation
and Preventive Mediation Cases, should have declared as not duly filed the Union’s Notice of Strike and
thereafter, should have referred the labor dispute to voluntary arbitration pursuant to Article 261,
supra, of the Labor Code. For sure, Section 6(c)(i), Rule VI, of the NCMB’s Manual specifically provides:

Section 6. Action on non-strikeable issues - A strike or lockout notice anchored on grounds involving (1)
inter-union or intra-union disputes (2) violation of labor standard laws (3) pending cases at the DOLE
Regional Offices, BLR, NLRC and its appropriate Regional Branches, NWPC and its Regional Wage Boards,
Office of the Secretary, Voluntary Arbitrator, Court of Appeals and the Supreme Court (4) execution and
enforcement of final orders, decisions, resolutions or awards of no. (3) above shall be considered not
duly filed and the party so filing shall be notified of such finding in writing by the Regional Branch
Director. On his part, the Conciliator-Mediator shall convince the party concerned to voluntarily
withdraw the notice without prejudice to further conciliation proceedings. Otherwise, he shall
recommend to the Regional Branch Director that the notice be treated as a preventive mediation case.

xxx xxx xxx

xxx xxx xxx

c. Action on Notices Involving Issues Cognizable by the Grievance Machinery, Voluntary Arbitration or
the National Labor Relations Commission.

i) Disputes arising from the interpretation or implementation of a collective bargaining agreement or

from the interpretation or enforcement of company personnel policies shall be referred to the grievance
machinery as provided for under Art. 261 of the Labor Code xxx (Emphasis supplied).

As quoted earlier, Article 261 of the Labor Code mentioned in the aforequoted Section 6(c)(i), Rule VI of
the NCMB Manual refers to the jurisdiction of voluntary arbitrator or panel of voluntary arbitrators "to
hear and decide all unresolved grievances arising from the interpretation or implementation of the CBA
and those arising from the interpretation or enforcement of company personnel policies," hence
"violations of a CBA, except those which are gross in character, shall no longer be treated as unfair labor
practice and shall be resolved as grievances under the CBA." The same Article further states that the
"Commission, its Regional Offices and the Regional Directors of the Department of Labor and
Employment (DOLE) 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 CBA."

As it were, Article 261 of the Labor Code, in relation to Section 6(c)(i), Rule VI of the NCMB Manual,
provides the manner in which the NCMB must resolve notices of strike that involve non-strikeable
issues. And whether the notice of strike or lockout involves inter-union or intra-union disputes, violation
of labor standards laws or issues cognizable by the grievance machinery, voluntary arbitration or the
NLRC, the initial step is for the NCMB to consider the notice of strike as not duly filed.
Centering on disputes arising from the interpretation or implementation of a CBA or from the
interpretation or enforcement of company personnel policies, following Section 6(c)(i), Rule VI, supra, of
the NCMB Manual, after the declaration that the notice of strike is "not duly filed," the labor dispute is
to be referred to voluntary arbitration pursuant to Article 261, supra, of the Labor Code.

In short, the peculiar facts of the instant case show that the University was deprived of a remedy that
would have enjoined the Union strike and was left without any recourse except to invoke the jurisdiction
of the SOLE.

Following Liberal, this Court will not allow the no strike, no lockout, grievance machinery and voluntary
arbitration clauses found in CBAs to be circumvented by the simple expedient of filing of a notice of
strike or lockout. A similar circumvention made possible by the inaction of the NCMB on the University’s
Motion to Strike Out Notice of Strike and to Refer the Dispute to Voluntary Arbitration will not be
countenanced. To rule otherwise would render meaningless Articles 261 and 262 of the Labor Code, as
amended, as well as the voluntary arbitration clauses found in CBAs.

All told, we find no reversible error committed by the CA in rendering its assailed decision.

WHEREFORE, the petition is DENIED. The Partially Amended Decision dated August 23, 2005 of the Court
of Appeals in CA-G.R. SP No. 85317 is AFFIRMED.

SO ORDERED.

CHAPTER II  Art. 267 – 268

CHAPTER III – FOREIGN ACTIVITIES Art. 269 – 271

BOOK SIX – POST EMPLOYMENT ART. 278 – 279

Termination of Employment  - Art. 280/ 281 – 282/283-284/285 – 286

1. Termination by employer

2. Just causes 2. Authorized causes 3. Due process

3. Twin-notice requirement

4. Hearing

5. Termination by employee

6. Resignation versus constructive dismissal

7. Preventive Suspension
 8. Reliefs from illegal dismissal

9. Money claims arising from employer-employee relationship

TITLE II – RETIREMENT FROM THE SERVICE Art. 287

1. Security of Tenure

2. Regular employees

3. Project employees

4. compulsory and optional retirement

5. retrenchment

Cases:

G.R. No. 87210 July 16, 1990

FILOMENA BARCENAS, petitioner,
vs.
THE NATIONAL LABOR RELATIONS COMMISSION (NLRC), Rev. SIM DEE the present Head Monk of the
Manila Buddha Temple, MANUEL CHUA, in his capacity as the President and Chairman of the Board of
Directors of the Poh Toh Buddhist Association of the Philippines, Inc., and in his private
capacity, respondents.

L.B. Camins for petitioner.

Lino M. Patajo and Jose J. Torrefranca for private respondents.

MEDIALDEA, J.:

This petition for review on certiorari (which We treat as a special civil action for certiorari) seeks to annul
the decision of the National Labor Relations Commission dated November 29, 1988, which reversed the
decision of the Labor Arbiter dated February 10, 1988 in NLRC NCR Case No. 12-4861-86 (Filomena
Barcenas v. Rev. Sim See, etc., et al.) on the ground that no employer-employee relationship exists
between the parties.

Petitioner alleged in her position paper the following facts:

In 1978, Chua Se Su (Su for short) in his capacity as the Head Monk of the Buddhist Temple of Manila
and Baguio City and as President and Chairman of the Board of Directors of the Poh Toh Buddhist
Association of the Phils. Inc. hired the petitioner who speaks the Chinese language as secretary and
interpreter. Petitioner's position required her to receive and assist Chinese visitors to the temple, act as
tourist guide for foreign Chinese visitors, attend to the callers of the Head Monk as well as to the food
for the temple visitors, run errands for the Head Monk such as paying the Meralco, PLDT, MWSS bills
and act as liaison in some government offices. Aside from her pay and allowances under the law, she
received an amount of P500.00 per month plus free board and lodging in the temple. In December,
1979, Su assumed the responsibility of paying for the education of petitioner's nephew. In 1981, Su and
petitioner had amorous relations. In May, 1982, of five months before giving birth to the alleged son of
Su on October 12, 1982, petitioner was sent home to Bicol. Upon the death of Su in July, 1983,
complainant remained and continued in her job. In 1985, respondent Manuel Chua (Chua, for short) was
elected President and Chairman of the Board of the Poh Toh Buddhist Association of the Philippines, Inc.
and Rev. Sim Dee for short) was elected Head Buddhist Priest. Thereafter, Chua and Dee discontinued
payment of her monthly allowance and the additional P500.00 effective 1983. In addition, petitioner and
her son were evicted forcibly from their quarters in the temple by six police officers. She was brought
first to the Police precinct in Tondo and then brought to Aloha Hotel where she was compelled to sign a
written undertaking not to return to the Buddhist temple in consideration of the sum of P10,000.00.
Petitioner refused and Chua shouted threats against her and her son. Her personal belongings including
assorted jewelries were never returned by respondent Chua.

Chua and DEE on the other hand, claimed that petitioner was never an employee of the Poh Toh Temple
but a servant who confined herself to the temple and to the personal needs of the late Chua Se Su and
thus, her position is coterminous with that of her master.

On February 10, 1988, the Labor Arbiter rendered a decision, the dispositive portion of which states:

WHEREFORE, premises considered, judgment is hereby rendered in favor of the complainant Filomena
Barcenas, and the respondent corporation is hereby ordered to pay her the following:

1. P26,575.00 backwages from August 9, 1986 up to date hereof.,

2. P14,650.00 as separation pay;

3. P18,000.00 as unpaid wages from August, 1983 up to August 8, 1986; and

4. P10,000.00 moral damages.

Complainant's charge of unfair labor practice is hereby dismissed for lack of merit.

SO ORDERED. 1

Respondents appealed to the National Labor Relations Commission which, as earlier stated, reversed the
above decision of the Labor Arbiter. Hence, this instant petition.

A painstaking review of the records compels Us to dismiss the petition.

At the outset, however, We agree with the petitioner's claim that she was a regular employee of the
Manila Buddhist Temple as secretary and interpreter of its Head Monk, Su As Head Monk, President and
Chairman of the Board of Directors of the Poh Toh Buddhist Association of the Philippines, Su was
empowered to hire the petitioner under Article V of the By-laws of the Association which states:

. . . (T)he President or in his absence, the Vice President shall represent the Association in all its dealings
with the public, subject to the Board, shall have the power to enter into any contract or agreement in
the name of the Association, shall manage the active business operation of the Association, shall deal
with the bank or banks . . . 2
Respondent NLRC represented by its Legal Offices 3 argues that since petitioner was hired without the
approval of the Board of Directors of the Poh Toh Buddhist Association of the Philippines, Inc., she was
not an employee of respondents. This argument is specious. The required Board approval would appear
to relate to the acts of the President in representing the association "in all its dealings with the public."
And, even granting that prior Board approval is required to confirm the hiring of the petitioner, the same
was already granted, albeit, tacitly. It must be noted that petitioner was hired in 1978 and no whimper
of protest was raised until this present controversy.

Moreover, the work that petitioner performed in the temple could not be categorized as mere domestic
work. Thus, We find that petitioner, being proficient in the Chinese language, attended to the visitors,
mostly Chinese, who came to pray or seek advice before Buddha for personal or business problems;
arranged meetings between these visitors and Su and supervised the preparation of the food for the
temple visitors; acted as tourist guide of foreign visitors; acted as liaison with some goverment offices;
and made the payment for the temple's Meralco, MWSS and PLDT bills. Indeed, these tasks may not be
deemed activities of a household helper. They were essential and important to the operation and
religious functions of the temple.

In spite of this finding, her status as a regular employee ended upon her return to Bicol in May, 1982 to
await the birth of her love-child allegedly by Su The records do not show that petitioner filed any leave
from work or that a leave was granted her. Neither did she return to work after the birth of her child on
October 12, 1982, whom she named Robert Chua alias Chua Sim Tiong. The NLRC found that it was only
in July, 1983 after Su died that she went back to the Manila Buddhist Temple. Petitioner's pleadings
failed to rebut this finding. Clearly, her return could not be deemed as a resumption of her old position
which she had already abandoned. Petitioner herself supplied the reason for her return. She stated:

. . . (I)t was the death-bed instruction to her by Chua Se Su to stay at the temple and to take care of the
two boys and to see to it that they finish their studies to become monks and when they are monks to
eventually take over the two temples as their inheritance from their father Chua Se Su. 4

Thus, her return to the temple was no longer as an employee but rather as Su's mistress who is bent on
protecting the proprietary and hereditary rights of her son and nephew. In her pleadings, the petitioner
claims that they were forcefully evicted from the temple, harassed and threatened by respondents and
that the Poh Toh Buddhist Association is a trustee corporation with the children as cestui que trust.
These claims are not proper in this labor case. They should be appropriately threshed out in the
complaints already filed by the petitioner before the civil courts. Due to these claims, We view the
respondents' offer of P10,000.00 as indicative more of their desire to evict the petitioner and her son
from the temple rather than an admission of an employer-employee relations.

Anent the petitioner's claim for unpaid wages since May, 1982 which she filed only in 1986, We hold
that the same has already prescribed. Under Article 292 of the Labor Code, all money claims arising from
employer-employee relations must be filed within three years from the time the cause of action
accrued, otherwise they shall forever be barred.

Finally, while petitioner contends that she continued to work in the temple after Su died, there is,
however, no proof that she was re-hired by the new Head Monk. In fact, she herself manifested that
respondents made it clear to her in no uncertain terms that her services as well as her presence and that
of her son were no longer needed. 5 However, she persisted and continued to work in the temple
without receiving her salary because she expected Chua and Dee to relent and permit the studies of the
two boys. 6 Consequently, under these circumstances, no employer-employee relationship could have
arisen.

ACCORDINGLY, the decision of the National Labor Relations Commission dated November 29, 1988 is
hereby AFFIRMED for the reasons aforestated. No costs.

SO ORDERED.

G.R. No. 109114 September 14, 1993

HOLIDAY INN MANILA and/or HUBERT LINER and BABY DISQUITADO, petitioners,

vs.
NATIONAL LABOR RELATIONS COMMISSION (Second Division) and ELENA HONASAN, respondents.

Inocentes, De Leon, Leogardo, Atienza, Manaye & Azucena Law Office for petitioners.

Florante M. Yambot for private respondent.

CRUZ, J.:

The employer has absolute discretion in hiring his employees in accordance with his standards of
competence and probity. This is his prerogative. Once hired, however, the employees are entitled to the
protection of the law even during the probation period and more so after they have become members
of the regular force. The employer does not have the same freedom in the hiring of his employees as in
their dismissal.

Elena Honasan applied for employment with the Holiday Inn and was on April 15, 1991, accepted for
"on-the-job training" as a telephone operator for a period of three weeks.1 For her services, she received
food and transportation allowance.2 On May 13, 1992, after completing her training, she was employed
on a "probationary basis" for a period of six months ending November 12,
1991.3

Her employment contract stipulated that the Hotel could terminate her probationary employment at
any time prior to the expiration of the six-month period in the event of her failure (a) to learn or
progress in her job; (b) to faithfully observe and comply with the hotel rules and the instructions and
orders of her superiors; or (c) to perform her duties according to hotel standards.

On November 8, 1991, four days before the expiration of the stipulated deadline, Holiday Inn notified
her of her dismissal, on the ground that her performance had not come up to the standards of the
Hotel.4

Through counsel, Honasan filed a complaint for illegal dismissal, claiming that she was already a regular
employee at the time of her separation and so was entitled to full security of tenure.5 The complaint was
dismissed on April 22, 1992 by the Labor Arbiter, 6 who held that her separation was justified under
Article 281 of the Labor Code providing as follows:

Probationary employment shall not exceed six (6) months from the date the employee started working,
unless it is covered by an apprenticeship agreement stipulating a longer period. The services of an
employee who has been engaged on a probationary basis may be terminated for a just cause or when
he fails to qualify as a regular employee in accordance with reasonable standards made known by the
employer to the employee at the time of his engagement. An employee who is allowed to work after a
probationary period shall be considered a regular employee.

On appeal, this decision was reversed by the NLRC, which held that Honasan had become a regular
employee and so could not be dismissed as a probationer.7 In its own decision dated November 27,
1992, the NLRC ordered the petitioners to reinstate Honasan "to her former position without loss of
seniority rights and other privileges with backwages without deduction and qualification."
Reconsideration was denied in a resolution dated January 26, 1993.8

The petitioners now fault the NLRC for having entertained Honasan's appeal although it was filed out of
time and for holding that Honasan was already a regular employee at the time of her dismissal, which
was made 4 days days before the expiration of the probation period.

The petition has no merit.

On the timeliness of the appeal, it is well-settled that all notices which a party is entitled to receive must
be coursed through his counsel of record. Consequently, the running of the reglementary period is
reckoned from the date of receipt of the judgment by the counsel of the appellant.9 Notice to the
appellant himself is not sufficient notice. 10 Honasan's counsel received the decision of the Labor Arbiter
on May 18, 1992. 11 Before that, however, the appeal had already been filed by Honasan herself, on May
8, 1992. 12 The petitioners claim that she filed it on the thirteenth but this is irrelevant. Even if the latter
date was accepted, the appeal was nevertheless still filed on time, in fact even before the start of the
reglementary period.

On the issue of illegal dismissal, we find that Honasan was placed by the petitioner on probation twice,
first during her on-the-job training for three weeks, and next during another period of six months,
ostensibly in accordance with Article 281. Her probation clearly exceeded the period of six months
prescribed by this article.

Probation is the period during which the employer may determine if the employee is qualified for
possible inclusion in the regular force. In the case at bar, the period was for three weeks, during
Honasan's on-the-job training. When her services were continued after this training, the petitioners in
effect recognized that she had passed probation and was qualified to be a regular employee.

Honasan was certainly under observation during her three-week on-the-job training. If her services
proved unsatisfactory then, she could have been dropped as early as during that period. But she was
not. On the contrary, her services were continued, presumably because they were acceptable, although
she was formally placed this time on probation.

Even if it be supposed that the probation did not end with the three-week period of on-the-job training,
there is still no reason why that period should not be included in the stipulated six-month period of
probation. Honasan was accepted for on-the-job training on April 15, 1991. Assuming that her probation
could be extended beyond that date, it nevertheless could continue only up to October 15, 1991, after
the end of six months from the earlier date. Under this more lenient approach, she had become a
regular employee of Holiday Inn and acquired full security of tenure as of October 15, 1991.

The consequence is that she could no longer be summarily separated on the ground invoked by the
petitioners. As a regular employee, she had acquired the protection of Article 279 of the Labor Code
stating as follows:

Art. 279. Security of Tenure — In cases of regular employment, the employer shall not terminate the
services of an employee except for a just cause or when authorized by this Title. An employee who is
unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other
privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary
equivalent computed from the time his compensation was withheld from him up to the time of his
actual reinstatement.

The grounds for the removal of a regular employee are enumerated in Articles 282, 283 and 284 of the
Labor Code. The procedure for such removal is prescribed in Rule XIV, Book V of the Omnibus Rules
Implementing the Labor Code. These rules were not observed in the case at bar as Honasan was simply
told that her services were being terminated because they were found to be unsatisfactory. No
administrative investigation of any kind was undertaken to justify this ground. She was not even
accorded prior notice, let alone a chance to be heard.

We find in the Hotel's system of double probation a transparent scheme to circumvent the plain
mandate of the law and make it easier for it to dismiss its employees even after they shall have already
passed probation. The petitioners had ample time to summarily terminate Honasan's services during her
period of probation if they were deemed unsatisfactory. Not having done so, they may dismiss her now
only upon proof of any of the legal grounds for the separation of regular employees, to be established
according to the prescribed procedure.

The policy of the Constitution is to give the utmost protection to the working class when subjected to
such maneuvers as the one attempted by the petitioners. This Court is fully committed to that policy and
has always been quick to rise in defense of the rights of labor, as in this case.
WHEREFORE, the petition is DISMISSED, with costs against petitioners. It is so ordered.

G.R. Nos. L-63550-51 January 31, 1984

RJL MARTINEZ FISHING CORPORATION and/or PENINSULA FISHING CORPORATION, petitioners,

vs.
NATIONAL LABOR RELATIONS COMMISSION and ANTONIO BOTICARIO, ISIDRO FARIOLAN, FERNANDO
SEVILLA, TOTONG ROLDAN, ROGER ESQUILLA, MARIO MIRANDA, EDUARDO ESPINOSA, ALBERTO
NOVERA, ANTONIO PATERNO, MARCIANO PIADORA, MARIO ROMERO, CLINITO ESQUILLA, ALEJO
BATOY, BOBBY QUITREZA, ROLANDO DELA TORRE, HERNANI REVATEZ, RODOLFO SEVILLA, ROLANDO
ANG, JUANITO PONPON, HOSPINIANO CALINDEZ, JOSE MABULA, DEONG DE LEON, MELENCIO CONEL
and ALFREDO BULAONG, respondents.

Martinez, Bermudez & Associates for petitioners.

The Solicitor General for respondent NLRC.

MELENCIO-HERRERA, J.:

Petition for Certiorari, Prohibition and mandamus assailing the Decision of respondent National Labor
Relations Commission (NLRC) in Cases Nos. AB-4-11054-81 and AB-8-12354-81 entitled Antonio
Boticario, et al. vs. RJL Fishing Corporation and/or Peninsula Fishing Corporation, dated November 26,
1982, as well as the Order, dated February 14, denying petitioners' Manifestation and Omnibus Motion
to dismiss private respondents' appeal. The dispositive portion of the challenged resolution reads:

WHEREFORE, in view of the foregoing considerations, the Decision appealed from is hereby set aside
and another one entered, directing respondents-appellees: (1) to reinstate complainants-appellants to
their former work, without loss of seniority rights and other privileges appertaining thereto; (2) to pay
complainants-appellants full backwages computed from the date they were dismissed up to the date
they are actually reinstated; (3) to pay complainants-appellants legal holiday pay, emergency living
allowance and 13th month pay in accordance with law; and (4) to pay complainants-appellants who are
entitled to incentive leave pay, as herein above determined, according to law.

The claims for overtime pay and premium pay for holiday and rest day are dismissed.

SO ORDERED. 1

This case was originally assigned to the Second Division but because of the pendency of a lower-
numbered case, G.R. No. 63474, entitled RJL Martinez Fishing Corporation vs. National Labor Relations
Commission, et als. before the First Division, involving the same petitioners and their workers (albeit a
different group and not exactly Identical issues), this case was transferred to the latter, Division for
proper action and determination. G.R. No. 63474 was dismissed by the First Division on August 17, 1983
for lack of merit.

Petitioner corporations are principally engaged in the deep-sea fishing business. Since 1978, private
respondents were employed by them as stevedores at Navotas Fish Port for the unloading of tuna fish
catch from petitioners' vessels and then loading them on refrigerated vans for shipment abroad.

On March 27, 1981, private respondents Antonio Boticario, and thirty (30) others, upon the premise that
they are petitioners' regular employees, filed a complaint against petitioners for non-payment of
overtime pay, premium pay, legal holiday pay, emergency allowance under P.D. Nos. 525, 1123, 1614,
1634, 1678, 1713, 1751, 13th month pay (P.D. 851), service incentive leave pay and night shift
differential. 2

Claiming that they were dismissed from employment on March 29, 1981 as a retaliatory measure for
their having failed the said complaint private respondents filed on the said complaint, private
respondents filed on April 21, 1981 another complaint against petitioners for Illegal Dismissal and for
Violation of Article 118 of the Labor Code, as amended. 3 Upon petitioners' motion, these two cases
were consolidated and tried jointly.

In disputing any employer-employee relationship between them, petitioners contend that private
respondents are contract laborers whose work terminated upon completion of each unloading, and that
in the absence of any boat arrivals, private respondents did not work for petitioners but were free to
work or seek employment with other fishing boat operators.

On February 25, 1982, the Labor Arbiter upheld petitioners' position ruling that the latter are extra
workers, who were hired to perform specific tasks on contractual basis; that their work is intermittent
depending on the arrival of fishing vessels; that if there are no fish to unload and load, they work for
some other fishing boat operators; that private respondent Antonio Boticario had executed an
employment contract under which he agreed to act as a labor contractor and that the other private
respondents are his men; that even assuming that private respondents are employees of petitioners,
their employer-employee relation is co-terminous with each unloading and loading job; that in the same
manner, petitioners are not under any obligation to hire petitioners exclusively, hence, when they were
not given any job on March 29, 1981, no dismissal was effected but that they were merely not rehired. 4

On April 1, 1982, private respondents received the Decision of the Labor Arbiter dismissing their
complaints. On April 19, 1982, they filed an appeal before respondent NLRC, which took cognizance
thereof.

In its Decision of November 26, 1982, the NLRC reversed the findings of the Labor Arbiter, and resolved,
as previously stated, to uphold the existence of employer-employee relationship between the parties.

Petitioners resorted to a "Manifestation and Omnibus Motion to Dismiss Appeal and to Vacate and/or to
Declare Null and Void the Decision of this Honorable Commission Promulgated on November 25 (should
be 26), 1982" but the same was denied, hence, the instant recourse.

As prayed for, a Temporary Restraining Order to enjoin the enforcement of the questioned decision of
respondent NLRC was issued on April 20, 1983, and on August 15, 1983, the Petition was given due
course by the Second Division.

Petitioners submit the following issues for resolution:

I. Whether or not the appeal from the decision of Labor Arbiter filed by private respondents is within the
l0-day reglementary period;

II. Whether or not respondent NLRC erred in reversing the decision of the Labor Arbiter despite the
failure to furnish petitioners with a copy of the appeal;

III. Whether or not there is an employer-employee relationship between the parties;

IV. Whether or not private respondents are entitled to legal holiday pay, emergency living allowance,
thirteenth month pay and incentive leave pay.

1. Petitioners, joined by the Solicitor General, contend that the appeal filed by private respondents from
the Decision of the Labor Arbiter was filed out of time considering that they received copy of the same
on April 1, 1982 but that they filed their appeal only on April 19, 1982, or 18 days later. If we were to
reckon the 10-day reglementary period to appeal as calendar days, as held in the case of Vir-Jen
Shipping and Marine Services, Inc. vs. NLRC, et al. 5 , private respondents' appeal was, indeed, out of
time. However, it was clear from Vir-Jen that the calendar day basis of computation would apply only
"henceforth" or to future cases. That ruling was not affected by this Court's Resolution of November 18,
1983 reconsidering its Decision of July 20, 1982. When the appeal herein was filed on April 19, 1982, the
governing proviso was found in Section 7, Rule XIII of the Rules and Regulations implementing the Labor
Code along with NLRC Resolution No. 1, Series of 1977, which based the computation on "working
days". They very face of the Notice of Decision itself 6 indicated aggrieved party could appeal within 10
"working days" from receipt of copy of the resolution appealed from. From April 1 to April 19, 1982 is
exactly ten (10) working days considering the Holy Week and the two Saturdays and Sundays that
supervened in between that period. In other words, private respondents' appeal, having been filed
during the time that the prevailing period of appeal was ten (10) working days and prior to the Vir-Jen
case promulgated on July 20, 1982, it must be held to have been timely filed.
2. Anent the failure of private respondents to furnish petitioners with a copy of their memorandum on
appeal, suffice it to state that the same is not fatal to the appeal. 7

3. The issue of the existence of an employer-employee relationship between the parties is actually a
question of fact, and the finding of the NLRC on this point is bonding upon us, the exceptions to the
general rule being absent in this case. Besides the continuity of employment is not the determining
factor, but rather whether the work of the laborer is part of the regular business or occupation of the
employer. 8 We are thus in accord with the findings of respondent NLRC in this regard.

Although it may be that private respondents alternated their employment on different vessels when
they were not assigned to petitioners' boats, that did not affect their employee status. The evidence also
establishes that petitioners had a fleet of fishing vessels with about 65 ship captains, and as private
respondents contended, when they finished with one vessel, they were instructed to wait for the next.
As respondent NLRC had found:

We further find that the employer-employee relationship between the parties herein is not co-
terminous with each loading and unloading job. As earlier shown, respondents are engaged in the
business of fishing. For this purpose, they have a fleet of fishing vessels. Under this situation,
respondents' activity of catching fish is a continuous process and could hardly be considered as seasonal
in nature. So that the activities performed by herein complainants, i.e. unloading the catch of tuna fish
from respondents' vessel and then loading the same to refrigerated vans, are necessary or desirable in
the business of respondents. This circumstances makes the employment of complainants a regular one,
in the sense that it does not depend on any specific project or seasonal activity. 9

The employment contract signed by Antonio Boticario, 10 which described him as "labor contractor", is
not really so inasmuch as wages continued to be paid by petitioners and he and the other workers were
uniformly paid. He was merely asked the petitioners to recruit other workers. Besides, labor-contracting
is prohibited under Sec. 9(b), Rule VIII, Book III — Rules and Regulations Implementing the Labor Code as
amended. 11 Directly in point and controlling is the ruling in an analogous case, Philippine Fishing Boat
Officers and Engineers Union vs. CIR, 12 reading:

The Court holds, therefore, that the employer-employee relationship existed between the parties
notwithstanding evidence to the fact that petitioners Visayas and Bergado, even during the time that
they worked with respondent company alternated their employment on different vessels when they
were not assigned on the company's vessels. For, as was stressed in the above-quoted case
of Industrial-Commercial-Agricultural Workers Organization vs. CIR, 16 SCRA 562 [1966], "that during the
temporary layoff the laborers are considered free to seek other employment is natural, since the
laborers are not being paid, yet must find means of support" and such temporary cessation of
operations "should not mean starvation for employees and their families."

4. Indeed, considering the length of time that private respondents have worked for petitioner — since
1978 — there is justification to conclude that they were engaged to perform activities usually necessary
or desirable in the usual business or trade of petitioners and are, therefore, regular employees. 13 As
such, they are entitled to the benefits awarded them by respondent NLRC.

WHEREFORE, the instant Petition for Certiorari, Prohibition and Mandamus is hereby dismissed and the
Temporary Restraining Order heretofore issued is hereby dissolved.
Costs against petitioners.

SO ORDERED.

G.R. No. 96078 January 9, 1992

HILARIO RADA, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION (Second Division) and PHILNOR CONSULTANTS AND
PLANNERS, INC., respondents.

Cabellero, Calub, Aumentado & Associates Law Offices for petitioner.

REGALADO, J.:

In this special civil action for certiorari, petitioner Rada seeks to annul the decision of respondent
National Labor Relations Commission (NLRC), dated November 19, 1990, reversing the decision of the
labor arbiter which ordered the reinstatement of petitioner with backwages and awarded him overtime
pay. 1

The facts, as stated in the Comment of private respondent Philnor Consultants and Planners, Inc.
(Philnor), are as follows:

Petitioner's initial employment with this Respondent was under a "Contract of Employment for a
Definite Period" dated July 7, 1977, copy of which is hereto attached and made an integral part hereof
as Annex A whereby Petitioner was hired as "Driver" for the construction supervision phase of the
Manila North Expressway Extension, Second Stage (hereinafter referred to as MNEE Stage 2) for a term
of "about 24 months effective July 1, 1977.

xxx xxx xxx

Highlighting the nature of Petitioner's employment, Annex A specifically provides as follows:

It is hereby understood that the Employer does not have a continuing need for the services of the
Employee beyond the termination date of this contract and that the Employee's services shall
automatically, and without notice, terminate upon the completion of the above specified phase of the
project; and that it is further understood that the engagement of his/her services is coterminus with the
same and not with the whole project or other phases thereof wherein other employees of similar
position as he/she have been hired. (Par. 7, emphasis supplied)

Petitioner's first contract of employment expired on June 30, 1979. Meanwhile, the main project, MNEE
Stage 2, was not finished on account of various constraints, not the least of which was inadequate
funding, and the same was extended and remained in progress beyond the original period of 2.3 years.
Fortunately for the Petitioner, at the time the first contract of employment expired, Respondent was in
need of Driver for the extended project. Since Petitioner had the necessary experience and his
performance under the first contract of employment was found satisfactory, the position of Driver was
offered to Petitioner, which he accepted. Hence a second Contract of Employment for a Definite Period
of 10 months, that is, from July 1, 1979 to April 30, 1980 was executed between Petitioner and
Respondent on July 7, 1979. . . .

In March 1980 some of the areas or phases of the project were completed, but the bulk of the project
was yet to be finished. By that time some of those project employees whose contracts of employment
expired or were about to expire because of the completion of portions of the project were offered
another employment in the remaining portion of the project. Petitioner was among those whose
contract was about to expire, and since his service performance was satisfactory, respondent renewed
his contract of employment in April 1980, after Petitioner agreed to the offer. Accordingly, a third
contract of employment for a definite period was executed by and between the Petitioner and the
Respondent whereby the Petitioner was again employed as Driver for 19 months, from May 1, 1980 to
November 30, 1981, . . .

This third contract of employment was subsequently extended for a number of times, the last extension
being for a period of 3 months, that is, from October 1, 1985 to December 31, 1985, . . .

The last extension, from October 1, 1985 to December 31, 1985 (Annex E) covered by an "Amendment
to the Contract of Employment with a Definite Period," was not extended any further because Petitioner
had no more work to do in the project. This last extension was confirmed by a notice on November 28,
1985 duly acknowledged by the Petitioner the very next day, . . .

Sometime in the 2nd week of December 1985, Petitioner applied for "Personnel Clearance" with
Respondent dated December 9, 1985 and acknowledged having received the amount of P3,796.20
representing conversion to cash of unused leave credits and financial assistance. Petitioner also released
Respondent from all obligations and/or claims, etc. in a "Release, Waiver and Quitclaim" . . . 2
Culled from the records, it appears that on May 20, 1987, petitioner filed before the NLRC, National
Capital Region, Department of Labor and Employment, a Complaint for non-payment of separation pay
and overtime pay. On June 3, 1987, Philnor filed its Position Paper alleging, inter alia, that petitioner was
not illegally terminated since the project for which he was hired was completed; that he was hired
under three distinct contracts of employment, each of which was for a definite period, all within the
estimated period of MNEE Stage 2 Project, covering different phases or areas of the said project; that his
work was strictly confined to the MNEE Stage 2 Project and that he was never assigned to any other
project of Philnor; that he did not render overtime services and that there was no demand or claim for
him for such overtime pay; that he signed a "Release, Waiver and Quitclaim" releasing Philnor from all
obligations and claims; and that Philnor's business is to provide engineering consultancy services,
including supervision of construction services, such that it hires employees according to the
requirements of the project manning schedule of a particular contract. 3

On July 2, 1987, petitioner filed an Amended Complaint alleging that he was illegally dismissed and that
he was not paid overtime pay although he was made to render three hours overtime work form Monday
to Saturday for a period of three years.

On July 7, 1987, petitioner filed his Position Paper claiming that he was illegally dismissed since he was a
regular employee entitled to security of tenure; that he was not a project employee since Philnor is not
engaged in the construction business as to be covered by Policy Instructions No. 20; that the contract of
employment for a definite period executed between him and Philnor is against public policy and a clear
circumvention of the law designed merely to evade any benefits or liabilities under the statute; that his
position as driver was essential, necessary and desirable to the conduct of the business of Philnor; that
he rendered overtime work until 6:00 p.m. daily except Sundays and holidays and, therefore, he was
entitled to overtime pay. 4

In his Reply to Respondent's Position Paper, petitioner claimed that he was a regular employee pursuant
to Article 278(c) of the Labor Code and, thus, he cannot be terminated except for a just cause under
Article 280 of the Code; and that the public respondent's ruling in Quiwa vs.  Philnor Consultants and
Planners, Inc. 5 is not applicable to his case since he was an administrative employee working as a
company driver, which position still exists and is essential to the conduct of the business of Philnor even
after the completion of his contract of employment. 6 Petitioner likewise avers that the contract of
employment for a definite period entered into between him and Philnor was a ploy to defeat the intent
of Article 280 of the Labor Code.

On July 28, 1987, Philnor filed its Respondent's Supplemental Position Paper, alleging therein that
petitioner was not a company driver since his job was to drive the employees hired to work at the MNEE
Stage 2 Project to and from the filed office at Sto. Domingo Interchange, Pampanga; that the office
hours observed in the project were from 7:00 a.m. to 4:00 p.m. Mondays through Saturdays; that
Philnor adopted the policy of allowing certain employees, not necessarily the project driver, to bring
home project vehicles to afford fast and free transportation to and from the project field office
considering the distance between the project site and the employees' residence, to avoid project delays
and inefficiency due to employee tardiness caused by transportation problem; that petitioner was
allowed to use a project vehicle which he used to pick up and drop off some ten employees along
Epifanio de los Santos Avenue (EDSA), on his way home to Marikina, Metro Manila; that when he was
absent or on leave, another employee living in Metro Manila used the same vehicle in transporting the
same employees; that the time used by petitioner to and from his residence to the project site from
5:30 a.m. to 7:00 a.m. and from 4:00 p.m. to 6:00 p.m., or about three hours daily, was not overtime
work as he was merely enjoying the benefit and convenience of free transportation provided by Philnor,
otherwise without such vehicle he would have used at least four hours by using public transportation
and spent P12.00 daily fare; that in the case of Quiwa vs.  Philnor Consultants and Planners, Inc., supra,
the NLRC upheld Philnor's position that Quiwa was a project employee and he was not entitled to
termination pay under Policy Instructions No. 20 since his employment was coterminous with the
completion of the project.

On August 25, 1987, Philnor filed its Respondent's Reply/Comments to Complainant's Rejoinder and
Reply, submitting therewith two letters dated January 5, 1985 and February 6, 1985, signed by MNEE
Stage 2 Project employees, including herein petitioner, where they asked what termination benefits
could be given to them as the MNEE Stage 2 Project was nearing completion, and Philnor's letter-reply
dated February 22, 1985 informing them that they are not entitled to termination benefits as they are
contractual/project employees.

On August 31, 1989, Labor Arbiter Dominador M. Cruz rendered a decision 7 with the following
dispositive portion:

WHEREFORE, in view of all the foregoing considerations, judgment is hereby rendered:

(1) Ordering the respondent company to reinstate the complainant to his former position without loss of
seniority rights and other privileges with full backwages from the time of his dismissal to his actual
reinstatement;

(2) Directing the respondent company to pay the complainant overtime pay for the three excess hours
of work performed during working days from January 1983 to December 1985; and

(3) Dismissing all other claims for lack of merit.

SO ORDERED.

Acting on Philnor's appeal, the NLRC rendered its assailed decision dated November 19, 1990, setting
aside the labor arbiter's aforequoted decision and dismissing petitioner's complaint.

Hence this petition wherein petitioner charges respondent NLRC with grave abuse of discretion
amounting to lack of jurisdiction for the following reasons:

1. The decision of the labor arbiter, dated August 31, 1989, has already become final and executory;

2. The case of Quiwa vs.  Philnor Consultants and Planners, Inc. is not binding nor is it applicable to this
case;

3. The petitioner is a regular employee with eight years and five months of continuous services for his
employer, private respondent Philnor;

4. The claims for overtime services, reinstatement and full backwages are valid and meritorious and
should have been sustained; and

5. The decision of the labor arbiter should be reinstated as it is more in accord with the facts, the law
and evidence.
The petition is devoid of merit.

1. Petitioner questions the jurisdiction of respondent NLRC in taking cognizance of the appeal filed by
Philnor in spite of the latter's failure to file a supersedeas bond within ten days from receipt of the labor
arbiter's decision, by reason of which the appeal should be deemed to have been filed out of time. It will
be noted, however, that Philnor was able to file a bond although it was made beyond the 10-day
reglementary period.

While it is true that the payment of the supersedeas bond is an essential requirement in the perfection
of an appeal, however, where the fee had been paid although payment was delayed, the broader
interests of justice and the desired objective of resolving controversies on the merits demands that the
appeal be given due course. Besides, it was within the inherent power of the NLRC to have allowed late
payment of the bond, considering that the aforesaid decision of the labor arbiter was received by
private respondent on October 3, 1989 and its appeal was duly filed on October 13, 1989. However, said
decision did not state the amount awarded as backwages and overtime pay, hence the amount of the
supersedeas bond could not be determined. It was only in the order of the NLRC of February 16, 1990
that the amount of the supersedeas bond was specified and which bond, after an extension granted by
the NLRC, was timely filed by private respondent.

Moreover, as provided by Article 221 of the Labor Code, "in any proceeding before the Commission or
any of the Labor Arbiters, the rules of evidence prevailing in Courts of law or equity shall not be
controlling and it is the spirit and intention of this Code that the Commission and its members and the
Labor Arbiters shall use every and all reasonable means to ascertain the facts in each case speedily and
objectively without regard to technicalities of law or procedure, all in the interest of due
process. 8 Finally, the issue of timeliness of the appeal being an entirely new and unpleaded matter in
the proceedings below it may not now be raised for the first time before this Court. 9

2. Petitioner postulates that as a regular employee, he is entitled to security of tenure, hence he cannot
be terminated without cause. Private respondent Philnor believes otherwise and asserts that petitioner
is merely a project employee who was terminated upon the completion of the project for which he was
employed.

In holding that petitioner is a regular employee, the labor arbiter found that:

. . . There is no question that the complainant was employed as driver in the respondent company
continuously from July 1, 1977 to December 31, 1985 under various contracts of employment. Similarly,
there is no dispute that respondent Philnor Consultant & Planner, Inc., as its business name connotes,
has been engaged in providing to its client(e)le engineering consultancy services. The record shows that
while the different labor contracts executed by the parties stipulated definite periods of engaging the
services of the complainant, yet the latter was suffered to continue performing his job upon the
expiration of one contract and the renewal of another. Under these circumstances, the complaint has
obtained the status of regular employee, it appearing that he has worked without fail for almost eight
years, a fraction of six months considered as one whole year, and that his assigned task as driver was
necessary and desirable in the usual trade/business of the respondent employer. Assuming to be true,
as spelled out in the employment contract, that the Employer has no "continuing need for the services
of the Employe(e) beyond the termination date of this contract and that the Employee's services shall
automatically, and without notice, terminate upon completion of the above specified phase of the
project," still we cannot see our way clear why the complainant was hired and his services engaged
contract after contract straight from 1977 to 1985 which, to our considered view, lends credence to the
contention that he worked as regular driver ferrying early in the morning office personnel to the
company main office in Pampanga and bringing back late in the afternoon to Manila, and driving
company executives for inspection of construction workers to the jobsites. All told, we believe that the
complainant, under the environmental facts obtaining in the case at bar, is a regular employee, the
provisions of written agreement to the
contrary notwithstanding and regardless of the oral understanding of the parties . . . 10

On the other hand, respondent NLRC declared that, as between the uncorroborated and unsupported
assertions of petitioners and those of private respondent which are supported by documents, greater
credence should be given the latter. It further held that:

Complainant was hired in a specific project or undertaking as driver. While such project was still on-
going he was hired several times with his employment period fixed every time his contract was
renewed. At the completion of the specific project or undertaking his employment contract was not
renewed.

We reiterate our ruling in the case of (Quiwa) vs.  Philnor Consultants and Planners, Inc.,  NLRC RAB III 5-
1738-84, it is being applicable in this case,  viz.:

. . . While it is true that the activities performed by him were necessary or desirable in the usual business
or trade of the respondent as consultants, planners, contractor and while it is also true that the duration
of his employment was for a period of about seven years, these circumstances did not make him a
regular employee in contemplation of Article 281 of (the) Labor Code. . . . 11

Our ruling in Sandoval Shipyards, Inc.  vs.  National Labor Relations Commission, et al.  12 is applicable to
the case at bar. Thus:

We hold that private respondents were project employees whose work was coterminous with the
project or which they were hired. Project employees, as distinguished from regular or non-project
employees, are mentioned in section 281 of the Labor Code as those "where the employment has been
fixed for a specific project or undertaking the completion or termination of which has been determined
at the time of the engagement of the employee."

Policy Instructions No. 20 of the Secretary of Labor, which was issued to stabilize employer-employee
relations in the construction industry, provides:

Project employees are those employed in connection with a particular construction project. Non-project
(regular) employees are those employed by a construction company without reference to any particular
project.

Project employees are not entitled to termination pay if they are terminated as a result of the
completion of the project or any phase thereof in which they are employed, regardless of the number of
projects in which they have been employed by a particular construction company. Moreover, the
company is not required to obtain clearance from the Secretary of Labor in connection with such
termination.
The petitioner cited three of its own cases wherein the National Labor Relations Commission, Deputy
Minister of Labor and Employment Inciong and the Director of the National Capital Region held that the
layoff of its project employees was lawful. Deputy Minister Inciong in TFU Case No. 1530, In Re Sandoval
Shipyards, Inc. Application for Clearance to Terminate Employees, rendered the following ruling on
February 26, 1979;

We feel that there is merit in the contention of the applicant corporation. To our mind, the employment
of the employees concerned were fixed for a specific project or undertaking.  For the nature of the
business the corporation is engaged into is one which will not allow it to employ workers for an indefinite
period.

It is significant to note that the corporation does not construct vessels for sale or otherwise which will
demand continuous productions of ships and will need permanent or regular workers. It merely accepts
contracts for shipbuilding or for repair of vessels form third parties and, only, on occasion when it has
work contract of this nature that it hires workers to do the job which, needless to say, lasts only for less
than a year or longer.

The completion of their work or project automatically terminates their employment, in which case, the
employer is, under the law, only obliged to render a report on the termination of the employment. (139-
140, Rollo  of G.R. No. 65689) (Emphasis supplied)

In  Cartagenas, et al.  vs.  Romago Electric Company, Inc., et al., 13 we likewise held that:

As an electrical contractor, the private respondent depends for its business on the contracts it is able to
obtain from real estate developers and builders of buildings. Since its work depends on the availability
of such contracts or "projects," necessarily the duration of the employment's of this work force is not
permanent but co-terminus with the projects to which they are assigned and from whose payrolls they
are paid. It would be extremely burdensome for their employer who, like them, depends on the
availability of projects, if it would have to carry them as permanent employees and pay them wages
even if there are no projects for them to work on. (Emphasis supplied.)

It must be stressed herein that although petitioner worked with Philnor as a driver for eight years, the
fact that his services were rendered only for a particular project which took that same period of time to
complete categorizes him as a project employee. Petitioner was employed for one specific project.

A non-project employee is different in that the employee is hired for more than one project. A non-
project employee, vis-a-vis a project employee, is best exemplified in the case of Fegurin, et
al.  vs.  National Labor Relations Commission, et al.  14 wherein four of the petitioners had been working
with the company for nine years, one for eight years, another for six years, the shortest term being
three years. In holding that petitioners are regular employees, this Court therein explained:

Considering the nature of the work of petitioners, that of carpenter, laborer or mason, their respective
jobs would actually be continuous and on-going. When a project to which they are individually assigned
is completed, they would be assigned to the next project or a phase thereof. In other words, they
belonged to a "work pool" from which the company would draw workers for assignment to other
projects at its discretion. They are, therefore, actually "non-project employees."
From the foregoing, it is clear that petitioner is a project employee considering that he does not belong
to a "work pool" from which the company would draw workers for assignment to other projects at its
discretion. It is likewise apparent from the facts obtaining herein that petitioner was utilized only for one
particular project, the MNEE Stage 2 Project of respondent company. Hence, the termination of herein
petitioner is valid by reason of the completion of the project and the expiration of his employment
contract.

3. Anent the claim for overtime compensation, we hold that petitioner is entitled to the same. The fact
that he picks up employees of Philnor at certain specified points along EDSA in going to the project site
and drops them off at the same points on his way back from the field office going home to Marikina,
Metro Manila is not merely incidental to petitioner's job as a driver. On the contrary, said transportation
arrangement had been adopted, not so much for the convenience of the employees, but primarily for
the benefit of the employer, herein private respondent. This fact is inevitably deducible from the
Memorandum of respondent company:

The herein Respondent resorted to the above transport arrangement because from its previous project
construction supervision experiences, Respondent found out that project delays and inefficiencies
resulted from employees' tardiness; and that the problem of tardiness, in turn, was aggravated by
transportation problems, which varied in degrees in proportion to the distance between the project site
and the employees' residence. In view of this lesson from experience, and as a practical, if expensive,
solution to employees' tardiness and its concomitant problems, Respondent adopted the policy of
allowing certain employees — not necessarily project drivers — to bring home project vehicles, so that
employees could be afforded fast, convenient and free transportation to and from the project field
office. . . . 15

Private respondent does not hesitate to admit that it is usually the project driver who is tasked with
picking up or dropping off his fellow employees. Proof thereof is the undisputed fact that when
petitioner is absent, another driver is supposed to replace him and drive the vehicle and likewise pick up
and/or drop off the other employees at the designated points on EDSA. If driving these employees to
and from the project site is not really part of petitioner's job, then there would have been no need to
find a replacement driver to fetch these employees. But since the assigned task of fetching and
delivering employees is indispensable and consequently mandatory, then the time required of and used
by petitioner in going from his residence to the field office and back, that is, from 5:30 a.m. to 7:00 a.m.
and from 4:00 p.m. to around 6:00 p.m., which the labor arbiter rounded off as averaging three hours
each working day, should be paid as overtime work. Quintessentially, petitioner should be given
overtime pay for the three excess hours of work performed during working days from January, 1983 to
December, 1985.

WHEREFORE, subject to the modification regarding the award of overtime pay to herein petitioner, the
decision appealed from is AFFIRMED in all other respects.

SO ORDERED.
G.R. No. L-23357 April 30, 1974

MERCURY DRUG CO., INC. and MARIANO QUE, petitioners,

vs.
COURT OF INDUSTRIAL RELATIONS and NARDO DAYAO, respondents.

Caparas and Ilagan for petitioner.

E. M. Banzali for private respondent.

MAKASIAR, J.:p

Petitioners Mercury Drug Co., Inc. and Mariano Que, as manager, seek the reversal of the decision of
respondent Court of Industrial Relations dated January 17, 1964 and its order dated February 25, 1964
denying petitioners' motion for reconsideration of the said decision.

Private respondent Nardo Dayao was employed on February 13, 1956 by the petitioners originally as
driver, later assigned as delivery man, then as checker and was last promoted to the position of assistant
chief checker in the checking department with the salary of P225.00 a month until his separation on
April 10, 1961.
Dayao's appointment as checker states that his annual compensation was P2,400.00 "which includes the
additional compensation for work on Sundays and legal holidays. Our firm being a Service Enterprise,
you will be required to perform work every day in a year as follows: 8 hours work on regular days and all
special holidays that may be declared but with 25% additional compensation; 4 hours work on every
other Sunday of the month; 4 hours work on all legal holidays. For any work performed in excess of the
hours as above mentioned, you shall be paid 25% additional compensation per hour." (Exh. 2, pp. 59-60,
rec.).

Days before April 10, 1961, Dayao in vain urged herein petitioners to pay them overtime pay, criticized
their, employees' association for failing to protect the welfare of the employees by not securing such
additional compensation for overtime, and campaigned among his co-employees to organize another
labor union. Hearing of Dayao's union activities, petitioner Mariano Que called for Dayao on April 10,
1961, told him to resign and persuaded him to accept the amount of P562.50 as termination pay and to
sign a clearance stating to the effect that he has no claims whatsoever of any kind and nature against
herein petitioners (Exh. 1).

On April 25, 1963, exactly two years and fifteen days from his separation on April 10, 1961, Dayao filed a
complaint for unfair labor practice against herein petitioners for dismissing him because of his having
campaigned among his co-employees to become members of a new labor union that he was then
organizing (Annex A, pp. 19-20, rec.).

In their answer dated May 10, 1963 to the ULP complaint, herein petitioners interposed as their only
defense that Dayao "was separated from the service ... for cause because of creating trouble with
another employee who was also dismissed and that even if the said complainant was separated for
cause, he received compensation pay and hereby relieved respondent from whatever claim or claims
that he had against respondents." Laches was not invoked by herein petitioners in their answer (Annex
B, pp. 21-22, rec.), nor in their memorandum dated October 28, 1963 (Annex C, pp. 23-32, rec.), much
less in their arguments dated February 12, 1964 in support of their motion dated and filed on August 3,
1964 for the reconsideration of the decision dated January 23, 1964. It is only in their instant petition for
review filed on August 28, 1964 that they relied on laches, aside from estoppel, to defeat herein private
respondent Dayao's ULP charge, taking a cue from the dissent dated July 27, 1964 of Judge Emiliano R.
Tabigne of the herein respondent Court of Industrial Relations, from the resolution of February 25, 1964
of the Presiding Judge and three Associate Judges of the respondent Court of Industrial Relations
denying herein petitioners' motion for reconsideration of their decision dated January 17, 1964.

It is an established principle that the findings of fact of the Court of Industrial Relations, when supported
by substantial evidence, are conclusive and binding on this Court (Sec. 6, R.A. No. 875; Phil. Fiber
Processing Co., Inc. vs. CIR, L-29770, July 19, 1973, 52 SCRA 110, 114; Bulakeña Rest. & Cat. vs. CIR, L-
26796, May 25, 1972, 45 SCRA 87, 100; Compania Maritima vs. Compania Maritima Labor Union, L-
29504, Feb. 29, 1972, 43 SCRA 464, 468; Cruz vs. Phil. Assn. of Free Labor Unions, L-26519, Oct. 29,
1971, 42 SCRA 68; Phil. Eng. Corp. vs. CIR, L-27880, Sept. 30, 1971, 41 SCRA 89; Castillo vs. CIR, L-26124,
May 29, 1971 39 SCRA 75, 83; Lakas ng Manggagawang Makabayan vs. CIR, L-32178, Dec. 28, 1970, 36
SCRA 600).
If the respondent Court ignored the evidence adduced by herein petitioners, it would be guilty of grave
abuse of discretion to warrant a review by Us of the findings of fact (Caltex Filipino, etc. vs. CIR, L-30632-
33, Apr. 11, 1972).

Contrary to the contention of herein petitioners, the finding of fact that herein private respondent
Nardo Dayao was dismissed from the service because of his union activities and that consequently
herein petitioners were guilty of unfair labor practice is amply substantiated by credible evidence. Thus,
the referee hearing officer, whose findings of fact and conclusions of law, were affirmed in toto  by the
respondent Court to be "supported by the evidence and the law on the matter," stated in his report:

Dayao testified that on April 10, 1961, respondent Que summoned him in the office and inquired why he
was organizing a new union in spite of the fact that there is already a labor organization existing in the
company and when he replied: "I did this thing because the company has not been paying us the
minimum wage the company has not been paying us for four hours work rendered on Sundays and also
for four hours work rendered on special holidays" (Tsn. pp. 8-9, July 10, 1963), respondent Que said: "Ah
ganoon pala. So you are organizing a new union, if that is so, from now on I do not like to see you any
more in this office and you can no longer enter the service or work in the company, I don't like unionist"
(Tsn. pp. 10-11, ibid); that several minutes after he was told to wait, respondent Que brought out an
amount of money and a piece of paper which he was asked to sign before delivering to him the money
that he told respondent Que: "I cannot sign this paper because in fact and in truth I am not resigning
from the company" but respondent Que retorted: whether you sign it or not, you could no longer work
so you better sign it; and that "after thinking about the matter that whether or not I sign the paper I
would be laid off and if I would be laid off I would have no money, so ultimately, I signed the paper and
received the amount of P562.50 stated in the paper." (Tsn. pp. 11-12, ibid). The paper referred to is a
cash voucher (Exhibit "A" and also Exhibit "4") covering complainant's separation pay of 15 days for
every year of service.

Dayao also declared that the proximate or immediate cause why he made efforts to organize a separate
union which he actually began in February, 1961, "was because the management, particularly the
manager, in spite of my several approaches to him, and in spite of my several representations made to
pay us the additional twenty-five percent and excess of the four hours work on Sundays and legal
holidays, did not like to give us such right or such payment" and for the further reason that "our union,
the Mercury Drug Company, Incorporated Employees" Union, was anemic in that it did not do anything
towards the welfare and protection of its member-employees, like for example those employees who
were dismissed were not investigated and also I approached our president of the union bringing to his
attention my request to the manager about the payment of extra-compensation for work on Sundays
and special holidays and our union president told me that he could not do anything about that.' (Tsn. pp.
34-35, ibid). According to Dayao, among the employees he had convinced beginning February, 1961 and
who agreed with him to organize another union were Josias Fideras, Nestor Talampas, Armando de
Leon, Aladdin Dimagmaliw and Rogelio Orbeta.

The testimonies of Josias Fideras and Nestor Talampas, assistant traffic supervisor and driver-delivery
man, respectively, substantially corroborated Dayao's declaration in material points, in that sometime in
February, 1961, the latter talked to them to joining a new labor union that he was organizing; that they
were convinced of Dayao's explanations and agreed to go along with his activities because of the
management's aversion to pay them overtime on Sundays and holidays and in of the fact that their
Association in the company was not good or it was not doing anything for the interest of its welfare of
its members; and that Dayao was not able to formally organize a separate union, as planned, because he
was discharged from the service of the corporation.

On the other hand, testifying on the cause of complainant's separation from the service, the president
and general manager of the corporation, respondent Mariano Que, declared: "I think he (Dayao)
quarreled with the president of their union, as a matter of fact he even have his head swollen, and he
also threatened, I think Ranin. He even threatened that he would kill Ranin so I called them to the office
to discuss the matter. I tried to pacify them, but they seem to be really very very mad at each other and
they wanted to quarrel. So I told them if that is the case, that they want to create scandal in the office, I
think it would be better for them to resign. At that time actually they were in a furious mood that they
could not be pacified, so I requested that they resign from their job because I did not want to affect the
office, and they both agreed that they resign." (Tsn. pp. 7-8, September 21, 1963). According to
respondent Que, the quarrel between Dayao and Ranin happened on Saturday, April 8, 1961, in the
Apollo Restaurant. In other words, the alleged incident did not take place in the office or premises of the
respondent corporation.

Jacinto Concepcion, personnel manager and also acting paymaster, stated that on Monday, April 10,
1961, upon instruction of Mariano Que, he prepared the cash voucher covering the separation pay of
Dayao of 15 days for every year of service, as well as the corresponding check therefor in the sum of
P562.50 and that after Dayao had signed the voucher, the check was delivered to him on that same day;
and that Dayao likewise received the amount of P140.58 representing his salary for a certain period not
shown in the records (Exhibit "3"), and also signed a clearance statement to the effect that he has no
claims of whatever kind and nature against the respondents (EXHIBIT "1"). Concepcion, however,
confessed no personal knowledge of the alleged quarrel between Dayao and Ranin in the Apollo
Restaurant on the evening of April 8, 1961, except from what respondent Que told him on April 10,
1961.

Romualdo Reyes, secretary and legal counsel of the corporation, among others, claimed that sometime
before the separation of complainant, the latter had consulted him outside of the office about
the vale  system of the Association and asked his intercession so that said complainant could also get
bigger vales  like the other officers of the Association but that he refused telling Dayao that the company
has nothing to do about the matter for that is the affair of the Association. Atty. Reyes was not present
at the conference between respondent Que and complainant Dayao on April 10, 1961, and just like
Concepcion, he was only informed by Que of what transpired therein.

In the examination in chief and in rebuttal, Dayao denied having had a quarrel with the Association
president, Apolinario Ranin, on any date before his dismissal and also asserted that he is not aware of
whether Ranin was also dismissed or not. Fideres and Talampas also professed no knowledge about the
alleged quarrel.

There is no question that complainant from the respondents the two sums of money stated above, as
well as having signed Exhibits "1", "3" and "4". There is also no dispute that he was called by respondent
Que in the Office on April 10, 1961, and on that date was separated from employment. The only
question to be decided is whether Nardo Dayao was discharged due to union activities, as he alleged, or
for valid cause because of creating trouble with another employee, as claimed by the respondents.
After carefully scrutinizing the records and evidence adduced in this case, the Court is not inclined to
believe the version given by the respondents. Be it noted that there is no clear and positive proof
establishing the fact that there really was a quarrel between Dayao and Ranin which allegedly happened
in the Apollo Restaurant on the night of April 8, 1961. Respondent Que's declaration that "I think" there
was such a quarrel and that he again "think" that Dayao would inflict bodily harm to Ranin could not be
given credence as it was only based on surmise and belief. Likewise, the testimonies of Jacinto
Concepcion and Romualdo Reyes regarding the said incident could not be given probative weight
because the tales they narrated in Court relative thereto were just information they received from
respondent Que, who may be said is not a disinterested party if not biased. And while it is incumbent
upon Concepcion to make investigation of troubles among the company employees in view of his
position as personnel manager, as he admitted, no investigation was made in the case of Dayao and
Ranin even after he was so informed of such trouble. (Tsn. p. 69, J. Concepcion, August 31, 1963). It
must be noted that Dayao vehemently and steadfastly denied having had a quarrel with Ranin on any
given time and expressed no knowledge of whether Ranin was also discharged or is still in the employ of
the corporation. In this connection, it is significant that Ranin, then union president and one of the
alleged protagonists, who could very well corroborate respondent Que's testimony on the incident and
thus overcome Dayao's denial, was not presented by the respondents as a witness in this case, a
circumstance which strongly militates against their cause.

But granting arguendo  that the quarrel did really occur, the Court nevertheless is of the opinion that it
could not be a sufficient basis for discharging from employment complainant herein. The quarrel
admittedly took place in a restaurant far from the company premises and, therefore, did not and could
not have prejudiced and affected in any manner the normal course of business of the corporation nor,
to say the least, has it relevant bearing on the complainant's employment as there is no showing that
the incident happened during complainant's official working time. The added contention that the
complainant resigned when told to do so by respondent Que does not generate belief. It is worthy to
mention that the complainant had been continuously in the service of the corporation for more than
five years since February 23, 1956, working as a driver, a delivery man, a checker, and then as assistant
to the chief checker of the checking department. There is no doubt his promotions in positions were
with corresponding increase in pay. He is a family man. His employment in the corporation is his only
means of livelihood. This being so and taking into account the prohibitive prices of prime necessities in
life nowadays, the tightness of money and scarcity of employment opportunities being felt not only in
metropolitan areas but also in rural and urban places, it is hard to believe that Dayao would be so
irresponsible and reckless to resign his position. He never intended leaving the service of the
corporation but, as the records demonstrate the receipt of the money, execution of Exhibits "1", "3" and
"4", and consequent separation from employment were forced upon him. There was no actual physical
force employed by respondent Que upon the person of Davao into making him sign the documents and
receive the termination pay. But the act of the president and general manager of the corporation in
telling complainant herein that whether or not he signs the documents he would be dismissed just the
same could be said a direct threat and a display of force and authority which afforded Dayao no
alternative but to obey as he was bided to do. While troubles among the employees, according to
personnel manager Concepcion, are investigated by him, no such investigation was conducted by him
regarding the alleged trouble between Dayao and Ranin "because I did not want to prejudice the
general manager inasmuch as he was personally handling the case." (Tsn. p. 69, August 31, 1963). If
Concepcion, who belongs to the managerial staff, was fearful of antagonizing the president and general
manager of the corporation, how much more of a minor employee like Dayao. Under such a situation, it
is believed that no reasonable person would do less than what Dayao did in signing the documents and
receiving the amount of his separation pay. But acceptance of termination pay does not divest a laborer
the right to prosecute his employer for unfair labor practice acts (PMC vs. National Labor Union, 48 O.G.
2765; Philippine Sugar Institute vs. CIR, et al., G.R. No. L-13475, Sept. 29, 1960), much less for signing the
clearance paper, Exhibit "1", considering the attendant circumstances surrounding the execution of the
same. (See also Sec. 5[a], R.A. 875).

The fact is that complainant herein was given the separation pay and told to leave the service of the
corporation because of his union activities. It has been shown that his efforts and representations made
to respondent Que for the payment of overtime compensation and for the excess hours of work
rendered on Sundays and holidays were of no avail. According to the respondents, such claims are not
tenable because they are fully covered by the contracts of employment. But, as the records will indicate,
Dayao believed otherwise and his stand was shared by the other employees, like Josias Fideres and
Ernesto Talampas. An examination of the employment or appointment paper of Nardo Dayao, dated
October 30, 1959 (Exh. "B", also Exh. "2") would show that the contents thereof may be subject to
interpretation, more particularly with respect to whether the employee is entitled to overtime or
additional compensation to the "4 hours work on every Sunday of the month" and "4 hours work on all
legal holidays," or that the same is included in the basic pay. But the Court refrains from passing on the
matter because that is not the issue in this case. What is important to state is the fact that the
management had received same request from the employees for clarification on whether they should
be given additional compensation for four hours work on Sundays and holidays. Thus, Concepcion
declared —

HEARING OFFICER (To the witness)

On this particular matter of four hours work on every other Sunday of the month and four hours work
on legal holidays, have you received a request for clarification of such matter,

THE WITNESS

Yes, sir. (Tsn. p. 87, August 31, 1963)

Moreover, according to Atty. Reyes, in a special meeting of the Mercury Drug Company, Inc. Employees'
Association held on August 31, 1969, he took the opportunity to explain to those gathered in the said
meeting that the additional compensation for the four hours work on Sundays and holidays is already
included in their basic pay, which only demonstrate that there was already a clamor then for such
additional pay. The foregoing buttress the complainant's assertion that on several occasions he had
requested respondent Que for the payment of such additional compensation, a fact not denied or
rebutted by the said respondent.

It has also been established that Dayao brought to the attention of the president of the Association the
matter of additional compensation with the view to having their union make a concerted request from
management for the payment thereof but Apolinario Ranin, then the Association president, told him
that nothing could be done about his request. This piece of evidence remained unrebutted also because
Ranin was not called by the respondents to testify in this case. In relation thereto, there is reason to
believe that the Association had been less vigorous and potent as an existing labor organization because
before and after the present dispute arose, it had and still continues to have as its presidents persons
occupying managerial and high confidential positions, whose interests are evidently allied with that of
the management. This conclusion finds further support from the testimony of the present Association
president, Jacinto Concepcion, that he was unaware of any meeting held during the incumbency of his
predecessor, Apolinario Ranin, and that it was through his personal talks with management and not
through the representation of the Association that the employees have been granted each a sack of rice
or equivalent value of P25.00 a month and also the benefit of group insurance. What is even worse is
that Concepcion could not state the names of the other officers of the Association during his
incumbency, as well as during the term of office of Ranin. "Considering the foregoing facts and
circumstances, there is reason to believe complainant's assertion that due to the failure of the
management to pay them the additional compensation for services on Sundays and holidays and for the
excess of the four hours work on said days and compounded by the refusal of the then Association
president to take common cause with his request for the payment of such money claim, he did plan to
form a separate union, no doubt, upon the hypothesis that in union there is strength. The records show
that beginning February, 1961, he put into effect his plan by campaigning among his co-employees in
the respondent corporation, like Josias Fideres, Nestor Talampas, Armando de Leon, Aladdin
Dimagmaliw and Rogelio Orbeta. That he really exerted efforts talking to, and convincing, the employees
and laborers of the corporation to join with him in organizing a new union was satisfactorily
substantiated and corroborated by two witnesses, Fideres and Talampas, whose presence in Court — it
may be worth mentioning — was made possible by the complainant herein only through the coercive
processes of the Court. They, however, declared that the new union was formally established, as
planned, due to the complainant's separation from the service.

Be it emphasized that respondent Que never disclaimed knowledge of charging employee's union
activity. In his testimony, he did not state or in any way insinuate that he was not aware of Dayao's
union activity before April 10, 1961. It was Concepcion who expressed into the records no knowledge of
the activity of Dayao, but whose testimony to that effect, nevertheless, is of no moment considering
that he had no hand nor was he consulted by respondent Que in the punitive action taken against
Dayao. The evidence, therefore, of the complainant that respondent Que came to know of his activity of
trying to organize another union before his discharge remained unassailed.

From all the foregoing discussion, it is clear that the preponderance of evidence sustains a finding in
favor of the complainant's version of what occurred between him and respondent Que in the office of
the corporation on April 10, 1961, and the Court, therefore, holds that respondents have interfered with
complainant's union activity and that his dismissal from employment was discriminatory. (Pp. 35-42,
rec.).

The foregoing searching analysis by the hearing officer of the evidence submitted by the parties in the
hearing of the unfair labor practice charge, is so impressive and so logical that his findings of facts and
conclusions of law were unqualifiedly adhered to by the four members of the respondent Court of
Industrial Relations. WE can do no less.

II

The insistence on the part of petitioners that the acceptance by private respondent Dayao of a
separation pay and his signing a renunciation of any other claim against herein petitioners, militates
against the charge of unfair labor practice gets into the teeth of the principle that such waiver of the
rights of labor contravenes public policy and therefore null and void, more so in this case when the root
cause of the union activities of Dayao was precisely motivated by his campaign for additional
compensation for overtime pay under the Eight-Hour Labor Law, against which claim estoppel or laches
is unavailing (see Manila Terminal Co., Inc. vs. CIR, et. al., 91 Phil. 625); because acceptance of
termination pay does not divest a laborer of the right to prosecute his employer for unfair labor practice
acts (Carino vs. ACCFA, L-19808, Sept. 29, 1966, 18 SCRA 183, 190; DMC vs. National Labor Union, 48
O.G. 2765; Phil. Sugar Institute vs. CIR, et. al., L-13475, Sept. 29, 1960). As Mr. Justice Conrado Sanchez,
speaking for the Court in the Carino case, supra, stated: "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 preferred him. His, then, in a case of adherence, not of choice. One thing sure, however, is
that petitioners did not relent on their claim. They pressed it. They are deemed not to have waived any
of their rights. Renuntiatio non praesumitur."

As in the case at bar, private respondent has never relented in his claim. His filing was merely delayed
and he is pressing it.

From the time he was employed as checker, private respondent was made to waive his right for
additional compensation for overtime pay under the appointment extended to him (see pp. 59-60, rec.,
or pp. 14-15, Annex F). Said qualified appointment is clearly an exploitation of the employee who would
be compelled to work more than eight hours on Sundays and legal holidays without additional
compensation, since in his appointment additional compensation for work on Sundays and holidays was
deemed or expressly included in his annual salary of P2,400.00. Under such an appointment, he can be
required to work for four hours every Sunday and for four hours on every legal holiday without
additional pay.

III

It is true that unfair labor practice charge with the prayer for reinstatement with back wages should be
filed within a reasonable period of time. But laches, like estoppel, should also be alleged as a defense in
the answer, otherwise the same is considered renounced. Petitioners failed to expressly allege the same
in their answer to the ULP charge, in their memorandum and in their motion for reconsideration of the
CIR decision.

However, the lapse of two years and 15 days from the dismissal from the service to the filing of the ULP
charge is not an unreasonable period of time under the circumstances.

In this respect, the statute of limitations prescribed by the Civil Code of the Philippines should apply in
the absence of any other specific legal provision. Article 1146 of the Civil Code of the Philippines directs
that the action upon an injury to the rights of the plaintiff must be instituted within four years. An action
upon a contract should be filed within 10 years (Art. 1144, CCP). All other actions whose periods are not
fixed in the Civil Code or in other laws must be brought within five years from the time the right of
action accrues (Art. 1149, CCP). Whether the ULP charge is based on an injury to the rights of Dayao or
placed under the category of all other actions for which no law prescribes the time limit for their
institution, the filing by respondent Dayao of the ULP charge against herein petitioners was well within
either the prescriptive period. It should be stressed that the 1935 Constitution has been very solicitous
for the welfare of labor and expressly stated that the State shall afford protection to labor (Sec. 6, Art.
XIV, 1935 Constitution) and expressly committed itself to the promotion of social justice to insure the
well-being and economic security of all the people (Sec. 5, Art. II, 1935 Constitution). The 1973
Constitution expanded such guarantees and imposes upon the State the duty to "assure the rights of
workers to self-organization, collective bargaining, security of tenure, and just and humane conditions of
work," after stipulating that the State "shall promote full employment and equality in employment,
insure equal work opportunities regardless of sex, race or creed" (Sec. 9, Art. II, 1973 Constitution). WE
would be denying such constitutional guarantees to herein private respondent Dayao, if the position of
herein petitioners were sustained.

Finally, if the dismissal of herein private respondent Dayao was for just cause, then there was no reason
for petitioners-employers to give him termination pay; because under the Termination Pay Law,
otherwise known as Republic Act No. 1052, as amended by Republic Act No. 1787, the employee whose
services are terminated for just cause is not entitled to termination pay (Sec. 1, Rep. Act No. 1052, as
amended).

Even under the Termination Pay Law, the alleged quarrel between private respondent Dayao and one
Ranin, the president of the labor union, in the presence of herein petitioner Mariano Que as manager of
petitioner corporation, is not one of the grounds justifying the dismissal of private respondent Dayao. It
is not even analogous to "serious misconduct or willful disobedience of the orders of his employer or its
representative in connection with his work." Even if it were conceded that private respondent Dayao
verbally quarrelled with the former president of their employees' association in the presence of
manager Mariano Que and that both ignored the latter's admonition for them to stop quarrelling, at
most the same was discourtesy which was not intended considering the origin of their quarrel — the
failure of Ranin, former president of the labor union, to fight for overtime pay for services rendered on
Sundays and holidays. Such discourtesy, at most, merits merely a reprimand or admonition but not
outright dismissal, since it did not involve the efficiency nor honesty of private respondent Dayao. The
fact that Dayao had been in the service for five years and ten months, during which period of time he
was promoted from driver to delivery man, to checker and finally to assistant chief checker in the
Checking Department with a salary of P225.00 a month demonstrates his efficiency, competence and
trustworthiness.

The remaining question is how much back wages shall be allowed private respondent Dayao.

While this case was submitted for decision on March 29, 1965, the delay in its resolution is not due to
the parties. However, it should be noted that private respondent Dayao filed his ULP charge with
reinstatement and back wages about two years and fifteen days after his separation on April 10, 1961.
As aforestated, the shortest prescriptive period for the filing of all other actions for which the statute of
limitations does not fix a period, is four years. The period of delay in instituting this ULP charge with
claim for reinstatement and back wages, although within the prescriptive period, should be deducted
from the liability of the employer to him for back wages. In order that the employee however should be
relieved from proving his income during the period he was out of the service and the employer from
submitting counter-proofs, which may delay the execution of the decision, the employer in the case at
bar should be directed to pay private respondent Dayao back wages equivalent to one year, eleven
months, and fifteen days without further disqualifications.
In fairness to the employer, he should not be compelled to reinstate an employee who is no longer
physically fit for the job from which he was illegally ousted.

WHEREFORE, THE PETITION IS HEREBY DISMISSED AND PETITIONERS ARE HEREBY DIRECTED:

(1) TO PAY PRIVATE RESPONDENT NARDO DAYAO BACK WAGES EQUIVALENT TO ONE YEAR, ELEVEN
MONTHS, AND FIFTEEN DAYS; .

(2) TO REINSTATE HIM AFTER CERTIFICATION OF HIS PHYSICAL FITNESS BY A GOVERNMENT PHYSICIAN;
AND

(3) TO PAY THE COSTS.

SO ORDERED.

G.R. No. 104690 February 23, 1994

ZENAIDA GACO, petitioner,
vs.
THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION and ORIENT LEAF TOBACCO
CORPORATION, respondents.

Marita B. Balloguing for petitioner.

Gregorio Alcaraz, Jr. for private respondent.

NOCON, J.:

It may appear that the work in private respondent Orient Leaf Tobacco Corporation is seasonal,
however, the records reveal that petitioner Zenaida Gaco was repeatedly re-hired, sufficiently
evidencing the necessity and indispensability of her services to the former's business or
trade.1 Furthermore, she has been employed since 1974 up to the end of the season in 1989. Owing to
her length of service, she became a regular employee, by operation of law, one year after she was
employed.2 Being a regular employee, she enjoys security of tenure in the sense that she cannot be
dismissed from employment except for just or authorized cause.3

Briefly stated, the antecedent facts are:

Petitioner was hired by private respondent on April 17, 1974 for the position of Picker. In 1975, after a
year of service, she was promoted to the position of Production Recorder. She held this position for a
period of fourteen (14) years until the end of private respondent's working season in 1989. In April,
1990, when petitioner reported for work at the start of the working season for that year, she found out
that her position was already occupied by another employee and that she was being demoted to the
position of Picker.

Petitioner believed that, having been with private respondent for fifteen (15) years without any
derogatory record, her demotion was not justified. Considering it as constructive dismissal, petitioner
thus refused to report for work and filed a complaint before the Labor Arbiter for payment of separation
pay.

Private respondent raised the defense that the demotion of petitioner was effected on a valid ground,
that is, gross inefficiency. It described her work, as follows:

. . . she was assigned as the production recorder. This job assignment is not too difficult nor complicated.
All she has to do is to record correctly and accurately weights on tags placed inside tobacco containers
as against the Production Reports which she accomplishes. In other words, the weights appearing on the
tags must be correctly recorded on her Production Report. This is very important because the said
Production Report, among other things, will be the basis in the preparation of the delivery Orders when
the Respondent corporation effects the delivery of its tobacco to its buyers, both local and foreign. To
illustrate, if the weight appearing on the Delivery Orders is less than what appears on the tags inside the
container, the difference in the weight represents the loss to the respondent. Conversely, if the weight
appearing on the Delivery Order is more than what appears on the tags inside the container the
difference can be the basis for the respondent's customer to demand a refund and a possible damage
suit. In both cases, the respondent corporation stands to lose, particularly its own credibility. This is how
serious mistakes in the weights may result.4

It is in this particular job assignment that she manifested said gross inefficiency, committing the same
mistakes frequently in spite of her attention being called repeatedly and advised to take the necessary
corrective measures.

On July 31, 1991, the Labor Arbiter rendered judgment favorable to petitioner, the dispositive portion of
which, reads:

CONFORMABLY WITH THE FOREGOING, judgment is hereby rendered:

1.) Declaring the demotion of complainant to be unjustified;

2.) Ordering respondent Orient Leaf Tobacco Corporation to pay complainant her backwages to be
computed from April 1990, the time her demotion was effected, up to July 31, 1991, and separation pay
in lieu of reinstatement, to be computed from April 1974, the date of hiring, up to July 31, 1991, as
follows:
a.) Backwages P35,490.00
b.) Separation Pay 40,222.00
————

T o t a l P75,712.00

3.) Dismissing the charge of unfair labor practice for want of merit.

SO ORDERED.5

The Labor Arbiter declared that petitioner's demotion was unjustified and she was not accorded due
process by private respondent:

. . .The evidence, consisting of a series of memoranda, are all dated March 20, 1990, before complainant
reported for the next working season. This would indicate that these memoranda were prepared as an
afterthought. And this observation is bolstered by the fact that the reported inaccurate recording of
complainant, which was made (the) basis for the claimed inefficiency, is not substantially supported. The
alleged reports made by complainant's supervisor and the Senior Accounting Clerk of the Production
Department (Annexes "B" and "C", Respondent's Position Paper), being both dated March 20, 1990, can
very well be merely simulated reports done to justify the otherwise unjustified action they were about
to implement. Respondent failed to submit even a single copy of the alleged erroneous (sic), "dirty and
untidy" reports of complaint.

We cannot rely on the documentary evidence presented by the respondent as the same were (sic) but
communications between the officers of the company.

True, there were reports made by complainant's direct superiors regarding her gross inefficiency from
which respondent based its action (Annexes "A" to "C", Ibid.). Yes, management's decision to approve
the recommendation to demote complainant was based on valid grounds (Annex "D", Ibid.). But the
truthfulness of the supposed valid grounds is here being attacked. And all of these transpired — from
the initial report to the time the management decided to implement its decision to demote her —
without complainant's participation and knowledge at any stage. The records are bereft of any showing
that complainant was notified in advance of respondent's impending action and the reason or reasons
thereof before it was actually effected. Neither does the record show that complainant was afforded any
opportunity to be heard.

xxx xxx xxx

While due process required by law is applied on dismissals, the same is also applicable to demotions
likewise affect the employment of a worker whose right to continued employment, under the same
terms and conditions, is also protected by law. Moreover, considering that demotion is, like dismissal,
also a punitive action, the employee being demoted should as in cases of dismissals, be given the chance
to contest the same.

xxx xxx xxx

Gauged against the foregoing well-established factual and settled legal considerations, the demotion of
complainant is definitely unjustified and, having been found to be have been in bad faith, must be
declared as constituting constructive dismissal.
This finds further support in the fact that when complainant Gaco refused to report for work as Picker,
they immediately promoted somebody to that position and offered her the lower position of Reject Piler
and, when complainant again refused to report, they offered a much lower position from the Relief
Crew, a very positive indication of constructive dismissal.

Unjustified demotion, in effect, constitutes constructive dismissal, which is illegal, and which would
entitle complainant to reinstatement and payment of backwages.6

On appeal before public respondent National Labor Relations Commission by private respondent, the
aforementioned decision was modified. The dispositive portion of its decision dated January 27, 1992
reads:

WHEREFORE, the appealed Decision is hereby MODIFIED by computing the separation pay in accordance
with the above or in the total amount of P15,015.00 and electing the award of backwages.

SO ORDERED.7

While it concurred with the finding of the Labor Arbiter that the demotion of petitioner was unjustified,
it expressed the contrary view that there was no constructive dismissal:

. . . We could not countenance the arbitrary and unilateral declaration of complaint not to report for
work for what she perceived to be unjust. Such open defiance against the exercise of management's
prerogative even if it be conceded to be unjust would wreck havoc on the natural and orderly business
structure and would encourage anarchism. An employee should recognize the prerogative of
management to transfer, demote or even to dismiss to protect its business subject however, to such
restraints as the law provides.8

Hence the present petition.

Petitioner imputes grave abuse of discretion on the part of respondent NLRC in:

1) deleting the award of backwages;

2) computing the separation pay on the basis of one-half (1/2) month pay for every twelve (12) months
of service; and

3) not awarding moral damages and attorney's fees to petitioner.

Petitioner argues that she should be awarded backwages because she was dismissed illegally.
Respondent NLRC had no basis in computing the separation pay at one-half (1/2) month pay for every
year of service. In numerous labor cases decided by this Court, the basis for computation thereof is one
(1) month pay for every year of service. As a normal consequence of having been dismissed illegally and
forced to litigate, she should be awarded moral damages and attorney's fees.

The Office of the Solicitor General supports entirely the decision of respondent NLRC. It maintains that
petitioner is not entitled to backwages since private respondent did not terminate her services. Rather,
it was petitioner who terminated her employment by refusing to report for work despite several
demands made upon her private respondent to do so. Respondent NLRC had sufficient basis in its
computation of the separation pay. Inasmuch as petitioner was demoted without due process,
appropriate sanction (in the form of separation pay) should be meted against private respondent.
Nevertheless, the sanction must be mitigated by the fact that: a) she refused to return to work without
just reason after repeated requests by private respondent; b) her union acquisced to her demotion c)
her work is seasonal in nature. There is no justification for her claim for award of moral damages and
attorney's fees.

After a judicious review of all the pleadings in this case vis-a-vis the questioned decision, this Court finds
merit in the petition and holds that respondent NLRC gravely abused its discretion when it modified the
decision of the Labor Arbiter.

The case of Philippine Japan Active Carbon Corporation, et al. v. NLRC, et al.,9 which was cited in the
recent case of Lemery Savings and Loan Bank, et al. v. NLRC. et al., 10 defines constructive dismissal as a
quitting because continued employment is rendered impossible, unreasonable or unlikely; as, an offer
involving a demotion in rank and a diminution in pay. As we have stated previously, both the Labor
Arbiter and respondent NLRC arrived at a factual finding that petitioner was demoted to her former
position without any justifiable cause. However, they differed in the conclusions they derived therefrom:
the Labor Arbiter considered petitioner's demotion as constructive dismissal whereas respondent NLRC
held that constructive dismissal could not deduced from the circumstances. On the basis of the
foregoing jurisprudence defining the term constructive dismissal, we sustain the ruling of the Labor
Arbiter and his rationalization thereon. Consequently, petitioner is entitled to her full backwages,
inclusive of allowances, and other benefits or their monetary equivalent computed from the time her
compensation was withheld from her up to the time of her actual reinstatement. 11 In ascertaining the
total amount of backwages payable to her, we enunciated in the case of Pines City Educational Center,
et al. v. NLRC, et al. 12 the doctrine that:

. . . we go back to the rule prior to the Mercury Drug rule that the total amount derived from
employment elsewhere by the employee from the date of reinstatement , if any, should be deducted
therefrom. . . .

However, we shall not follow Article 279 of the Labor Code to the letter regarding the period of
backwages in view of the peculiar circumstances of the present case, namely, "there is now a strained
relationship between (petitioner) and (private respondent) and (petitioner) prays for payment of
separation pay in lieu of reinstatement." 13 Instead, the period thereof shall be reckoned from the time
her compensation was withheld from her, or in April, 1990 up to the finality of our decision.

Respondent NLRC reduced the amount of separation pay, as follows:

Under the foregoing circumstances, complainant should be reinstated without backwages; however,
since she already manifested her desire not to work for respondent anymore, she should instead be
granted separation pay in lieu of reinstatement, further asking into consideration her long service with
respondent. It appearing that the work at the respondent's company is seasonal in nature, the
separation pay should be computed on the basis of one-half (1/2) month pay for every twelve (12)
months of service, or a total of eleven (11) constructive years. (Rollo 40)14

Again, we sustain the ruling of the Labor Arbiter granting separation pay in the amount of one (1) month
to pay for every year of service. This has been our consistent ruling in numerous decisions awarding
separation pay to an illegally dismissed employee in lieu of reinstatement. 15 It should be emphasized
that separation pay is being awarded in this case for this reason, a fact which the Office of the Solicitor
General overlooked.

We note that the issued regarding award of moral damages and attorney's fees to petitioner is being
raised only in the proceedings before this Court, thus, she cannot impute grave abuse of discretion on
the part of respondent NLRC on this aspect.

WHEREFORE, the petition is hereby GRANTED. The decision of the National Labor Relations Commission
dated January 27, 1992 is SET ASIDE and the decision of the Labor Arbiter dated July 31, 1991 is
REINSTATED subject to the modification that the period of backwages should be from April, 1990 up to
the finality of this decision less earnings elsewhere, if any, during this period whereas the period of
separation pay should be from April, 1974 up to the finality of this decision.

SO ORDERED.

G.R. No. 156317. April 26, 2005

CARLOS F. SALOMON, STEPHEN L. BATHAN, NICOLAS E. CAMARA, EMMANUEL B. DELA TORRE,

LEONILO C. DONATO, SEGUNDO E. FERRER, JESUS L. GUELA, JR., AMADO P. LIONGSON, DEOGRACIAS
C. MANALANZAN, GERUNDIO A. NATANAUAN, RICARDO D. PARZA, RICARDO R. SAMANIEGO,
VALENTIN R. URREA, JR., FRANCISCO H. VILLANUEVA, Petitioners,
vs.
ASSOCIATE OF INTERNATIONAL SHIPPING LINES, INC., Respondents.

DECISION

SANDOVAL-GUTIERREZ, J.:

At bar is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as
amended, assailing the Decision1 dated June 13, 2002 and Resolution2 dated November 28, 2002
rendered by the Court of Appeals in CA-G.R. SP No. 63176, entitled "Carlos F. Salomon, Stephen L.
Bathan, Nicolas E. Camara, Emmanuel B. Dela Torre, Leonilo C. Donato, Segundo E. Ferrer, Jesus L.
Guela, Jr., Amado P. Liongson, Deogracias C. Manalanzan, Gerundio A. Natanauan, Ricardo D. Parza,
Ricardo R. Samaniego, Jr., Valentin R. Urrea, Jr., and Francisco H. Villanueva vs. National Labor Relations
Commission and Association of International Shipping Lines, Inc.."

The facts as borne by the records are:

The Association of International Shipping Lines, Inc., respondent, is a corporation engaged in the
principal business of shipping and container and/or cargo services.

As a result of a decline in the volume of cargo measuring activities and shipping transactions,
respondent suffered substantial financial losses equivalent to ₱213,583.00 in 1996; ₱783,935.00 in
1997; and ₱1,334,729.00 in 1998.

With this development, respondent adopted an organizational streamlining program that resulted in the
closure of its Measuring Department and retrenchment or termination from the service of seventeen
(17) workers. Among them were Carlos F. Salomon, Stephen L. Bathan, Nicolas E. Camara, Emmanuel B.
Dela Torre, Leonilo C. Donato, Segundo E. Ferrer, Jesus L. Guela, Jr., Amado P. Liongson, Deogracias C.
Manalanzan, Gerundio A. Natanauan, Ricardo D. Parza, Ricardo R. Samaniego, Jr., Valentin R. Urrea, Jr.,
and Francisco H. Villanueva, herein petitioners who occupied booking coordinator and measurer
positions.

In separate letters dated March 30, 1998, respondent terminated petitioners’ services effective April 30,
1998. Simultaneously, respondent filed with the Department of Labor and Employment (DOLE) a "Notice
of Closure" or report of petitioners’ retrenchment from the service.

Aggrieved, petitioners filed with the National Conciliation and Mediation Board (NCMB) a complaint for
illegal dismissal and payment of retirement benefits against respondent, docketed as NCMB-NCR-PM-
04-131-98.

During the conciliation proceedings, respondent paid petitioners their retirement pay at the rate of 1
month salary per year of service.3 Additionally, they received their leave credits, and pro-rated 13th
month pay. And after having been paid their retirement pay, they executed and signed separate
Releases and Quitclaims. Consequently, the above case was considered closed and terminated.

Surprisingly, petitioners filed with the Labor Arbiter a complaint for payment of retirement benefits,
damages and attorney’s fees against respondent, docketed as NLRC NCR Case No. 00-06-05153-98. They
alleged that what each received was a separation pay, not retirement benefits.

On May 25, 2000, the Labor Arbiter rendered a Decision dismissing the complaint.

On appeal, the National Labor Relations Commission (NLRC), in a Resolution dated September 29, 2000,
affirmed the Labor Arbiter’s Decision.

Petitioners then filed a motion for reconsideration but was denied by the NLRC in a Resolution dated
January 8, 2001. Hence, they filed with the Court of Appeals a petition for certiorari alleging that the
NLRC committed grave abuse of discretion in declaring that they are not entitled to retirement benefits
and in holding that they are precluded from claiming such benefits because of their quitclaims.

On June 13, 2002, the Appellate Court promulgated its Decision affirming the assailed Resolutions of the
NLRC. In denying petitioners’ claim for retirement benefits, the Appellate Court held:
"It is clear from the records that petitioners were separated from service due to retrenchment
undertaken by private respondent company. Unarguably, retrenchment is recognized as one of the
authorized causes for termination of employment under the Labor Code. x x x:

xxxxxx

The records show that private respondent company complied with the requirements of law with regard
to retrenchment as the NCMB considered the question of the propriety of petitioners’ retrenchment
closed. Thus, the issue in this case is whether the grant of ‘retirement benefits’ to petitioners as shown
in their quitclaims precludes their availment of retirement benefits pursuant to their Collective
Bargaining Agreement.

Petitioners contend that there is no provision in the CBA which states that their receipt of separation
pay precludes their claim for retirement benefits and vice versa. x x x.

Petitioners argue that the ‘retirement benefits’ they received in their quitclaims were their separation
pay pursuant to Article 283. As stated in the present petition, granting that what petitioners received
were their retirement benefits, they are still entitled to separation pay. To support such claim,
petitioners cited the cases of Aquino vs. NLRC, 206 SCRA 118 and University of the East vs. Minister of
Labor, 152 SCRA 676 wherein the Supreme Court ruled that the receipt of separation pay of the
employees who were involuntarily separated from service do not preclude them from receiving their
retirement benefits under their CBA.

Private respondent company, on the other hand, argues that petitioners are not entitled to retirement
benefits, as the provisions for the separation pay and retirement benefits under their CBA are
exclusionary. Moreover, petitioners executed their respective quitclaims voluntarily and thus, should
remain binding.

The cases cited by petitioners could not be applied in the case at bar. The reason however, is not the
fact that the employees were claiming retirement benefits after they received their separation pay, but
rather it is apparent from the pertinent CBAs that the manner of separation from service of the
employees is not significant in the availment of the retirement benefits. The same is not true in the
present case. A perusal of the provision of petitioners’ CBA on retirement readily shows that the same is
optional on the employees who have served private respondent company for at least 15 years. This is
different from the provisions of the CBAs of the cited cases wherein the retirement benefits are not
optional but automatically applies when an employee is terminated from employment after serving the
required number of years. It is a fact that petitioners were involuntarily separated from service and thus,
under the law should be given separation pay. Private respondent thus, under the law should give
separation pay. Private respondent company in its notice of termination to petitioners stated that the
latter would receive their separation pay. The same however, did not materialize as petitioners
questioned the propriety of their retrenchment before the NCMB. As a result of said complaint,
petitioners instead of receiving their separation pay, only received their retirement benefits plus other
benefits which represent the totality of their claims from private respondent company.

The NLRC and the Labor Arbiter ruled that the amount received by petitioners as shown in their
quitclaims represent all the retirement benefits due them. The Court will not disturb this finding for
upon review of the said quitclaims, it is apparent that the amount is representative of all the claims of
petitioners. x x x.

Moreover, the minutes of the conference in the NCMB showed that the parties studied their options.
Petitioners asked private respondent Company to show proof of losses to justify its decision to abolish
the department. Thereafter, the parties agreed upon the following: (1) private respondent company will
abolish the Measuring Department, (2) private respondent company will pay petitioners their retirement
benefits plus other benefits due them.

A perusal of the records reveal that petitioners freely and voluntarily signed their individual
quitclaims. Moreover, during their conciliation meetings, petitioners were assisted by their union. x x x.
Absent any evidence showing that petitioners were tricked into signing their quitclaim, the Court will not
resort to surmises and conjectures as to what is behind the quitclaim executed by the parties. As
correctly held by public respondent NLRC, petitioners are no longer entitled to separation pay nor
additional retirement benefits under their CBA.

WHEREFORE, based on the foregoing, the petition is hereby DENIED for lack of merit.

SO ORDERED."

On November 28, 2002, the Court of Appeals issued a Resolution denying petitioners’ motion for
reconsideration.

Petitioners, in the instant petition for review on certiorari, contend that the Court of Appeals erred in
holding that they are not entitled to retirement benefits. Petitioners invoke Sections 1 and 3 of the
parties’ Collective Bargaining Agreement (CBA) expressly providing that retirement benefits may be
granted to them in addition to their separation pay. They likewise call our attention to Aquino vs.
NLRC4 holding that payment of separation benefits does not exclude payment of retirement benefits.

For its part, respondent maintains that the parties’ CBA expressly prohibits the payment of retirement
benefits to employees terminated for cause. thus, petitioners’ reliance on Aquino vs. NLRC5 is misplaced.
Moreover, they executed valid quitclaims.

While it is axiomatic that retirement laws are liberally construed in favor of the persons intended to be
benefited, however, such interpretation cannot be made in this case in light of the clear lack of
consensual and statutory basis of the grant of retirement benefits to petitioner. 6

The parties’ CBA provides:

"Section 1. In case of termination due to redundancy, retrenchment, dissolution of a

department/conference/section and/or the whole ASSOCIATION, sickness or physical disability, a
regular employee shall be entitled to a separate pay equivalent to his one (1) month basic pay for every
year of service. A fraction of at least six (6) months shall be considered as one (1) whole year and less
than six (6) months shall be prorated accordingly.

xxxxxx

Section 3. Optional Retirement – An employee shall have the option to retire regardless of age provided
he/she has rendered at least 15 years of continuous service to the ASSOCIATION. An employee shall be
entitled to the following benefits.
a. 15 to less than 20 years of service – 50% of the monthly basic salary for every year of service.

b. 20 years of service – 100% of the monthly basic salary for every year of service."

Obviously, petitioners, as prescribed by the parties’ CBA, are entitled only to either the separation pay, if
they are terminated for cause, or optional retirement benefits, if they rendered at least 15 years of
continuous services.

Here, petitioners were separated from the service for cause. Cpnsequently, pursuant to the CBA, what
each actually received is a separation pay. Accordingly and considering their Releases and Quitclaims,
they are no longer entitled to retirement benefits.

It bears stressing that as held by the Labor Arbiter, the NLRC and the Court of Appeals, there is no
provision in the parties’ CBA authorizing the grant to petitioners of retirement benefits in addition to
their retrenchment pay; and that there is no indication that they were forced by respondent to sign the
Releases and Quitclaims.

We have always accorded respect and finality to the findings of fact of the Court of Appeals, particularly
if they coincide with those of the Labor Arbiter and the NLRC when supported by substantial evidence,
as in this case. The reason for this is that quasi-judicial agencies, like the Arbitration Board and the NLRC,
have acquired a unique expertise because their jurisdictions are confined to specific matters.7

WHEREFORE, the petition is DENIED. The assailed Decision dated June 13, 2002 and Resolution dated
November 28, 2002 of the Court of Appeals in CA-G.R. SP No. 63176 are hereby AFFIRMED. Costs against
petitioners.

SO ORDERED.