Labor Arb Compilation of Cases - Compiled by Cha Mendoza

Preliminaries
Thursday, July 01, 2004

2:46 AM
I. Constitution
LABOR
Section 3. The State shall afford full protection to labor, local and overseas, organized and
unorganized, and promote full employment and equality of employment opportunities for all.
It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations,
and peaceful concerted activities, including the right to strike in accordance with law. They shall be
entitled to security of tenure, humane conditions of work, and a living wage. They shall also
participate in policy and decision-making processes affecting their rights and benefits as may be
provided by law.
The State shall promote the principle of shared responsibility between workers and employers and
the preferential use of voluntary modes in settling disputes, including conciliation, and shall enforce
their mutual compliance therewith to foster industrial peace.
The State shall regulate the relations between workers and employers, recognizing the right of labor
to its just share in the fruits of production and the right of enterprises to reasonable returns to
investments, and to expansion and growth.
II. Labor Code
boss, chief, manager Page 1

A. Constitutional Policy on Labor
2:55 AM
1. Section 3, Article XIII, 1987 Constitution

LABOR
Section 3. The State shall afford full protection to labor, local and overseas, organized and
unorganized, and promote full employment and equality of employment opportunities for all.
It shall guarantee the rights of all workers to
self-organization,
collective bargaining and negotiations,
and peaceful concerted activities, including the right to strike in accordance with law.
They shall be entitled to security of tenure,
humane conditions of work,
and a living wage.
They shall also participate in policy and decision-making processes affecting their rights and
benefits as may be provided by law.
The State shall promote

...the principle of shared responsibility between workers and employers
...and the preferential use of voluntary modes in settling disputes, including conciliation,
...and shall enforce their mutual compliance therewith to foster industrial peace.
to its just share in the fruits of production and the right of enterprises to reasonable returns to
2. Labor Code Policy

(i) Art. 3
Art. 3. Declaration of basic policy. The State shall afford protection to labor, promote full
employment, ensure equal work opportunities regardless of sex, race or creed and regulate
the relations between workers and employers. The State shall assure the rights of workers to
self-organization, collective bargaining, security of tenure, and just and humane conditions of
work.
Azucena notes:
2-sentence declaration of basic policy in Art. 3 hardly mentions the ER except in the phrase
"regulate the relations between workers and employers"
*basic policy should be to balance or to ccordinate the rights and interests of both workers and
employers
*on share responsibility (cf Art 1700, NCC): relations between labor and capital are impressed with
public interest, and labor contracts must yield to the common good
*Constitutional Balance: more in favor of labor. But protection to labor does not mean oppression
or destruction of capital
(ii) Art. 4
Art. 4. Construction in favor of labor. All doubts in the implementation and interpretation of
the provisions of this Code, including its implementing rules and regulations, shall be resolved
in favor of labor.
(iii) Art. 211 (a) and (e): Free collective bargaining and negotiations, including voluntary
arbitration, mediation and conciliation; provide adequate machinery for dispute resolution
Art. 211. Declaration of Policy.
A. It is the policy of the State:
a. To promote and emphasize the primacy of free collective bargaining and
negotiations, including voluntary arbitration, mediation and conciliation, as modes
of settling labor or industrial disputes;
e. To provide an adequate administrative machinery for the expeditious

e. To provide an adequate administrative machinery for the expeditious
settlement of labor or industrial disputes;
B. Non-unionized Establishments
a. Helplessness of unorganized labor
b. Adversarial situation
c. Denying worker participation does not promote healthy and harmonious relationship
d. Labor-Management Council (LMC)
- Article 255, 273(g) and 277(g)
Art. 255. Exclusive bargaining representation and workers’ participation in policy and
decision-making. The labor organization designated or selected by the majority of the
employees in an appropriate collective bargaining unit shall be the exclusive representative of
the employees in such unit for the purpose of collective bargaining. However, an individual
employee or group of employees shall have the right at any time to present grievances to their
employer.
Any provision of law to the contrary notwithstanding, workers shall have the right, subject to
such rules and regulations as the Secretary of Labor and Employment may promulgate, to
participate in policy and decision-making processes of the establishment where they are
employed insofar as said processes will directly affect their rights, benefits and welfare. For
this purpose, workers and employers may form labor-management councils: Provided, That
the representatives of the workers in such labor-management councils shall be elected by at
least the majority of all employees in said establishment. (As amended by Section 22, Republic
Act No. 6715, March 21, 1989)
Art. 273. Study of labor-management relations. The Secretary of Labor shall have the
power and it shall be his duty to inquire into:
(g) the possibilities for the adoption of practical and effective methods of labor-management
cooperation;
Art. 277. Miscellaneous provisions.

g. The Ministry shall help promote and gradually develop, with the agreement of labor
organizations and employers, labor-management cooperation programs at appropriate levels
of the enterprise based on the shared responsibility and mutual respect in order to ensure
industrial peace and improvement in productivity, working conditions and the quality of working
life. (Incorporated by Batas Pambansa Bilang 130, August 21, 1981)
-Sections 1 and 2, Rule XXI, Book V, Rules and Regulations Implementing the Labor Code

PAL V. NLRC
12:17 AM
PHIL. AIRLINES V NLRC (PALEA)

225 SCRA 301
MELO; August 13, 1993
NATURE
Petition for certiorari
FACTS
- On March 15, 1985, PAL completely revised its 1966 Code of Discipline. The Code was circulated among the employees and was immediately implemented,
and some employees were subjected to the disciplinary measures.
- The Philippine Airlines Employees Association (PALEA) filed a complaint before the NLRC contending that PAL, by its unilateral implementation of the Code,
w as guilty of unfair labor practice, specifically Paragraphs E and G of Art 249 and Art 253 of the Labor Code. PALEA alleged that copies of the Code had been
circulated in limited numbers; that being penal in nature the Code must conform with the requirements of sufficient publication, and that the Code w as arbitrary,
oppressive, and prejudicial to the rights of the employ ees. It pray ed that implementation of the Code be held in abey ance; that PAL should discuss the substance
of the Code w ith PALEA; that employ ees dismissed under the Code reinstated and their cases subjected to further hearing; and that PAL be declared guilty of
unfair labor practice and be ordered to pay damages.
- PAL filed a MTD, asserting its prerogativ e as an employer to prescribe rules and regulations regarding employees' conduct in carrying out their duties and
functions, and alleging that it had not v iolated the CBA or any provision of the Labor Code.
ISSUE
1. WON the formulation of a Code of Discipline among employees is a shared responsibility of the employer and the employees
HELD
1. YES.
Ratio Employees have a right to participate in the deliberation of matters w hich may affect their rights and the formulation of policies relative thereto and one
such matter is the formulation of a code of discipline.
Reasoning It w as only on March 2, 1989, with the approval of RA 6715, amending Art 211 of the Labor Code, that the law ex plicitly considered it a State policy
"to ensure the participation of w orkers in decision and policy-making processes affecting their rights, duties and welfare." However, even in the absence of said
clear prov ision of law , the exercise of management prerogatives was never considered boundless. Thus, in Cruz vs. Medina, it w as held that management's
prerogativ es must be without abuse of discretion.
- In San Miguel Brew ery Sales Force Union vs. Ople, we upheld the company's right to implement a new system of distributing its products, but gav e the
follow ing caveat: So long as a company's management prerogatives are exercised in good faith for the adv ancement the employer's interest and not for the
purpose of defeating or circumventing the rights of the employ ee, under special laws or under valid agreements, this Court will uphold them.
- All this points to the conclusion that the exercise of managerial prerogatives is not unlimited. It is circumscribed by limitations found in law, a CBA, or
the general principles of fair play and justice. Moreover, it must be duly established that the prerogative being invoked is clearly a managerial one.
- Verily, a line must be drawn between management prerogatives regarding business operations per se and those which affect the rights of the
employees. In treating the latter, management should see to it that its employees are at least properly informed of its decisions or modes of action.
PAL asserts that all its employ ees have been furnished copies of the Code, the LA and the NLRC found to the contrary , which finding, is entitled to great respect.
- PALEA recognizes the right of the Company to determine matters of management policy and Company operations and to direct its manpower. Management of
the Company includes the right to organize, plan, direct and control operations, to hire, assign employees to work, transfer employees from one department to
another, to promote, demote, discipline, suspend or discharge employees for just cause; to lay-off employees for valid and legal causes, to introduce new or
improved methods or facilities or to change existing methods or facilities and the right to make and enforce Company rules and regulations to carry out the
functions of management. The exercise by management of its prerogativ e shall be done in a just, reasonable, humane and/or lawful manner.
- Such prov ision in the CBA may not be interpreted as cession of employees' rights to participate in the deliberation of matters w hich may affect their rights and
the formulation of policies relativ e thereto. And one such matter is the formulation of a code of discipline. Industrial peace cannot be achieved if the employees
are denied their just participation in the discussion of matters affecting their rights.
Disposition Petition is DISMISSED.
Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 85985 August 13, 1993

PHILIPPINE AIRLINES, INC. (PAL), petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER ISABEL P. ORTIGUERRA
and PHILIPPINE AIRLINES EMPLOYEES ASSOCIATION (PALEA), respondents.
Solon Garcia for petitioner.
Adolpho M. Guerzon for respondent PALEA.
MELO, J.:
In the instant petition for certiorari, the Court is presented the issue of whether or not the formulation
of a Code of Discipline among employees is a shared responsibility of the employer and the
employees.
On March 15, 1985, the Philippine Airlines, Inc. (PAL) completely revised its 1966 Code of

On March 15, 1985, the Philippine Airlines, Inc. (PAL) completely revised its 1966 Code of
Discipline. The Code was circulated among the employees and was immediately implemented, and
some employees were forthwith subjected to the disciplinary measures embodied therein.
Thus, on August 20, 1985, the Philippine Airlines Employees Association (PALEA) filed a complaint
before the National Labor Relations Commission (NLRC) for unfair labor practice (Case No.
NCR-7-2051-85) with the following remarks: "ULP with arbitrary implementation of PAL's Code of
Discipline without notice and prior discussion with Union by Management" (Rollo, p. 41). In its
position paper, PALEA contended that PAL, by its unilateral implementation of the Code, was guilty
of unfair labor practice, specifically Paragraphs E and G of Article 249 and Article 253 of the Labor
Code. PALEA alleged that copies of the Code had been circulated in limited numbers; that being
penal in nature the Code must conform with the requirements of sufficient publication, and that the
Code was arbitrary, oppressive, and prejudicial to the rights of the employees. It prayed that
implementation of the Code be held in abeyance; that PAL should discuss the substance of the
Code with PALEA; that employees dismissed under the Code be reinstated and their cases
subjected to further hearing; and that PAL be declared guilty of unfair labor practice and be ordered
to pay damages (pp. 7-14, Record.)
PAL filed a motion to dismiss the complaint, asserting its prerogative as an employer to prescibe
rules and regulations regarding employess' conduct in carrying out their duties and functions, and
alleging that by implementing the Code, it had not violated the collective bargaining agreement
(CBA) or any provision of the Labor Code. Assailing the complaint as unsupported by evidence, PAL
maintained that Article 253 of the Labor Code cited by PALEA reffered to the requirements for
negotiating a CBA which was inapplicable as indeed the current CBA had been negotiated.
In its reply to PAL's position paper, PALEA maintained that Article 249 (E) of the Labor Code was
violated when PAL unilaterally implemented the Code, and cited provisions of Articles IV and I of
Chapter II of the Code as defective for, respectively, running counter to the construction of penal
laws and making punishable any offense within PAL's contemplation. These provisions are the
following:
Sec. 2. Non-exclusivity. — This Code does not contain the entirety of the rules and regulations of the
company. Every employee is bound to comply with all applicable rules, regulations, policies,
procedures and standards, including standards of quality, productivity and behaviour, as issued and
promulgated by the company through its duly authorized officials. Any violations thereof shall be
punishable with a penalty to be determined by the gravity and/or frequency of the offense.
Sec. 7. Cumulative Record. — An employee's record of offenses shall be cumulative. The penalty for
an offense shall be determined on the basis of his past record of offenses of any nature or the
absence thereof. The more habitual an offender has been, the greater shall be the penalty for the
latest offense. Thus, an employee may be dismissed if the number of his past offenses warrants
such penalty in the judgment of management even if each offense considered separately may not
warrant dismissal. Habitual offenders or recidivists have no place in PAL. On the other hand, due
regard shall be given to the length of time between commission of individual offenses to determine
whether the employee's conduct may indicate occasional lapses (which may nevertheless require
sterner disciplinary action) or a pattern of incorrigibility.
Labor Arbiter Isabel P. Ortiguerra handling the case called the parties to a conference but they failed
to appear at the scheduled date. Interpreting such failure as a waiver of the parties' right to present
evidence, the labor arbiter considered the case submitted for decision. On November 7, 1986, a
decision was rendered finding no bad faith on the part of PAL in adopting the Code and ruling that
no unfair labor practice had been committed. However, the arbiter held that PAL was "not totally fault
free" considering that while the issuance of rules and regulations governing the conduct of
employees is a "legitimate management prerogative" such rules and regulations must meet the test
of "reasonableness, propriety and fairness." She found Section 1 of the Code aforequoted as "an all
embracing and all encompassing provision that makes punishable any offense one can think of in
the company"; while Section 7, likewise quoted above, is "objectionable for it violates the rule against
double jeopardy thereby ushering in two or more punishment for the same misdemeanor." (pp.
38-39, Rollo.)
The labor arbiter also found that PAL "failed to prove that the new Code was amply circulated."
Noting that PAL's assertion that it had furnished all its employees copies of the Code is unsupported
by documentary evidence, she stated that such "failure" on the part of PAL resulted in the imposition
of penalties on employees who thought all the while that the 1966 Code was still being followed.
Thus, the arbiter concluded that "(t)he phrase ignorance of the law excuses no one from

Thus, the arbiter concluded that "(t)he phrase ignorance of the law excuses no one from
compliance . . . finds application only after it has been conclusively shown that the law was
circulated to all the parties concerned and efforts to disseminate information regarding the new law
have been exerted. (p. 39, Rollo.) She thereupon disposed:
WHEREFORE, premises considered, respondent PAL is hereby ordered as follows:
1. Furnish all employees with the new Code of Discipline;
2. Reconsider the cases of employees meted with penalties under the New Code of Discipline and
remand the same for further hearing; and
3. Discuss with PALEA the objectionable provisions specifically tackled in the body of the decision.
All other claims of the complainant union (is) [are] hereby, dismissed for lack of merit.
SO ORDERED. (p. 40, Rollo.)
PAL appealed to the NLRC. On August 19, 1988, the NLRC through Commissioner Encarnacion,
with Presiding Commissioner Bonto-Perez and Commissioner Maglaya concurring, found no
evidence of unfair labor practice committed by PAL and affirmed the dismissal of PALEA's charge.
Nonetheless, the NLRC made the following observations:
Indeed, failure of management to discuss the provisions of a contemplated code of discipline which
shall govern the conduct of its employees would result in the erosion and deterioration of an
otherwise harmonious and smooth relationship between them as did happen in the instant case.
There is no dispute that adoption of rules of conduct or discipline is a prerogative of management
and is imperative and essential if an industry, has to survive in a competitive world. But labor climate
has progressed, too. In the Philippine scene, at no time in our contemporary history is the need for a
cooperative, supportive and smooth relationship between labor and management more keenly felt if
we are to survive economically. Management can no longer exclude labor in the deliberation and
adoption of rules and regulations that will affect them.
The complainant union in this case has the right to feel isolated in the adoption of the New Code of
Discipline. The Code of Discipline involves security of tenure and loss of employment — a property
right! It is time that management realizes that to attain effectiveness in its conduct rules, there should
be candidness and openness by Management and participation by the union, representing its
members. In fact, our Constitution has recognized the principle of "shared responsibility" between
employers and workers and has likewise recognized the right of workers to participate in "policy and
decision-making process affecting their rights . . ." The latter provision was interpreted by the
Constitutional Commissioners to mean participation in "management"' (Record of the Constitutional
Commission, Vol. II).
In a sense, participation by the union in the adoption of the code if conduct could have accelerated
and enhanced their feelings of belonging and would have resulted in cooperation rather than
resistance to the Code. In fact, labor-management cooperation is now "the thing." (pp. 3-4, NLRC
Decision ff. p. 149, Original Record.)
Respondent Commission thereupon disposed:
WHEREFORE, premises considered, we modify the appealed decision in the sense that the New
Code of Discipline should be reviewed and discussed with complainant union, particularly the
disputed provisions [.] (T)hereafter, respondent is directed to furnish each employee with a copy of
the appealed Code of Discipline. The pending cases adverted to in the appealed decision if still in
the arbitral level, should be reconsidered by the respondent Philippine Air Lines. Other dispositions
of the Labor Arbiter are sustained.
SO ORDERED. (p. 5, NLRC Decision.)
PAL then filed the instant petition for certiorari charging public respondents with grave abuse of
discretion in: (a) directing PAL "to share its management prerogative of formulating a Code of
Discipline"; (b) engaging in quasi-judicial legislation in ordering PAL to share said prerogative with
the union; (c) deciding beyond the issue of unfair labor practice, and (d) requiring PAL to reconsider
pending cases still in the arbitral level (p. 7, Petition; p. 8,Rollo.)
As stated above, the Principal issue submitted for resolution in the instant petition is whether
management may be compelled to share with the union or its employees its prerogative of
formulating a code of discipline.
PAL asserts that when it revised its Code on March 15, 1985, there was no law which mandated the
sharing of responsibility therefor between employer and employee.
Indeed, it was only on March 2, 1989, with the approval of Republic Act No. 6715, amending Article
211 of the Labor Code, that the law explicitly considered it a State policy "(t)o ensure the
participation of workers in decision and policy-making processes affecting the rights, duties and
welfare." However, even in the absence of said clear provision of law, the exercise of management
prerogatives was never considered boundless. Thus, in Cruz vs. Medina (177 SCRA 565 [1989]) it
was held that management's prerogatives must be without abuse of discretion.
In San Miguel Brewery Sales Force Union (PTGWO) vs. Ople (170 SCRA 25 [1989]), we upheld the
company's right to implement a new system of distributing its products, but gave the following

company's right to implement a new system of distributing its products, but gave the following
caveat:
So long as a company's management prerogatives are exercised in good faith for the advancement
of the employer's interest and not for the purpose of defeating or circumventing the rights of the
employees under special laws or under valid agreements, this Court will uphold them.
(at p. 28.)
All this points to the conclusion that the exercise of managerial prerogatives is not unlimited. It is
circumscribed by limitations found in law, a collective bargaining agreement, or the general
principles of fair play and justice (University of Sto. Tomas vs. NLRC, 190 SCRA 758 [1990]).
Moreover, as enunciated in Abbott Laboratories (Phil.), vs. NLRC (154 713 [1987]), it must be duly
established that the prerogative being invoked is clearly a managerial one.
A close scrutiny of the objectionable provisions of the Code reveals that they are not purely
business-oriented nor do they concern the management aspect of the business of the company as in
the San Miguel case. The provisions of the Code clearly have repercusions on the employee's right
to security of tenure. The implementation of the provisions may result in the deprivation of an
employee's means of livelihood which, as correctly pointed out by the NLRC, is a property right
(Callanta, vs Carnation Philippines, Inc., 145 SCRA 268 [1986]). In view of these aspects of the case
which border on infringement of constitutional rights, we must uphold the constitutional requirements
for the protection of labor and the promotion of social justice, for these factors, according to Justice
Isagani Cruz, tilt "the scales of justice when there is doubt, in favor of the worker" (Employees
Association of the Philippine American Life Insurance Company vs. NLRC, 199 SCRA 628 [1991]
635).
Verily, a line must be drawn between management prerogatives regarding business operations per
se and those which affect the rights of the employees. In treating the latter, management should see
to it that its employees are at least properly informed of its decisions or modes action. PAL asserts
that all its employees have been furnished copies of the Code. Public respondents found to the
contrary, which finding, to say the least is entitled to great respect.
PAL posits the view that by signing the 1989-1991 collective bargaining agreement, on June 27,
1990, PALEA in effect, recognized PAL's "exclusive right to make and enforce company rules and
regulations to carry out the functions of management without having to discuss the same with
PALEA and much less, obtain the latter'sconformity thereto" (pp. 11-12, Petitioner's Memorandum;
pp 180-181, Rollo.) Petitioner's view is based on the following provision of the agreement:
The Association recognizes the right of the Company to determine matters of management it policy
and Company operations and to direct its manpower. Management of the Company includes the
right to organize, plan, direct and control operations, to hire, assign employees to work, transfer
employees from one department, to another, to promote, demote, discipline, suspend or discharge
employees for just cause; to lay-off employees for valid and legal causes, to introduce new or
improved methods or facilities or to change existing methods or facilities and the right to make and
enforce Company rules and regulations to carry out the functions of management.
The exercise by management of its prerogative shall be done in a just reasonable, humane and/or
lawful manner.
Such provision in the collective bargaining agreement may not be interpreted as cession of
employees' rights to participate in the deliberation of matters which may affect their rights and the
formulation of policies relative thereto. And one such mater is the formulation of a code of discipline.
Indeed, industrial peace cannot be achieved if the employees are denied their just participation in
the discussion of matters affecting their rights. Thus, even before Article 211 of the labor Code (P.D.
442) was amended by Republic Act No. 6715, it was already declared a policy of the State, "(d) To
promote the enlightenment of workers concerning their rights and obligations . . . as employees."
This was, of course, amplified by Republic Act No 6715 when it decreed the "participation of workers
in decision and policy making processes affecting their rights, duties and welfare." PAL's position
that it cannot be saddled with the "obligation" of sharing management prerogatives as during the
formulation of the Code, Republic Act No. 6715 had not yet been enacted (Petitioner's
Memorandum, p. 44; Rollo, p. 212), cannot thus be sustained. While such "obligation" was not yet
founded in law when the Code was formulated, the attainment of a harmonious labor-management
relationship and the then already existing state policy of enlightening workers concerning their rights
as employees demand no less than the observance of transparency in managerial moves affecting
employees' rights.
Petitioner's assertion that it needed the implementation of a new Code of Discipline considering the
nature of its business cannot be overemphasized. In fact, its being a local monopoly in the business
demands the most stringent of measures to attain safe travel for its patrons. Nonetheless, whatever
disciplinary measures are adopted cannot be properly implemented in the absence of full
cooperation of the employees. Such cooperation cannot be attained if the employees are restive on
account, of their being left out in the determination of cardinal and fundamental matters affecting

account, of their being left out in the determination of cardinal and fundamental matters affecting
their employment.
WHEREFORE, the petition is DISMISSED and the questioned decision AFFIRMED. No special
pronouncement is made as to costs.
SO ORDERED.
Feliciano, Bidin, Romero and Vitug, JJ., concur.

SMB Sales Force Union vs. Ople (1989)
12:36 AM
- In San Miguel Brew ery Sales Force Union vs. Ople, we upheld the company's right to implement a new system of distributing its products, but gav e the
follow ing caveat: So long as a company's management prerogatives are exercised in good faith for the adv ancement the employer's interest and not for the
purpose of defeating or circumventing the rights of the employ ee, under special laws or under valid agreements, this Court will uphold them.
G.R. No. L-53515 February 8, 1989

SAN MIGUEL BREWERY SALES FORCE UNION (PTGWO), petitioner,
vs.
HON. BLAS F. OPLE, as Minister of Labor and SAN MIGUEL CORPORATION, respondents.
Lorenzo F. Miravite for petitioner.
Isidro D. Amoroso for New San Miguel Corp. Sales Force Union.
Siguion Reyna, Montecillo & Ongsiako for private respondent.
GRIÑO-AQUINO, J.:
This is a petition for review of the Order dated February 28, 1980 of the Minister of Labor in Labor
Case No. AJML-069-79, approving the private respondent's marketing scheme, known as the
"Complementary Distribution System" (CDS) and dismissing the petitioner labor union's complaint
for unfair labor practice.
On April 17, 1978, a collective bargaining agreement (effective on May 1, 1978 until January 31,
1981) was entered into by petitioner San Miguel Corporation Sales Force Union (PTGWO), and the
private respondent, San Miguel Corporation, Section 1, of Article IV of which provided as follows:
Art. IV, Section 1. Employees within the appropriate bargaining unit shall be entitled to a basic
monthly compensation plus commission based on their respective sales. (p. 6, Annex A; p. 113,
Rollo.)
In September 1979, the company introduced a marketing scheme known as the "Complementary
Distribution System" (CDS) whereby its beer products were offered for sale directly to wholesalers
through San Miguel's sales offices.
The labor union (herein petitioner) filed a complaint for unfair labor practice in the Ministry of Labor,
with a notice of strike on the ground that the CDS was contrary to the existing marketing scheme
whereby the Route Salesmen were assigned specific territories within which to sell their stocks of
beer, and wholesalers had to buy beer products from them, not from the company. It was alleged
that the new marketing scheme violates Section 1, Article IV of the collective bargaining agreement
because the introduction of the CDS would reduce the take-home pay of the salesmen and their
truck helpers for the company would be unfairly competing with them.
The complaint filed by the petitioner against the respondent company raised two issues: (1) whether
the CDS violates the collective bargaining agreement, and (2) whether it is an indirect way of busting
the union.
In its order of February 28, 1980, the Minister of Labor found:
... We see nothing in the record as to suggest that the unilateral action of the employer in
inaugurating the new sales scheme was designed to discourage union organization or diminish its
influence, but rather it is undisputable that the establishment of such scheme was part of its overall
plan to improve efficiency and economy and at the same time gain profit to the highest. While it may
be admitted that the introduction of new sales plan somewhat disturbed the present set-up, the
change however was too insignificant as to convince this Office to interpret that the innovation
interferred with the worker's right to self-organization.
Petitioner's conjecture that the new plan will sow dissatisfaction from its ranks is already a
prejudgment of the plan's viability and effectiveness. It is like saying that the plan will not work out to
the workers' [benefit] and therefore management must adopt a new system of marketing. But what
the petitioner failed to consider is the fact that corollary to the adoption of the assailed marketing
technique is the effort of the company to compensate whatever loss the workers may suffer because
of the new plan over and above than what has been provided in the collective bargaining agreement.
To us, this is one indication that the action of the management is devoid of any anti-union hues. (pp.
24-25, Rollo.)
The dispositive part of the Minister's Order reads:
WHEREFORE, premises considered, the notice of strike filed by the petitioner, San Miguel Brewery
Sales Force Union-PTGWO is hereby dismissed. Management however is hereby ordered to pay an
additional three (3) months back adjustment commissions over and above the adjusted commission
under the complementary distribution system. (p. 26, Rollo.)

under the complementary distribution system. (p. 26, Rollo.)
The petition has no merit.
Public respondent was correct in holding that the CDS is a valid exercise of management
prerogatives:
Except as limited by special laws, an employer is free to regulate, according to his own discretion
and judgment, all aspects of employment, including hiring, work assignments, working methods,
time, place and manner of work, tools to be used, processes to be followed, supervision of workers,
working regulations, transfer of employees, work supervision, lay-off of workers and the discipline,
dismissal and recall of work. ... (NLU vs. Insular La Yebana Co., 2 SCRA 924; Republic Savings
Bank vs. CIR 21 SCRA 226, 235.) (Perfecto V. Hernandez, Labor Relations Law, 1985 Ed., p. 44.)
(Emphasis ours.)
Every business enterprise endeavors to increase its profits. In the process, it may adopt or devise
means designed towards that goal. In Abbott Laboratories vs. NLRC, 154 SCRA 713, We ruled:
... Even as the law is solicitous of the welfare of the employees, it must also protect the right of an
employer to exercise what are clearly management prerogatives. The free will of management to
conduct its own business affairs to achieve its purpose cannot be denied.
So long as a company's management prerogatives are exercised in good faith for the advancement
of the employer's interest and not for the purpose of defeating or circumventing the rights of the
employees under special laws or under valid agreements, this Court will uphold them (LVN Pictures
Workers vs. LVN, 35 SCRA 147; Phil. American Embroideries vs. Embroidery and Garment
Workers, 26 SCRA 634; Phil. Refining Co. vs. Garcia, 18 SCRA 110). San Miguel Corporation's offer
to compensate the members of its sales force who will be adversely affected by the implementation
of the CDS by paying them a so-called "back adjustment commission" to make up for the
commissions they might lose as a result of the CDS proves the company's good faith and lack of
intention to bust their union.
WHEREFORE, the petition for certiorari is dismissed for lack of merit.
SO ORDERED.
Narvasa, Cruz, Gancayco and Medialdea, JJ., concur.
Pasted from <http://www.lawphil.net/judjuris/juri1989/feb1989/gr_l53515_1989.html>

GTE Directories Corp. v. GTE Directories Corp. Employees Union
(1991)
12:24 AM
GTE Directories Corp. v. GTE Directories Corp. Employees Union (1991)

Minister Sanchez decided the dispute in the exercise of the jurisdiction assumed by his predecessor in
accordance with Article 263 (g) of the Labor Code.
Even that assumption s is open to question. The production and publication of telephone directories, which is
the principal activity of GTE, can scarcely be described as an industry affecting the national interest. GTE is a
publishing firm
chiefly dependent on the marketing and sale of advertising space for its not inconsiderable revenues.
Its services, while of value, cannot be deemed to be in the same category of such essential activities as "the
generation or distribution of energy" or those undertaken by "banks, hospitals, and export -oriented industries."
 It cannot be regarded as playing as vital a role in communication as other mass media. The small number of
employees involved in the dispute, the employer's payment of "P10 million in income tax alone to the Philippine
government," and the fact that the "top officers of the union were dismissed during the conciliation process,"
obviously do not suffice to make the dispute in the case at bar one "adversely affecting the national interest."
G.R. No. 76219 May 27, 1991

GTE DIRECTORIES CORPORATION, petitioner,
vs.
HON. AUGUSTO S. SANCHEZ and GTE DIRECTORIES CORPORATION EMPLOYEES
UNION, respondents.
Siguion Reyna, Montecillo & Ongsiako for petitioner.
Ignacio P. Lacsina for respondent Union.
NARVASA, J.: p
GTE Directories Corporation (hereafter, simply GTE) is a foreign corporation engaged in the Philippines in F: GTE Directories Corp is a foreign
the business of publishing the PLDT (Philippine Long Distance Telephone Company) telephone directories
for Metro Manila and several provinces.
corporation enganged in publishing
The record shows that initially, the practice was for its sales representatives to be given work assignments PLDT's telephone directories
within specific territories by the so-called "draw method." These sales territories were so plotted or mapped -initially, sales reps were given work
out as to have "an equal number of advertisers as well as . . . revenue. . ." Within these territories, the sales assignments w/n specific territories
representatives therein assigned were given quotas; i.e., they had to "achieve a certain amount of revenue (draw method)
or advertisements sold, decreased, increased or cancelled within a given period of time."
A territory was not fully released to the salesperson for handling at one time, but assigned in increments or
partial releases of account. Now, increments were given by the so -called "Grid System," grids (divisions or
sections) within each territory usually numbering five ( i.e., Grids I to V). Each grid was assigned a fixed
closing dated. At such closing date, a salesperson should have achieved a certain amount of the revenue
target designated for his grid; otherwise, he loses the forthcoming grid or forfeits the remaining grids not yet
received. The Grid System was installed for the following reasons: (1) to give all salespersons an opportunity
to contact advertisers within a reasonable period; (2) to assure GTE that it will get its share of advertising
budget from clients as early as possible; and (3) to ensure an even flow of work throughout the company.
This practice was observed from 1980 until sometime in June, 1984 when GTE realized that competition
among media for a share of the advertising revenue had become so keen as to require quick reaction. GTE
therefore launched an aggressive campaign to get what it considered to be its rightful share of the
advertising budget of its clientele before it could be allocated to other media (newspaper, television, radio,
etc.) It adopted a new strategy by which:
(1) all its sales representatives were required, as in the past, to achieve specified revenue targets
(advertisements sold) within pre-determined periods;
(2) in cases of cancelled revenue accounts or advertisements, it required all its salespersons to re -establish
contact and renew the same within a fixed period;
(3) if the cancelled revenue accounts were not renewed within the assigned period, said accounts were
declared, for a set period, OPEN TERRITORY to all sales representatives including the one who reported
the cancellation;
(4) if not renewed during said open territory period, said cancelled accounts were deemed no longer "open
territory," and the same could be referred for handling to contractual salespersons and/or outside agencies.
A new "Sales Evaluation and Production Policy" was thereafter drawn up. GTE informed all its sales
representatives of the new policy in a Memorandum dated October 12, 1984. The new policy was regarded
as an improvement over the previous Sales Production Policy, which solely considered quota attainment and
handling in the Sales Report for the purpose of evaluating performance.
It appears that the new policy did not sit well with the union. It demanded that it be given 15 days "to raise
questions or objections to or to seek reconsideration of the sales and administrative practices issued by the
Company on June 14, 1984." This, GTE granted, and by letter dated October 26, 1984, the union submitted
its proposals for "revisions, corrections and deletions of some policies incorporated in the Sales
Administrative Practices issued on June 14, 1984 including the new policies recently promulgated by
Management."
GTE next formulated a new set of "Sales Administrative Practices," pursuant to which it issued on July 9,
1985, a memorandum requiring all Premise Sales Representatives (PSRs) to submit individual reports
reflecting target revenues as of deadlines, set at August 2, 1985. This was superseded by another
memorandum dated July 16, 1985, revising the previous schedules on the basis of "the consensus reached
after several discussions with your DSMs, as well as, most of you," and pointing out that "the amount
required on the 1st deadline (P30,000) . . . has been reduced further (to P20,000) having taken into
consideration that most of your accounts you have already on hand are with your respective "prep artists""
On August 5, 1985, GTE's Sales Manager sent another Memorandum to "all premise sales personnel." That
memorandum observed that most of them had omitted to submit reports regarding "the target of P20,000.00
revenue handled on . . . (the) first Grid deadline of August 2, 1985" notwithstanding that "several
consultations/discussions . . . (had) been held with your DSMs, as well as yourselves in different and
separate occasions," and "these schedules/targets were drawn up by no less than you, collectively," and
notwithstanding that "this has been a practice of several years." It closed with the expressed expectation that
the sales reports would be submitted "no later than 2:00 P.M. reflecting P20,000.00 revenue handled, as per
memo re: Grid Deadlines dated July 16, 1985."
But as before, the sales representatives did not submit the reports. Instead their union , GTE Directories

But as before, the sales representatives did not submit the reports. Instead their union , GTE Directories
Corporation Employees Union (hereafter, simply the union), sent a letter to the Sales Manager dated August
5, 1985. 1 The letter stated that in fact "only one out of nineteen sales representatives met the P20,000
revenue handled on our first grid deadline of August 2;" that the schedule was not "drawn (up) as a result of
an agreement of all concerned" since GTE had failed to get "affirmative responses" from "clustered groups
of SRs;" that the union could not "Comprehend how cancelling non -cancelling accounts help production;"
and that its members would fail "expectations of cancelling . . . non -cancelling accounts" since it "would
result to further reduction of our pay which (they) believe is the purpose of your discriminate and whimsical
memo."
The following day, on August 6, 1985, the union filed in behalf of the sales representatives, a notice of strike
grounded on alleged unfair labor practices of GTE consisting of the following:
1. Refusal to bargain on unjust sales policies particularly on the failure to meet the 75% of the average sales
production for two consecutive years;
2. Open territory of accounts;
3. Illegal suspension of Brian Pineda, a union officer; and
4. Non-payment of eight days' suspension pay increase.
In due course, the Bureau of Labor Relations undertook to conciliate the dispute.
On the same day, August 6, 1985, GTE sent still another memorandum to sixteen (16) of its premise sales
representatives, this time through its Director for Marketing & Sales, requiring submission of "individual
reports reflecting target revenues as of grid deadlines . . . not later than 4:00 P.M. . . ." 2 No compliance was
made. GTE thereupon suspended its sales representatives "without pay effective August 12, 1985 for five
(5) working days" and warned them that their failure to submit the requisite reports by August 19, 1985
would merit "more drastic disciplinary actions." Still, no sales representative complied with the requirement
to submit the reports ("list of accounts to be cancelled"). So, by memorandum of the Marketing Director
dated August 19, 1985, all the sales representatives concerned were suspended anew "effective August 20,
1985 until you submit the . . . (report)."
Finally, GTE gave its sales representatives an ultimatum. By memorandum dated August 23, 1985,
individually addressed to its sales representatives, GTE required them, for the last time, to submit the
required reports ("list of accounts to be cancelled") within twenty -four (24) hours from receipt of the
memorandum; otherwise, they would be terminated "for cause." Again not one sales representatives
submitted a report. Instead, on August 29, 1985, the Union President sent an undated letter to GTE
(addressed to its Director for Marketing & Sales) acknowledging receipt of the notice of their suspension on
August 19, 1985 in view of their "continued refusal to submit the list of accounts to be cancelled," professing
surprise at being "served with a contradictory notice, giving us this time 24 hours to submit the required list,
without the suspension letter, which we consider as still in force, being first recalled or withdrawn," asking
that they be informed which of the two directives should be followed, and reserving their "right to take such
action against you personally for your acts of harassment and intimidation which are clearly designed to
discourage our legitimate union activities in protesting management's continious ( sic) unfair labor practices."
Consequently, by separate letters dated August 29, 1985 individually received, GTE terminated the
employment of the recalcitrant sales representatives, numbering fourteen, with the undertaking to give them
"separation pay, upon proper clearance and submission of company documents, material etc., in . . . (their)
possession." Among those dismissed were the union's president and third vice president, and several
members of its board of directors. On September 2, 1985, the union declared a strike in which about 60
employees participated.
During all this time, conciliation efforts were being exerted by the Bureau of Labor Relations, including
attempts to prevent the imposition of sanctions by GTE on its employees, and the strike itself. When these
proved futile, Acting Labor Minister Vicente Leogardo, Jr. issued an Order dated December 6, 1985
assuming jurisdiction over the dispute. The order made the following disposition, to wit:
WHEREFORE, this Office hereby assumes jurisdiction over the labor dispute at G.T.E. Directories, pursuant
to Article 264 (g) of the Labor Code of the Philippines, as amended. Accordingly, all striking workers
including those who were dismissed during the conciliation proceedings, except those who have already
resigned, are hereby directed to return to work and the management of G.T.E. Directories to accept all
returning employees under the same terms and conditions prevailing previous to the strike notice and
without prejudice to the determination of the obligation and rights of the parties or to the final outcome of this
dispute. The Bureau of Labor Relations is hereby directed to hear the dispute and submit its
recommendations within 15 days upon submission of the case for resolution.
All concerned including the military and police authorities are hereby requested to assist in the
implementation of this Order."
The Acting Secretary opined that the dispute "adversely affects the national interest," because:
1) GTE, a "100% foreign owned" company, had, as publisher of "PLDT's Metro Manila and provincial
directories . . . earned a total of P127,038,463 contributing close to P10 million in income tax alone to the
Philippine government," and that "major contribution to the national economy . . . (was) being threatened
because of the strike;" and
2) "top officers of the union were dismissed during the conciliation process thereby compounding the
dispute,"
Reconsideration of this Order was sought by GTE by motion filed on December 16, 1985, on the ground
that—
1) "the basis for assumption of jurisdiction is belied by the facts and records of the case and hence,
unwarranted;"
2) "national interest is not adversely affected to warrant assumption of jurisdiction by (the) Office of the
Minister of Labor and Employment;" and
3) "assumption of jurisdiction by the . . . Minister . . . without prior consultation with the parties violates the
company's right to due process of law."
GTE however reiterated its previously declared "position that with or without the order now being
questioned, it will accept all striking employees back to work except the fourteen (14) premise sales
representatives who were dismissed for cause prior to the strike."
By Resolution of then Labor Minister Blas Ople dated January 20, 1986, GTE's motion for reconsideration
was denied. The order noted inter alia that GTE had "accepted back to work all the returning workers except
fourteen (14) whom it previously dismissed insisting that they were legally dismissed for violation of
company rules and, therefore, are not included and may not be reinstated on the basis of a return -to-work
order," and that "they were dismissed for their alleged failure to comply with the reportorial requirement
under the Sales and Administrative Practices in effect since 1981 but which for the present is the subject of
negotiations between the parties." The Order then —
1) adverted to the "general rule (that) promulgations of company policies and regulations are basic
management prerogatives although the principle of collective bargaining encompasses almost all relations
between the employer and its employees which are best threshed out through negotiations, . . . (and that) it
is recognized that company policies and regulations are, unless shown to be grossly oppressive or contrary

to law, generally binding and valid on the parties until finally revised or amended unilaterally or preferably
through negotiations or by competent authorities;"
2) affirmed the "recognized principle of law that company policies and regulations are, unless shown to be
grossly oppressive or contrary to law, generally binding (and) valid on the parties and must be complied with
until finally revised or amended unilaterally or preferably through negotiations or by competent authorities;"
and
3) closed by pointing out that "as a basic principle, the matter of the acceptability of company policies and
rules is a proper subject of collective negotiations between the parties or arbitration if necessary."
In a clarificatory Order dated January 21, 1986, Minister Ople reiterated the proposition that "promulgations
of company policies and regulations are basic management prerogatives," and that "unless shown to be
grossly oppressive or contrary to law," they are "generally binding and valid on the parties and must be
complied with until finally revised or amended unilaterally or preferably, through negotiations or by
competent authorities."
Adjudication of the dispute on the merits was made on March 31, 1986 by Order of Minister Ople's
successor, Augusto Sanchez. The Order —
1) pointed out "that the issue central to the labor dispute revolves around compliance with existing company
policies, rules and regulations specifically the sales evaluation and production policy which was amended by
the October 12, 1984 memorandum and the grid schedule;"
2) declared that because fourteen (14) sales representatives — who after reinstatement pursuant to the
order of January 20, 1986 had been placed "on forced leave with pay —"were actually dismissed for failure
to comply with the reporting requirements under the "Sales Administration Practices" which was ( sic) then
the subject of negotiations between the parties at the Bureau of Labor Relations," it was only fair that they
'be reinstated . . .with back wages since they were terminated from employment based on a policy . . . still
being negotiated to avoid precisely a labor-management dispute from arising" therefrom;"
3) pronounced the union's action relative to the allegedly illegal dismissal of one Brian Pineda to be "barred
by extinctive prescription" in accordance with the CBA then in force; and
4) on the foregoing premises adjudicated the dispute as follows:
1. The union and management of G.T.E. Directories Corporation are directed to negotiate and effect a
voluntary settlement on the questioned Grid schedule, the Sales Evaluation and Production Policy;
2. Management is ordered to reinstate the fourteen (14) employees with full back wages from the time they
were dismissed up to the time that they were on forced leave with pay."
Both the Union and GTE moved for reconsideration of the Order.
The Union contended that:
1) GTE should have been adjudged guilty of unfair labor practice and other unlawful acts;
2) its strike should have been declared lawful;
3) GTE's so-called "bottom-third" policy, as well as all sales and administrative practices related thereto,
should have been held illegal; and
4) GTE should have been commanded: (a) to pay all striking employees their usual salaries, allowances,
commission and other emoluments corresponding to the period of their strike; (b) to release to its employees
the 8-days pay increase unlawfully withheld from them; (c) to lift the suspension imposed on Brian Pineda
and restore to him the pay withheld corresponding to the suspension period; (d) to pay the sales
representatives all their lost income corresponding to the period of their suspensions, and dismissal,
including commissions that they might have earned corresponding to their one -week forced leave.
GTE for its part, argued that the termination of the employment of its fourteen (14) premise sales
representatives prior to the strike should have been upheld. It also filed an opposition to the union's motion
for reconsideration.
The motions were resolved in a "Decision" handed down by Minister Sanchez on June 6, 1986. The Minister
stated that he saw no need to change his rulings as regards Pineda's suspension, the question on GTE's
sales and administrative policies, and the matter of back wages. However, as regards "the other issues
raised by the union," the Minister agreed "with the company that these were not adequately threshed out in
the earlier proceedings . . . (for) (w)hile it is true that the union had already presented evidence to support its
contention, the company should be given the opportunity to present its own evidence." Accordingly, he
directed the Bureau of Labor Relations to hear said "other issues raised by the union and to submit its
findings and recommendations thereon within 20 days from submission of the case for decision."
Again GTE moved for reconsideration; again it was rebuffed. The Labor Minister denied its motion by Order
dated October 1, 1986. In that order, the Minister, among other things —
1) invoked Section 6, Rule XIII of the Rules and Regulations Implementing the Labor Code, pertinently
reading as follows:
During the proceedings, the parties shall not do any act which may disrupt or impede the early settlement of
the dispute. They are obliged, as part of their duty to bargain collectively in good faith, to participate fully and
promptly in the conciliation proceedings called by the Bureau or the Regional Office.
and pointed out that "in dismissing 14 salesmen . . . for alleged violations of the reportorial requirements of
its sales policies which was then the subject of conciliation proceedings between them, (GTE) acted
evidently in bad faith; hence the status quo prior to their dismissal must be restored . . . (and) their
reinstatement with backwages is in order up to the time they were on forced leave. . . ;"
2) declared that because he had "ordered the parties to negotiate and effect a voluntary settlement of the
questioned Grid Schedule, the Sales Evaluation and Productions Policy, it would be unripe and premature
for us to rule on the legality or illegality on the company's sales policies at this instance;"
3) opted, however, to himself resolve "the so-called 'other issues"' which he had earlier directed the Bureau
of Labor Relations to first hear and resolve (in the Decision of June 6, 1986, supra), i.e., GTE's liability for
unfair labor practice, the legality of the strike and the strikers' right to be paid their wages while on strike, his
ruling thereon being as follows:
While the company, in merely implementing its challenged sales policies did not ipso facto commit an unfair
labor practice, it did so when it in mala fide dismissed the fourteen salesmen, all union members, while
conciliation proceedings were being conducted on disputes on its very same policies, especially at that time
when a strike notice was filed on the complaint of the union alleging that said sales policies are being used
to bust the union; thus precipitating a lawful strike on the part of the latter. A strike is legal if it was provoked
by the employer's failure to abide by the terms and conditions of its collective bargaining agreement with the
union, by the discrimination employed by it with regard to the hire and tenure of employment, and the
dismissal of employees due to union activities as well as the company's refusal to bargain collectively in
good faith (Cromwell Commercial Co., Inc. vs. Cromwell Employees and Laborers Union, 19 SCRA 398).
The same rule applies if employer was guilty of bad faith delay in reinstating them to their position (RCPI vs.
Phil. Communications Electronics & Electricity Workers Federation, 58 SCRA 762).
While as a rule strikers are not entitled to backpay for the strike period (J.P. Heilbronn Co. vs. NLU, 92 Phil.
575) strikers may be properly awarded backwages where the strike was precipitated by union busting
activities of the employer (Davao Free Workers, Front, et al. vs, CIR, 60 SCRA 408), as in the case at
bar. . . .

The Minister accordingly annulled and set aside his order for the Bureau of Labor Relations to conduct
hearings on said issues since he had already resolved them, and affirmed his Order of March 31,
1986—"directing Union and Management to negotiate a voluntary settlement on the company sales policies
and reinstating the fourteen employees with full backwages from the time they were dismissed up to the time
they were on forced leave with pay" — "but with the modification that management . . . (was) directed to give
the striking workers strike duration pay for the whole period of the strike less earnings."
GTE thereupon instituted the special civil action of certiorari at bar praying for invalidation, because
rendered with grave abuse of discretion, of the Labor Minister's orders —
1) commanding "reinstatement of the fourteen dismissed employees, and
2) "finding . . . (it) guilty of unfair labor practice and directing (it) to pay strike duration pay to striking
workers."
It seems to the Court that upon the undisputed facts on record, GTE had cause to dismiss the fourteen (14)
premise sales representatives who had repeatedly and deliberately, not to say defiantly, refused to comply
with its directive for submission of individual reports on specified matters. The record shows that GTE
addressed no less than (six) written official communications to said premise sales representatives
embodying this requirement, to wit:
1) Memorandum of July 9, 1985 pursuant to GTE's "Sales Administrative Practices" — superseded by a
memorandum dated July 16, 198 — requiring submission of individual reports by August 2, 1985;
2) Memorandum of August 5, 1985, requiring submission of the reports by 2:00 P.M.;
3) Memorandum of August 6, 1985, for submission of requisite reports not later than 4:00 P.M. of that day,
with a warning of "appropriate disciplinary action;"
4) Letter of August 9, 1985 imposing suspension without pay for five (5) working days and extending the
period for submission of reports to August 19, 1985;
5) Letter of August 19, 1985 suspending the sales representatives until their submission of the required
reports;
6) Letter dated August 28, 1985 giving the sales representatives "a last chance to comply with . . . (the)
directive within 24 hours from receipt . . .;" with warning that failure to comply would result in termination of
employment.
The only response of the sales representatives to these formal directives were:
1) a letter by their Union to GTE's Sales Manager dated August 5, 1985 in which the requirement was
criticized as not being the "result of an agreement of all concerned," and as incomprehensible, "discriminate
and whimsical;"
2) a strike notice filed with the Ministry of Labor on August 6, 1985; and
3) an undated letter sent to GTE's Director for Marketing & Sales on August 29, 1985, drawing attention to
what it deemed contradictory directives, and reserving the right to take action against the manager for "acts
of harassment and intimidation . . . clearly designed to discourage our legitimate union activities in protesting
management's continuous unfair labor practices."
The basic question then is whether or not the effectivity of an employer's regulations and policies is
dependent upon the acceptance and consent of the employees thereby sought to be bound; or otherwise
stated, whether or not the union's objections to, or request for reconsideration of those regulations or
policies automatically suspend enforcement thereof and excuse the employees' refusal to comply with the
same.
This Court has already had occasion to rule upon a similar issue. The issue was raised in a 1989 case, G.R.
No. 53515, San Miguel Brewery Sales Force Union (PTGWO) v. Ople. 3 In that case, the facts were briefly
as follows:
In September 1979, the company introduced a marketing scheme known as the "Complementary distribution
system" (CDS) whereby its beer products were offered for sale directly to wholesalers through San Miguel's
sales offices.
The labor union (herein petitioner) filed a complaint for unfair labor practice in the Ministry of Labor, with a
notice of strike on the ground that the CDS was contrary to the existing marketing scheme whereby the
Route Salesmen were assigned specific territories within which to sell their stocks of beer, and wholesalers
had to buy beer products from them, not from the company. It was alleged that the new marketing scheme
violates . . . (a provision) of the collective bargaining agreement because the introduction of the CDS would
reduce the take-home pay of the salesmen and their truck helpers for the company would be unfairly
competing with them."
The Labor Minister found nothing to suggest that the employer's unilateral action of inaugurating a new sales
scheme "was designed to discourage union organization or diminish its influence;" that on the contrary, it
was "part of its overall plan to improve efficiency and economy and at the same time gain profit to the
highest;" that the union's "conjecture that the new plan will sow dissatisfaction from its rank is already a
prejudgment of the plan's viability and effectiveness, . . . like saying that the plan will not work out to the
workers' (benefit) and therefore management must adopt a new system of marketing." The Minister
accordingly dismissed the strike notice, although he ordered a slight revision of the CDS which the employer
evidently found acceptable.
This Court approved of the Minister's findings, and declared correct his holding that the CDS was "a valid
exercise of management prerogatives," 4 viz.:
Except as limited by special laws, an employer is free to regulate, according to his own discretion and
judgment, all aspects of employment, including hiring, work assignments, working methods, time, place and
manner of work, tools to be used, processes to be followed, supervision of workers, working regulations,
transfer of employees, work supervision, lay-off of workers and the discipline, dismissal and recall of
work. . . . (NLU vs. Insular La Yebana Co., 2 SCRA 924; Republic Savings Bank vs. CIR, 21 SCRA 226,
235.) (Perfecto V. Hernandez, Labor Relations Law, 1985 ed., p. 44.) (Emphasis ours.)
The Court then closed its decision with the following pronouncements: 5
Every business enterprise endeavors to increase its profits. In the process, it may adopt or devise means
designed towards that goal. In Abbott Laboratories vs. NLRC, 154 SCRA 713, We ruled:
. . . Even as the law is solicitous of the welfare of the employees, it must also protect the right of an employer
to exercise what are clearly management prerogatives. The free will of management to conduct its own
business affairs to achieve its purpose cannot be denied.
So long as a company's management prerogatives are exercised in good faith for the advancement of the
employer's interest and not for the purpose of defeating or circumventing the rights of the employees under
special laws or under valid agreements, this Court will uphold them (LVN, Pictures Workers vs. LVN, 35
SCRA 147; Phil. American Embroideries vs. Embroidery and Garments Workers, 26 SCRA 634; Phil.
Refining Co. vs. Garcia, 18 SCRA 110). . . .
In the case at bar, it must thus be conceded that its adoption of a new "Sales Evaluation and Production
Policy" was within its management prerogative to regulate, according to its own discretion and judgment, all
aspects of employment, including the manner, procedure and processes by which particular work activities
should be done. There were, to be sure, objections presented by the union, i.e., that the schedule had not
been "drawn (up) as a result of an agreement of all concerned," that the new policy was incomprehensible,
discriminatory and whimsical, and "would result to further reduction" of the sales representatives'

discriminatory and whimsical, and "would result to further reduction" of the sales representatives'
compensation. There was, too, the union's accusation that GTE had committed unfair labor practices, such
as—
1. Refusal to bargain on unjust sales policies particularly on the failure to meet the 75% of the average sales
production for two consecutive years;
2. Open territory of accounts;
3. Illegal suspension of Brian Pineda, a union officer; and
4. Non-payment of eight days' suspension pay increase.
This Court fails to see, however, how these objections and accusations justify the deliberate and obdurate
refusal of the sales representatives to obey the management's simple requirement for submission by all
Premise Sales Representatives (PSRs) of individual reports or memoranda requiring reflecting target
revenues—which is all that GTE basically required — and which it addressed to the employees concerned
no less than six (6) times. The Court fails to see how the existence of objections made by the union justify
the studied disregard, or wilful disobedience by the sales representatives of direct orders of their superior
officers to submit reports. Surely, compliance with their superiors' directives could not have foreclosed their
demands for the revocation or revision of the new sales policies or rules; there was nothing to prevent them
from submitting the requisite reports with the reservation to seek such revocation or revision.
To sanction disregard or disobedience by employees of a rule or order laid down by management, on the
pleaded theory that the rule or order is unreasonable, illegal, or otherwise irregular for one reason or
another, would be disastrous to the discipline and order that it is in the interest of both the employer and his
employees to preserve and maintain in the working establishment and without which no meaningful
operation and progress is possible. Deliberate disregard or disobedience of rules, defiance of management
authority cannot be countenanced. This is not to say that the employees have no remedy against rules or
orders they regard as unjust or illegal. They may object thereto, ask to negotiate thereon, bring proceedings
for redress against the employer before the Ministry of Labor. But until and Unless the rules or orders are
declared to be illegal or improper by competent authority, the employees ignore or disobey them at their
peril. It is impermissible to reverse the process: suspend enforcement of the orders or rules until their legality
or propriety shall have been subject of negotiation, conciliation, or arbitration.
These propositions were in fact adverted to in relation to the dispute in question by then Minister Blas Ople
in his Order dated January 21, 1986, to the effect among others, that "promulgations of company policies
and regulations are basic management prerogatives" and that it is a "recognized principle of law that
company policies and regulations are, unless shown to be grossly oppressive or contrary to law, generally
binding (and) valid on the parties and must be complied with until finally revised or amended unilaterally or
preferably through negotiations or by competent authorities."
Minister Sanchez however found GTE to have "acted evidently in bad faith" in firing its 14 salespersons "for
alleged violations of the reportorial requirements of its sales policies which was then the subject of
conciliation proceedings between them;" 6 and that "(w)hile the company, in merely implementing its
challenged sales policies did not ipso facto commit an unfair labor practice, it did so when it in mala
fide dismissed the fourteen salesmen, all union members, while conciliation proceedings were being
conducted on disputes on its very same policies, especially at that time when a strike notice was filed on the
complaint of the union alleging that said sales policies are being used to bust the union; thus precipitating a
lawful strike on the part of the latter." No other facts appear on record relevant to the issue of GTE's
dismissal of the 14 sales representatives. There is no proof on record to demonstrate any underhanded
motive on the part of GTE in formulating and imposing the sales policies in question, or requiring the
submission of reports in line therewith. What, in fine, appears to be the Minister's thesis is that an employer
has the prerogative to lay down basic policies and rules applicable to its employees, but may not exact
compliance therewith, much less impose sanctions on employees shown to have violated them, the moment
the propriety or feasibility of those policies and rules, or their motivation, is challenged by the employees and
the latter file a strike notice with the Labor Department — which is the situation in the case at bar.
When the strike notice was filed by the union, the chain of events which culminated in the termination of the
14 sales persons' employment was already taking place, the series of defiant refusals by said sales
representatives to comply with GTE's requirement to submit individual reports was already in progress. At
that time, no less than three (3) of the ultimate six (6) direct orders of the employer for the submission of the
reports had already been disobeyed. The filing of the strike notice, and the commencement of conciliation
activities by the Bureau of Labor Relations did not operate to make GTE's orders illegal or unenforceable so
as to excuse continued non-compliance therewith. It does not follow that just because the employees or their
union are unable to realize or appreciate the desirability of their employers' policies or rules, the latter were
laid down to oppress the former and subvert legitimate union activities. Indeed, the overt, direct, deliberate
and continued defiance and disregard by the employees of the authority of their employer left the latter with
no alternative except to impose sanctions. The sanction of suspension having proved futile, termination of
employment was the only option left to the employer.
To repeat, it would be dangerous doctrine indeed to allow employees to refuse to comply with rules and
regulations, policies and procedures laid down by their employer by the simple expedient of formally
challenging their reasonableness or the motives which inspired them, or filing a strike notice with the
Department of Labor and Employment, or, what amounts to the same thing, to give the employees the
power to suspend compliance with company rules or policies by requesting that they be first subject of
collective bargaining, It would be well nigh impossible under these circumstances for any employer to
maintain discipline in its establishment. This is, of course, intolerable. For common sense teaches, as Mr.
Justice Gregorio Perfecto once had occasion to stress 7that:
Success of industries and public services is the foundation upon which just wages may be paid. There
cannot be success without efficiency. There cannot be efficiency without discipline. Consequently, when
employees and laborers violate the rules of discipline they jeopardize not only the interest of the employer
but also their own. In violating the rules of discipline they aim at killing the hen that lays the golden eggs.
Laborers who trample down the rules set for an efficient service are, in effect, parties to a conspiracy, not
only against capital but also against labor. The high interest of society and of the individuals demand that we
should require everybody to do his duty. That demand is addressed not only to employer but also to
employees.
Minister Sanchez decided the dispute in the exercise of the jurisdiction assumed by his predecessor in
accordance with Article 263 (g) of the Labor Code, 8 providing in part as follows:
(g) When in his opinion there exists a labor dispute causing or likely to cause strikes or lockouts adversely
affecting the national interest, such as may occur in but not limited to public utilities, companies engaged in
the generation or distribution of energy, banks, hospitals, and export -oriented industries, including those
within export processing zones, the Minister of Labor and Employment shall assume jurisdiction over the
dispute and decide it or certify the same to the Commission for compulsory arbitration. . . .
Even that assumption of jurisdiction is open to question.
The production and publication of telephone directories, which is the principal activity of GTE, can scarcely
be described as an industry affecting the national interest. GTE is a publishing firm chiefly dependent on the
marketing and sale of advertising space for its not inconsiderable revenues. Its services, while of value,

marketing and sale of advertising space for its not inconsiderable revenues. Its services, while of value,
cannot be deemed to be in the same category of such essential activities as "the generation or distribution of
energy" or those undertaken by "banks, hospitals, and export -oriented industries." It cannot be regarded as
playing as vital a role in communication as other mass media. The small number of employees involved in
the dispute, the employer's payment of "P10 million in income tax alone to the Philippine government," and
the fact that the "top officers of the union were dismissed during the conciliation process," obviously do not
suffice to make the dispute in the case at bar one "adversely affecting the national interest."
WHEREFORE, the petition is GRANTED, and as prayed for, the Order dated October 1, 1986 of the public
respondent is NULLIFIED and SET ASIDE.
SO ORDERED.
Gancayco, Griño-Aquino and Medialdea, JJ., concur.
Cruz, J., took no part.
Footnotes
1 The original was attached as Annex B of the Compliance dated Sept. 10, 1990 submitted by GTE through
counsel (rollo, pp. 270, 273).
2 Copies were attached as Annexes C, C-1 to C-15 of the Compliance dated Sept. 10, 1990, supra(rollo, pp.
276-291).
3 170 SCRA 25-28.
4 At pp. 27-28.
5 At p. 28.
6 SEE page 7, supra.
7 Batangas Transportation Co. v. Bagong Pagkakaisa of the Employees and Laborers of the Batangas
Trans. Co., 7 Phil. 108, 112 (1949).
8 Order dated Dec. 6, 1985 by Acting Labor Minister Vicente Leogardo, Jr.: SEE p. 4, supra.
Pasted from <http://www.lawphil.net/judjuris/juri1991/may1991/gr_76219_1991.html>

MERALCO v. QUISUMBING
12:17 AM

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 127598 January 27, 1999

MANILA ELECTRIC COMPANY, petitioner,
vs.
THE HONORABLE SECRETARY OF LABOR LEONARDO QUISUMBING AND
MERALCO EMPLOYEES AND WORKERS ASSOCIATION (MEWA), respondents.
MARTINEZ, J.:
In this petition for certiorari, the Manila Electric Company (MERALCO) seeks to annul
the orders of the Secretary of Labor dated August 19, 1996 and December 28, 1996,
wherein the Secretary required MERALCO and its rank and file union — the Meralco
Workers Association (MEWA) — to execute a collective bargaining agreement (CBA) for
the remainder of the parties' 1992-1997 CBA cycle, and to incorporate in this new CBA
the Secretary's dispositions on the disputed economic and non-economic issues.
MEWA is the duly recognized labor organization of the rank-and-file employees of
MERALCO.
On September 7, 1995, MEWA informed MERALCO of its intention to re-negotiate the
terms and conditions of their existing 1992-1997 Collective Bargaining Agreement
(CBA) covering the remaining period of two years starting from December 1, 1995 to
November 30, 1997. 1 MERALCO signified its willingness to re-negotiate through its
letter dated October 17, 1995 2 and formed a CBA negotiating panel for the purpose. On
November 10, 1995, MEWA submitted its proposal 3 to MERALCO, which, in turn,
presented a counter-proposal. Thereafter, collective bargaining negotiations proceeded.
However, despite the series of meetings between the negotiating panels of MERALCO
and MEWA, the parties failed to arrive at "terms and conditions acceptable to both of
them."
On April 23, 1996, MEWA filed a Notice of Strike with the National Capital Region
Branch of the National Conciliation and Mediation Board (NCMB) of the Department of
Labor and Employment (DOLE) which was docketed as NCMB-NCR-NS-04-152-96, on
the grounds of bargaining deadlock and unfair labor practices. The NCMB then
conducted a series of conciliation meetings but the parties failed to reach an amicable
settlement. Faced with the imminence of a strike, MERALCO on May 2, 1996, filed an
Urgent Petition 4 with the Department of Labor and Employment which was docketed as
OS-AJ No. 0503[1]96 praying that the Secretary assume jurisdiction over the labor
dispute and to enjoin the striking employees to go back to work.
The Labor Secretary granted the petition through its Order 5 of May 8, 1996, the
dispositive portion of which reads:
WHEREFORE, premises considered, this Office now assumes jurisdiction over the labor
dispute obtaining between the parties pursuant to Article 263(g) of the Labor Code.
Accordingly, the parties are here enjoined from committing any act that may exacerbate
the situation. To speed up the resolution of the dispute, the parties are also directed to
submit their respective Position Papers within ten (10) days from receipt.
Undersecretary Jose M. Espanol, Jr. is deputized to conduct conciliation conferences
between the parties to bridge their differences and eventually hammer out a solution
that is mutually acceptable. He shall be assisted by the Legal Service.
SO ORDERED.
Thereafter, the parties submitted their respective memoranda and on August 19, 1996,
the Secretary resolved the labor dispute through an Order, 6 containing the following
awards:
ECONOMIC DEMANDS
Wage increase — P2,300.00 for the first year covering the period from December 1,

Wage increase — P2,300.00 for the first year covering the period from December 1,
1995 to November 30, 1996
— P2,200.00 for the second year covering the period December 1, 1996 to November
30, 1997.
Red Circle Rate (RCR) Allowance — all RCR allowances (promotional increases that go
beyond the maximum range of a job classification salary) shall be integrated into the
basic salary of employees effective December 1, 1995.
Longevity Allowance — the integration of the longevity allowance into the basic wage is
denied; the present policy is maintained.
Longevity Increase — the present longevity bonus is maintained but the bonus shall be
incorporated into the new CBA.
Sick Leave — MEWA's demand for upgrading is denied; the company's present policy is
maintained. However, those who have not used the sick leave benefit during a particular
year shall be entitled to a one-day sick leave incentive.
Sick leave reserve — the present reserve of 25 days shall be reduced to 15 days; the
employee has the option either to convert the excess of 10 days to cash or let it remain
as long as he wants. In case he opts to let it remain, he may later on convert it into cash
at his retirement or separation.
Vacation Leave — MEWA's demand for upgrading denied & the company's present
policy is maintained which must be incorporated into the new CBA but scheduled
vacation leave may be rounded off to one full day at a time in case of a benefit involving
a fraction of a day;
Union Leave — of MEWA's officers, directors or stewards assigned to perform union
duties or legitimate union activity is increased from 30 to 40 Mondays per month.
Maternity, Paternity and Funeral leaves — the existing policy is to be maintained and
must be incorporated in the new CBA unless a new law granting paternity leave benefit
is enacted which is superior to what the company has already granted.
Birthday Leave — union's demand is granted. If birthday falls on the employee's rest
day or on a non-working holiday, the worker shall be entitled to go on leave with pay on
the next working day.
Group Hospitalization & Surgical Insurance Plan (GHSIP) and Health Maintenance Plan
(HMP) — present policy is maintained insofar as the cost sharing is concerned — 70%
for the Company and 30% for MEWA.
Health Maintenance Plan (HMP) for dependents — subsidized dependents increased
from three to five dependents.
Longevity Bonus — is increased from P140.00 to P200.00 for even year of service to be
received by the employee after serving the Company for 5 years.
Christmas Bonus and Special Christmas Grant — MEWA's demand of one month salary
as Christmas Bonus two month's salary as Special Christmas Grant is granted and to be
incorporated in the new CBA.
Midyear Bonus — one month's pay to be included in the CBA.
Anniversary Bonus — union's demand is denied.
Christmas Gift Certificate — company has the discretion as to whether it will give it to its
employees.
Retirement Benefits:
a. Full retirement-present policy is maintained;
b. one cavan of rice per month is granted to retirees;
c. special retirement leave and allowance-present policy is maintained;
d. HMP coverage for retirees — HMP coverage is granted to retirees who have not
reached the age of 70, with MERALCO subsidizing 100% of the monthly premium; those
over 70 are entitled to not more than 30 days of hospitalization at the J.F. Cotton
Hospital with the company shouldering the entire cost.
e. HMP coverage for retiree's dependents is denied.
f. Monthly pension of P3,000.00 for each retiree is denied.
g. Death benefit for retiree's beneficiaries is denied.
Optional retirement — union's demand is denied; present policy is maintained;
employee is eligible for optional retirement if he has rendered at least 18 years of
service.
Dental, Medical and Hospitalization Benefits — grant of all the allowable medical,
surgical, dental and annual physical examination benefits, including free medicine
whenever the same is not available at the JFCH.
Resignation benefits — union's demand is denied.

whenever the same is not available at the JFCH.
Resignation benefits — union's demand is denied.
Night work — union demand is denied but present policy must be incorporated in CBA.
Shortswing — work in another shift within the same day shall be considered as the
employee's work for the following day and the employee shall be given additional four
(4) hours straight time and the applicable excess time premium if he works beyond 8
hours in the other shift.
High Voltage allowance — is increased from P45.00 to P55.00 to be given to any
employee authorized by the Safety Division to perform work on or near energized bare
lines & bus including stockman drivers & crane operators and other crew members on
ground.
High Pole Allowance — is increased from P30.00 to P40.00 to be given to those
authorized to climb poles up to at least 60 ft. from the ground. Members of the team
including stockman drivers, crane operators and other crew members on the ground,
are entitled to this benefit.
Towing Allowance — where stockmen drive tow trailers with long poles and equipment
on board, they shall be entitled to a towing allowance of P20.00 whether they perform
the job on regular shift or on overtime.
Employee's Cooperative — a loan of P3 M seed money is granted to the proposed
establishment of a cooperative, payable in twenty (20) years starting one year from the
start of operations.
Holdup Allowance — the union demand is denied; the present policy shall be
maintained.
Meal and Lodging Allowance — shall be increased effective December 1, 1995 as
follows:
Breakfast — from P25.00 to P35.00
Lunch — from P35.00 to P45.00
Dinner — from P35.00 to P45.00
Lodging — from P135.00 to P180.00 a night in all MERALCO franchise areas.
Payroll Treatment for Accident while on Duty — an employee shall be paid his salary
and allowance if any is due plus average excess time for the past 12 months from the
time of the accident up to the time of full recovery and placing of the employee back to
normal duty or an allowance of P2,000.00, whichever is higher.
Housing and Equity Assistance Loan — is increased to P60,000.00; those who have
already availed of the privilege shall be allowed to get the difference.
Benefits for Collectors:
a. Company shall reduce proportionately the quota and monthly average product level
(MAPL) in terms of equivalent bill assignment when an employee is on sick leave and
paid vacation leave.
b. When required to work on Saturdays, Sundays and holidays, an employee shall
receive P60.00 lunch allowance and applicable transportation allowance as determined
by the Company and shall also receive an additional compensation to one day fixed
portion in addition to lunch and transportation allowance.
c. The collector shall be entitled to an incentive pay of P25.00 for every delinquent
account disconnected.
d. When a collector voluntarily performs other work on regular shift or overtime, he shall
be entitled to remuneration based on his computed hourly compensation and the
reimbursement of actually incurred transportation expenses.
e. Collectors shall be provided with bobcat belt bags every year.
f. Collector's cash bond shall be deposited under his capital contribution to MESALA.
g. Collectors quota and MAPL shall be proportionately reduced during typhoons, floods,
earthquakes and other similar force majeure events when it is impossible for a collector
to perform collection work.
Political Demands:
a. Scope of the collective bargaining unit — the collective bargaining unit shall be
composed of all regular rank-and-file employees hired by the company in all its offices
and operative centers throughout its franchise area and those it may employ by reason
of expansion, reorganization or as a result of operational exigencies.
b. Union recognition and security —
i. The union shall be recognized by the Company as sole and exclusive bargaining
representative of the rank-and-file employees included in the bargaining unit. The
Company shall agree to meet only with Union officers and its authorized representatives
on all matters involving the Union and all issues arising from the implementation and

on all matters involving the Union and all issues arising from the implementation and
interpretation of the new CBA.
ii. The union shall meet with the newly regularized employees for a period not to exceed
four (4) hours, on company time, to acquaint the new regular employees of the rights,
duties and benefits of Union membership.
iii. The right of all rank-and-file employees to join the union shall be recognized in
accordance with the maintenance of membership principle as a form of union security.
c. Transfer of assignment and job security —
i. No transfer of an employee from one position to another shall be made if motivated by
considerations of sex, race, creed, political and religious belief, seniority or union
activity.
ii. If the transfer is due to the reorganization or decentralization, the distance from the
employee's residence shall be considered unless the transfer is accepted by the
employee. If the transfer is extremely necessary, the transfer shall be made within the
offices in the same district.
iii. Personnel hired through agencies or contractors to perform the work done by
covered employees shall not exceed one month. If extension is necessary the union
shall be informed. But the Company shall not permanently contract out regular or
permanent positions that are necessary in the normal operation of the Company.
d. Check off Union Dues — where the union increases its dues as approved by the
Board of Directors, the Company shall check off such increase from the salaries of
union members after the union submits check off authorizations signed by the majority
of the members. The Company shall honor only those individual authorizations signed
by the majority of the union members and collectively submitted by the union to the
Company's Salary Administration.
e. Payroll Reinstatement — shall be in accordance with Article 223, p. 3 of the Labor
Code.
f. Union Representation in Committees — the union is allowed to participate in policy
formulation and in the decision-making process on matters affecting their rights and
welfare, particularly in the Uniform Committee, the Safety Committee and other
committees that may be formed in the future.
Signing Bonus — P4,000.00 per member of the bargaining unit for the conclusion of the
CBA.
Existing benefits already granted by the Company but which are not expressly or
impliedly repealed in the new agreement shall remain subsisting and shall be included in
the new agreement to be signed by the parties effective December 1, 1995.
On August 30, 1996, MERALCO filed a motion for reconsideration 7 alleging that the
Secretary of Labor committed grave abuse of discretion amounting to lack or excess of
jurisdiction:
1. in awarding to MEWA a package that would cost at least P1.142 billion, a package
that is grossly excessive and exorbitant, would not be affordable to MERALCO and
would imperil its viability as a public utility affected with national interest.
2. in ordering the grant of a P4,500.00 wage increase, as well as a new and improved
fringe benefits, under the remaining two (2) years of the CBA for the -rank-and-file
employees.
3. in ordering the "incorporation into the CBA of all existing employee benefits, on the
one hand, and those that MERALCO has unilaterally granted to its employees by virtue
of voluntary company policy or practice, on the other hand."
4. in granting certain "political demands" presented by the union.
5. in ordering the CBA to be "effective December 1995" instead of August 19, 1996
when he resolved the dispute.
MERALCO filed a supplement to the motion for reconsideration on September 18, 1995,
alleging that the Secretary of Labor did not properly appreciate the effect of the awarded
wages and benefits on MERALCO's financial viability.
MEWA likewise filed a motion asking the Secretary of Labor to reconsider its Order on
the wage increase, leaves, decentralized filing of paternity and maternity leaves,
bonuses, retirement benefits, optional retirement, medical, dental and hospitalization
benefits, short swing and payroll treatment. On its political demands, MEWA asked the
Secretary to rule on its proposal to institute a Code of Discipline for its members and the
union's representation in the administration of the Pension Fund.
On December 28, 1996, the Secretary issued an Order 8 resolving the parties' separate

On December 28, 1996, the Secretary issued an Order 8 resolving the parties' separate
motions, the modifications of the August 19, 1996 Order being highlighted hereunder:
1) Effectivity of Agreement — December 1, 1995 to November 30, 1997.
Economic Demands
2) Wage Increase:
First year — P2,200.00 per month;
Second year — P2,200.00 per month.
3) Integration of Red Circle Rate (RCR) and Longevity Allowance into Basic Salary —
the RCR allowance shall be integrated into the basic salary of employees as of August
19, 1996 (the date of the disputed Order).
4) Longevity Bonus — P170 per year of service starting from 10 years of continuous
service.
5) Vacation Leave — The status quo shall be maintained as to the number of vacation
leave but employees' scheduled vacation may be taken one day at a time in the manner
that this has been provided in the supervisory CBA.
6) Sick Leave Reserve — is reduced to 15 days, with any excess payable at the end of
the year. The employee has the option to avail of this cash conversion or to accumulate
his sick leave credits up to 25 days for conversion to cash at retirement or separation
from the service.
7) Birthday Leave — the grant of a day off when an employee's birthday falls on a non-
working day is deleted.
8) Retirement Benefits for Retirees — The benefits granted shall be effective on August
19, 1996, the date of the disputed order up to November 30, 1997, which is the date the
CBA expires and shall apply to those who are members of the bargaining unit at the
time the award is made.
One sack of rice per quarter of the year shall be given to those retiring between August
19, 1996 and November 30, 1997.
On HMP Coverage for Retirees — The parties "maintain the status quo, that is, with the
Company complying with the present arrangement and the obligations to retirees as is."
9) Medical, Dental and Hospitalization Benefits — The cost of medicine unavailable at
the J.F. Cotton Hospital shall be in accordance with MERALCO's Memorandum dated
September 14, 1976.
10) GHSIP and HMP for Dependents — The number of dependents to be subsidized
shall be reduced from 5 to 4 provided that their premiums are proportionately increased.
11) Employees' Cooperative — The original award of P3 million pesos as seed money
for the proposed Cooperative is reduced to P1.5 million pesos.
12) Shortswing — the original award is deleted.
13) Payroll Treatment for Accident on Duty — Company ordered to continue its present
practice on payroll treatment for accident on duty without need to pay the excess time
the Union demanded.
Political Demands:
14) Scope of the collective bargaining unit — The bargaining unit shall be composed of
all rank and file employees hired by the Company in accordance with the original Order.
15) Union recognition and security — The incorporation of a closed shop form of union
security in the CBA; the Company is prohibited from entertaining individuals or groups of
individuals only on matters that are exclusively within the domain of the union; the
Company shall furnish the Union with a complete list of newly regularized employees
within a week from regularization so that the Union can meet these employees on the
Union's and the employee's own time.
16) Transfer of assignment and job security — Transfer is a prerogative of the Company
but the transfer must be for a valid business reason, made in good faith and must be
reasonably exercised. The CBA shall provide that "No transfer of an employee from one
position to another, without the employee's written consent, shall be made if motivated
by considerations of sea, race, creed, political and religious belief, age or union activity.
17) Contracting Out — The Company has the prerogative to contract out services
provided that this move is based on valid business reasons in accordance with law, is
made in good faith, is reasonably exercised and, provided further that if the contracting
out involves more than six months, the Union must be consulted before its
implementation.
18) Check off of union dues
In any increase of union dues or contributions for mandatory activities, the union must
submit to the Company a copy of its board resolution increasing the union dues or

submit to the Company a copy of its board resolution increasing the union dues or
authorizing such contributions;
If a board resolution is submitted, the Company shall deduct union dues from all union
members after a majority of the union members have submitted their individual written
authorizations. Only those check-off authorization submitted by the union shall be
honored by the Company.
With respect to special assessments, attorney's fees, negotiation fees or any other
extraordinary fees individual authorization shall be necessary before the company may
so deduct the same.
19) Union Representation in Committees — The union is granted representation in the
Safety Committee, the Uniform Committee and other committees of a similar nature and
purpose involving personnel welfare, rights and benefits as well as duties.
Dissatisfied, petitioner filed this petition contending that the Secretary of Labor gravely
abused his discretion:
1) . . . in awarding wage increases of P2,200.00 for 1996 and P2,200 for 1997.
2) . . . in awarding the following economic benefits:
a. Two months Christmas bonus;
b. Rice Subsidy and retirement benefits for retirees;
c. Loan for the employees' cooperative;
d. Social benefits such as GHSIP and HMP for dependents, employees' cooperative
and housing equity assistance loan;
e. Signing bonus;
f. Integration of the Red Circle Rate Allowance.
g. Sick leave reserve of 15 days
h. The 40-day union leave;
i. High pole/high voltage and towing allowance; and
j. Benefits for collectors
3) . . . in expanding the scope of the bargaining unit to all regular rank and file
employees hired by the company in all its offices and operating centers and those it may
employ by reason of expansion, reorganization or as a result of operational exigencies;
4) . . . in ordering for a closed shop when his original order for a maintenance of
membership arrangement was not questioned by the parties;
5) . . . in ordering that Meralco should consult the union before any contracting out for
more than six months;
6) . . . in decreeing that the union be allowed to have representation in policy and
decision making into matters affecting "personnel welfare, rights and benefits as well as
duties;"
7) . . . in ruling for the inclusion of all terms and conditions of employment in the
collective bargaining agreement;
8) . . . in exercising discretion in determining the retroactivity of the CBA;
Both MEWA and the Solicitor General, on behalf of the Secretary of Labor, filed their
comments to the petition. While the case was also set for oral argument on Feb. 10,
1997, this hearing was cancelled due to MERALCO not having received the comment of
the opposing parties. The parties were instead required to submit written memoranda,
which they did. Subsequently, both petitioner and private respondent MEWA also filed
replies to the opposing parties' Memoranda, all of which We took into account in the
resolution of this case.
The union disputes the allegation of MERALCO that the Secretary abused his discretion
in issuing the assailed orders arguing that he acted within the scope of the powers
granted him by law and by the Constitution. The union contends that any judicial review
is limited to an examination of the Secretary's decision-making/discretion — exercising
process to determine if this process was attended by some capricious or whimsical act
that constitutes "grave abuse"; in the absence of such abuse, his findings — considering
that he has both jurisdiction and expertise to make them — are valid.
The union's position is anchored on two premises:
First, no reviewable abuse of discretion could have attended the Secretary's arbitral
award because the Secretary complied with constitutional norms in rendering the
disputed award. The union posits that the yardstick for comparison and for the
determination of the validity of the Secretary's actions should be the specific standards
laid down by the Constitution itself. To the union, these standards include the State
policy on the promotion of workers' welfare, 9 the principle of distributive justice, 10 the
right of the State to regulate the use of property, 11the obligation of the State to protect

right of the State to regulate the use of property, 11the obligation of the State to protect
workers, both organized and unorganized, and insure their enjoyment of "humane
conditions of work" and a "living wage," and the right of labor to a just share in the fruits
of production. 12
Second, no reversible abuse of discretion attended the Secretary's decision because
the Secretary took all the relevant evidence into account, judiciously weighed them, and
rendered a decision based on the facts and law. Also, the arbitral award should not be
reversed given the Secretary's expertise in his field and the general rule that findings of
fact based on such expertise is generally binding on this Court.
To put matters in proper perspective, we go back to basic principles. The Secretary of
Labor's statutory power under Art. 263 (g) of the Labor Code to assume jurisdiction over
a labor dispute in an industry indispensable to the national interest, and, to render an
award on compulsory arbitration, does not exempt the exercise of this power from the
judicial review that Sec. 1, Art. 8 of the Constitution mandates. This constitutional
provision states:
Judicial power includes the duty of the courts of justice to settle actual controversies
involving rights which are legally demandable and enforceable, and to determine
whether or not there has been a grave abuse of discretion amounting to lack or excess
of jurisdiction on the part of any branch or instrumentality of the government .
Under this constitutional mandate, every legal power of the Secretary of Labor under the
Labor Code, or, for that matter, any act of the Executive, that is attended by grave
abuse of discretion is subject to review by this Court in an appropriate proceeding. To
be sure, the existence of an executive power alone — whether granted by statute or by
the Constitution — cannot exempt the executive action from judicial oversight,
interference or reversal when grave abuse of discretion is, or is alleged to be, present.
This is particularly true when constitutional norms are cited as the applicable yardsticks
since this Court is the final interpreter of the meaning and intent of the Constitution. 13
The extent of judicial review over the Secretary of Labor's arbitral award is not limited to
a determination of grave abuse in the manner of the secretary's exercise of his statutory
powers. This Court is entitled to, and must — in the exercise of its judicial power —
review the substance of the Secretary's award when grave abuse of discretion is alleged
to exist in the award, i.e., in the appreciation of and the conclusions the Secretary drew
from the evidence presented.
The natural and ever present limitation on the Secretary's acts is, of course, the
Constitution. And we recognize that indeed the constitutional provisions the union cited
are State policies on labor and social justice that can serve as standards in assessing
the validity of a Secretary of Labor's actions. However, we note that these provisions do
not provide clear, precise and objective standards of conduct that lend themselves to
easy application. We likewise recognize that the Constitution is not a lopsided document
that only recognizes the interests of the working man; it too protects the interests of the
property owner and employer as well. 14
For these reasons — and more importantly because a ruling on the breadth and scope
of the suggested constitutional yardsticks is not absolutely necessary in the disposition
of this case — we shall not use these yardsticks in accordance with the time-honored
practice of avoiding constitutional interpretations when a decision can be reached using
non-constitutional standards. We have repeatedly held that one of the essential
requisites for a successful judicial inquiry into constitutional questions is that the
resolution of the constitutional question must be necessary in deciding the case. 15
In this case we believe that the more appropriate and available standard — and one
does not require a constitutional interpretation — is simply the standard of
reasonableness. In layman's terms, reasonableness implies the absence of
arbitrariness; 16 in legal parlance, this translates into the exercise of proper discretion
and to the observance of due process. Thus, the question we have to answer in
deciding this case is whether the Secretary's actions have been reasonable in light of
the parties positions and the evidence they presented.
MEWA's second premise — i.e., that the Secretary duly considered the evidence
presented — is the main issue that we shall discuss at length below. Additionally,
MEWA implied that we should take great care before reading an abuse of discretion on
the part of the Secretary because of his expertise on labor issues and because his
findings of fact deserve the highest respect from this Court.
This Court has recognized the Secretary of Labor's distinct expertise in the study and
settlement of labor disputes falling under his power of compulsory arbitration. 17 It is also

settlement of labor disputes falling under his power of compulsory arbitration. 17 It is also
well-settled that factual findings of labor administrative officials, if supported by
substantial evidence, are entitled not only to great respect but even to finality. 18 We,
therefore, have no difficulty in accepting the union's caveat on how to handle a
Secretary of Labor's arbitral award.
But at the same time, we also recognize the possibility that abuse of discretion may
attend the exercise of the Secretary's arbitral functions; his findings in an arbitration
case are usually based on position papers and their supporting documents (as they are
in the present case), and not on the thorough examination of the parties' contending
claims that may be present in a court trial and in the face-to-face adversarial process
that better insures the proper presentation and appreciation of evidence. 19 There may
also be grave abuse of discretion where the board, tribunal or officer exercising judicial
function fails to consider evidence adduced by the present. 20 Given the parties' positions
on the justiciability of the issues before us, the question we have to answer is one that
goes into the substance of the Secretary's disputed orders: Did the Secretary properly
consider and appreciate the evidence presented before him?
We find, based on our consideration of the parties' positions and the evidence on
record, that the Secretary of Labor disregarded and misappreciated evidence,
particularly with respect to the wage award. The Secretary of Labor apparently also
acted arbitrarily and even whimsically in considering a number of legal points; even the
Solicitor General himself considered that the Secretary gravely abused his discretion on
at least three major points: (a) on the signing bonus issue; (b) on the inclusion of
confidential employees in the rank and file bargaining unit, and (c) in mandating a union
security "closed-shop" regime in the bargaining unit.
We begin with a discussion on the wages issue. The focal point in the consideration of
the wage award is the projected net income for 1996 which became the basis for the
1996 wage award, which in turn — by extrapolation — became the basis for the (2nd
Year) 1997 award. MERALCO projected that the net operating income for 1996 was
14.7% above the 1999 level or a total net operating income of 4.171 Billion, while the
union placed the 1996 net operating income at 5.795 Billion.
MERALCO based its projection on the increase of the income for the first 6 months of
1996 over the same period in 1995. The union, on the other hand, projected that the
1996 income would increase by 29% to 35% because the "consumption of electric
power is at its highest during the last two quarters with the advent of the Yuletide
season." The union likewise relied heavily on a newspaper report citing an estimate by
an all Asia capital financial analyst that the net operating income would amount to 5.795
Billion. 21
Based essentially on these considerations, the Secretary made the following
computations and ordered his disputed wage award:
Projected net operating
income for 1996 5,795,000,000
Principals and interests 1,426,571,703
Dividends at 1995 rate 1,636,949,000
Net Amount left with the Company 2,729,479,297
Add: Tax credit equivalent to 35% of labor cost 231,804,940
Company's net operating income 2,961,284,237
For 1997, the projected income is P7,613,612 which can easily absorb the incremental
increase of P2,200 per month or a total of P4,500 during the last year of the CBA period.
xxx xxx xxx
An overriding aim is to estimate the amount that is left with the Company after the
awarded wages and benefits and the company's customary obligations are paid. This
amount can be the source of an item not found in the above computations but which the
Company must provide for, that is — the amount the company can use for expansion.
Considering the expansion plans stated in the Company's Supplement that calls for capital
expenditures of 6 billion, 6.263 billion and 5.802 billion for 1996, 1997 and 1998
respectively, We conclude that our original award of P2,300 per month for the first year and
P2,200 for the second year will still leave much by way of retained income that can be used
for expansion." 22 (Emphasis ours.)
We find after considering the records that the Secretary gravely abused his discretion in

We find after considering the records that the Secretary gravely abused his discretion in
making this wage award because he disregarded evidence on record. Where he
considered MERALCO's evidence at all, he apparently misappreciated this evidence in
favor of claims that do not have evidentiary support. To our mind, the MERALCO
projection had every reason to be reliable because it mas based on actual and
undisputed figures for the first six months of 1996. 23 On the other hand, the union
projection was based on a speculation of Yuletide consumption that the union failed to
substantiate. In fact, as against the union's unsubstantiated Yuletide consumption claim,
MERALCO adduced evidence in the form of historical consumption data showing that a
lengthy consumption does not tend to rise during the Christmas period. 24 Additionally,
the All-Asia Capital Report was nothing more than a newspaper report that did not show
any specific breakdown or computations. While the union claimed that its cited figure is
based on MERALCO's 10-year income stream, 25 no data or computation of this 10-year
stream appear in the record.
While the Secretary is not expected to accept the company-offered figures wholesale in
determining a wage award, we find it a grave abuse of discretion to completely
disregard data that is based on actual and undisputed record of financial performance in
favor of the third-hand and unfounded claims the Secretary eventually relied upon. At
the very least, the Secretary should have properly justified his disregard of the company
figures. The Secretary should have also reasonably insured that the figure that served
as the starting point for his computation had some substantial basis.
Both parties extensely discussed the factors that the decision maker should consider in
making a wage award. While We do not seek to enumerate in this decision the factors
that should affect wage determination, we must emphasize that a collective bargaining
dispute such as this one requires due consideration and proper balancing of the
interests of the parties to the dispute and of those who might be affected by the dispute.
To our mind, the best way in approaching this task holistically is to consider the
available objective facts, including, where applicable, factors such as the bargaining
history of the company, the trends and amounts of arbitrated and agreed wage awards
and the company's previous CBAs, and industry trends in general. As a rule,
affordability or capacity to pay should be taken into account but cannot be the sole
yardstick in determining the wage award, especially in a public utility like MERALCO. In
considering a public utility, the decision maker must always take into account the "public
interest" aspects of the case; MERALCO's income and the amount of money available
for operating expenses — including labor costs — are subject to State regulation. We
must also keep in mind that high operating costs will certainly and eventually be passed
on to the consuming public as MERALCO has bluntly warned in its pleadings.
We take note of the "middle ground" approach employed by the Secretary in this case
which. we do not necessarily find to be the best method of resolving a wage dispute.
Merely finding the midway point between the demands of the company and the union,
and "splitting the difference" is a simplistic solution that fails to recognize that the parties
may already be at the limits of the wage levels they can afford. It may lead to the danger
too that neither of the parties will engage in principled bargaining; the company may
keep its position artificially low while the union presents an artificially high position, on
the fear that a "Solomonic" solution cannot be avoided. Thus, rather than encourage
agreement, a "middle ground approach" instead promotes a "play safe" attitude that
leads to more deadlocks than to successfully negotiated CBAs.
After considering the various factors the parties cited, we believe that the interests of
both labor and management are best served by a wage increase of P1,900.00 per
month for the first year and another P1,900.00 per month for the second year of the two -
year CBA term. Our reason for this is that these increases sufficiently protects the
interest of the worker as they are roughly 15% of the monthly average salary of
P11,600.00. 26 They likewise sufficiently consider the employer's costs and its overall
wage structure, while at the same time, being within the range that will not disrupt the
wage trends in Philippine industries.
The record shows that MERALCO, throughout its long years of existence, was never
remiss in its obligation towards its employees. In fact, as a manifestation of its strong
commitment to the promotion of the welfare and well-being of its employees, it has
consistently improved their compensation package. For instance, MERALCO has
granted salary increases 27 through the collective bargaining agreement the amount of
which since 1980 for both rank-and-file and supervisory employees were as follows:

AMOUNT OF CBA DIFFEREN
INCREASES CE
CBA COVERAGE RANK-AND- SUPERVISO AMOUN PERCEN
FILE RY T T
1980 230 342.5 112.5 48.91%
1981 210 322.5 112.5 53.57
1982 200 312.5 112.5 56.25
TOTAL 640 977.5 337.5 52.73
1983 320 432.5 112.5 35.16
1984 350 462.5 112.5 32.14
1985 370 482.5 112.5 30.41
TOTAL 1,040.00 1,377.50 337.5 32.45
1986 860 972.5 112.5 13.08
1987 640 752.5 112.5 17.58
1988 600 712.5 112.5 18.75
TOTAL 2,100.00 2,437.50 337.5 16.07
1989 1,100.00 1,212.50 112.5 10.23
1990 1,200.00 1,312.50 112.5 9.38
1991 1,300.00 1,412.50 112.5 8.65
TOTAL 3,600.00 3,937.50 337.5 9.38
1992 1,400.00 1,742.50 342.5 24.46
1993 1,350.00 1,682.50 332.5 24.63
1994 1,150.00 1,442.50 292.5 25.43
TOTAL 3,900.00 4,867.50 967.5 24.81
Based on the above-quoted table, specifically under the column "RANK-AND-FILE," it is

easily discernible that the total wage increase of P3,800.00 for 1996 to 1997 which we
are granting in the instant case is significantly higher than the total increases given in
1992 to 1994, or a span of three (3) years, which is only P3,900.00 a month. Thus, the
Secretary's grant of P2,200.00 monthly wage increase in the assailed order is
unreasonably high a burden for MERALCO to shoulder.
We now go to the economic issues.
1. CHRISTMAS BONUS
MERALCO questions the Secretary's award of "Christmas bonuses" on the ground that
what it had given its employees were special bonuses to mark or celebrate "special
occasions," such as when the Asia Money Magazine recognized MERALCO as the
"best managed company in Asia." These grants were given on or about Christmas time,
and the timing of the grant apparently led the Secretary to the conclusion that what were
given were Christmas bonuses given by way of a "company practice" on top of the
legally required 13th month pay.
The Secretary in granting the two-month bonus, considered the following factual finding,
to wit:
We note that each of the grant mentioned in the commonly adopted table of grants has
a special description. Christmas bonuses were given in 1988 and 1989. However, the
amounts of bonuses given differed. In 1988, it was P1,500. In 1989, it was 1/2 month
salary. The use of "Christmas bonus" title stopped after 1989. In 1990, what was given
was a "cash gift" of 1/2 month's salary. The grants thereafter bore different titles and
were for varying amounts. Significantly, the Company explained the reason for the 1995

were for varying amounts. Significantly, the Company explained the reason for the 1995
bonuses and this explanation was not substantially contradicted by the Union.
What comes out from all these is that while the Company has consistently give some
amount by way of bonuses since 1988, these awards were not given uniformly as
Christmas bonuses or special Christmas grants although they may have been given at
or about Christmas time.
xxx xxx xxx
The Company is not therefore correct in its position that there is no established practice of
giving Christmas bonuses that has ripened to the status of being a term and condition of
employment. Regardless of its nomenclature and purpose, the act of giving this bonus in the
spirit of Christmas has ripened into a Company practice. 28
It is MERALCO's position that the Secretary erred when he recognized that there was
an "established practice" of giving a two-month Christmas bonus based on the fact that
bonuses were given on or about Christmas time. It points out that the "established
practice" attributed to MERALCO was neither for a considerable period of time nor
identical in either amount or purpose. The purpose and title of the grants were never the
same except for the Christmas bonuses of 1988 and 1989, and were not in the same
amounts.
We do not agree.
As a rule, a bonus is not a demandable and enforceable obligation; 29 it may
nevertheless be granted on equitable considerations 30 as when the giving of such
bonus has been the company's long and regular practice. 31 To be considered a "regular
practice," the giving of the bonus should have been done over a long period of time, and
must be shown to have been consistent and deliberate. 32 Thus we have ruled
in National Sugar Refineries Corporation vs. NLRC: 33
The test or rationale of this rule on long practice requires an indubitable showing that the
employer agreed to continue giving the benefits knowing fully well that said employees
are not covered by the law requiring payment thereof.
In the case at bar, the record shows that MERALCO, aside from complying with the
regular 13th month bonus, has further been giving its employees an additional
Christmas bonus at the tail-end of the year since 1988. While the special bonuses
differed in amount and bore different titles, it can not be denied that these were given
voluntarily and continuously on or about Christmas time. The considerable length of time
MERALCO has been giving the special grants to its employees indicates a unilateral
and voluntary act on its part, to continue giving said benefits knowing that such act was
not required by law.
Indeed, a company practice favorable to the employees has been established and the
payments made by MERALCO pursuant thereto ripened into benefits enjoyed by the
employees. Consequently, the giving of the special bonus can no longer be withdrawn
by the company as this would amount to a diminution of the employee's existing
benefits. 34
We can not, however, affirm the Secretary's award of a two-month special Christmas
bonus to the employees since there was no recognized company practice of giving a
two-month special grant. The two-month special bonus was given only in 1995 in
recognition of the employees prompt and efficient response during the calamities.
Instead, a one-month special bonus, We believe, is sufficient, this being merely a
generous act on the part of MERALCO.
2. RICE SUBSIDY and RETIREMENT BENEFITS for RETIREES
It appears that the Secretary of Labor originally ordered the increase of the retirement
pay, rice subsidy and medical benefits of MERALCO retirees. This ruling was
reconsidered based on the position that retirees are no longer employees of the
company and therefore are no longer bargaining members who can benefit from a
compulsory arbitration award. The Secretary, however, ruled that all members of the
bargaining unit who retire between August 19, 1996 and November 30, 1997 ( i.e., the
term of the disputed CBA under the Secretary's disputed orders) are entitled to receive
an additional rice subsidy.
The question squarely brought in this petition is whether the Secretary can issue an
order that binds the retirement fund. The company alleges that a separate and
independent trust fund is the source of retirement benefits for MERALCO retirees, while
the union maintains that MERALCO controls these funds and may therefore be
compelled to improve this benefit in an arbitral award.
The issue requires a finding of fact on the legal personality of the retirement fund. In the

The issue requires a finding of fact on the legal personality of the retirement fund. In the
absence of any evidence on record indicating the nature of the retirement fund's legal
personality, we rule that the issue should be remanded to the Secretary for reception of
evidence as whether or not the MERALCO retirement fund is a separate and
independent trust fund. The existence of a separate and independent juridical entity
which controls an irrevocable retirement trust fund means that these retirement funds
are beyond the scope of collective bargaining: they are administered by an entity not a
party to the collective bargaining and the funds may not be touched without the trustee's
conformity.
On the other hand, MERALCO control over these funds means that MERALCO may be
compelled in the compulsory arbitration of a CBA deadlock where it is the employer, to
improve retirement benefits since retirement is a term or condition of employment that is
a mandatory subject of bargaining.
3. EMPLOYEES' COOPERATIVE
The Secretary's disputed ruling requires MERALCO to provide the employees covered
by the bargaining unit with a loan of 1.5 Million as seed money for the employees
formation of a cooperative under the Cooperative Law, R.A. 6938. We see nothing in
this law — whether expressed or implied — that requires employers to provide funds, by
loan or otherwise, that employees can use to form a cooperative. The formation of a
cooperative is a purely voluntary act under this law, and no party in any context or
relationship is required by law to set up a cooperative or to provide the funds therefor. In
the absence of such legal requirement, the Secretary has no basis to order the grant of
a 1.5 million loan to MERALCO employees for the formation of a cooperative.
Furthermore, we do not see the formation of an employees cooperative, in the absence
of an agreement by the collective bargaining parties that this is a bargainable term or
condition of employment, to be a term or condition of employment that can be imposed
on the parties on compulsory arbitration.
4. GHSIP, HMP BENEFITS FOR DEPENDENTS and HOUSING EQUITY LOAN
MERALCO contends that it is not bound to bargain on these benefits because these do
not relate to "wages, hours of work and other terms and conditions of employment"
hence, the denial of these demands cannot result in a bargaining impasse.
The GHSIP, HMP benefits for dependents and the housing equity loan have been the
subject of bargaining and arbitral awards in the past. We do not see any reason why
MERALCO should not now bargain on these benefits. Thus, we agree with the
Secretary's ruling:
. . . Additionally and more importantly, GHSIP and HMP, aside from being contributory plans,
have been the subject of previous rulings from this Office as bargainable matters. At this
point, we cannot do any less and must recognize that GHSIP and HMP are matters where
the union can demand and negotiate for improvements within the framework of the collective
bargaining system. 35
Moreover, MERALCO have long been extending these benefits to the employees and
their dependents that they now become part of the terms and conditions of employment.
In fact, MERALCO even pledged to continue giving these benefits. Hence, these
benefits should be incorporated in the new CBA.
With regard to the increase of the housing equity grant, we find P60,000.00 reasonable
considering the prevailing economic crisis.
5. SIGNING BONUS
On the signing bonus issue, we agree with the positions commonly taken by MERALCO
and by the Office of the Solicitor General that the signing bonus is a grant motivated by
the goodwill generated when a CBA is successfully negotiated and signed between the
employer and the union. In the present case, this goodwill does not exist. In the words of
the Solicitor General:
When negotiations for the last two years of the 1992-1997 CBA broke down and the parties
sought the assistance of the NCMB, but which failed to reconcile their differences, and when
petitioner MERALCO bluntly invoked the jurisdiction of the Secretary of Labor in the
resolution of the labor dispute, whatever goodwill existed between petitioner MERALCO and
respondent union disappeared. . . . . 36
In contractual terms, a signing bonus is justified by and is the consideration paid for the
goodwill that existed in the negotiations that culminated in the signing of a CBA. Without
the goodwill, the payment of a signing bonus cannot be justified and any order for such
payment, to our mind, constitutes grave abuse of discretion. This is more so where the

signing bonus is in the not insignificant total amount of P16 Million.
6. RED-CIRCLE-RATE ALLOWANCE
An RCR allowance is an amount, not included in the basic salary, that is granted by the
company to an employee who is promoted to a higher position grade but whose actual
basic salary at the time of the promotion already exceeds the maximum salary for the
position to which he or she is promoted. As an allowance, it applies only to specific
individuals whose salary levels are unique with respect to their new and higher
positions. It is for these reasons that MERALCO prays that it be allowed to maintain the
RCR allowance as a separate benefit and not be integrated in the basic salary.
The integration of the RCR allowance in the basic salary of the employees had
consistently been raised in the past CBAs (1989 and 1992) and in those cases, the
Secretary decreed the integration of the RCR allowance in the basic salary. We do not
see any reason why it should not be included in the present CBA. In fact, in the 1995
CBA between MERALCO and the supervisory union (FLAMES), the integration of the
RCR allowance was recognized. Thus, Sec. 4 of the CBA provides:
All Red-Circle-date Allowance as of December 1, 1995 shall be integrated in the basic salary
of the covered employees who as of such date are receiving such allowance. Thereafter, the
company rules on RCR allowance shall continue to be observed/applied. 37
For purposes of uniformity, we affirm the Secretary's order on the integration of the RCR
allowance in the basic salary of the employees.
7. SICK LEAVE RESERVE OF 15 DAYS
MERALCO assails the Secretary's reduction of the sick leave reserve benefit from 25
days to 15 days, contending that the sick leave reserve of 15 days has reached the
lowest safe level that should be maintained to give employees sufficient buffer in the
event they fall ill.
We find no compelling reason to deviate from the Secretary's ruling that the sick leave
reserve is reduced to 15 days, with any excess convertible to cash at the end of the
year. The employee has the option to avail of this cash conversion or to accumulate his
sick leave credits up to 25 days for conversion to cash at his retirement or separation
from the service. This arrangement is, in fact, beneficial to MERALCO. The latter admits
that "the diminution of this reserve does not seriously affect MERALCO because
whatever is in reserve are sick leave credits that are payable to the employee upon
separation from service. In fact, it may be to MERALCO's financial interest to pay these
leave credits now under present salary levels than pay them at future higher salary
levels. 38
8. 40-DAY UNION LEAVE
MERALCO objects to the demanded increase in union leave because the union leave
granted to the union is already substantial. It argues that the union has not
demonstrated any real need for additional union leave.
The thirty (30) days union leave granted by the Secretary, to our mind, constitute
sufficient time within which the union can carry out its union activities such as but not
limited to the election of union officers, selection or election of appropriate bargaining
agents, conduct referendum on union matters and other union -related matters in
furtherance of union objectives. Furthermore, the union already enjoys a special union
leave with pay for union authorized representatives to attend work education seminars,
meetings, conventions and conferences where union representation is required or
necessary, and Paid-Time-off for union officers, stewards and representatives for
purpose of handling or processing grievances.
9. HIGH VOLTAGE/HIGH POLE/TOWING ALLOWANCE
MERALCO argues that there is no justification for the increase of these allowances. The
personnel concerned will not receive any additional risk during the life of the current
CBA that would justify the increase demanded by the union. In the absence of such risk,
then these personnel deserve only the same salary increase that all other members of
the bargaining unit will get as a result of the disputed CBA. MERALCO likewise assails
the grant of the high voltage/high pole allowance to members of the team who are not
exposed to the high voltage/high pole risks. The risks that justify the higher salary and
the added allowance are personal to those who are exposed to those risks. They are not
granted to a team because some members of the team are not exposed to the given
risks.
The increase in the high-voltage allowance (from P45.00 to P55.00), high-pole
allowance (from P30.00 to P40.00), and towing allowance is justified considering the
heavy risk the employees concerned are exposed to. The high-voltage allowance is

heavy risk the employees concerned are exposed to. The high-voltage allowance is
granted to an employee who is authorized by the company to actually perform work on
or near energized bare lines and bus, while the high-pole allowance is given to those
authorized to climb poles on a height of at least 60 feet from the ground to work thereat.
The towing allowance, on the other hand, is granted to the stockman drivers who tow
trailers with long poles and equipment on board. Based on the nature of the job of these
concerned employees, it is imperative to give them these additional allowances for
taking additional risks. These increases are not even commensurate to the danger the
employees concerned are subjected to. Besides, no increase has been given by the
company since 1992. 39
We do not, however, subscribe to the Secretary's order granting these allowances to the
members of the team who are not exposed to the given risks. The reason is obvious no
risk, no pay. To award them the said allowances would be manifestly unfair for the
company and even to those who are exposed to the risks, as well as to the other
members of the bargaining unit who do not receive the said allowances.
10. BENEFITS FOR COLLECTORS
MERALCO opposes the Secretary's grant of benefits for collectors on the ground that
this is grossly unreasonable both in scope and on the premise it is founded.
We have considered the arguments of the opposing parties regarding these benefits
and find the Secretary's ruling on the (a) lunch allowance; (b) disconnection fee for
delinquent accounts; (c) voluntary performance of other work at the instance of the
Company; (d) bobcat belt bags; and (e) reduction of quota and MAPL during typhoons
and other force majeure events, reasonable considering the risks taken by the company
personnel involved, the nature of the employees' functions and responsibilities and the
prevailing standard of living. We do not however subscribe to the Secretary's award on
the following:
(a) Reduction of quota and MAPL when the collector is on sick leave because the
previous CBA has already provided for a reduction of this demand. There is no need to
further reduce this.
(b) Deposit of cash bond at MESALA because this is no longer necessary in view of the
fact that collectors are no longer required to post a bond.
We shall now resolve the non-economic issues.
1. SCOPE OF THE BARGAINING UNIT
The Secretary's ruling on this issue states that:
a. Scope of the collective bargaining unit. The union is demanding that the collective
bargaining unit shall be composed of all regular rank and file employees hired by the
company in all its offices and operating centers through its franchise and those it may
employ by reason of expansion, reorganization or as a result of operational exigencies.
The law is that only managerial employees are excluded from any collective bargaining
unit and supervisors are now allowed to form their own union (Art. 254 of the Labor
Code as amended by R.A. 6715 ). We grant the union demand.
Both MERALCO and the Office of the Solicitor General dispute this ruling because it
disregards the rule. We have established on the exclusion of confidential employees
from the rank and file bargaining unit.
In Pier 8 Arrastre vs. Confesor and General Maritime and Stevedores Union , 40 we ruled
that:
Put another way, the confidential employee does not share in the same "community of
interest" that might otherwise make him eligible to join his rank and file co -workers,
precisely because of a conflict in those interests.
Thus, in Metrolab Industries vs. Roldan-Confesor, 41 We ruled:
. . . that the Secretary's order should exclude the confidential employees from the
regular rank and file employees qualified to become members of the MEWA bargaining
unit.
From the foregoing disquisition, it is clear that employees holding a confidential position
are prohibited from joining the union of the rank and file employees.
2. ISSUE OF UNION SECURITY
The Secretary in his Order of August 19, 1996, 42 ruled that:
b. Union recognition and security. The Union is proposing that it be recognized by the
Company as sole and exclusive bargaining representative of the rank and file
employees included in the bargaining unit for the purpose of collective bargaining
regarding rates of pay, wages, hours of work and other terms and conditions of
employment. For this reason, the Company shall agree to meet only with the Union

employment. For this reason, the Company shall agree to meet only with the Union
officers and its authorized representatives on all matters involving the Union as an
organization and all issues arising from the implementation and interpretation of the new
CBA. Towards this end, the Company shall not entertain any individual or group of
individuals on matters within the exclusive domain of the Union.
Additionally, the Union is demanding that the right of all rank and file employees to join
the Union shall be recognized by the Company. Accordingly, all rank and file employees
shall join the Union.
xxx xxx xxx
These demands are fairly reasonable. We grant the same in accordance with the
maintenance of membership principle as a form of union security.
The Secretary reconsidered this portion of his original order when he said in his
December 28, 1996 order that:
. . . . When we decreed that all rank and file employees shall join the Union, we were
actually decreeing the incorporation of a closed shop form of union security in the CBA
between the parties. In Ferrer v. NLRC, 224 SCRA 410, the Supreme Court ruled that a
CBA provision for a closed shop is a valid form of union security and is not a restriction
on the right or freedom of association guaranteed by the Constitution, citing Lirag v.
Blanco, 109 SCRA 87.
MERALCO objected to this ruling on the grounds that: (a) it was never questioned by
the parties; (b) there is no evidence presented that would justify the restriction on
employee's union membership; and (c) the Secretary cannot rule on the union security
demand because this is not a mandatory subject for collective bargaining agreement.
We agree with MERALCO's contention.
An examination of the records of the case shows that the union did not ask for a closed
shop security regime; the Secretary in the first instance expressly stated that a
maintenance of membership clause should govern; neither MERALCO nor MEWA
raised the issue of union security in their respective motions for reconsideration of the
Secretary's first disputed order; and that despite the parties clear acceptance of the
Secretary's first ruling, the Secretary motu proprio reconsidered his maintenance of
membership ruling in favor of the more stringent union shop regime.
Under these circumstances, it is indubitably clear that the Secretary gravely abused his
discretion when he ordered a union shop in his order of December 28, 1996. The
distinctions between a maintenance of membership regime from a closed shop and their
consequences in the relationship between the union and the company are well
established and need no further elaboration.
Consequently, We rule that the maintenance of membership regime should govern at
MERALCO in accordance with the Secretary's order of August 19, 1996 which neither
party disputed.
3. THE CONTRACTING OUT ISSUE
This issue is limited to the validity of the requirement that the union be consulted before
the implementation of any contracting out that would last for 6 months or more.
Proceeding from our ruling in San Miguel Employees Union-PTGWO vs.
Bersamira, 43 (where we recognized that contracting out of work is a proprietary right of
the employer in the exercise of an inherent management prerogative) the issue we see
is whether the Secretary's consultation requirement is reasonable or unduly restrictive of
the company's management prerogative. We note that the Secretary himself has
considered that management should not be hampered in the operations of its business
when he said that:
We feel that the limitations imposed by the union advocates are too specific and may not be
applicable to the situations that the company and the union may face in the future. To our
mind, the greater risk with this type of limitation is that it will tend to curtail rather than allow
the business growth that the company and the union must aspire for. Hence, we are for the
general limitations we have stated above because they will allow a calibrated response to
specific future situations the company and the union may face. 44
Additionally, We recognize that contracting out is not unlimited; rather, it is a prerogative
that management enjoys subject to well-defined legal limitations. As we have previously
held, the company can determine in its best business judgment whether it should
contract out the performance of some of its work for as long as the employer is
motivated by good faith, and the contracting out must not have been resorted to
circumvent the law or must not have been the result of malicious or arbitrary
action. 45 The Labor Code and its implementing rules also contain specific rules

action. 45 The Labor Code and its implementing rules also contain specific rules
governing contracting out (Department or Labor Order No. 10, May 30, 1997, Sections
1-25).
Given these realities, we recognize that a balance already exists in the parties'
relationship with respect to contracting out; MERALCO has its legally defined and
protected management prerogatives while workers are guaranteed their own protection
through specific labor provisions and the recognition of limits to the exercise of
management prerogatives. From these premises, we can only conclude that the
Secretary's added requirement only introduces an imbalance in the parties' collective
bargaining relationship on a matter that the law already sufficiently regulates. Hence, we
rule that the Secretary's added requirement, being unreasonable, restrictive and
potentially disruptive should be struck down.
4. UNION REPRESENTATION IN COMMITTEES
As regards this issue, We quote with approval the holding of the Secretary in his Order
of December 28, 1996, to wit:
We see no convincing reason to modify our original Order on union representation in
committees. It reiterates what the Article 211 (A)(g) of the Labor Code provides: "To
ensure the participation of workers in decision and policy-making processes affecting
their rights, duties and welfare. Denying this opportunity to the Union is to lay the claim
that only management has the monopoly of ideas that may improve management
strategies in enhancing the Company's growth. What every company should remember
is that there might be one among the Union members who may offer productive and
viable ideas on expanding the Company's business horizons. The Union's participation
in such committees might just be the opportune time for dormant ideas to come forward.
So, the Company must welcome this development (see also PAL v. NLRC, et. al., G.R.
85985, August 13, 1995). It must be understood, however, that the committees referred
to here are the Safety Committee, the Uniform Committee and other committees of a
similar nature and purpose involving personnel welfare, rights and benefits as well as
duties."
We do not find merit in MERALCO's contention that the above-quoted ruling of the
Secretary is an intrusion into the management prerogatives of MERALCO. It is
worthwhile to note that all the Union demands and what the Secretary's order granted is
that the Union be allowed to participate in policy formulation and decision -making
process on matters affecting the Union members' rights, duties and welfare as required
in Article 211 (A) (g) of the Labor Code. And this can only be done when the Union is
allowed to have representatives in the Safety Committee, Uniform Committee and other
committees of a similar nature. Certainly, such participation by the Union in the said
committees is not in the nature of a co-management control of the business of
MERALCO. What is granted by the Secretary is participation and representation. Thus,
there is no impairment of management prerogatives.
5. INCLUSION OF ALL TERMS AND CONDITIONS IN THE CBA
MERALCO also decries the Secretary's ruling in both the assailed Orders that —
All other benefits being enjoyed by the Company's employees but which are not expressly or
impliedly repealed in this new agreement shall remain subsisting and shall likewise be
included in the new collective bargaining agreement to be signed by the parties effective
December 1, 1995. 46
claiming that the above-quoted ruling intruded into the employer's freedom to contract
by ordering the inclusion in the new CBA all other benefits presently enjoyed by the
employees even if they are not incorporated in the new CBA. This matter of inclusion,
MERALCO argues, was never discussed and agreed upon in the negotiations; nor
presented as issues before the Secretary; nor were part of the previous CBA's between
the parties.
We agree with MERALCO.
The Secretary acted in excess of the discretion allowed him by law when he ordered the
inclusion of benefits, terms and conditions that the law and the parties did not intend to
be reflected in their CBA.
To avoid the possible problems that the disputed orders may bring, we are constrained
to rule that only the terms and conditions already existing in the current CBA and was
granted by the Secretary (subject to the modifications decreed in this decision) should
be incorporated in the CBA, and that the Secretary's disputed orders should accordingly
be modified.

6. RETROACTIVITY OF THE CBA
Finally, MERALCO also assails the Secretary's order that the effectivity of the new CBA
shall retroact to December 1, 1995, the date of the commencement of the last two years
of the effectivity of the existing CBA. This retroactive date, MERALCO argues, is
contrary to the ruling of this Court in Pier 8 Arrastre and Stevedoring Services, Inc. vs.
Roldan-Confessor 47 which mandates that the effective date of the new CBA should be
the date the Secretary of Labor has resolved the labor dispute.
On the other hand, MEWA supports the ruling of the Secretary on the theory that he has
plenary power and discretion to fix the date of effectivity of his arbitral award citing our
ruling in St. Lakes Medical Center, Inc. vs.
Torres. 48 MEWA also contends that if the arbitral award takes effect on the date of the
Secretary Labor's ruling on the parties' motion for reconsideration ( i.e., on December 28,
1996), an anomaly situation will result when CBA would be more than the 5 -year term
mandated by Article 253-A of the Labor Code.
However, neither party took into account the factors necessary for a proper resolution of
this aspect. Pier 8, for instance, does not involve a mid-term negotiation similar to this
case, while St. Lukes does not take the "hold over" principle into account, i.e., the rule
that although a CBA has expired, it continues to have legal effects as between the
parties until a new CBA has been entered into. 49
Art. 253-A serves as the guide in determining when the effectivity of the CBA at bar is to
take effect. It provides that the representation aspect of the CBA is to be for a term of 5
years, while
. . . [A]ll other provisions of the Collective Bargaining Agreement shall be re -negotiated
not later than 3 years after its execution. Any agreement on such other provision of the
Collective Bargaining Agreement entered into within 6 months from the date of expiry of
the term of such other provisions as fixed in such Collective Bargaining Agreement shall
retroact to the day immediately following such date. If such agreement is entered into
beyond 6 months, the parties shall agree on the duration of the effectivity thereof. . . . .
Under these terms, it is clear that the 5-year term requirement is specific to the
representation aspect. What the law additionally requires is that a CBA must be re -
negotiated within 3 years "after its execution." It is in this re-negotiation that gives rise to
the present CBA deadlock.
If no agreement is reached within 6 months from the expiry date of the 3 years that
follow the CBA execution, the law expressly gives the parties — not anybody else — the
discretion to fix the effectivity of the agreement.
Significantly, the law does not specifically cover the situation where 6 months have
elapsed but no agreement has been reached with respect to effectivity. In this
eventuality, we hold that any provision of law should then apply for the law abhors a
vacuum. 50
One such provision is the principle of hold over, i.e., that in the absence of a new CBA,
the parties must maintain the status quo and must continue in full force and effect the
terms and conditions of the existing agreement until a new agreement is reached. 51 In
this manner, the law prevents the existence of a gap in the relationship between the
collective bargaining parties. Another legal principle that should apply is that in the
absence of an agreement between the parties, then, an arbitrated CBA takes on the
nature of any judicial or quasi-judicial award; it operates and may be executed only
respectively unless there are legal justifications for its retroactive application.
Consequently, we find no sufficient legal ground on the other justification for the
retroactive application of the disputed CBA, and therefore hold that the CBA should be
effective for a term of 2 years counted from December 28, 1996 (the date of the
Secretary of Labor's disputed order on the parties' motion for reconsideration) up to
December 27, 1999.
WHEREFORE, the petition is granted and the orders of public respondent Secretary of
Labor dated August 19, 1996 and December 28, 1996 are set aside to the extent set
forth above. The parties are directed to execute a Collective Bargaining Agreement
incorporating the terms and conditions contained in the unaffected portion is of the
Secretary of Labor's orders of August 19, 1996 and December 28, 1996, and the
modifications set forth above. The retirement fund issue is remanded to the Secretary of
Labor for reception of evidence and determination of the legal personality of the
MERALCO retirement fund. 1âwphi 1.nê
t
SO ORDERED.

SO ORDERED.
Davide, Jr., C.J., Melo, Kapunan and Pardo, JJ., concur.
Footnotes
1 Annex "A" of Petition, Rollo, p. 93.
2 Annex "B" of Petition, Rollo, p. 94.
3 Annex "5" of MEWA's Comment, Rollo, pp. 852-879:
1. Wage increase — 1995 — P4,000.00/month
1996 — P3,000.00/month
2. Integration of RCR and longevity allowances into the basic salary.
3. Longevity increase in the amount of P30.00 a year.
4. Sick leave upgraded from 21 to 31 days depending on length of service and sick
leave reserve reduced to 15 days.
5. Vacational leave — 24 days minimum — 32 days maximum.
6. Union leave with pay for 50 Mondays per month.
7. Maternity leave — 70 days — normal delivery
90 days — caesarian
Paternity leave — 10 days — normal
14 days — caesarian
8 days — miscarriage.
8. Funeral leave — 12 days — 6 days.
9. Birthday leave — falls on regular working day — leave with pay regular day off —
entitled next working day — non-working holiday — next working day.
10. Group hospitalization and surgical insurance plan (GHSIP) and health and
maintenance plan (HMP) for dependents.
11. Longevity bonus.
12. Christmas bonus — equivalent to one month's salary & allowance and special
Christmas grant — (incorporated in the CBA) equivalent to two month's pay to be given
in the middle of November and second week of December.
13. Mid-year bonus — incorporated in the CBA.
14. Anniversary bonus — P6,000.00/1st year P8,000.00/2nd year.
15. Christmas Gift Certificate
16 Retirement
17. Dental, medical and hospitalization benefits
18. Resignation benefit — for employees who served for at least 7 years.
19. Night work — 50% of employees basic salary.
20. Shortswing — an employee after resting for not more than 8 hours is required to
work in another shift is considered employees' work for the following day and given
additional 4 hours straight time.
21. High voltage/high pole allowance for P45.00 to P75.00.
22. Employees' Cooperative — to provide the seed money of P3,000,000.00.
23. Hold-up allowance — pay P5,000.00 value of personal belonging taken from
accountable officer.
24. Fieldmen's rubber shoes
25. Uniforms
26. Calamity leave
27. Danger exposure allowance
28. Meal and lodging allowance breakfast — P40.00
Lunch — P60.00
Dinner — P60.00
Lodging — P200 night
29. Payroll treatment for accident while on duty
30. Housing equity assistance loan — increased to P60,000.00
31. Female employee's uniforms, and
32. Benefits for collectors.
The Union's political demands consist of:
1. The scope of the collective bargaining unit — all regular rank and file hired by the
company in all its offices.
1. Union recognition and security — all rank & file employees to join the union.
2. allow union to meet with the newly regularized employees for a period not exceeding
4 hours — excused for work.
3. Transfer of assignment and job security.
4. Check-off of union dues.

4. Check-off of union dues.
5. Payroll reinstatement.
6. Union representation in committees.
7. Signing bonus of P7,000.00.
4 Annex "G" of Petition, Rollo, pp. 120-122.
5 Annex "H" of Petition, Rollo, pp. 124-125.
6 Annex "M", Rollo, pp. 319-340.
7 Annex "N" of Petition, Rollo, pp. 341-394.
8 Annex "V" of Petition, Rollo, pp. 661-715.
9 Sec. 18, Article 2 of the 1987 Constitution.
10 Sec. 6, Article 12, Id.
11 Sec. 1, Article 13, Id.
12 Sec. 3, Article 12 and Section 3[3], Article 15 of the 1987 Constitution.
13 Phil. Scout Veteran Security vs. NLRC, 262 SCRA 112 [1996], citing Insular Bank of
Asia and America Employees Union (IBAAEU) vs. Inciong, 132 SCRA 663 [1984];
Endencia vs. David, 93 Phil. 696 [1953].
14 Sec. 3, pars. 3 & 4, Article 13 of the 1987 Constitution.
15 Garcia vs. Exec. Secretary, 204 SCRA 516 [1991]; Dumlao vs. Comelec, 95 SCRA
390 [1980]; Assoc. of Small Landowners of the Phil. vs. Secretary of Agrarian Reform,
175 SCRA 343 [1989].
16 Taxicab Operators of Metro Manila, Inc. vs. Board of Transportation, 117 SCRA 597
[1982].
17 Pier 8 Arrastre and Stevedoring Services, Inc. vs. Roldan-Confesor, 241 SCRA 295
[1995].
18 American Home Assurance Company vs. NLRC, 259 SCRA 280 [1996]; Lopez
Sugar Corp. vs. Federation of Free Workers, et. al., 189 SCRA 179 [1990].
19 PAL vs. Confesor, 231 SCRA 41 [1994].
20 PAL vs. Confesor, Id.; Caltex Filipino Managers Supervisors vs. CIR, 44 SCRA 350
[1972]; Labor ng Pagkakaisa sa Peter-Paul vs. CIR, 96 Phil. 63 [1954].
21 See Annex "B" of the Union's Rejoinder to Company's Opposition to Union's Motion
for Reconsideration, Rollo, p. 1521.
22 Annex "V" of Petition, Rollo, p. 694.
23 Annex "S" of Petition, Rollo, p. 596.
24 Annex "W" of Petition, Rollo, p. 716.
25 A formula used by the Court in determining the reasonableness of the wages award
in PAL vs. Confesor, supra.
26 Annex "I", Rollo, p. 133.
The MERALCO rank and file employee receives a monthly average salary of P11,601
as against the median salary of P9,620 monthly and the weighted average salary of
P9,729 monthly prevailing in the community. This means that Meralco's average
monthly salary rate for its rank and file employees is 20.60 percent higher than the
median salary and 19.24 percent higher than the weighted average salary enjoyed by
other rank and file employees within the community.
27 Annex "K", Rollo, p. 221.
29 Azucena, The Labor Code, Vol. 1, 1996 Ed., p. 314.
30 Philippine Education Co., Inc. vs. Court of Industrial Relations, 92 SCRA 381 [1979].
31 Liberation Steamship Co., Inc. vs CIR, 23 Phil. 1105 [1968]; National Development
Co., vs. CIR, 23 Phil. 1106; Heacock Co. vs. NLU, 95 Phil. 553; NWSA vs. NWSA
Consilidated Labor Union, 21 SCRA 203 [1967].
32 Globe Mackay Cable and Radio Corporation vs. NLRC, 163 SCRA 71 [1988].
33 220 SCRA 463 [1993].
34 Art. 100 of the Labor Code; Davao Fruits Corporation vs. Associate Labor Union, 225
SCRA 567 [1993].
35 Annex "V" of Petition, Rollo, p. 704.
36 See Rollo, p. 1786.
37 Annex "E" of the Union's Rejoinder to Company's Opposition to Union's Motion for
Reconsideration, Rollo, p. 1525.
38 MERALCO's Memorandum, Rollo, p. 1721.
39 MEWA's Memorandum, p. 37.
40 214 SCRA 295 [1995]; citing Golden Farms, Inc. vs. Calleja, 175 SCRA 471 [1989];
Philips Industrial Development, Inc. vs. NLRC, 210 SCRA 348 [1992]; National

Philips Industrial Development, Inc. vs. NLRC, 210 SCRA 348 [1992]; National
Association of Trade Unions-Republic Planters Bank Supervisors Chapter vs. Hon.
Ruben Torres, 239 SCRA 546 [1994].
41 254 SCRA 182.
42 Annex "M" of Petition, Rollo, p. 338.
43 186 SCRA 496 [1990].
45 De Ocampo vs. NLRC, 213 SCRA 652 [1992].
46 Annex "M" of Petition, Rollo, p. 340.
47 241 SCRA 294, 307 [1995].
48 223 SCRA 779 [1993].
49 Lopez Sugar Corporation vs. Federation of Free Workers, 189 SCRA 179 [1990].
50 Duldulao vs. Ramos, 91 Phil. 2611; Rivera vs. Court of Appeals, 176 SCRA 169
[1989].
51 National Congress of Unions in the Sugar Industry vs. Ferrer -Calleja, 205 SCRA 478
[1995].
The Lawphil Project - Arellano Law Foundation
Pasted from <http://www.lawphil.net/judjuris/juri1999/jan1999/gr_127598_1999.html>

San Miguel Corp. Employees Union-PTGWO v. Bersamira (1990)
12:27 AM
San Miguel Corp. Employees Union-PTGWO v. Bersamira (1990)

A labor dispute can nevertheless exist “regardless of whether the disputants stand in the proximate
relationship of employer and employee,” provided the controversy concerns, among others, the terms
and conditions of employment or a change or arrangement thereof. The existence of a labor dispute is
not negatived by the fact that the plaintiffs and defendants do not stand in the proximate relation
of an employer and employee.
SAN MIGUEL EMPLOYEES UNION V BERSAMIRA

186 SCRA 496
MELENCIO-HERRERA; June 13, 1990
NATURE
Special civ il action for certiorari
FACTS
- SMC entered into contracts for merchandising services with Lipercon and D'Rite (L&D), independent contractors duly licensed by DOLE. In said contracts, it
w as expressly understood and agreed that the EEs employed by the contractors were to be paid by the latter and that none of them w ere to be deemed EEs or
agents of SanMig. There was to be no employer-employee relation between the contractors and/or its workers, on the one hand, and SMC on the other.
- Petitioner SMCEU-PTWGO (Union) is duly authorized representative of the monthly paid rank-and-file EEs of SMC. Their CBA provides that temporary,
probationary , or contract EEs are excluded from the bargaining unit and outside scope of CBA.
- Union adv ised SMC that some L&D w orkers had signed up for union membership and sought the regularization of their employment w ith SMC. Union alleged
that this group of EEs, w hile appearing to be contractual workers of supposedly independent contractors, have been continuously working for SMC for a period of
6 months to 15 y ears and that their w ork is neither casual nor seasonal as they are performing work or activities necessary or desirable in the usual business or
trade of SMC, and that there ex ists a "labor-only" contracting situation. It w as then demanded that the employment status of these workers be regularized. This
w as not acted upon by SMC, and so Union filed a notice of strike, and then a second notice.
- Series of pickets w ere staged by L&D workers in various SMC plants and offices. SMC RTC to enjoin the Union from: representing and or acting for and in
behalf of the employ ees of L&D for the purposes of collective bargaining; calling for and holding a strike vote to compel plaintiff to hire the employ ees or workers
of L&D, among others.
- Union filed a Motion to Dismiss SMC's Complaint on the ground of lack of jurisdiction over the case/nature of the action, which motion was opposed by SMC,
w hich was denied by respondent Judge. And after several hearings, issued Injunction. RTC reasoned that the absence of ER-EE relationship negates the
ex istence of labor dispute, so court has jurisdiction to take cognizance of SMC's grievance. Hence, this action.
ISSUE
1. WON RTC correctly assumed jurisdiction over the controversy and properly issued the Writ of Preliminary Injunction.
HELD
1. NO
Re: Definition of Labor Dispute (p4 of Outline)
Ratio A labor dispute can nevertheless exist “regardless of whether the disputants stand in the proximate relationship of employer and employee, provided the
controv ersy concerns, among others, the terms and conditions of employment or a "change" or "arrangement" thereof” The exis tence of a labor dispute is not
negativ ed by the fact that the plaintiffs and defendants do not stand in the prox imate relation of employ er and employee. (A212 LC)
Reasoning Crucial to the resolution of the question on jurisdiction, is the matter of w hether or not the case at bar inv olv es, or is inconnection with, or relates to a
labor dispute. An affirmativ e answer would bring the case within the original and exclusiv e jurisdic tion of labor tribunals to the ex clusion of the regular Courts. In
this case, the matter re terms, tenure and conditions of EE’s employment and the arrangement of those terms as well as the matter of representation bring these
issues w ithin the scope of a labor dispute. Hence it is the labor tribunals that hav e jurisdiction and not the regular courts
Re: ER Functions and ULP (p30 of Outline)

- As the case is indisputably linked with a labor dispute, jurisdiction belongs to the labor tribunals. So, Labor Arbiters have original and exclusiv e jurisdiction to
hear and decide the follow ing cases involving all workers including: [a] unfair labor practice cases; [b] those that w orkers may file inv olving wages, hours of work
and other terms and conditions of employment; and [c] cases arising from any violation of A265 LC, including questions involving the legality of striker and
lockouts.
- SMC’s claim that the action is for damages under A19, 20 and 21 of CC is not enough to keep the case within the jurisdictional boundaries of regular Courts.
That claim for damages is interwoven with a labor dispute. To allow the action filed below to prosper would bring about "split jurisdiction" which is obnoxious to
the orderly administration of justice.
- SC recognizes the proprietary right of SMC to exercise an inherent management prerogative and its best business judgment to determine whether it should
contract out the performance of some of its w ork to independent contractors. However, the rights of all w orkers to self-organization, collective bargaining and
negotiations, and peaceful concerted activ ities, including the right to strike in accordance with law (S3, A13, 1987 Constitution) equally call for recognition and
protection. Those contending interests must be placed in proper perspectiv e and equilibrium.
Disposition Petition is GRANTED.
G.R. No. 87700 June 13, 1990

SAN MIGUEL CORPORATION EMPLOYEES UNION-PTGWO, DANIEL S.L. BORBON II,
HERMINIA REYES, MARCELA PURIFICACION, ET AL., petitioners,
vs.
HON. JESUS G. BERSAMIRA, IN HIS CAPACITY AS PRESIDING JUDGE OF BRANCH 166,
RTC, PASIG, and SAN MIGUEL CORPORATION, respondents.

RTC, PASIG, and SAN MIGUEL CORPORATION, respondents.
Romeo C. Lagman for petitioners.
Jardeleza, Sobrevinas, Diaz, Mayudini & Bodegon for respondents.
MELENCIO-HERRERA, J.:
Respondent Judge of the Regional Trial Court of Pasig, Branch 166, is taken to task by petitioners in
this special civil action for certiorari and Prohibition for having issued the challenged Writ of
Preliminary Injunction on 29 March 1989 in Civil Case No. 57055 of his Court entitled "San Miguel
Corporation vs. SMCEU-PTGWO, et als."
Petitioners' plea is that said Writ was issued without or in excess of jurisdiction and with grave abuse
of discretion, a labor dispute being involved. Private respondent San Miguel Corporation (SanMig.
for short), for its part, defends the Writ on the ground of absence of any employer-employee
relationship between it and the contractual workers employed by the companies Lipercon Services,
Inc. (Lipercon) and D'Rite Service Enterprises (D'Rite), besides the fact that the Union is bereft of
personality to represent said workers for purposes of collective bargaining. The Solicitor General
agrees with the position of SanMig.
The antecedents of the controversy reveal that:
Sometime in 1983 and 1984, SanMig entered into contracts for merchandising services with
Lipercon and D'Rite (Annexes K and I, SanMig's Comment, respectively). These companies are
independent contractors duly licensed by the Department of Labor and Employment (DOLE).
SanMig entered into those contracts to maintain its competitive position and in keeping with the
imperatives of efficiency, business expansion and diversity of its operation. In said contracts, it was
expressly understood and agreed that the workers employed by the contractors were to be paid by
the latter and that none of them were to be deemed employees or agents of SanMig. There was to
be no employer-employee relation between the contractors and/or its workers, on the one hand, and
SanMig on the other.
Petitioner San Miguel Corporation Employees Union-PTWGO (the Union, for brevity) is the duly
authorized representative of the monthly paid rank-and-file employees of SanMig with whom the
latter executed a Collective Bargaining Agreement (CBA) effective 1 July 1986 to 30 June 1989
(Annex A, SanMig's Comment). Section 1 of their CBA specifically provides that "temporary,
probationary, or contract employees and workers are excluded from the bargaining unit and,
therefore, outside the scope of this Agreement."
In a letter, dated 20 November 1988 (Annex C, Petition), the Union advised SanMig that some
Lipercon and D'Rite workers had signed up for union membership and sought the regularization of
their employment with SMC. The Union alleged that this group of employees, while appearing to be
contractual workers supposedly independent contractors, have been continuously working for
SanMig for a period ranging from six (6) months to fifteen (15) years and that their work is neither
casual nor seasonal as they are performing work or activities necessary or desirable in the usual
business or trade of SanMig. Thus, it was contended that there exists a "labor-only" contracting
situation. It was then demanded that the employment status of these workers be regularized.
On 12 January 1989 on the ground that it had failed to receive any favorable response from SanMig,
the Union filed a notice of strike for unfair labor practice, CBA violations, and union busting (Annex
D, Petition).
On 30 January 1989, the Union again filed a second notice of strike for unfair labor practice (Annex
F, Petition).
As in the first notice of strike. Conciliatory meetings were held on the second notice. Subsequently,
the two (2) notices of strike were consolidated and several conciliation conferences were held to
settle the dispute before the National Conciliation and Mediation Board (NCMB) of DOLE (Annex G,
Petition).
Beginning 14 February 1989 until 2 March 1989, series of pickets were staged by Lipercon and
D'Rite workers in various SMC plants and offices.
On 6 March 1989, SMC filed a verified Complaint for Injunction and Damages before respondent
Court to enjoin the Union from:
a. representing and/or acting for and in behalf of the employees of LIPERCON and/or D'RITE for the
purposes of collective bargaining;
b. calling for and holding a strike vote, to compel plaintiff to hire the employees or workers of
LIPERCON and D'RITE;
c. inciting, instigating and/or inducing the employees or workers of LIPERCON and D'RITE to
demonstrate and/or picket at the plants and offices of plaintiff within the bargaining unit referred to in
the CBA,...;
d. staging a strike to compel plaintiff to hire the employees or workers of LIPERCON and D'RITE;
e. using the employees or workers of LIPERCON AND D'RITE to man the strike area and/or picket
lines and/or barricades which the defendants may set up at the plants and offices of plaintiff within

lines and/or barricades which the defendants may set up at the plants and offices of plaintiff within
the bargaining unit referred to in the CBA ...;
f. intimidating, threatening with bodily harm and/or molesting the other employees and/or contract
workers of plaintiff, as well as those persons lawfully transacting business with plaintiff at the work
places within the bargaining unit referred to in the CBA, ..., to compel plaintiff to hire the employees
or workers of LIPERCON and D'RITE;
g. blocking, preventing, prohibiting, obstructing and/or impeding the free ingress to, and egress from,
the work places within the bargaining unit referred to in the CBA .., to compel plaintiff to hire the
employees or workers of LIPERCON and D'RITE;
h. preventing and/or disrupting the peaceful and normal operation of plaintiff at the work places
within the bargaining unit referred to in the CBA, Annex 'C' hereof, to compel plaintiff to hire the
employees or workers of LIPERCON and D'RITE. (Annex H, Petition)
Respondent Court found the Complaint sufficient in form and substance and issued a Temporary
Restraining Order for the purpose of maintaining the status quo, and set the application for Injunction
for hearing.
In the meantime, on 13 March 1989, the Union filed a Motion to Dismiss SanMig's Complaint on the
ground of lack of jurisdiction over the case/nature of the action, which motion was opposed by
SanMig. That Motion was denied by respondent Judge in an Order dated 11 April 1989.
After several hearings on SanMig's application for injunctive relief, where the parties presented both
testimonial and documentary evidence on 25 March 1989, respondent Court issued the questioned
Order (Annex A, Petition) granting the application and enjoining the Union from Committing the acts
complained of, supra. Accordingly, on 29 March 1989, respondent Court issued the corresponding
Writ of Preliminary Injunction after SanMig had posted the required bond of P100,000.00 to answer
for whatever damages petitioners may sustain by reason thereof.
In issuing the Injunction, respondent Court rationalized:
The absence of employer-employee relationship negates the existence of labor dispute. Verily, this
court has jurisdiction to take cognizance of plaintiff's grievance.
The evidence so far presented indicates that plaintiff has contracts for services with Lipercon and
D'Rite. The application and contract for employment of the defendants' witnesses are either with
Lipercon or D'Rite. What could be discerned is that there is no employer-employee relationship
between plaintiff and the contractual workers employed by Lipercon and D'Rite. This, however, does
not mean that a final determination regarding the question of the existence of employer-employee
relationship has already been made. To finally resolve this dispute, the court must extensively
consider and delve into the manner of selection and engagement of the putative employee; the
mode of payment of wages; the presence or absence of a power of dismissal; and the Presence or
absence of a power to control the putative employee's conduct. This necessitates a full-blown trial. If
the acts complained of are not restrained, plaintiff would, undoubtedly, suffer irreparable damages.
Upon the other hand, a writ of injunction does not necessarily expose defendants to irreparable
damages.
Evidently, plaintiff has established its right to the relief demanded. (p. 21, Rollo)
Anchored on grave abuse of discretion, petitioners are now before us seeking nullification of the
challenged Writ. On 24 April 1989, we issued a Temporary Restraining Order enjoining the
implementation of the Injunction issued by respondent Court. The Union construed this to mean that
"we can now strike," which it superimposed on the Order and widely circulated to entice the Union
membership to go on strike. Upon being apprised thereof, in a Resolution of 24 May 1989, we
required the parties to "RESTORE the status quo ante declaration of strike" (p. 2,62 Rollo).
In the meantime, however, or on 2 May 1989, the Union went on strike. Apparently, some of the
contractual workers of Lipercon and D'Rite had been laid off. The strike adversely affected thirteen
(13) of the latter's plants and offices.
On 3 May 1989, the National Conciliation and Mediation Board (NCMB) called the parties to
conciliation. The Union stated that it would lift the strike if the thirty (30) Lipercon and D'Rite
employees were recalled, and discussion on their other demands, such as wage distortion and
appointment of coordinators, were made. Effected eventually was a Memorandum of Agreement
between SanMig and the Union that "without prejudice to the outcome of G.R. No. 87700 (this case)
and Civil Case No. 57055 (the case below), the laid-off individuals ... shall be recalled effective 8
May 1989 to their former jobs or equivalent positions under the same terms and conditions prior to
"lay-off" (Annex 15, SanMig Comment). In turn, the Union would immediately lift the pickets and
return to work.
After an exchange of pleadings, this Court, on 12 October 1989, gave due course to the Petition and
required the parties to submit their memoranda simultaneously, the last of which was filed on 9
January 1990.
The focal issue for determination is whether or not respondent Court correctly assumed jurisdiction
over the present controversy and properly issued the Writ of Preliminary Injunction to the resolution

over the present controversy and properly issued the Writ of Preliminary Injunction to the resolution
of that question, is the matter of whether, or not the case at bar involves, or is in connection with, or
relates to a labor dispute. An affirmative answer would bring the case within the original and
exclusive jurisdiction of labor tribunals to the exclusion of the regular Courts.
Petitioners take the position that 'it is beyond dispute that the controversy in the court a quo involves
or arose out of a labor dispute and is directly connected or interwoven with the cases pending with
the NCMB-DOLE, and is thus beyond the ambit of the public respondent's jurisdiction. That the acts
complained of (i.e., the mass concerted action of picketing and the reliefs prayed for by the private
respondent) are within the competence of labor tribunals, is beyond question" (pp. 6-7, Petitioners'
Memo).
On the other hand, SanMig denies the existence of any employer-employee relationship and
consequently of any labor dispute between itself and the Union. SanMig submits, in particular, that
"respondent Court is vested with jurisdiction and judicial competence to enjoin the specific type of
strike staged by petitioner union and its officers herein complained of," for the reasons that:
A. The exclusive bargaining representative of an employer unit cannot strike to compel the employer
to hire and thereby create an employment relationship with contractual workers, especially were the
contractual workers were recognized by the union, under the governing collective bargaining
agreement, as excluded from, and therefore strangers to, the bargaining unit.
B. A strike is a coercive economic weapon granted the bargaining representative only in the event of
a deadlock in a labor dispute over 'wages, hours of work and all other and of the employment' of the
employees in the unit. The union leaders cannot instigate a strike to compel the employer, especially
on the eve of certification elections, to hire strangers or workers outside the unit, in the hope the
latter will help re-elect them.
C. Civil courts have the jurisdiction to enjoin the above because this specie of strike does not arise
out of a labor dispute, is an abuse of right, and violates the employer's constitutional liberty to hire or
not to hire. (SanMig's Memorandum, pp. 475-476, Rollo).
We find the Petition of a meritorious character.
A "labor dispute" as defined in Article 212 (1) of the Labor Code includes "any controversy or matter
concerning terms and conditions of employment or the association or representation of persons in
negotiating, fixing, maintaining, changing, or arranging the terms and conditions of employment,
regardless of whether the disputants stand in the proximate relation of employer and employee."
While it is SanMig's submission that no employer-employee relationship exists between itself, on the
one hand, and the contractual workers of Lipercon and D'Rite on the other, a labor dispute can
nevertheless exist "regardless of whether the disputants stand in the proximate relationship of
employer and employee" (Article 212 [1], Labor Code, supra) provided the controversy concerns,
among others, the terms and conditions of employment or a "change" or "arrangement" thereof
(ibid). Put differently, and as defined by law, the existence of a labor dispute is not negative by the
fact that the plaintiffs and defendants do not stand in the proximate relation of employer and
employee.
That a labor dispute, as defined by the law, does exist herein is evident. At bottom, what the Union
seeks is to regularize the status of the employees contracted by Lipercon and D'Rite in effect, that
they be absorbed into the working unit of SanMig. This matter definitely dwells on the working
relationship between said employees vis-a-vis SanMig. Terms, tenure and conditions of their
employment and the arrangement of those terms are thus involved bringing the matter within the
purview of a labor dispute. Further, the Union also seeks to represent those workers, who have
signed up for Union membership, for the purpose of collective bargaining. SanMig, for its part,
resists that Union demand on the ground that there is no employer-employee relationship between it
and those workers and because the demand violates the terms of their CBA. Obvious then is that
representation and association, for the purpose of negotiating the conditions of employment are also
involved. In fact, the injunction sought by SanMig was precisely also to prevent such representation.
Again, the matter of representation falls within the scope of a labor dispute. Neither can it be denied
that the controversy below is directly connected with the labor dispute already taken cognizance of
by the NCMB-DOLE (NCMB-NCR- NS-01- 021-89; NCMB NCR NS-01-093-83).
Whether or not the Union demands are valid; whether or not SanMig's contracts with Lipercon and
D'Rite constitute "labor-only" contracting and, therefore, a regular employer-employee relationship
may, in fact, be said to exist; whether or not the Union can lawfully represent the workers of Lipercon
and D'Rite in their demands against SanMig in the light of the existing CBA; whether or not the
notice of strike was valid and the strike itself legal when it was allegedly instigated to compel the
employer to hire strangers outside the working unit; — those are issues the resolution of which call
for the application of labor laws, and SanMig's cause's of action in the Court below are inextricably
linked with those issues.
The precedent in Layno vs. de la Cruz (G.R. No. L-29636, 30 April 1965, 13 SCRA 738) relied upon
by SanMig is not controlling as in that case there was no controversy over terms, tenure or

by SanMig is not controlling as in that case there was no controversy over terms, tenure or
conditions, of employment or the representation of employees that called for the application of labor
laws. In that case, what the petitioning union demanded was not a change in working terms and
conditions, or the representation of the employees, but that its members be hired as stevedores in
the place of the members of a rival union, which petitioners wanted discharged notwithstanding the
existing contract of the arrastre company with the latter union. Hence, the ruling therein, on the basis
of those facts unique to that case, that such a demand could hardly be considered a labor dispute.
As the case is indisputably linked with a labor dispute, jurisdiction belongs to the labor tribunals. As
explicitly provided for in Article 217 of the Labor Code, prior to its amendment by R.A. No. 6715 on
21 March 1989, since the suit below was instituted on 6 March 1989, Labor Arbiters have original
and exclusive jurisdiction to hear and decide the following cases involving all workers including "1.
unfair labor practice cases; 2. those that workers may file involving wages, hours of work and other
terms and conditions of employment; ... and 5. cases arising from any violation of Article 265 of this
Code, including questions involving the legality of striker and lockouts. ..." Article 217 lays down the
plain command of the law.
The claim of SanMig that the action below is for damages under Articles 19, 20 and 21 of the Civil
Code would not suffice to keep the case within the jurisdictional boundaries of regular Courts. That
claim for damages is interwoven with a labor dispute existing between the parties and would have to
be ventilated before the administrative machinery established for the expeditious settlement of those
disputes. To allow the action filed below to prosper would bring about "split jurisdiction" which is
obnoxious to the orderly administration of justice (Philippine Communications, Electronics and
Electricity Workers Federation vs. Hon. Nolasco, L-24984, 29 July 1968, 24 SCRA 321).
We recognize the proprietary right of SanMig to exercise an inherent management prerogative and
its best business judgment to determine whether it should contract out the performance of some of
its work to independent contractors. However, the rights of all workers to self-organization, collective
bargaining and negotiations, and peaceful concerted activities, including the right to strike in
accordance with law (Section 3, Article XIII, 1987 Constitution) equally call for recognition and
protection. Those contending interests must be placed in proper perspective and equilibrium.
WHEREFORE, the Writ of certiorari is GRANTED and the Orders of respondent Judge of 25 March
1989 and 29 March 1989 are SET ASIDE. The Writ of Prohibition is GRANTED and respondent
Judge is enjoined from taking any further action in Civil Case No. 57055 except for the purpose of
dismissing it. The status quo ante declaration of strike ordered by the Court on 24 May 1989 shall be
observed pending the proceedings in the National Conciliation Mediation Board-Department of Labor
and Employment, docketed as NCMB-NCR-NS-01-02189 and NCMB-NCR-NS-01-093-83. No costs.
SO ORDERED.
Paras and Regalado, JJ., concur.
Padilla, Sarmiento, JJ., took no part.
Pasted from <http://www.lawphil.net/judjuris/juri1990/jun1990/gr_87700_1990.html>

Gold City Integrated Port Service, Inc. v. NLRC (1995)
12:30 AM
Gold City Integrated Port Service, Inc. v. NLRC (1995)

Note: A strike can only happen when there is a labor dispute.
In this case a strike occurred. It was an illegal strike for not complying with formal requisites.
a. A STRIKE, considered as the most effective weapon of labor is defined as any temporary stoppage of
work by the concerted action of employees as a result of an industrial or labor dispute.
b. A labor dispute includes any controversy or matter concerning terms or conditions of employment of
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.
c. Private respondents and their co-workers stopped working and held the mass action to press for their
wages and other benefits. What transpired then was clearly a strike, for the cessation of work by
concerted action resulted from a labor dispute.
G.R. No. 103560 July 6, 1995

GOLD CITY INTEGRATED PORT SERVICE, INC. (INPORT), petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION (Fifth Division) ADELO EBUNA, EMMANUEL
VALMORIDA, RODOLFO PEREZ, ROGER ZAGADO, MARCOS GANZAN, AND REY VALLE,
(WILFREDO DAHAN, ROGELIO VILLAFUERTE, WILFREDO AMPER, RICARDO ABA, YOLITO
AMBUS, FIDEL CALIO, VICENTE CAHATOL, SOTECO CUENCA, NICOLAS DALAGUAN,
BALBINO FAJARDO, ROLANDO JAMILA, RICARDO LAURETO, RUDY LAURETO, QUIRICO
LEJANIO, OSCAR LAPINIG, FELIPE LAURETE, JESUSTUDY OMISOL, ZOSIMO OMISOL,
PEDRO SUAREZ, SATURNINO SISIBAN and MANUEL YANEZ), respondents.
G.R. No. 103599 July 6, 1995
ADELO EBUNA, WILFREDO DAHAN, RICARDO LAURETO, REY VALLE, VICENTE CAHATOL,
MARCOS GANZAN, RODOLFO PEREZ, ROEL SAA, ROGELIO VILLAFUERTE, MANUEL
YANEZ, WILFREDO AMPER, QUIRECO LEJANO, EMMANUEL VALMORIA, ROLANDO
JAMILLA, NICOLAS DALAGUAN, BALBINO FAJARDO, PEDRO SUAREZ, ELPIDIO ESTROGA,
RUBEN PAJO, JESUSTODY OMISOL, RICARDO ABA, FIDEL CALIO, SATURNINO SESYBAN,
RUDY LAURETO, OSCAR LAPINIG, FELIPE LAURENTE, ROGER ZAGADO, SOTECO
CUENCA, FIDEL ESLIT, ZOSIMO OMISOL, ANGEL BERNIDO, and MICHAEL
YAGOTYOT, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, FIFTH DIVISION, and GOLD CITY
INTEGRATED PORT SERVICES, INC. (INPORT), respondents.
ROMERO, J.:
Should separation pay and backwages be awarded by public respondent NLRC to participants of an
illegal strike? This is the core issue to be decided in these two petitions.
Gold City Integrated Port Service, Inc. (INPORT) filed a petition for certiorari against the National
Labor Relations Commission (NLRC) assailing the latter's decision in "Gold City Integrated Port
Services, Inc. v. Adelo Ebuna, et al." (NLRC RAB X Case No. 5-0405-85) with twenty-seven private
respondents (G.R. No. 103599). 1 This petition has been consolidated with G.R. No. 103599 where
the petitioners are the private respondents in instant case and the private respondent is INPORT.
For the sake of clarity, INPORT shall be denominated in the case at bench as the petitioner and the
employees as private respondents.
Instant case arose from the following facts:
Early in the morning of April 30, 1985, petitioner's employees stopped working and gathered in a
mass action to express their grievances regarding wages, thirteenth month pay and hazard pay.
Said employees were all members of the Macajalar Labor Union — Federation of Free Workers
(MLU-FFW) with whom petitioner had an existing collective bargaining agreement.
Petitioner was engaged in stevedoring and arrastre services at the port of Cagayan de Oro. The
strike paralyzed operations at said port.
On the same morning, the strikers filed individual notices of strike ("Kaugalingon nga Declarasyon sa

Pag-Welga") with the then Ministry of Labor and Employment.
With the failure of conciliation conferences between petitioner and the strikers, INPORT filed a
complaint before the Labor Arbiter for Illegal Strike with prayer for a restraining order/preliminary
injunction.
On May 7, 1985, the National Labor Relations Commission issued a temporary restraining order.
Thereafter, majority of the strikers returned to work, leaving herein private respondents who
continued their protest. 2
Counsel for private respondents filed a manifestation that petitioner required prior screening
conducted by the MLU-FFW before the remaining strikers could be accepted back to work.
Meanwhile, counsel for the Macajalar Labor Union (MLU-FFW) filed a "Motion to Drop Most of the
Party Respondents From the Above Entitled Case." The 278 employees on whose behalf the motion
was filed, claimed that they were duped or tricked into signing the individual notices of strike. After
discovering this deception and verifying that the strike was staged by a minority of the union officers
and members and without the approval of, or consultation with, majority of the union members, they
immediately withdrew their notice of strike and returned to work.
The petitioner INPORT, not having interposed any objection, the Labor Arbiter, in his decision dated
July 23, 1985, granted their prayer to be excluded as respondents in the complaint for illegal strike.
Moreover, petitioner's complaint was directed against the 31 respondents who did not return to work
and continued with the strike.
For not having complied with the formal requirements in Article 264 of the Labor Code, 3 the strike
staged by petitioner's workers on April 30, 1985 was found by the Labor Arbiter to be illegal. 4 The
workers who participated in the illegal strike did not, however, lose their employment, since there
was no evidence that they participated in illegal acts. After noting that petitioner accepted the other
striking employees back to work, the Labor Arbiter held that the private respondents should similarly
be allowed to return to work without having to undergo the required screening to be undertaken by
their union (MLU-FFW).
As regards the six private respondents who were union officers, the Labor Arbiter ruled that they
could not have possibly been "duped or tricked" into signing the strike notice for they were active
participants in the conciliation meetings and were thus fully aware of what was going on. Hence, said
union officers should be accepted back to work after seeking reconsideration from herein petitioner. 5
The dispositive portion of the decision reads:
IN VIEW OF THE FOREGOING, it is hereby ordered that the strike undertaken by the officers and
majority union members of Macajalar Labor Union-FFW is ILLEGAL contrary to Article 264 of the Labor
Code, as amended. Our conclusion on the employment status of the illegal strikers is subject to our
discussion above. 6
Both petitioner and private respondents filed motions for reconsideration, which public respondent
NLRC treated as appeals. 7
On January 14, 1991, the NLRC affirmed with modification 8 the Arbiter's decision. It held that the
concerted action by the workers was more of a "protest action" than a strike. Private respondents,
including the six union officers, should also be allowed to work unconditionally to avoid
discrimination. However, in view of the strained relations between the parties, separation pay was
awarded in lieu of reinstatement. The decretal portion of the Resolution reads:
WHEREFORE, the decision appealed from is Affirmed with modification in accordance with the foregoing
resolution. Complainant INPORT is hereby ordered, in lieu of reinstatement, to pay respondents the
equivalent of twelve (12) months salaries each as separation pay. Complainant is further ordered to pay
respondents two (2) years backwages based on their last salaries, without qualification or deduction. The
appeal of complainant INPORT is Dismissed for lack of merit. 9
Upon petitioner's motion for reconsideration, public respondent modified the above resolution on
December 12, 1991. 10
The Commission ruled that since private respondents were not actually terminated from service,
there was no basis for reinstatement. However, it awarded six months' salary as separation pay or
financial assistance in the nature of "equitable relief." The award for backwages was also deleted for
lack of factual and legal basis. In lieu of backwages, compensation equivalent to P1,000.00 was
given.
The dispositive portion of the assailed Resolution reads:
WHEREFORE, the resolution of January 14, 1991 is Modified reducing the award for separation pay to
six (6) months each in favor of respondents, inclusive of lawful benefits as well as those granted under
the CBA, if any, based on the latest salary of respondents, as and by way of financial assistance while the
award for backwages is Deleted and Set Aside. In lieu thereof, respondents are granted compensation for
their sudden loss of employment in the sum of P1,000.00 each. The motion of respondents to implead
PPA as third-party respondent is Noted. Except for this modification the rest of the decision sought to be
reconsidered shall stand. 11
In the instant petitions for certiorari, petitioner alleges that public respondent Commission committed
grave abuse of discretion in awarding private respondents separation pay and backwages despite

grave abuse of discretion in awarding private respondents separation pay and backwages despite
the declaration that the strike was illegal.
On the other hand, private respondents, in their petition, assail the reduction of separation pay and
deletion of backwages by the NLRC as constituting grave abuse of discretion.
They also allege that the Resolution of January 14, 1991 could not be reconsidered after the
unreasonable length of time of eleven months.
Before proceeding with the principal issues raised by the parties, it is necessary to clarify public
respondent's statements concerning the strike staged by INPORT's employees.
In its resolution dated January 14, 1991, the NLRC held that the facts prevailing in the case at bench
require a relaxation of the rule that the formal requisites for a declaration of a strike are mandatory.
Furthermore, what the employees engaged in was more of a spontaneous protest action than a
strike. 12
Nevertheless, the Commission affirmed the Labor Arbiter's decision which declared the strike illegal.
A strike, considered as the most effective weapon of labor, 13 is defined as any temporary stoppage
of work by the concerted action of employees as a result of an industrial or labor dispute. 14 A labor
dispute includes any controversy or matter concerning terms or 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. 15
Private respondents and their co-workers stopped working and held the mass action on April 30,
1985 to press for their wages and other benefits. What transpired then was clearly a strike, for the
cessation of work by concerted action resulted from a labor dispute.
The complaint before the Labor Arbiter involved the legality of said strike. The Arbiter correctly ruled
that the strike was illegal for failure to comply with the requirements of Article 264 (now Article 263)
paragraphs (c) and (f) of the Labor Code. 16
The individual notices of strike filed by the workers did not conform to the notice required by the law
to be filed since they were represented by a union (MLU-FFW) which even had an existing collective
bargaining agreement with INPORT.
Neither did the striking workers observe the strike vote by secret ballot, cooling-off period and
reporting requirements.
As we stated in the case of National Federation of Sugar Workers v. Ovejera, 17 the language of the
law leaves no room for doubt that the cooling-off period and the seven-day strike ban after the strike-
vote report were intended to be mandatory. 18
Article 265 of the Labor Code reads, inter alia:
(i)t SHALL be unlawful for any labor organization . . . to declare a strike . . . without first having filed
the notice required in the preceding Article or without the necessary strike vote first having been
obtained and reported to the Ministry. (Emphasis ours)
In explaining the above provision, we said:
In requiring a strike notice and a cooling-off period, the avowed intent of the law is to provide an
opportunity for mediation and conciliation. It thus directs the MOLE to exert all efforts at mediation
and conciliation to effect a voluntary settlement' during the cooling-off period. . . .
xxx xxx xxx
The cooling-off period and the 7-day strike ban after the filing of a strike-vote report, as prescribed in Art.
264 of the Labor Code, are reasonable restrictions and their imposition is essential to attain the legitimate
policy objectives embodied in the law. We hold that they constitute a valid exercise of the police power of
the state.19
From the foregoing, it is patent that the strike on April 30, 1985 was illegal for failure to comply with
the requirements of the law.
The effects of such illegal strikes, outlined in Article 265 (now Article 264) of the Labor Code, make a
distinction between workers and union officers who participate therein.
A 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
their employment status. 20 An ordinary striking worker cannot be terminated for mere participation in
an illegal strike. There must be proof that he committed illegal acts during a strike. A union officer, on
the other hand, may be terminated from work when he knowingly participates in an illegal strike, and
like other workers, when he commits an illegal act during a strike.
In the case at bench, INPORT accepted the majority of the striking workers, including union officers,
back to work. Private respondents were left to continue with the strike after they refused to submit to
the "screening" required by the company. 21
The question to be resolved now is what these remaining strikers, considering the circumstances of
the case, are entitled to receive under the law, if any.
Are they entitled, as they claim, to reinstatement or separation pay and backwages?
In his decision, the Labor Arbiter ordered INPORT to reinstate/accept the remaining workers as well

In his decision, the Labor Arbiter ordered INPORT to reinstate/accept the remaining workers as well
as to accept the remaining union officers after the latter sought reconsideration from INPORT. 22
The NLRC on January 14, 1991, modified the above decision by ordering INPORT to pay private
respondents the equivalent of twelve months in salary as separation pay in lieu of reinstatement and
two years' backwages. 23
On reconsideration, public respondent modified its original award and reduced the separation pay to
six months, deleted the award for backwages and instead awarded P1,000.00 as compensation for
their sudden loss of employment. 24
Under the law, an employee is entitled to reinstatement and to his full backwages when he is
unjustly dismissed. 25
Reinstatement means restoration to a state or condition from which one had been removed or
separated. Reinstatement and backwages are separate and distinct reliefs given to an illegally
dismissed employee. 26
Separation pay is awarded when reinstatement is not possible, due, for instance, to strained
relations between employer and employee.
It is also given as a form of financial assistance when a worker is dismissed in cases such as the
installation of labor saving devices, redundancy, retrenchment to prevent losses, closing or
cessation of operation of the establishment, or in case the employee was found to have been
suffering from a disease such that his continued employment is prohibited by law. 27
Separation pay is a statutory right defined as the amount that an employee receives at the time of
his severance from the service and is designed to provide the employee with the wherewithal during
the period that he is looking for another employment. 28 It is oriented towards the immediate future,
the transitional period the dismissed employee must undergo before locating a replacement job. 29
Hence, an employee dismissed for causes other than those cited above is not entitled to separation
pay. 30Well-settled is it that separation pay shall be allowed only in those instances where the
employee is validly dismissed
for causes other than serious misconduct or those reflecting on his moral character. 31
Backwages, on the other hand, is a form of relief that restores the income that was lost by reason of
unlawful dismissal. 32
It is clear from the foregoing summary of legal provisions and jurisprudence that there must
generally be unjust or illegal dismissal from work, before reinstatement and backwages may be
granted. And in cases where reinstatement is not possible or when dismissal is due to valid causes,
separation pay may be granted.
Private respondents contend that they were terminated for failure to submit to the controversial
"screening" requirement.
Public respondent Commission took the opposite view and held:
As the evidence on record will show, respondents were not actually terminated from the service.
They were merely made to submit to a screening committee as a prerequisite for readmission to
work. While this condition was found not wholly justified, the fact remains that respondents who are
resistant to such procedure are partly responsible for the delay in their readmission back to work.
Thus, We find justifiable basis in further modifying our resolution of January 14, 1991 in accordance
with the equities of the case.
We shall therefore recall the award for backwages for lack of factual and legal basis. The award for
separation pay shall likewise (be) reasonably reduced. Normally, severance benefit is granted as an
alternative remedy to reinstatement. And since there is no dismissal to speak of, there is no basis for
awarding reinstatement as a legal remedy. In lieu thereof, We shall grant herein respondents separation
pay as and by way of financial assistance in the nature of an "equitable relief". 33
We find that private respondents were indeed dismissed when INPORT refused to accept them back
to work after the former refused to submit to the "screening" process.
Applying the law (Article 264 of the Labor Code) which makes a distinction, we differentiate between
the union members and the union officers among private respondents in granting the reliefs prayed
for.
Under Article 264 of the Labor Code, a worker merely participating in an illegal strike may not be
terminated from his employment. It is only when he commits illegal acts during a strike that he may
be declared to have lost his employment status. Since there appears no proof that these union
members committed illegal acts during the strike, they cannot be dismissed. The striking union
members among private respondents are thus entitled to reinstatement, there being no just cause
for their dismissal.
However, considering that a decade has already lapsed from the time the disputed strike occurred,
we find that to award separation pay in lieu of reinstatement would be more practical and
appropriate.
No backwages will be awarded to private respondent-union members as a penalty for their

participation in the illegal strike. Their continued participation in said strike, even after most of their
co-workers had returned to work, can hardly be rewarded by such an award.
The fate of private respondent-union officers is different. Their insistence on unconditional
reinstatement or separation pay and backwages is unwarranted and unjustified. For knowingly
participating in an illegal strike, the law mandates that a union officer may be terminated from
employment. 34
Notwithstanding the fact that INPORT previously accepted other union officers and that the
screening required by it was uncalled for, still it cannot be gainsaid that it possessed the right and
prerogative to terminate the union officers from service. The law, in using the word may, grants the
employer the option of declaring a union officer who participated in an illegal strike as having lost his
employment. 35
Moreover, an illegal strike which, more often than not, brings about unnecessary economic
disruption and chaos in the workplace should not be countenanced by a relaxation of the sanctions
prescribed by law.
The union officers are, therefore, not entitled to any relief.
However, the above disquisition is now considered moot and academic and cannot be effected in
view of a manifestation filed by INPORT dated May 15, 1987. 36 In said Manifestation, it attached a
Certification by the President of the Macajalar Labor Union (MLU-FFW) to the effect that the private
respondents/remaining strikers have ceased to be members of said union. The MLU-FFW had an
existing collective bargaining agreement with INPORT containing a union security clause. Article 1,
Section 2(b) of the CBA provides:
The corporation shall discharge, dismiss or terminate any employee who may be a member of the Union
but loses his good standing with the Union and or corporation, upon proper notice of such fact made by
the latter; provided, however, . . . after they shall have received the regular appointment as a condition for
his continued employment with the corporation. . . . 37
Since private respondents (union members) are no longer members of the MLU, they cannot be
reinstated. In lieu of reinstatement, which was a proper remedy before May 1987 when they were
dismissed from the union, we award them separation pay. We find that to award one month salary
for every year of service until 1985, after April of which year they no longer formed part of INPORT's
productive work force partly through their own fault, is a fair settlement.
Finally, there is no merit in INPORT's statement that a Resolution of the NLRC cannot be modified
upon reconsideration after the lapse of an unreasonable period of time. Under the present
circumstances, a period of eleven months is not an unreasonable length of time. The Resolution of
the public respondent dated January 14, 1991 did not acquire finality in view of the timely filing of a
motion for reconsideration. Hence, the Commission's modified Resolution issued on December 12,
1991 is valid and in accordance with law.
In sum, reinstatement and backwages or, if no longer feasible, separation pay, can only be granted if
sufficient bases exist under the law, particularly after a showing of illegal dismissal. However, while
the union members may thus be entitled under the law to be reinstated or to receive separation pay,
their expulsion from the union in accordance with the collective bargaining agreement renders the
same impossible.
The NLRC's award of separation pay as "equitable relief" and P1,000.00 as compensation should be
deleted, these being incompatible with our findings detailed above.
WHEREFORE, from the foregoing premises, the petition in G.R. No. 103560 ("Gold City Integrated
Port Service Inc. v. National Labor Relations Commission, et al.") is GRANTED. One month salary
for each year of service until 1985 is awarded to private respondents who were not union officers as
separation pay. The petition in G.R. No. 103599 ("Adelo Ebuna, et al. v. National Labor Relations
Commission, et al.") is DISMISSED for lack of merit. No costs.
SO ORDERED.
Feliciano, Melo, Vitug and Francisco, JJ., concur.
Footnotes
1 Namely, Adelo Ebuna, Wilfredo Dahan, Ricardo Laureto, Rey Valle, Vicente Cahatol, Marcos
Ganzan, Rodolfo Perez, Roel Saa, Rogelio Villafuerte, Manuel Yanez, Wilfredo Amper, Quireco
Lejano, Emmanuel Valmoria, Rolando Jamilla, Nicolas Dalaguan, Balbino Fajardo, Pedro Suarez,
Elpidio Estroga, Ruben Pajo, Jesustody Omisol, Ricardo Aba, Fidel Calio, Saturnino Sesyban, Rudy
Laureto, Oscar Lapinig, Felipe Laurente, Roger Zagado, Soteco Cuenca, Fidel Eslit, Zosimo Omisol,
Angel Bernido and Michael Yagotyot.
2 Of the thirty-one remaining strikers, four have already died, leaving the twenty-seven respondents
herein.
3 Now Article 263.
4 Decision of Executive Labor Arbiter Ildefonso O. Agbuya, dated July 23, 1985, NLRC RABX Case
No. 5-0405-85. Rollo, p. 57.

No. 5-0405-85. Rollo, p. 57.
5 Decision of the Labor Arbiter, p. 11; Rollo, p. 66.
6 Ibid., p. 66.
7 On May 20, 1987, petitioner filed a Manifestation to the effect that the 32 remaining striking
employees have ceased to be members of the Macajalar Labor Union — FFW, per Certification
dated May 15, 1987 by the President of MLU-FFW. Rollo, p. 84.
8 Resolution penned by Presiding Commissioner Musib M. Buat and concurred in by Commissioner
Leon G. Gonzaga, Jr., Commissioner Oscar N. Abella, on leave. Rollo, p. 85.
9 Rollo, p. 105.
10 Penned by Presiding Commissioner Musib M. Buat, with Commissioners Oscar N. Abella and
Leon G. Gonzaga, Jr., concurring. Rollo, p. 119.
11 Rollo, p. 124.
12 Rollo, pp. 96-98.
13 Bisig ng Manggagawa sa Concrete Aggregates Inc. v. NLRC, G.R. No. 105090, September 16,
1993, 226 SCRA 499; Ilaw at Buklod ng Manggagawa v. NLRC, G.R. No. 91980, June 27, 1991,
198 SCRA 586.
14 Labor Code, Article 212 (0).
15 Labor Code, Article 212 (1).
16 Article 264. Strikes, picketing, and lockouts. —
(c) In cases of bargaining deadlocks, the certified or duly recognized bargaining representative may
file a notice of strike . . . with the Ministry at least thirty (30) days before the intended date thereof. In
cases of unfair labor practices, the period of strike shall be shortened to fifteen (15) days; and in the
absence of a duly certified or recognized bargaining representative, the notice of strike may be filed
by any legitimate labor organization in behalf of its members.
xxx xxx xxx
(f) A decision to declare a strike must be approved by at least two-thirds (2/3) of the total union
membership in the bargaining unit concerned obtained by secret ballot in meetings or referenda. . . .
In every case, the union . . . shall furnish the Ministry the results of the voting at least seven (7) days
before the intended strike . . . , subject to the cooling-off period herein provided. (Emphasis supplied)
17 G.R. No. L-59743, May 31, 1982, 114 SCRA 354.
18 Ibid., p. 365.
19 Ibid., at p. 367.
20 Labor Code, Article 265 (now Article 264).
21 The screening was allegedly requested by the Macajalar Labor Union of petitioner INPORT upon
the belief that a competing union, the National Federation of Labor, influenced its members into
staging the strike. INPORT points out that it agreed to the screening requirement because it merely
wanted to avoid further friction with the union (MLU-FFW). Rollo, pp. 120-121.
22 Rollo, p. 66.
23 Rollo, p. 105.
24 Rollo, p. 124.
25 Labor Code, Article 279.
26 Torillo v. Leogardo, G.R. No. 77205, May 27, 1991, 197 SCRA 471; Indophil Acrylic Mfg. Corp. v.
NLRC, G.R. No. 96488, September 27, 1993, 226 SCRA 723.
27 Labor Code, Articles 283 and 284; Lemery Savings and Loan Bank v. NLRC, G.R. No. 96439,
January 27, 1992, 205 SCRA 492; Banco Filipino Savings and Mortgage Bank v. NLRC, G.R. No.
82135, August 20, 1990, 188 SCRA 700.
28 A Prime Security Services Inc. v. NLRC, G.R. No. 93476, March 19, 1993, 220 SCRA
142citing PLDT v. NLRC 164 SCRA 671, Del Castillo v. NLRC, 176 SCRA 229 and Cosmopolitan
Funeral Homes v. Maalat, 187 SCRA 108; Aquino v. NLRC, G.R. No. 87653, February 11, 1992,
206 SCRA 118.
29 Escareal v. NLRC, G.R. No. 99359, September 2, 1992, 213 SCRA 472.
30 Article 279 and 282; Rule 1, Section 7, Book VI, Omnibus Implementing Rules of the Labor Code.
31 PLDT v. NLRC, G.R. No. L-80609, Aug. 23, 1988, 164 SCRA 671; Sampaguita Garments Corp.
v. NLRC, G.R. No. 102406, June 17, 1994, 233 SCRA 260; Cathedral School of Technology, G.R.
No. 101483, October 13, 1991, 214 SCRA 551; Baguio Country Club v. NLRC, G.R. No. 102397,
September 4, 1992, 213 SCRA 664.
32 Escareal v. NLRC, 213 SCRA 472.
33 Rollo, p. 123.
35 Article 264.
(a) . . . 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

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
36 Rollo, p. 84.
37 Petition, p. 15; Rollo, p. 15.
Pasted from <http://www.lawphil.net/judjuris/juri1995/jul1995/gr_103560_1995.html>

ELGIN, J. & E. RY. CO. v. BURLEY et al.
12:54 AM
325 U.S. 711

65 S.Ct. 1282
89 L.Ed. 1886
ELGIN, J. & E. RY. CO. v. BURLEY et al.
No. 160.
Argued Nov. 15, 1944.
Decided June 11, 1945.
Rehearing Granted Oct. 15, 1945.
See 66 S.Ct. 86.
Mr. Paul R. Conaghan, of Chicago, Ill., for petitioner.
Mr. John H. Gately, of Chicago, Ill., for respondents.
Mr. Justice RUTLEDGE delivered the opinion of the Court.
1
This cause, arising upon an amended complaint,1 brings for decision novel and important
questions concerning the authority of a collective bargaining representative, affecting the
operation of the Railway Labor Act of 1934, 48 Stat. 1185, 45 U.S.C. § 151 ff, 45 U.S.C.A. §
151 et seq. The ultimate issues are whether such an agent has authority, by virtue of the
Act or otherwise, either to compromise and settle accrued monetary claims of ten
employees or to submit them for determination by the National Railroad Adjustment Board
to the exclusion of their right, after the settlement and after the Board's adverse decision,
to assert them in a suit brought for that purpose. The claims are for 'penalty damages' for
alleged violation of the starting time provisions of a collective agreement, varying from
$3,500 to $14,000, and in the aggregate amounting to $65,274.00. 2
2
The District ourt rendered summary judgment for the carrier, holding that the Board's
award was a final adjudication of the claims, within the union's power to seek and the
Board's to make, precluding judicial review.3 The Court of Appeals reversed the judgment, 7
Cir., 140 F.2d 488, 490, holding that the record presented a question of fact whether the
union had been authorized by respondents 'to negotiate, compromise, and settle' the
claims. We granted certiorari, 323 U.S. 690, 65 S.Ct. 45, in order to resolve the important
questions affecting application and operation of the Act.
3
A statement of the more important facts will put the issues in sharper perspective. The
controversy relates to operations in petitioner's so-called 'Whiting Yard.' Prior to July 24,
1934, respondents, or some of them, were employed by the Standard Oil Company to do
private intraplant switching in its Whiting, Indiana, plant. On that date this work was taken
over by petitioner. Until then Standard Oil's switching crews began work each day at hours
fixed in advance by the management, which varied as plant operations required.
4
Prior to 1934 petitioner's crews at all yards in Indiana and Illinois began work daily in
accordance with starting time provisions contained in Article 6 of a collective agreement
made in 1927 between petitioner and the Brotherhood of Railroad Trainmen, governing
rules, working conditions and rates of pay of yardmen.
5
Upon transfer of the Whiting yard switching to petitioner, respondents theretofore employed
by Standard Oil became employees of petitioner and members of the Brotherhood. On July
24, 1934, company officials conferred with representatives of the engineers, the firemen
and the yardmen concerning terms of employ ment. The Brotherhood acted for the yardmen.
Apparently agreement was reached on all matters except starting time but, as to that,
versions of what transpired differ. Respondents and the Brotherhood have maintained that
the 1927 agreement, including Article 6, became applicable to them upon the transfer. They
say, however, that they assented to a suspension of Article 6 for thirty days from July 27,
1934, to enable the company to work out adjustment to the plant's operations, and
accordingly it governed their relation with petitioner from August 26, 1934.
6

6
The company has insisted that Article 6 did not become applicable to respondents upon the
transfer and that it made no agreement to apply Article 6, other than to follow it as closely
as possible, prior to October 31, 1938, when it and the Brotherhood eventually agreed to
place Whiting yard crews on fixed starting time under circumstances to be noted.
7
Whichever version is true, a long controversy resulted. The carrier continued to follow the
former practice, although departures from the schedule were reduced, as it claims, in
conformity with the oral undertaking to observe it as far as possible. The work went on
without interruption. But numerous complaints on account of departures were made through
local officers of the Brotherhood. Time slips were filed by the employees. Frequent
negotiations took place. None however resulted in a settlement prior to October 31, 1938.
8
In this state of affairs, respondents authorized the Brotherhood to file complaint with the
National Railroad Adjustment Board for violation of Article 6. This was done on November
23, 1936. The 'statement of claim' was signed and filed by Williams, chairman of the
general grievance committee. It asserted that the carrier, having 'placed the employees
under the agreement of the yardmen,' had 'failed to put into effect the starting time
provisions' o Article 6, and denied that violation was justified either because the carrier had
agreed with the Engineers to follow the formerly prevailing practice or by the carrier's claim
that the work could be done in no other way. The submission was intended to secure
compliance. There was no prayer for money damages. Petitioner maintained that Article 6
was not applicable.
9
The Board, following its customary procedure, 4 docketed the claim as No. 3537, notified the
carrier and the union that the case, with many others docketed at the same time, was
'assumed to be complete,' and forwarded to each copies of the other's submissions. The
record does not disclose what followed until nearly two years later.
10
On October 31, 1938, Williams and Johnson, secretary of the Brotherhood, two of the
grievance committee's three members, accepted an offer made by petitioner's president,
Rogers, to settle the claim. The settlement took the form of a proposal, made in a letter by
Rogers to Williams, to settle some 61 different claims, including 'Labor Board Docket No.
3537—Starting time of switch engines in Whiting S. O. Yard.' Williams and Johnson
endorsed acceptance for the Brotherhood and the yardmen on the letter. Because of its
importance, pertinent portions are set forth in the margin. 5 On the day the settlement was
concluded Rogers and Williams advised the Board of it by letter and jointly requested that
the case be withdrawn from the docket, which accordingly was done.
11
Notwithstanding the settlement, a further dispute arose. In March, 1939, the Brotherhood,
through Williams, requested the carrier to furnish a complete list of crews in the Whiting
yard started at times other than those fixed by Article 6 from August 27, 1934, to
November 15, 1938, when the settlement became effective. The company declined to
furnish the list, stating it was at a loss to understand the reason for the request in view of
the settlement.
12
The upshot of the dispute was the filing of another claim with the Board, Docket No. 7324,
on May 18, 1939, by Williams, acting for the Brotherhood. This submission was 'for one
day's pay at time and one-half for each foreman and each helper for each day they were
required to work in yard service in the Whiting (Standard Oil Company) Yard, in violation of
the fixed starting time provided for in Article No. 6 of the Yardmen's Agreement * * *
effective January 1, 1927, and applicable to Whiting (Standard Oil Company) Yardmen, July
27, 1934, from dates of August 27, 1934, until November 14, 1938, inclusive.'
13
The submission not only maintained the applicability of Article 6 and accrual of the
individual claims asserted. It also maintained that the settlement of October 31, 1938, was
effective only to fix the starting time for the future and had no effect to waive or determine
individual claims for penalty damages accrued prior to the settlement. 6
14
The carrier's submission reiterated its position in Case No. 3537. It also relied upon the
settlement as precluding later assertion of any claim, individual or collective, based upon

settlement as precluding later assertion of any claim, individual or collective, based upon
occurrences prior to the date of the settlement.
15
The matter went to decision by the Board. Under the procedure prescribed in case of
deadlock, cf. § 3, First (l), a referee was called in. The award was made by the First Division
on September 6, 1940. It sustained the Board's jurisdiction,7 found that 'the parties to said
dispute were given due notice of hearing thereon,' and held that 'the evidence shows that
the parties to the agreement disposed of the claim here made by the letter of carrier dated
October 28, 1938, accepted by employees October 31, 1938.' Accordingly the claim was
'denied per findings.'
16
Thereafter, on November 19, 1940, the present suit was instituted. As has been not d, the
case comes here after a summary judgment rendered on the carrier's motion, supported by
the affidavit of its vice president. This in effect set up the compromise agreement and the
award in Case No. 7324 as bases for the judgment sought.
17
The range and precise nature of the issues may be summarized best perhaps as they were
shaped upon respondents' opposition to the carrier's motion. They denied that either
Williams or the union had authority to release their individual claims or to submit them for
decision by the Board. They relied upon provisions of the Brotherhood's constitution and
rules,8 of which the carrier was alleged to have knowledge, as forbidding union officials to
release individual claims or to submit them to the Board 'without specific authority to do so
granted by the individual members themselves'; and denied that such authority in either
respect had been given.
18
The validity and the conclusive effect of the award were challenged also upon other
grounds, among them that respondents individually received no notice of the submission or
the hearing until after the award was made; that since the award denied a claim for money
damages, it was within the exception of Section 3, First (m), which provides that 'the
awards shall be final and binding upon both parties to the dispute, except insofar as they
shall contain a money award,' and therefore did not preclude this suit; and that the Act, if
construed to make the award conclusive, would violate the Fifth Amendment's due process
provision by denying judicial review to defeated employees, though allowing it to defeated
employers. Cf. § 3, First (p), (q); Washington Terminal Co. v. Boswell, 75 U.S.App.D.C. 1,
124 F.2d 235, affirmed by an equally divided Court, 319 U.S. 732, 63 S.Ct. 1430, 87 L.Ed.
1694.
19
Finally respondents suggested most sweepingly that the Board may act 'merely as an
arbitrator,' with the result that 'any decisions thereunder are void because it passes on
matters and bases its decision and its opinion on law and fact which is contrary to public
policy.' The prayer was that the court overrule the carrier's motion for summary judgment
and, in doing so, determine that the release was not effective; the award was not a final
adjudication of the claims; and the award was void for lack of jurisdiction of the parties or
the subject matter or 'because said Act under which award was entered is unconstitutional.'
20
The District Court's judgment rested squarely on the conclusive effect of the award in
Docket No. 7324. It did not indicate whether it regarded the Brotherhood's authority to
submit the claims and appear for the employees as derived from the statute or, apart from
the statute, as a matter of law upon the particular facts. But it must be taken to have held
that, upon the pleadings and the affidavits, no genuine issue of material fact was presented,
Federal Rules of Civil Procedure, Rule 56(c), 28 U.S.C.A. following section 723c, and
therefore that it was immaterial if, as alleged, respondents had not individually given the
Brotherhood or Williams specific authority to submit their claims for decision or represent
them in the hearings.
21
The Court of Appeals, however, made to reference to the issues concerning the award and
its effect upon the claims. But its judgment must be taken to have determined implicitly
that none of petitioner's contentions in these respects is valid.
22
The issues are not merely, as the Court of Appeals assumed, whether the Brotherhood had
authority to compromise and settle the claims by agreement with the carrier and whether

authority to compromise and settle the claims by agreement with the carrier and whether
on the record this presents a question of fact. For petitioner insists, and the District Court
held, that the award of the Board was validly made, and is final, precluding judicial review.
We do not reach the questions of finality, which turn upon construction of the statutory
provisions and their constitutional validity as construed. 9 Those questions should not be
determined unless the award was validly made, which presents, in our opinion, the crucial
question. Respondents attack the validity and legal effectiveness of the award in three
ways. Two strike at its validity on narrow grounds. Respondents say the Brotherhood had no
power to submit the dispute for decision by the Board without authority given by each of
them individually and that no such authority was given. They also maintain that they were
entitled to have notice individually of the proceedings before the Board and none was given.
23
The third and most sweeping contention undercuts all other issues concerning the award's
effects, whether for validity or for finality. In substance it is that the award, when rendered,
amounts to nothing more than an advisory opinion. The contention, founded upon language
of the opinion in Moore v. Illinois Central R. Co., 312 U.S. 630, 61 S.Ct. 754, 85 L.Ed. 1089,
regards the Act's entire scheme for the settlement of grievances as wholly conciliatory in
character, involving no element of legal effectiveness, with the consequence that the parties
are entirely free to accept or ignore the Board's decision.
24
At the outset we put aside this broadest contention as inconsistent with the Act's terms,
purposes and legislative history.1 0 The Moore case involved no question concerning the
validity or the legal effectiveness of an award when rendered. 1 1 Nor did it purport to
determine that the Act creates no legal obligations through an award or otherwise. Apart
from the affirmance by equal division in Washington Terminal Co. v. Boswell, supra, both
prior and later decisions here are wholly inconsistent with such a view of its effects. Cf.
Virginian Ry. Co. v. System Federation, 300 U.S. 515, 57 S.Ct. 592, 81 L.Ed. 789; Texas &
N.O.R. Co. v. Railway Clerks, 281 U.S. 548, 50 S.Ct. 427, 74 L.Ed. 1034;1 2 Switchmen's
Union v. National Mediation Board, 320 U.S. 297, 64 S.Ct. 95, 88 L.Ed. 61; General
Committee v. M-K-T R. Co., 320 U.S. 323, 64 S.Ct. 146, 88 L.Ed. 76; General Committee v.
Southern Pacific Co., 320 U.S. 338, 64 S.Ct. 142, 88 L.Ed. 85.
I.
25
The difference between disputes over grievances and disputes concerning the making of
collective agreements is traditional in railway labor affairs. It has assumed large importance
in the Railway Labor Act of 1934, substantively and procedurally. 1 3 It divides the jurisdiction
and functions of the Adjustment Board from those of the Mediation Board, giving them their
distinct characters. It also affects the parts to be played by the collective agent and the
represented employees, first in negotiations for settlement in conference and later in the
quite different procedures which the Act creates for disposing of the two types of dispute.
Cf. §§ 3, 4.
26
The statute first marks the distinction in Section 2, which states as among the Act's five
general purposes: '(4) to provide for the prompt and orderly settlement of all disputes
concerning rates of pay, rules, or working conditions; (5) to provide for the prompt and
orderly settlement of all disputes growing out of grievances or out of the interpretation or
application of agreements covering rates of pay, rules, or working conditions.' The two sorts
of dispute are sharply distinguished,1 4 though there are points of common treatment.
Nevertheless, it is clear from the Act itself, from the history of railway labor disputes and
from the legislative history of the various statutes which have dealt with them, 1 5 that
Congress has drawn major lines of difference between the two classes of controversy.
27
The first relates to disputes over the formation of collective agreements or efforts to secure
them. They arise where there is no such agreement or where it is sought to change the
terms of one, and therefore the issue is not whether an existing agreement controls the
controversy. They look to the acquisition of rights for the future, not to assertion of rights
claimed to have vested in the past.
28
The second class, however, contemplates the existence of a collective agreement already
concluded or, at any rate, a situation in which no effort is made to bring about a formal
change in terms or to create a new one. The dispute relates either to the meaning or proper

change in terms or to create a new one. The dispute relates either to the meaning or proper
application of a particular provision with reference to a specific situation or to an omitted
case. In the latter event the claim is founded upon some incident of the employ ment
relation, or asserted one, independent of those covered by the collective agreement, e.g.,
claims on account of personal injuries. In either case the claim is to rights a crued, not
merely to have new ones created for the future.
29
In general the difference is between what are regarded traditionally as the major and the
minor disputes of the railway labor world. 1 6 The former present the large issues about which
strikes ordinarily arise with the consequent interruptions of traffic the Act sought to avoid.
Because they more often involve those consequences and because they seek to create
rather than to enforce contractual rights, they have been left for settlement entirely to the
processes of noncompulsory adjustment.
30
The so-called minor disputes, on the other hand, involving grievances, affect the smaller
differences which inevitably appear in the carrying out of major agreements and policies or
arise incidentally in the course of an employ ment. They represent specific maladjust ments
of a detailed or individual quality. They seldom produce strikes, though in exaggerated
instances they may do so.1 7 Because of their comparatively minor character and the general
improbability of their causing interruption of peaceful relations and of traffic, the 1934 Act
sets them apart from the major disputes and provides for very different treatment.
31
Broadly, the statute as amended marks out two distinct routes for settlement of the two
classes of dispute, respectively, each consisting of three stages. The Act treats the two
types of dispute alike in requiring negotiation as the first step toward settlement and
therefore in contemplating voluntary action for both at this stage, in the sense that
agreement is sought and cannot be compelled. To induce agreement, however, the duty to
negotiate is imposed for both grievances and major disputes. 1 8
32
Beyond the initial stages of negotiation and conference, however, the procedures diverge.
'Major disputes' go first to mediation under the auspices of the National Mediation Board; if
that fails, then to acceptance or rejection of arbitration, cf. § 7; Trainmen v. Toledo, P. &
W.R. Co., 321 U.S. 50, 64 S.Ct. 413, 88 L.Ed. 534, 150 A.L.R. 810; and finally to possible
presidential intervention to secure adjustment. § 10. For their settlement the statutory
scheme retains throughout the traditional voluntary processes of negotiation, mediation,
voluntary arbitration, and conciliation. Every facility for bringing about agreement is
provided and pressures for mobilizing public opinion are applied. The parties are required to
submit to the successive procedures designed to induce agreement. § 5, First (b). But
compulsions go only to insure that those procedures are exhausted before resort can be had
to self-help. No authority is empowered to decide the dispute and no such power is
intended, unless the parties themselves agree to arbitra ion.
33
The course prescribed for the settlement of grievances is very different beyond the initial
stage. Thereafter the Act does not leave the parties wholly free, at their own will, to agree
or not to agree. On the contrary, one of the main purposes of the 1934 amendments was to
provide a more effective process of settlement. 1 9
34
Prior to 1934 the parties were free at all times to go to court to settle these disputes.
Notwithstanding the contrary intent of the 1926 Act, 44 Stat. 577, 45 U.S.C.A. § 151 et
seq., each also had the power, if not the right, to defeat the intended settlement of
grievances by declining to join in creating the local boards of adjustment provided for by
that Act. They exercised this power to the limit. Deadlock became the common practice,
making decision impossible. The result was a complete breakdown in the practical working
of the machinery. Grievances accumulated and stagnated until the mass assumed the
proportions of a major dispute. Several organizations took strike ballots and thus
threatened to interrupt traffic, a factor which among others induced the Coordinator of
Transportation to become the principal author and advocate of the amendments. The
sponsor in the House insisted that Congress act upon them before adjournment for fear that
if no action were taken a railroad crisis might take place. 2 0 The old Mediation Board was
helpless.2 1 To break this log jam, and at the same time to get grievances out of the way of

the settling of major disputes through the functioning of the Mediation Board, the
Adjustment Board was created and given power to decide them. 2 2
35
The procedure adopted is not one of mediation an conciliation only, like that provided for
major disputes under the auspices of the Mediation Board. Another tribunal of very different
character is established with 'jurisdiction' to determine grievances and make awards
concerning them. Each party to the dispute may submit it for decision, w ether or not the
other is willing, provided he has himself discharged the initial duty of negotiation. 2 3 § 3,
First (i). Rights of notice, hearing, and participation or representation are given. § 3, First
(j). In some instances judicial review and enforcement of awards are expressly provided or
are contemplated. § 3, First (p); cf. § 3, First (m). When this is not done, the Act purports
to make the Board's decisions 'final and binding.' § 3, First (m).
36
The procedure is in terms and purpose very different from the preexisting system of local
boards. That system was in fact and effect nothing more than one for what respondents call
'voluntary arbitration.' No dispute could be settled unless submitted by agreement of all
parties. When one was submitted, deadlock was common and there was no way of escape.
The Adjustment Board was created to remove the settlement of grievances from this
stagnating process and bring them within a general and inclusive plan of decision. 2 4 The aim
was not to dispense with agreement. It was to add decision where agreement fails and thus
to safeguard the public as well as private interests against the harmful effects of the
preexisting scheme.
II.
37
The collective agent's power to act in the various stages of the statutory procedures is part
of those procedures and necessarily is related to them in function, scope and purpose.
38
The statute itself vests exclusive authority to negotiate and to conclude agreements
concerning major disputes in the duly selected collective agent. Cf. Virginian Ry. Co. v.
System Federation, supra. 2 5 Since the entire statutory procedure for settling major disputes
is aimed only at securing agreement and not decision, unless the parties agree to
arbitration, this exclusive authority includes representation of the employees not only in the
stage of conference, but also in the later ones of mediation, arbitration and conciliation.
39
Whether or not the agent's exclusive power extends also to the settlement of grievances, in
conference or in proceedings before the Board, presents more difficult questions. The
statute does not expressly so declare. Nor does it explicitly exclude these functions. The
questions therefore are to be determined by implication from the pertinent provisions.
These are the ones relating to rights of participation in negotiations for settlement and in
proceedings before the Board. They are in part identical with the provisions relating to
major disputes, but not entirely so; and the differences are highly material.
40
The questions of power to bargain concerning grievances, that is, to conclude agreements
for their settlement, and to represent aggrieved employees in proceedings before the Board
are not identical. But they obviously are closely related in the statutory scheme and in fact.
If the collective agent has exclusive power to settle grievance by agreements, a strong
inference, though not necessarily conclusive, would follow for its exclusive power to
represent the aggrieved employee before the Board. The converse also would be true.
Accordingly it will be convenient to consider the two questions together.
41
The primary provisions affecting the duty to treat are found in Section 2, First and Second,
imposing the duty generally as to all disputes, both major and minor, and Sections 2, Sixth
and 3, First (i), together with the proviso to Section 2, Fourth, which apply specially to
grievances. These sections in material part are set forth in the margin, 2 6 except the proviso
which is as follows: 'Provided, That nothing in this Act shall be construed to prohibit a
carrier from permitting an employee, individually, or local representatives of employees
from conferring with management during working hours without loss of time, or to prohibit
a carrier from furnishing free transportation to its employees while engaged in the business
of a labor organization.'2 7 (Emphasis added.)
42
Relating to participation in the Board's proceeding, in addition to the concluding sentence of

Relating to participation in the Board's proceeding, in addition to the concluding sentence of
Section 3, First (i), see note 26, is Section 3, First (j), as follows: 'Parties may be heard
either in person, by counsel, or by other representatives, as they may respectively elect,
and the several divisions of the Adjustment Board shall give due notice of all hearings to the
employee or employees and the carrier or carriers involved in any dispute submitted to
them.' (Emphasis added)
43
Petitioner urges that, notwithstanding the proviso and Section 3, First (j), the effect of the
provisions taken as a whole is to make the collective agent the employees' exclusive
representative for the settlement of all disputes, both major and minor, and of the latter
'whether arising out of the application of such (collective) agreements or otherwise.' The
argument rests primarily upon Sections 2, First, Second, Third, Fourth, Sixth, and 3, First
(i). It emphasizes the carrier's duty to treat with the collective representative, as reinforced
by Sections 2, Eighth and Tenth.2 8
44
Petitioner does not squarely deny that the aggrieved employee may confer with the carrier's
local officials either personally or through local union representatives in accordance with the
proviso to Section 2, Fourth. But this right, if it exists, is regarded apparently as at most
one to be heard, since in petitioner's view the power to make settlement by agreement is
vested exclusively in the collective agent. Cf. §§ 2, Sixth and 3, First (i).
45
The collective agent, as the carrier conceives the statute, is the 'representative(s),
designated and authorized so to confer' within the meaning of Section 2, Second, without
distinction between major and minor disputes. It is likewise the '(representative), for the
purposes of this Act,' again without distinction between the two types of dispute, in the
selection of which by 'the respective parties' Section 2, Third forbids the other to interfere.
It is also 'the designated representative' of the employees with whom, by Section 2, Sixth,
the carrier is required to treat concerning grievances in conference, a provision considered
to carry over into Section 3, First (i). The latter requires that disputes over grievances 'shall
be handled in the usual manner up to and including the chief operating officer of the carrier
designated to handle such disputes.'
46
In accordance with this view 'either party,' within the further provision of Section 3, First (i)
authorizing reference of the dispute to the Adjustment Board 'by petition of the parties or by
either party,' refers to the carrier or the collective agent, not to the aggrieved employee
acting otherwise than by the collective agent. Hence, 'parties' as used in Section 3, First (j),
is given similar meaning. Consequently the collective agent also has exclusive power to
submit the dispute to the Board and to represent aggrieved employees before it.
47
Petitioner's view has been adopted, apparently, in the general practice, if not the formally
declared policy of the Adjustment Board. And this, it seems, has been due to the position
taken consistently by the employees' representatives on the Board, over the opposition of
carrier representatives. 2 9 The unions, apparently, like petitioner in this case, interpret the
Act as not contemplating two distinct systems for the settlement of disputes, one wholly
collective for major disputes, the other wholly individual for minor ones. In this view the
collective agent becomes a party to the collective agreement by making it and its interest as
representative of the collective interest does not cease when that function ends. It remains
a party to the agreement, as such representative, after it is made; and consequently, in
that capacity and for the protection of the collective interest, is concerned with the manner
in which the agreement may be interpreted and applied.
48
Accordingly, petitioner urges that the statute, both by its terms and by its purpose, confers
upon the collective agent the same exclusive power to deal with grievances, whether by
negotiation and contract, or by presentation to the Board when agreement fails, as is given
with respect to major disputes. And the aggrieved employee's rights of individual action are
limited to rights of hearing before the union and possibly also by the carrier.
49
We think that such a view of the statute's effects, in so far as it would deprive the aggrieved
employee of effective voice in any settlement and of individual hearing before the Board,
would be contrary to the clear import of its provisions and to its policy.
50

would be contrary to the clear import of its provisions and to its policy.
50
It would be difficult to believe that Congress intended, by the 1934 amendments, to
submerge wholly the individual and minority interests, with all power to act concerning
them, in the collective interest and agency, not only in forming the contracts which govern
their employment relation,3 0 but also in giving effect to them and to all other incidents of
that relation. Acceptance of such a view would require the clearest expression of purpose.
For this would mean that Congress had nullified all preexisting rights of workers to act in
relation to their employ ment, including perhaps even the fundamental right to consult with
one's employer, except as the collective agent might permit. Apart from questions of
validity, the conclusion that Congress intended such consequences could be accepted only if
it were clear that no other construction would achieve the statutory aims. 3 1
51
The Act's provisions do not require such a construction. On the contrary they appear
expressly to preclude it. The proviso to Section 2, Fourth in terms reserves the right of 'an
employee, individually' to confer with management; and Section 3, First (j), not only
requires the Board to give 'due notice of all hearings to the employee * * * involved in any
dispute submitted * * *,' but provides for 'parties' to be heard 'either in person, by counsel,
or by other representatives, as they may respectively elect.'
52
These provisions would be inapposite if the collective agent, normally a labor union and an
unincorporated association, exclusively were contemplated. Such organizations do not and
cannot appear and be heard 'in person.' Nor would the provision for notice 'to the employee
* * * involved in any dispute' be either appropriate or necessary. If only the collective
representative were given rights of submission, notice, appearance and representation,
language more aptly designed so to limit those rights was readily available and was
essential for the purpose.
53
This conclusion accords fully with the terms of the proviso to Section 2, Fourth. It appears
to be intended as a qualification, in respect to loss of time and free transportation, of the
section's preceding prohibitions against the carrier's giving financial and other aid to labor
organizations and to employees in an effort to influence their union affiliations. 3 2 However,
the language clearly contemplates also that the individual employee's right to confer with
the management about his own grievance is preserved. There is some indication in the
legislative history to this effect. 3 3The right is so fundamental that we do not believe the
purpose was to destroy it. Cf. 40 Op.Atty.Gen., No. 59, pp. 5, 6 (Dec. 29, 1942); Hughes
Tool Co. v. National Labor Relations Board, 5 Cir., 147 F.2d 69.
54
Rights of conference are not identical with rights of settlement. But the purpose of
conference and the duty to treat is to bring about agreement. The right and the obligation
to share in the negotiations are relevant to their aim. Conceivably the statute might confer
the right to participate in the negotiations, that is, to be heard before any agreement is
concluded, either upon the collective agent or upon the aggrieved employee or employees,
at the same time conferring upon the other the final voice in determining the terms of the
settlement. This is, in effect, the position taken by each of the parties in this case. But they
differ concerning where the final say has been vested. Petitioner maintains it has been given
to the union. Respondents say it has been left with them.
55
In the view we take the Act guarantees to the aggrieved employee more than merely the
right to be heard by the union and the carrier. We cannot say that the terms of the proviso
to Section 2, Fourth and of Section 3, First (j) are so limited. Moreover, Section 3, First (p)
expressly states that the statutory suit to enforce an award in favor of an aggrieved
employee may be brought by 'the petitioner,' presumably the collective agent, or by the
employee. All of these provisions contemplate effective participation in the statutory
procedures by the aggrieved employee.
56
His rights, to share in the negotiations, to be heard before the Board, to have notice, and to
bring the enforcement suit, would become rights more of shadow than of substance if the
union, by coming to agreement with the carrier, could foreclose his claim altogether at the
threshold of the statutory procedure. This would be true in any case where the employee's
ideas of appropriate settlement might differ from the union's. But the drastic effects in
curtailment of his preexisting rights to act in such matters for his own protection would be

curtailment of his preexisting rights to act in such matters for his own protection would be
most obvious in two types of cases; one, where the grievance arises from incidents of the
employment not covered by a collective agreement, in which presumabl the collective
interest would be affected only remotely, if at all; the other, where the interest of an
employee not a member of the union and the collective interest, or that of the union itself,
are opposed or hostile. That the statute does not purport to discriminate between these and
other cases furnishes strong support for believing its purpose was not to vest final and
exclusive power of settlement in the collective agent. 3 4
57
We need not determine in this case whether Congress intended to leave the settlement of
grievances altogether to the individual workers, excluding the collective agent entirely
except as they may specifically authorize it to act for them, or intended it also to have voice
in the settlement as representative of the collective interest. Cf. Matter of Hughes Tool
Company, 56 N.L.R.B. 981, modified and enforced, Hughes Tool Co. v. National Labor
Relations Board, supra. The statute does not expressly exclude grievances from the
collective agent's duty to treat or power to submit to the Board. Both collective and
individual interests may be concerned in the settlement where, as in this case, the dispute
concerns all members alike, and settlement hangs exclusively upon a single common issue
or cause of dispute arising from the terms of a collective agreement. 3 5 Those interest
combine in almost infinite variety of relative importance in relation to particular grievances,
from situations in which the two are hostile or in which they bear little or no relation of
substance to each other and opposed to others in which they are identified. 3 6
58
Congress made no effort to deal specifically with these variations. 3 7 But whether or not the
collective agent has rights, independently of the aggrieved employee's authoriza ion, to act
as representative of the collective interest and for its protection in any settlement, whether
by agreement or in proceedings before the Board, an award cannot be effective as against
the aggrieved employee unless he is represented individually in the proceedings in
accordance with the rights of notice and appearance or representation given to him by
Section 3, First (j). Those rights are separate and distinct from any the collective agent may
have to represent the collective interest. For an award to affect the employee's rights,
therefore, more must be shown than that the collective agent appeared and purported to
act for him. It must appear that in some legally sufficient way he authorized it to act in his
behalf.3 8
59
Petitioner's contrary view, as has been indicated, regards the settlement of grievances as
part of the collective bargaining power, indistinguishable from the making of collective
agreements. The assumption ignores the major difference which the Act has drawn between
those functions, both in defining them and in the modes provided for settlement.
60
To settle for the future alone, without reference to or effect upon the past, is in fact to
bargain collectively, that is, to make a collective agreement. That authority is conferred
independently of the power to deal with grievances, as part of the power to contract
'concerning rates of pay, rules, or working conditions.' It includes the power to make a new
agreement settling for the future a dispute concerning the coverage or meaning of a pre-
existing collective agreement. For the collective bargaining power is not exhausted by being
once exercised; it covers changing the terms of an existing agreement as well as making
one in the first place.
61
But it does not cover changing them with retroactive effects upon accrued rights or claims.
For it is precisely the difference between making settlements effective only for the future
and making them effective retroactively to conclude rights claimed as having already
accrued which marks the statutory boundary between collective bargaining and the
settlement of grievances. The latter by explicit definition includes the 'interpretation or
application' of existing agreements. To regard this as part of the collective bargaining power
identifies it with making new agreements having only prospective operation; and by so
doing obliterates the statute's basic distinction between those functions. 3 9
62
The Brotherhood had power, therefore, as collective agent to make an agreement with the
carrier, effective for the future only, to settle the question of starting time, and that power
was derived from the Act itself. In dealing within its scope, the carrier was not required to

was derived from the Act itself. In dealing within its scope, the carrier was not required to
look further than the Act's provisions to ascertain the union's authority. But it does not
follow, as petitioner assumes, that it had the same right to deal with the union concerning
the past. That aspect of the dispute was not part of the collective agent's exclusive statutory
authority.
63
If to exclude it severs what otherwise might be considered organic, the severance clearly is
one which Congress could make and is one we think it has made, by its definition of
grievances and by the provisions for individual participation in their settlement. If,
moreover, as petitioner urges, this may make the settlement less convenient than if power
to deal with grievances were vested exclusively in the collective agent, that consequence
may be admitted. But it cannot outweigh the considerations of equal or greater force which
we think Congress has taken into account in preserving the individual workman's right to
have a voice amounting to more than mere protest in the settlement of claims arising out of
his employment.
64
From the fact that the Brotherhood occupied the position of collective bargaining agent and
as such had power to deal for the future, therefore, petitioner was not entitled to make any
assumption concerning its authority to settle the claims accrued for the past or to represent
the claimants exclusively in proceedings before the Board. Accordingly for the union to act
in their behalf with conclusive effect, authorization by them over and above any authority
given by the statute was essential.
III.
65
Petitioner urges that, apart from the statute, the facts of record show as a matter of law
that respondents authorized the Brotherhood to settle the claims, to submit them to the
Board, and to represent them in its proceedings. Respondents deny that authority in any of
these respects was given, either by individual authorization or by virtue of the
Brotherhood's constitution and rules; and they insist that the record presents these
questions as issues of fact.
66
Stripped of its statutory influences, petitioner's argument comes in substance to this. It is
undisputed that from August 27, 1934, to November 23, 1936, when the complaint in
Docket No. 3537 was filed, respondents made out time slips and filed many complaints with
the carrier's local officials through local officers of the Brotherhood on account of departures
from the schedule of Article 6. The question of the article's applicability was a matter of
discussion between the Brotherhood and company officials from the time of the transfer in
1934. Respondents admit having authorized the Brotherhood, at a meeting of their local
lodge, to file the complaint in Docket No. 3537 and that this complaint was filed in full
compliance with the Brotherhood's constitution and rules. The settlement of October, 1938,
and the consequent withdrawal of the claim in Docket No. 3537 were made by the same
official, Williams, whom respondents had authorized to file the claim and with whom, in
effect, both the collective agreement and the Brotherhood's regulations required petitioner
to deal concerning the matter. 4 0 Moreover, the complaint in Docket No. 7324, filed in May,
1939, was filed by Williams and in the same manner as the complaint in Docket No. 3537.
67
From these facts petitioner concludes that respondents authorized the Brotherhood to settle
the claims and to represent them before the Board. In its view, all of these transactions
related to the same subject matter, namely, whether Article 6 was applicable in the Whiting
yard, the only difference being that the relief sought in the two proceedings was not the
same; and that difference is not material.
68
Respondents differ concerning the effect of these facts and others they set forth. They
allege that under the Brotherhood's constitution and rules neither Williams and Johnson nor
the general grievance committee could 'revise or change a general wage 'schedule' or
agreement concerning rates of pay, nor working conditions, unless authorized to do so by a
majority vote of the lodges, or by a majority vote of the membership in the system'; that
claims of individual members for back compensation could not be released without specific
authority given individually; that no such authority was given; and that the carrier had
knowledge of these limitations. They further allege that Williams and Johnson failed to notify

them of the settlement, as the by-laws required;4 1 and deny that they knew of the
settlement, the proceedings in Docket 7324 or the award until after the award was made,
when they promptly repudiated it.4 2 They say accordingly that Williams acted without
authority from them directly or through the Brotherhood's regulations in submitting and
presenting the claims; and that the award is invalid not only for this reason but also
because no notice of the proceeding was given to them.
69
It is apparent that the parties are at odds upon the inferences to be drawn from the facts
and their legal effects rather than upon the facts themselves. Respondents deny, and
petitioner apparently does not claim, that they at any time individually and specifically
authorized the Brotherhood or its officials to compromise their claims for money due or to
act for them exclusively in Board proceedings concerning those claims. If there is an issue in
this respect it is obviously one of fact concerning which evidence and findings would be
required.
70
The real issues, as we view the record, come down to whether respondents assented, in
legal effect, to the final settlement of their claims by the union or to exclusive
representation by it in any of the following ways: (1) by making complaints through local
union officials; ( ) by authorizing the Brotherhood to submit the complaint in Docket No.
3537; (3) by virtue of the Brotherhood's regulations; (4) by virtue of the collective
agreement.
71
The collective agreement could not be effective to deprive the employees of their individual
rights. Otherwise those rights would be brought within the collective bargaining power by a
mere exercise of that power, contrary to the purport and effect of the Act as excepting them
from its scope and reserving them to the individuals aggrieved. In view of that reservation
the Act clearly does not contemplate that the right saved may be nullified merely by
agreement between the carrier and the union.
72
Nor can we say as a matter of law that the mere making of complaints through local
Brotherhood officials amounted to final authorization to the union to settle the claims or
represent the employees before the Board. Neither the statute nor the union's regulations
purported to give these effects to that conduct. The time slips apparently were filed by the
employees themselves. The record shows only the general fact that complaints concerning
departures were made through local officials. More than this would be required to disclose
unequivocal intention to surrender the individual's right to participate in the settlement and
to give the union final voice in making it together with exclusive power to represent him
before the Board. The making of complaints in this manner was only preliminary to
negotiation and equivocal at the most.
73
Nor can we say, in the present state of the record, that the union's regulations
unequivocally authorized the general grievance committee or its chairman either to settle
the claims or to act as exclusive representative before the Board. The parties rely upon
apparently conflicting provisions or, if they are not actually in conflict, then upon different
ones, the applicability of some of which is in dispute. Thus respondents rely upon Rule 3,
which forbids change in existing agreements without the required vote of local lodges or
system membership, and petitioner says the rule is not applicable to the dispute in this
case. Whether or not the rule is applicable is a question of fact to be determined in the light
of whatever evidence may be presented to sustain the one view or the other. Conceivably it
may be intended to apply only where no grievance is involved or to the settlement of
grievances and other disputes as well. But we cannot say, in the absence of further light
than is now available, that on its face the rule bears only the one construction or the other.
74
Similar difficulties arise in connection with the other regulations. Only some of them are set
forth in the printed record, although the full constitution and rules were made a part of the
record proper by petitioner. The rules and regulations do not purport to require members to
negotiate and settle their grievances only through the union. The general committee can act
only when a grievance is referred to it by a local lodge. The rules are extensive, parts of
them appear to involve possible conflict, the parties differ concerning their effects, and the
mode of their operation quite obviously may be largely affected by the manner in which
they are applied in practice. Their construction and legal effect are matters of some

they are applied in practice. Their construction and legal effect are matters of some
complexity and should not be undertaken in a vacuum apart from the facts relating to their
application in practice. Because both factual and legal inferences would be involved in
determining the effects of the regulations to bring about a surrender of the individual rights
to take part in the settlement and in the Board's proceedings, those effects cannot be
determined as a matter of law in the first instance here.
75
Nor can we say as a matter of law that authorizing the submission in Docket No. 3537,
without more, constitute authorization either to make the agreement of settlement or to
represent the employees in Docket No. 7324. The matter requires some explication in the
lig t of the view we have taken concerning the rights of an aggrieved employee in the
settlement of grievances. In that view no valid settlement can be made unless he agrees. If
settlement by agreement after negotiation fails, he has the right to submit the dispute to
the Board for decision. If it is submitted he has rights of notice, hearing and individual
representation according to his choice.
76
All these rights are separate and distinct, though closely related. A surrender or delegation
of one would not result in surrender of the others as a matter of law or necessarily as a
matter of fact. Whether in particular circumstances it might do so would depend upon
whether they were considered sufficient to disclose such an intent. 4 3 It follows that authority
to concur in an agreement of settlement does not imply without more authority to represent
the employee in Board proceedings, or the latter the former. This is true when the authority
is given to the collective agent as it is when it is given to another. That circumstance is not
controlling. It only bears as one factor in the total situation. Accordingly in this case the
mere fact that the respondents authorized the union to make the submission and to
represent them in Docket No. 3537 did not imply authority to make the settlement
agreement or to represent them in the quite different later proceedings in Docket No. 7324.
77
The record does not show conclusively that prior to the submission in Docket No. 3537 the
employees had finally committed the whole matter of their claims into the union's hands in
such a manner as to constitute a surrender of their individual rights to concur in any
agreement of settlement. That conclusion is not justified merely from the fact that the union
participated in negotiations with the carrier.
78
Moreover, the authorization, to act in Docket No. 3537, obviously was given after efforts to
secure settlement by negotiation and agreement were considered to have failed. Only then
was anyone entitled to make the submission. Accordingly that authorization was entirely
consistent with the idea that no further negotiations would be had, and therefore, without
more, also with the idea that no authority to negotiate further was implied. It may be that
upon a full hearing concerning the course and scope of the negotiations prior to this
submission, the evidence will justify a conclusion that the respondents had authorized the
union to act finally for them. But the record in its present state does not justify that
conclusion as a matter of law. 4 4
79
It may be true also that if Docket No. 3537 had been carried to decision the award would
have been effective to determine the rights of the parties. But no award was made in that
proceeding. It was terminated and the claim was withdrawn. Whether or not that action or
other events occurring later were effective to terminate the authority given to submit for the
Board's determination the issue which was the foundation of respondents' monetary claims
or whether that authority continued in spite of the changed conditions are questions also to
be determined from a factual evaluation of the entire situation, essentially preliminary to
determination of legal effects, which we cannot make.
80
Since upon the total situation we cannot say as a matter of law that respondents had
authorized the Brotherhood to act for them in Docket No. 7324, whether in submitting the
cacause or in representing them before the Board; since it is conceded also that they were
not given notice of the proceeding otherwise than as the union had knowledge of them; and
since further they have denied that they had knowledge of the proceedings and of the
award until after it was entered, the question whether the award was effective in any mater
to affect their rights must be determined in the further proceedings which are required. The
crucial issue in this respect, of course, will be initially whether respondents had authorized

crucial issue in this respect, of course, will be initially whether respondents had authorized
the Brotherhood in any legally sufficient manner to represent them, individually, in the
Board's proceedings in Docket No. 7324.
81
Until that question is determined, it is not necessary for us to pass upon the important issue
concerning the finality and conclusive effect of the award, or to determine the validity and
legal effect of the compromise agreement. We accordingly express no opinion concerning
those issues.
82
The judgment is affirmed. The cause is remanded for further proceedings in conformity with
this opinion.
83
Affirmed and cause remanded.
84
Mr. Justice FRANKFURTER, dissenting.
85
On July 27, 1934, the Brotherhood of Railroad Trainmen made an agreement with
petitioner, Elgin, Joliet and Eastern Railway Company, affecting its yardmen whereby the
starting time for switching crews was fixed. The respondents are employed as switching
crews in the Whiting, Indiana yard of petitioner. They are all members of the Brotherhood.
Observance by petitioner of this yard agreement was called into question. After abortive
conferences for the adjustment of these claims between officials of petitioner and of the
Brotherhood, C. H. Williams, General Chairman of the Brotherhood General Grievance
Committee, filed a complaint covering several grievances with the National Railroad
Adjustment Board, created by the Railway Labor Act of 1934, 48 Stat. 1185, 45 U.S.C. §
151 et seq., 45 U.S.C.A. § 151 et seq., to compel petitioner's compliance with the agreed
time. In November, 1936, the cases were duly docketed. Before they came to be heard,
petitioner, on October 28, 1938, proposed settlement of numerous claims against it by the
Brotherhood then pending before the Adjustment Board. Among these claims was the
dispute as to starting time. Petitioner agreed for a ninety-day trial period, beginning
November 15, 1938, to abide by the time fixed in the 1934 agreement. But its offer was
conditioned 'on a complete settlement and withdrawal of all cases now pending either before
the board, or under discussion with this office * * * and it is further understood that in the
event these settlements are accepted that the claims listed in this letter cover all claims of a
similar nature, and that no other claims covering the same or like situations will be
presented when such claims arise from causes occurring prior to the date of this
settlement.' On October 31, 1938, settlement on these terms was accepted for the yardmen
by Williams, General Chairman, and S. F. Johnson, the Secretary of the Brotherhood's
General Grievance Committee. On the same day and upon request of the Brotherhood and
Railway, the cases were removed from its docket by the Adjustment Board.
86
Later the Brotherhood filed with the Adjustment Board a second complaint claiming money
damages on behalf of its members for violation of the 1934 agreement. The Board, by
formal award, denied the claim on the ground that the 'evidence shows that the parties to
the agreement disposed of the claim here made by the letter of carrier dated October 28th,
1938, accepted by employees October 31, 1938.'
87
Respondents then filed this suit in the District Court for damages. Petitioner invoked the
1938 settlement and the Board's award thereon as a bar, and moved for summary
judgment. Respondents resisted this motion by denying the authority of the Brotherhood
officials to present their claims to the Board or to agree to the settlement. The District Court
gave summary judgment for the petitioner which was reversed by the Circuit Court of
Appeals for the Seventh Circuit on the ground that the question of authority of the
Brotherhood officials raised an issue of fact for trial by the District Court. 140 F.2d 488. The
correctness of this ruling is the important question now before us. 323 U.S. 690, 65 S.Ct.
45.
88
We have had recent occasion to consider the Railway Labor Act in other aspects.
Switchmen's Union v. National Mediation Board, 320 U.S. 297, 64 S.Ct. 95, 88 L.Ed. 61;
General Committee v. M.-K.-T.R. Co., 320 U.S. 323, 64 S.Ct. 146, 88 L.Ed. 76; General

Committee v. Sou. Pac. Co., 320 U.S. 338, 64 S.Ct. 142, 88 L.Ed. 85. The complexities
which the problems in those cases laid bare, make clear that the specific question
immediately before us cannot be isolated from the scheme and structure of the Railway
Labor Act as an entirety. The Act in turn cannot be appreciated apart from the environment
out of which it came and the purposes which it was designed to serve.
89
From the point of view of industrial relations our railroads are largely a thing apart. The
nature and history of the industry, the experience with unionization of the roads, the
concentration of authority on both sides of the industry in negotiating collective
agreements, the intimacy of relationship between the leaders of the two parties shaped by a
long course of national, or at least regional, negotiations, the intricate technical aspects of
these agreements and the specialized knowledge for which their interpretation and
application call, the practical interdependence of seemingly separate collective
agreements—these and similar considerations admonish against mutilating the
comprehensive and complicated system governing railroad industrial relations by episodic
utilization of inapposite judicial remedies.
90
The Railway Labor Act of 1934 is primarily an instrument of government. As such, the view
that is held of the particular world for which the Act was designed will largely guide the
direction of judicial interpretation of the Act. The railroad would for which the Railway Labor
Act was designed has thus been summarized by one of the most discerning students of
railroad labor relations: 'The railroad world is like a state within a state. Its population of
some three million, if we include the families of workers, has its own customs and its own
vocabulary, and lives according to rules of its own making. * * * This state within a state
has enjoyed a high degree of internal peace for two generations; despite the divergent
interests of its component parts, the reign of law has been firmly established.' Garrison, Th
Railroad Adjustment Board: A Unique Administrative Agency (1937) 46 Yale L.J. 567,
568-69.
91
The Railway Labor Act of 1934 is an expression of that 'reign of law' and provides the means
for maintaining it. Nearly half a century of experimental legislation lies behind the Act. It is
fair to say that every stage in the evolution of this railroad labor code was progressively
infused with the purpose of securing self-adjustment between the effectively organized
railroads and the equally effective railroad unions and, to that end, of establishing facilities
for such self-adjustment by the railroad community of its own industrial controversies.
These were certainly not expected to be solved by illadapted judicial interferences, escape
from which was indeed one of the driving motives in establishing specialized machinery of
mediation and arbitration. Government intervention of any kind was contemplated only as a
last resort for the avoidance of calamitous strikes.
92
The landmarks in this history, tersely summarized, are the meager act of October 1, 1888,
25 Stat. 501, providing for voluntary arbitration; the Erdman Act of June 1, 1898, 30 Stat.
424, securing government mediation and arbitration, but applicable only to those actually
engaged in train service operations; the Newlands Act of July 15, 1913, 38 Stat. 103, 45
U.S.C.A. §§ 101 125 providing for a permanent board of mediation and also a board of
arbitration; the Adamson Act of September 3, 1916, 39 Stat. 721, as to which see Wilson v.
New, 243 U.S. 332, 37 S.Ct. 298, 61 L.Ed. 755, L.R.A1917E, 938, Ann.Cas.1918A, 1024;
Order No. 8 of February 21, 1918, formulating the labor policy of the Government after the
United States took over the railroads, see Hines, War History of American Railroads (1928)
p. 155 et seq.; the more elaborate machinery established by Title III of the Transportation
Act of 1920, 41 Stat. 456, 469, 45 U.S.C.A. § 131 et seq. for adjustments of these
controversies, which in its turn was repealed and replaced by the Railway Labor Act of May
20, 1926, 44 Stat. 577, 45 U.S.C.A. § 151 et seq., legislation agreed upon between the
railroads and the Brotherhoods and probably unique in having been frankly accepted as
such by the President and Congress. 1 The actual operation of this legislation partly
disappointed the hopes of its sponsors, and led, for the still greater promotion of self-
government by the railroad industry, to the Act of 1934.
93
The assumption as well as the aim of that Act is a process of permanent conference and
negotiation between the carriers on the one hand and the employees through their unions
on the other. Section 2, First, 45 U.S.C.A. § 152, First, provides 'It shall be the duty of all

on the other. Section 2, First, 45 U.S.C.A. § 152, First, provides 'It shall be the duty of all
carriers * * * and employees to exert every reasonable effort to make and maintain
agreements concerning rates of pay, rules, and working conditions, and to settle all
disputes, whether arising out of the application of such agreements or otherwise * * *.'
Section 2, Second, provides 'All disputes between a carrier * * * and its * * * employees
shall be considered, and, if possible, decided, with all expedition, in conference between
representatives designated and authorized so to confer, respectively, by the carrier * * *
and by the employees thereof interested in the dispute.' According to § 2, Sixth, 'In case of
a dispute * * * arising out of grievances or out of the interpretation or application of
agreements concerning rates of pay, rules, or working conditions, it shall be the duty of the
designated representative or representatives of such carrier * * * and of such employees,
wit in ten days after the receipt of notice of a desire on the part of either party to confer in
respect to such dispute, to specify a time and place at which such conference shall be held *
* *.' Section 3, First (i) directs that disputes growing out of grievances or the interpretation
or application of agreements concerning rates of pay, rules, or working conditions be
handled by conference and negotiation, including resort if necessary to the chief operating
officer of the carrier. Compliance with these statutory duties is a prerequisite to appeal to
the National Railroad Adjustment Board. The purpose of this legislation is the exertion of
maximum pressure toward amicable settlement between the parties. Resort to the
Adjustment Board is the last step in the statutory process.
94
In the controversy before us an amicable adjustment between the parties—the goal of the
legislation—had been achieved by pursuing the course which the Act of 1934 directed. We
are now asked to nullify this settlement, arrived at after prolonged negotiations, and to
open the door of litigation to new discords. Not only is it sought to revive the dispute and to
restore it to the status it had before the Adjustment Board more than eight years ago. The
respondents claim that after all these years they have a right to repudiate their bargaining
agents and to try the authority of these agents as though this were a conventional lawsuit
involving the responsibility of a principal for the donduct of his agent.
95
As members of their Brotherhood, respondents were of course familiar with the procedure
whereby the union speaks for them both to the Railroad and before the Adjustment Board.
The Brotherhood's 'Constitution and General Rules', which the respondents made part of
their case below, are clear about this. Rule No. 7 declares that, after a grievance has been
transmitted to a General Grievance Committee, that Committee 'shall have power to alter,
amend, add to or strike out * * * any part or all of any complaint or claim submitted to the
committee, subject to appeal to the entire General Committee and/or Board of Appeals. A
general grievance Committee may authority their chairman to handle all grievances
received from local lodges with the management for settlement * * *.' Respondents cannot
deny that the Brotherhood officials had authority to seek compliance by the railroad with the
starting time agreement through the Adjustment Board. In view of the sweeping power of
the General Grievance Committee to settle grievances, the settlement that was made on
behalf of the Brotherhood is invulnerable. The attack on the settlement because it was
signed by only two of the three members of the Committee is frivolous. Such procedure is
not at all unusual. Williams and Johnson settled other grievances in like manner, many of
them involving claims for money. The Brotherhood's own rules sanction such action in that
the Committee may authorize the Chairman to handle all grievances.
96
This is not a simple little case about an agent's authority. Demands of the employees'
representative imply not only authority from those for whom he speaks but the duty of
respect from those to whom he speaks. The carrier is under a legal duty to treat with the
union's representative for the purposes of the Railway Labor Act. Section 2, Ninth; see
Virginian Ry. v. System Federation, 300 U.S. 515, 57 S.Ct. 592, 81 L.Ed. 789. We do not
have the ordinary case where a third person dealing with an ostensible agent must at his
peril ascertain the agent's authority. In such a situation a person may protect himself by
refusing to deal. Here petitioner has a duty to deal. If petitioner refuses to deal with the
officials of the employees' union by challenging their authority, it does so under pain of
penalty. If it deals with them on the reasonable belief that the grievance officials of the
Brotherhood are acting in accordance with customary union procedure, settlements thus
made ought not to be at the hazard of being jettis ned by future litigation. To allow such
settlements to be thus set aside is to obstruct the smooth working of the Act. It undermines

settlements to be thus set aside is to obstruct the smooth working of the Act. It undermines
the confidence so indispensable to adjustment by negotiation, which is the vital object of
the Act. See Division 525, Order of Ry. Conductors of America v. Gorman, 8 Cir., 133 F.2d
273, 278.
97
But respondents claim that irrespective of the authority of the Brotherhood officials to
handle claims for the enforcement of the agreed starting time, Williams did not have
authority to present to the Adjustment Board the claim for damages due to respondents for
petitioner's alleged past violation of the starting-time agreement. They insist that there is
no relation between a claim for money resulting from the violation of a collective agreement
and a claim for the enforcement of a collective agreement. But surely this is to sever that
which is organic. It wholly disregards the nature of such a collective agreement, its
implications and its ramifications. In passing on the claim for money damages arising out of
the yard agreement, any tribunal would have to examine, interpret and apply the collective
agreement precisely as it would if the issue were the duty to observe the agreement in the
future. An award based on the application of the collective agreement would, quite apart
from technical questions of res judicata, affect future claims governed by the same
collective agreement whatever the particular forms in which the claims may be cast. To find
here merely an isolated, narrow question of law as to past liability is to disregard the ties
which bind the money controversy to its railroad environment. Such a view is blind to the
fact that 'all members of the class or craft to which an aggrieved employee belongs have a
real and legitimate interest in the dispute. Each of them, at some later time, may be
involved in a similar dispute.' 40 Ops. Atty. Gen., No. 59 (Dec. 29, 1942) pp. 4, 5. Indeed,
such a view leaves out of consideration not only the significant bearing of the construction
of the same collective agreement on parts of the carrier's lines not immediately before the
Court. It overlooks the relation of a provision in a collective agreement with one railroad to
comparable provisions of collective agreements with other roads.
98
To allow the issue of authorization after an award by the Board to be relitigated in the
courts is inimical to the internal government of the Brotherhood. Union membership
generates complicated relations. Policy counsels against judicial intrusion upon these
relations. If resort to courts is at all available, it certainly should not disregard and displace
the arrangements which the members of the organization voluntarily establish for their
reciprocal interests and by which they bound themselves to be governed. The rights and
duties of membership are governed by the rules of the Brotherhood. Rule 10 concerns
objections to official action: 'Whatever action may be taken by the general grievance
committee * * * shall be law to the lodges on that road until the next meeting of the board
of appeals, and if any member refuses to vote or abide by the action of such general
grievance committee or board of adjustment he shall be expelled from the Brotherhood for
violation of obligation.' To ask courts to adjudicate the meaning of the Brotherhood rules
and customs without preliminary resort to remedial proceedings within the Brotherhood is to
encourage influences of disruption within the union instead of fostering these unions as
stabilizing forces. Rules of fraternal organizations, with all the customs and assumptions
that give them life, cannot be treated as though they were ordinary legal documents of
settled meaning. 'Freedom of litigation, for instance, is hardly so essential a part of the
democratic process that the courts should be asked to strike down all hindrances to its
pursuit. The courts are as wise, to take an example of this, in adhering to the general
requirement that all available remedies ithin the union be exhausted before redress is
sought before them as they are unwise in many of the exceptions they have grafted upon
this rule.' Witmer, Civil Liberties and the Trade Union (1941) 50 Yale L.J. 621, 630. To an
increasing extent, courts require dissidents within a union to seek interpretation of the
organization's rules and to seek redress for grievances arising out of them before
appropriate union tribunals. Compare Norfolk & W. Ry. Co. v. Harris, 260 Ky. 132, 84
S.W.2d 69; Agrippino v. Perrotti, 270 Mass. 55, 169 N.E. 793; Snay v. Lovely, 276 Mass.
159, 176 N.E. 791; Webb v. Chicago, R.I. & G. Ry. Co., Tex.Civ.App., 136 S.W.2d 245.
99
The Railway Labor Act, as the product of long experience, is a complicated but carefully
devised scheme for adjusting the relations between the two powerful groups constituting
the railroad industry. It misconceives the legislation and mutilates its provisions to read into
it common law notions for the settlement of private rights. If, when a dispute arises over

the meaning of a collective agreement, the legally designated railroad bargaining unit
cannot negotiate with the carrier without first obtaining the specific authorization of every
individual member of the union who may be financially involved in the dispute, it not only
weakens the union by encouraging divisive elements. It gravely handicaps the union in its
power to bargain responsibly. That is not all. Not to allow the duly elected officers of an
accredited union to speak for its membership in accordance with the terms of the internal
government of the union and to permit any member of the union to pursue his own interest
under a collective agreement undermines the very conception of a collective agreement. It
reintroduces the destructive individualism in the relations between the railroads and their
workers which it was the very purpose of the Railway Labor Act to eliminate. To allow every
individual worker to base individual claims on his private notions of the scope and meaning
of a collective agreement intended to lay down uniform standards for all those covered by
the collective agreement, is to permit juries and courts to make varying findings and give
varying constructions to an agreement inevitably couched in words or phrases reflecting the
habits, usage and understanding of the railroad industry. Thus will be introduced those
disclocating differentiations for workers in the same craft which have always been among
the most fertile provocations to friction, strife, and strike in the railroad world. The Railway
Labor Act, one had supposed, would be construed so as to reduce and not to multiply these
seeds of strife.
100
In order to avoid mischievous opportunities for the assertion of individual claims by shippers
as against the common interest of uniformity in construing railroad tariffs, this Court so
construed the Interstate Commerce Act in the famous Abilene Cotton Oil case, Texas & P.
Ry. Co. v. Abilene Cotton Oil Co., 204 U.S. 426, 27 S.Ct 350, 51 L.Ed. 553, 9 Ann.Cas.
1075, as to withdraw from the shipper the historic common law right to sue in the courts for
charging unreasonable rates. It required resort to the Interstate Commerce Commission
because not to do so would result in the impairment of the general purpose of that Act. It
did so because even though theoretically this Court could ultimately review such
adjudications imbedded in the various judicial judgments—if a shipper could go to a court in
the first instance—there would be considerations of fact which this Court could not possibly
disentangle so as to secure the necessary uniformity. The beneficent rule in the Abilene
Cotton Oil case was evolved by reading the Interstate Commerce Act, 49 U.S.C.A. § 1 et
seq., not as though it were a collection of abstract words, but by treating it as an
instrument of government growing out of long experience with certain evils and addressed
to their correction. Chief Justice White's opinion in that case was characterized by his
successor, Chief Justice Taft, as a 'conspicuous instance of his unusual and remarkable
power and facility in statesmanlike interpretation of statute law.' 257 U.S. xxv. The
provisions of the Railway Labor Act do not even necessitate such a creative act of
adjudication as this Court in the Abilene case unanimously accomplished. The Railway Labor
Act contains no embarrassing specific provision, as was true of § 22 of the Interstate
Commerce Act, 24 Stat. 379, 387, 49 U.S.C.A. § 22, calling for subordination to the main
purpose of the legislation. The considerations making for harmonious adjustment of railroad
industrial relations through the machinery designed by Congress in the Railway Labor Act
are disregarded by allowing that machinery to be by-passed and by introducing dislocating
differentiations through individual resort to the courts in the application of a collective
agreement.
101
Since the claim before the Adjustment Board was for money, there remains the question
whether its disposition was open to judicial review. The Railway Labor Act commands that
the Board's 'awards shall be final and binding upon both parties to the dispute, except
insofar as they shall contain a money award.' Section 3, First (m). But the determination
here in controversy does not 'contain a money award' so as to be excepted from the final
and binding effect given other awards. The obvious meaning of 'money award' is an award
directing the payment of money, not one denying payment. See Berry man v. Pullman Co.,
D.C., 48 F.Supp. 542. We are pointed to no aids to construction that should withhold us
from giving the familiar term 'money award' any other than its ordinary meaning as
something that awards money. This construction is confirmed by comparison with the
provisions of the Interstate Commerce Act dealing with reparation orders. Since both Act
came out of the same Congressional Committees one finds, naturally enough, that the
provisions for enforcement and review of the Adjustment Board's awards were based on

those for reparation orders by the Interstate Commerce Commission. Compare Railway
Labor Act, § 3, First (p) with interstate Commerce Act, as amended by § 5 of the Hepburn
Act, 34 Stat. 584, 590, 49 U.S.C. § 16(1), (2), 49 U.S.C.A. § 16(1, 2). If a carrier fails to
comply with a reparation order, as is true of non-compliance with an Adjustment Board
award, the complainant may sue in court for enforcement; the Commission's order and
findings and evidence then become prima facie evidence of the facts stated. But a denial of
a money claim by the Interstate Commerce Commission bars the door to redress in the
courts. Baltimore & Ohio R. Co. v. Brady, 288 U.S. 448, 53 S.Ct. 441, 77 L.Ed. 888;
Interstate Commerce Comm. v. United States, 289 U.S. 385, 388, 53 S.Ct. 607, 609, 77
L.Ed. 1273; Terminal Warehouse v. Penn. R. Co., 297 U.S. 500, 507, 56 S.Ct. 546, 548, 80
L.Ed. 827.
102
The Railway Labor Act precludes review of the Board's award; and, since authorization of
the Brotherhood officials to make the settlement is not now open to judicial inquiry, the
judgment calls for reversal.
103
The CHIEF JUSTICE, Mr. Justice ROBERTS and Mr. Justice JACKSON join in this dissent.
1
Amendments were allowed to cure jurisdictional defects found to exist upon an earlier
appeal. Alderman v. Elgin, Joliet & Eastern Ry. Co., 7 Cir., 125 F.2d 971.
2
The record sets forth no provision for penalty damages. But the complaint alleges that
under the terms of the agreement each of the plaintiffs is entitled to 'pay for an additional
day, at time and one-half, at the regular daily rate' for each day he was required to work
contrary to the agreement's terms.
3
The court said: 'I think that the controversy was submitted to the Board, that it had
jurisdiction and that it was decided, and that the plaintiffs were represented there and are
bound thereby. * * * I think the ruling of the Adjustment Board was binding upon the
plaintiffs as well as upon the defendant, and that it is binding on this court in this
proceeding.'
4
The procedure, though informal, consists principally in written statements or 'submissions'

filed by the parties, which perform the functions of pleading and evidence combined, and
oral argument upon the submissions thus made. See Garrison, The National Railroad
Adjustment Board: A Unique Administrative Agency (1937) 46 Yale L.J. 567, for a detailed
description of the procedure. See also Final Report of the Attorney General's Committee on
Administrative Procedure (1941) 185 ff.; Administrative Procedure in Government Agencies,
Sen. Doc. No. 10, Part IV, 77th Cong., 1st Sess.
5
The letter was addressed to Williams, as general chairman of the Brotherhood, and dated
October 28, 1938. It stated:
'Since my letter of August 18th in which I tentatively proposed settlement of certain matters
of grievance we have had further correspondence and conferences which had modified our
decision in some cases. Therefore, in order that the whole matter be placed in concrete
form I am outlining below our proposals to settle all of the cases except as otherwise
specified.
'Case No. 5—Labor Board Docket #3537—Starting time of switch engines in Whiting S. O.
Yard.
'Settled by agreement that the starting times for a ninety day trial period commencing
November 15th, 1938, shall be the times provided for in Article 6 of the Yardmen's
Agreement instead of the starting times heretofore agreed upon and now being followed. If
at the end of the ninety day trial period the Railway Company or its employees claim that
the starting times as fixed in Article 6 do not result in efficient and economical operation
and in satisfaction to our employees and to the industry served, then representatives of the
Railway Company and representatives of the Yardmen, and representatives of the Engineers
and representatives of the Firemen will sit down and work out a schedule of starting time
best suited for meeting the special requirements of the industry.
'We have by this letter given you a complete resume of all of the claims which have not
heretofore been disposed of, filed by you on behalf of the employees whom you represent
and have proposed in this letter a very liberal disposition of all the cases involved. The

and have proposed in this letter a very liberal disposition of all the cases involved. The
settlements proposed are predicated on a complete settlement and withdrawal of all cases
now pending either before the board, or under discussion with this office except Case No. 4,
which it is understood will be left to a decision by the National Railroad Adjustment Board,
and it is further understood that n the event these settlements are accepted that the claims
listed in this letter cover all claims of a similar nature, and that no other claims covering the
same or like situations will be presented when such claims arise from causes occurring prior
to the date of this settlement. (Emphasis added)
'Yours truly,
'S. M. Rogers, President.
'Accepted for the Yardmen:
Oct. 31, 1938.
'C. H. Williams, General Chairman, B. of R.T.
'S. F. Johnson, Secretary, B. of R.T.'
6
Cf. note 5. The submission stated: 'There were no agreements reached whereby payment
for violation of Article No. 6 of the Yardmen's Agreement would be waived as a result of
withdrawal of Labor Board Docket No. 3537. In fact that case held no claims for payment
for time. It was simply a case to settle the dispute as to the carrier's right to force the yard
crews in the Whiting yard to work at times other than the fixed starting time provided for in
Article 6. * * *
'As stated before, Case No. 5—Labor Board Docket No. 3537 contained no claim for pay to
Whiting Yardmen. Consequently it was not a question before the Management and the
Committee in the starting time negotiation and claim cannot be made that a waiver was
made on a matter which was not negotiated.'
The submission also denied that oral agreements relating to starting time, claimed by the
carrier to have been made at the time of the transfer in 1934, could be effective 'to
invalidate the prescribed written rule of Article 6.' Williams however did not question the
validity of the verbal agreement, as he maintained, for the thirty day suspension.
7
The submission in no way challenged the jurisdiction of the Board or of the Division.
8
See Part III. The provisions regulate the union's internal procedure in relation to making
changes in a 'general or system wage schedule or agreement,' Rule No. 3, and that to be
followed when the local chairman or grievance committee fails 'satisfactorily to adjust any
grievance referred to it.' Rule No. 7. The latter includes a provision that 'a general grievance
committee may authorize their chairman to handle all grievances received from local
lodges.' See also note 40.
9
Cf. § 3 First (m), (o), (p), (q).

10
Cf. Part I.
11
It was held that nothing in the Act 'purports to take away from the courts the jurisdiction to
determine a controversy over a wrongful discharge or to make an administrative finding a
prerequisite to filing a suit in court,' 312 U.S. at page 634, 61 S.Ct. at page 756, 85 L.Ed.
1089; and therefore the employee's suit could be maintained against the carrier without
prior resort to the Adjustment Board. Among the reasons assigned was that the machinery
provided for settling disputes was not 'based on a philosophy of legal compulsion' but
created 'a system for peaceful adjustment and mediation voluntary in its nature.'
The problem presented was whether the Adjustment Board procedure either was exclusive
or was an essential preliminary to judicial proceedings within the doctrine of primary
jurisdiction. These were questions not entirely determinable by the criterion of whether the
procedure is wholly advisory or conciliatory in character. For, conceivably, Congress might
have made the taking of the Board's merely advisory opinion a condition precedent to
asking for judicial relief; and, conversely, allowing that relief without prior resort to the
Board does not necessarily make the Board's action, when taken, merely advisory.
12
Thus, one of the statute's primary commands, judicially enforceable, is found in the
repeated declaration of a duty upon all parties to a di pute to negotiate for its settlement.
See note 26; Virginian Ry. Co. v. System Federation, 300 U.S. 515, 57 S.Ct. 592, 81 L.Ed.

See note 26; Virginian Ry. Co. v. System Federation, 300 U.S. 515, 57 S.Ct. 592, 81 L.Ed.
789; cf. Switchmen's Union v. National Mediation Board, 320 U.S. 297, 300, 320, 64 S.Ct.
95, 96, 106, 88 L.Ed. 61; General Committee v. M-K-T R. Co., 320 U.S. 323, 331, 334, 64
S.Ct. 146, 150, 151, 88 L.Ed. 76. This duty is not merely perfunctory. Good faith exhaustion
of the possibility of agreement is required to fulfill it. Cf. Virginian Ry. Co. v. System
Federation, supra, 300 U.S. at pages 548, 550, 57 S.Ct. at pages 599, 600, 81 L.Ed. 789;
Brotherhood of Railroad Trainmen v. Toledo, P. & W.R. Co., 321 U.S. 50, 56 ff, 64 S.Ct.
413, 416, 88 L.Ed. 534, 150 A.L.R. 810. At successive stages of the statutory procedure
other duties are imposed. Cf. §§ 5, First (b), 6, 10.
13
Cf. the references cited in notes 4 and 15.

14
Cf. text Part II at note 38; also Hughes Tool Co. v. National Labor Relations Board, 5 Cir.,
147 F.2d 69, 72, 73.
15
See the references cited in note 4; Hearings before Committee on Interstate Commerce on
H.R.7650, 73d Cong., 2d Sess.; Hearings before Committee on Interstate Commerce on
S.3266, 73d Cong., 2d Sess.; Pennsylvania R. Co. v. Railroad Labor Board, 261 U.S. 72, 43
S.Ct. 278, 67 L.Ed. 536; Pennsylvania Railroad System Federation v. Pennsylvania R.
Co., 267 U.S. 203, 45 S.Ct. 307, 69 L.Ed. 574; Texas & N.O.R. Co. v. Brotherhood, 281 U.S.
548, 50 S.Ct. 427, 74 L.Ed. 1034; Virginian Ry. Co. v. System Federation, 300 U.S. 515, 57
S.Ct. 592, 81 L.Ed. 789.
16
Cf. the references cited in note 4. Commissioner (also Coordinator) Eastman, who very
largely drafted the 1934 amendments, said in testifying at the House Committee hearings
concerning them:
'Please note that disputes concerning changes in rates of pay, rules, or working conditions
may not be so referred (to the National Adjustment Board), but are to be handled, when
unadjusted, through the process of mediation. The national adjustment board is to handle
only the minor cases growing out of grievances or out of the interpretation or application of
agreements.' Hearings before Committee on Interstate Commerce on H.R.7650, 73 Cong.,
2d Sess., 47; cf. also pp. 49, 51, 59, 62. And see the testimony of Harrison, a principal
union proponent, before the House Committee, id., at 80—83; and before the Senate
Committee, Hearings before Committee on Interstate Commerce on S.3266, 73d Cong., 2d
Sess., 33, 35.
17
Cf. the testimony of Eastman and Harrison, cited in note 16.

18
Cf. note 12; also notes 26, 27, and text infra. The obligation is not partial. In plain terms
the duty is laid on carrier and employees alike, together with their representatives; and in
equally plain terms it applies to all disputes covered by the Act, whether major or minor.
19
H.Rep.No.1944 on H.R.9861, 73d Cong., 2d Sess., 3; S.Rep.No.1065 on S.3266, 73d Cong.,

2d Sess., 1, 2.
20
Cf. 78 Cong.Rec.12553. Coordinator Eastman referred, in his testimony, to four recent

strike votes occasioned by deadlock. Hearings before Committee on Interstate Commerce
on S.3266, 73d Cong., 2d Sess., 17.
21
The Chairman told the Senate Committee: 'The provision in the present act (1926) for
adjustment boards is in practice about as near a fool provision as anything could possibly
be. I mean this—that on the face of it they shall, by agreement, do so and so. Well, you can
do pretty nearly anything by agreement, but how can you get them to agree?' Hearings
before Committee on Interstate Commerce on S.3266, 73d Cong., 2d Sess., 137.
22
See, for a general view of the circumstances inducing enactment of the 1934 Amendments,
the references cited above in notes 4, 15, 16, 19. The report of the House Committee in
charge of the bill stated:
'Many thousands of these disputes have been considered by boards established under the
Railway Labor Act; but the boards have been unable to reach a majority decision, and so
the proceedings have been deadlocked. These unadjusted disputes have become so

the proceedings have been deadlocked. These unadjusted disputes have become so
numerous that on several occasions the employees have resorted to the issuance of strike
ballots and threatened to interrupt interstate commerce in order to secure an adjustment.
This has made it necessary for the President of the United States to intervene and establish
an emergency board to investigate the controversies. This condition should be corrected in
the interest of industrial peace and of uninterrupted transportation service. This bill,
therefore, provides for the establishment of a national board of adjustment to which these
disputes may be submitted if they shall not have been adjusted in conference between the
parties.' H.Rep.No.1944, 73d Cong., 2d Sess., 3. Cf. also the testimony of Coordinator
Eastman, Hearings before Committee on Interstate Commerce on H.R.7650, 73d Cong., 2d
Sess., 49.
23
Section 3, First (i) expressly conditions the right to move from negotiation into proceedings
before the Adjustment Board upon 'failing to reach an adjustment in this manner,' i.e., by
negotiation.
24
See the testimony of Coordinator Eastman and Mr. Harrison, cited in note 16. The latter
stated, at the Senate Committee hearings, pp. 33, 35:
'* * * (T)his has been a question for the last 14 years as to what kind of boards we are
going to have to settle our grievances. * * * We have always sought national boards; the
railroads * * * have sought the system boards, regional boards. * * * Most of the boards *
* * under the present law have deadlocked on any number of cases. As a result of that
there was fast growing up in our industry a serious condition that might very well develop
into substantial interruption of interstate commerce. * * * These railway labor organizations
have always opposed compulsory determination of their controversies. We have lived a long
time and got a lot of experience, and we know that these minor cases that develop out of
contracts that we make freely, and * * * we are now ready to concede that we can risk
having our grievances go to a board and get them determined, and that is a contribution
that these organizations are willing to make; * * * if we are going to get a hodge-podge
arrangement by law, then we don't want to give up that right, because we only give up the
right because we feel that we will get a measure of justice by this machinery that we
suggest here.' (Emphasis added.)
25
Cf. also Medo Photo Supply Corp. v. National Labor Relations Board, 321 U.S. 678, 64 S.Ct.
830, 88 L.Ed. 1007; J. I. Case Co. v. National Labor Relations Board, 321 U.S. 332, 64 S.Ct.
576, 88 L.Ed. 762.
26
By Section 2, First, 'It shall be the duty of all carriers, their officers, agents, and employees
to exert every reasonable effort to make and maintain agreements concerning rates of pay,
rules, and working conditions, and to settle all disputes, whether arising our of the
application of such agreements or otherwise, in order to avoid any interruption to commerce
* * *.' By Section 2, Second, 'All disputes between a carrier or carriers and its or their
employees shall be considered, and, if possible, decided, with all expedition, in conference
between representatives designated and authorized so to confer, respectively, by the carrier
or carriers and by the employees thereof interested in the dispute.' (Emphasis added.)
These are the basic sections creating the duty, applicable to all disputes, major or minor,
and to carriers and employees alike.
Other provisions affecting the general duty to treat are those of Section 2 Third, that
'representatives, for the purposes of this Act, shall be designated by the respective parties
without interference' by the other and 'need not be persons in the employ of the carrier'; of
Section 2, Fourth, that 'the majority of any craft or class of employees shall have the right
to determine who shall be the representative of the craft or class for the purposes of this
Act'; and of Section 2, Eighth that 'every carrier shall notify its employees by printed notices
* * * that all disputes between the carrier and its employees will be handled in accordance
with the requirements of this Act.' (Emphasis added.)
Section 2, Sixth applies specially to grievances, as does Section 3, First (i). The former
provides: 'In case of a dispute between a carrier or carriers and its or their employees,
arising out of grievances or out of the interpretation or application of agreement's
concerning rates of pay, rules, or working conditions, it shall be the duty of the designated
representative or representatives of such carrier or carriers and of such employees, within
ten days after the receipt of notice of a desire on the part of either party to confer in respect

ten days after the receipt of notice of a desire on the part of either party to confer in respect
to such dispute, to specify a time and place * * *.' Section 3 First (i) is as follows: 'The
disputes between an employee or group of employees and a carrier or carriers growing out
of grievances or out of the interpretation or application of agreements concerning rates of
pay, rules, or working conditions, including cases pending and unadjusted on the date of
approval of this Act, shall be handled in the usual manner up to and including the chief
operating officer of the carrier designated to handle such disputes; but, failing to reach an
adjustment in this manner, the disputes may be referred by petition of the parties or by
either party to the appropriate division of the Adjustment Board with a full statement of the
facts and all supporting data bearing upon the disputes.' (Emphasis added.)
27
Section 2, Eighth makes this proviso part of the contract of employ ment between the carrier
and each employee, and section 2, Tenth makes it a misdemeanor for the carrier to refuse
to observe it. Section 2, Eighth incorporates the provisions of Sections 2, Third, Fourth and
Fifth in each employee's contract of employ ment. Section 2, Tenth makes it a misdemeanor
for the carrier to fail or refuse to comply with the terms of Section 2, Third, Fourth, Fifth,
Seventh and Eighth.
28
See note 27.

29
Cf. Administrative Procedure in Government Agencies, Sen.Doc. 10, Part IV, 77th Cong., 1st
Sess., 7.
30
Cf. Steele v. Louisville & N.R. Co., 323 U.S. 192, 65 S.Ct. 226; Tunstall v. Brotherhood of
Locomotive Firemen & Enginemen,323 U.S. 210, 65 S.Ct. 235; Wallace Corp. v. National
Labor Relations Board, 323 U.S. 248, 65 S.Ct. 238.
31
In this connection it is important to recall that the Act does not contemplate the existence of
closed shops, to the extent at any rate that the carrier is forbidden to make such
agreements. Cf. § 2, Fourth; 78 Cong.Rec. 12,402; 40 Op.Atty.Gen., No. 59 (Dec. 29,
1942). Accordingly the interests of unorganized workers and members of minority unions
are concerned in the solution. These are not always adverse to the interests of the majority
or of the designated union. But they may be so or even hostile. Cf. the authorities cited in
note 30. To regard the statute as so completely depriving persons thus situated of voice in
affairs affecting their very means of livelihood would raise very serious questions.
32
This undoubtedly was the primary object. The language in the concluding clause, 'while
engaged in the business of a labor organization,' applies literally only to employees
travelling upon union business, and has no apparent application to the preceding provision
relating to the individual employee's right to confer with management.
33
Hearings before Committee on Interstate Commerce on H.R.7650, 73d Cong., 2d Sess., 36,
44, 89.
34
Cf. note 37 and text. It is to be doubted that Congress by the generally inclusive language
used concerning grievances intended, for instance, to give the collective agent exclusive
power to settle a grievance arising independently of the collective agreement, affecting only
non-union men to whose claim the union and the majority were hostile.
35
But whether or not the carrier's violation affects all the members of the group immediately
and alike, so as to create a present basis for claims by each, the violation, though resulting
from misinterpretation, would constitute a present threat to the similar rights of all covered
by the contract. Cf. Hughes Tool Co. v. National Labor Relations Board, supra, 147 F.2d 72,
74; 40 Op.Atty.Gen., No. 59, pp. 4, 5 (Dec. 29, 1942).
To leave settlements in such cases ultimately to the several choices of the members, each
according to his own desire without regard to the effect upon the collective interest, would
mean that each affected worker would have the right to choose his own terms and to
determine the meaning and effect of the collective agreement for himself. Necessarily, the
carrier would be free to join with him in doing so and thus to bargain with each employee
for whatever terms its economic power, pitted against his own, might induce him to accept.
The result necessarily would be to make the agreement effective, not to all alike, but

The result necessarily would be to make the agreement effective, not to all alike, but
according to whatever varied interpretations individual workers, from equally varied
motivations, might be willing to accept. To give the collective agent power to make the
agreement, but exclude it from any voice whatever in its interpretation would go far toward
destroying its uniform application.
36
Depending upon the substantive character of the claim, its foundation in a collective
agreement or otherwise, its intrinsically substantial or insubstantial nature, the number of
employees affected, the length of time it remains unsettled, the number of claims allowed
so to run, or perhaps other factors, the grievance may be a matter of large moment to the
group as a whole or of little or no concern to it and, it may be, of either identical or
converse importance to the individual or individuals directly affected.
37
Congress was concerned primarily with differences between the carrier and the employees,
not with differences among the latter or between them, or some of them, and the collective
agent. The statute therefore was not drawn with an eye levelled to these problems, except
as to choice of representatives, cf. § 2, Fourth; § 2, Ninth; and note 34.
38
Authority might be conferred in whatever ways would be sufficient according to generally

accepted or 'common law' rules for the creation of an agency, as conceivably by specific
authorization given orally or in writing to settle each grievance, by general authority given
to settle such grievances as might arise, or by assenting to such authority by becoming a
member of a union and thereby accepting a provision in its constitution or rules authorizing
it to make such settlements.
39
The distinction holds true although 'interpretation or application' may look to the future as
well as the past, as it often does. It goes to the source of the right asserted, whether in an
antecedent agreement or only to one presently sought. The difference is important for other
issues as well as those presently involved, e.g., application of statutes of limitations.
The distinction is not to be ignored or wiped out merely because a particular dispute or
agreement may look both to the past and to the future. The special procedure for settling
grievances was created because it was intended they should be disposed of differently from
disputes over 'rates of pay, rules, or working conditions,' which were committed exclusively
o the collective agent's authority. One important difference preserved the aggrieved
employee's rights to participate in all stages of the settlement. Congress therefore, when it
preserved those rights, contemplated something more than collective representation and
action to make the settlement effective for the past. It follows that the individual
employee's rights cannot be nullified merely by agreement between the carrier and the
union. They are statutory rights, which he may exercise independently or authorize the
union to exercise in his behalf.
40
The collective agreement, of which Article 6 is a part, provides: 'Any controversy arising as
to the application of the rules herein agreed upon * * * shall be taken up * * *' by the
general grievance committee with the general superintendent of the carrier, 'and in the
event of their failure to agree upon a satisfactory settlement, the Committee may appeal to
the Vice President.' (Emphasis added.) Petitioner says this provision bound it to deal only
with the general committee.
Petitioner also relies upon Rule 10 of the Brotherhood's constitution and general rules as
imposing the same duty:
'Whatever action may be taken by the General Grievance Committee or Board of
Adjustment of any system within the meaning of the above General Rules shall be law to
the Lodges on that road until and unless reversed by the Board of Appeals, and if any
member refuses to vote or abide by the action of such General Grievance Committee or
Board of Adjustment, he shall be expelled from the Brotherhood for violation of obligation.'
See also note 8.
41
This, they say, was because Williams did not regard the agreement as waiving the money
claims, since he did not give them the required notice and shortly after the settlement filed
the money claims with the Board. Cf. note 6.
42
Respondents also attack the settlement because it was not signed by the third member of

Respondents also attack the settlement because it was not signed by the third member of
the grievance committee, the local grievance chairman. This objection borders on the
frivolous.
43
In other words, the aggrieved employee has the right to delegate his power to concur in an
agreement of settlement, but at the same time to reserve his rights to make submission to
the Board and of appearance and representation before it, or conversely to reserve his right
to concur and delegate the rights of submission and representation. To what extent he may
delegate one or all depends therefore upon the intent with which he makes the particular
delegation as disclosed by the circumstances in which it is made, or gives evidence of such
intent by his conduct, and this will be a question of fact unless the circumstances so clearly
show he intended to make the delegation claimed that no other conclusion is possible.
44
It is true that respondents' position concerning the consequences of their authorization to

make the submission in Docket No. 3537 is not altogether consistent. For in claiming that
they authorized submission only to determine the applicability of Article 6 for the future,
and not to determine the question of retroactivity so as to establish or conclude adversely
the basis for their individual monetary claims, they appear to ignore, as does petitioner in
some of its contentions, the distinction between collective bargaining and the settlement of
grievances as the Act defines them. Cf. note 39 and text. If their purpose was merely to
authorize settlement for the future, without retroactive effects, the submission to the
Adjustment B ard was misconceived, since it has no power to render a decision requiring the
carrier or the union to make a new agreement. Its only authority, under the Act, is to
determine what they have agreed upon previously or, outside the scope of a collective
agreement, what rights the carrier and its employees may have acquired by virtue of other
incidents of the employ ment relation. Such an issue by its very nature looks to the past,
though it may also seek compliance for the future.
1
In his message of December 8, 1925, to Congress, President Coolidge stated: 'I am

informed that the railroad managers and their employees have reached a substantial
agreement as to what legislation is necessary to regulate and improve their relationship.
Whenever they bring forward such proposals, which seems sufficient to protect the interests
of the public, they should be enacted into law.' 67 Cong.Rec. 463.
Pasted from <http://openjurist.org/325/us/711/elgin-ry-co-v-burley>

UNITED EMPLOYEES UNION OF GELMART INDUSTRIES V NORIEL
12:10 AM
UNITED EMPLOYEES UNION OF GELMART INDUSTRIES V NORIEL

67 SCRA 267
FERNANDO; October 3, 1975
NATURE
Petition for certiorari and prohibition
FACTS
- the petition seeks to have the certification election declared null and void, for it w as held under circumstances that manifested lack
of fairness
- it w as alleged that the petitioner-union w as included, but under another name, in the list of contending unions in the election, w here
the w inning party had 63% of the votes, w hile the petitioner only had 4.5% (thus, the w inner w on by a landslide, even if the votes of
all the other 7 contending unions w ere combined. Therefore, the mistake didn’t really affect the outcome of the election)
ISSUE WON the certification election is void
HELD NO
Ratio Considering what transpired, it is apparent that the grievance spoken of is more fancied than real, the assertion of confusion
and demoralization based on conjecture rather than reality. At most, it w as an honest mistake
Reasoning The institution of collective bargaining is a prime manifestation of industrial democracy at w ork. The tw o parties to the
relationship, labor and management, make their ow n rules by coming to terms. That is to govern themselves in matters that really
count. As labor, how ever, is composed of a number of individuals, it is indispensable that they be represented by a labor
organization of their choice. Thus may be discerned how crucial a certification election is.
- There must be an opportunity to determine w hich labor organization shall act on their behalf.It is precisely because respect must
be accorded to the w ill of labor thus ascertained that a general allegation of duress is not sufficient to invalidate a certif ication
election; it must be show n by competent and credible proof. That is to give substance to the principle of majority rule, one of the
basic concepts of a democratic polity.
Disposition Petition dismissed.
G.R. No. L-40810 October 3, 1975

UNITED EMPLOYEES UNION OF GELMART INDUSTRIES PHILIPPINES (UEUGIP), petitioner,
vs.
HON. CARMELO NORIEL, DIRECTOR, BUREAU OF LABOR RELATIONS; GEORGE A.
EDUVALA, REPRESENTATION OFFICER, BUREAU OF LABOR RELATIONS; and NATIONAL
UNION OF GARMENTS, TEXTILE, CORDAGE AND ALLIED WORKERS OF THE PHILIPPINES
(GATCORD), respondents.
Benito P. Fabie for petitioner.
Assistant Solicitor General Hugo E. Gutierrez, Jr., Assistant Solicitor General Reynato S. Puno and
Solicitor Romeo C. de la Cruz for respondents Carmelo Noriel, etc., et al.
Hermon C. Lagman for respondents Unions.
FERNANDO, J.:
The plea for setting aside a certification election earnestly and vigorously pressed by petitioner in
this certiorariand prohibition proceeding is predicated on the proposition that it was held under
circumstances that manifested lack of fairness, thus raising a procedural due process question.
There was an equally firm and vehement denial in a comprehensive comment filed on behalf of
private respondent, National Union of Garments, Textile, Cordage and Allied Workers of the
Philippines. The stress in the comment of respondent Director Carmelo Noriel 1 was on the absence
of a grave abuse of discretion. As will be more fully discussed, a careful scrutiny of what transpired
as revealed not only in the pleadings but in the oral argument will disclose that the attack on the
certification election cannot succeed. The petition lacks merit.
The petition sought to have the certification election declared null and void ab initio and thus
unenforceable, alleging that the contending parties in a pre-election conference conducted by the
Bureau of Labor Relations agreed that petitioner would be listed in the ballot as United Employees
Union of Gelmart Industries Philippines (UEUGIP). 2 In the notice of the certification election,
however, it was wilfully deleted and replaced by "a non-contending party, namely, Philippine Social
Security Labor Union (PSSLU), which, although an existing labor federation ... has nothing to do and
has no interest or right of participation [therein]." 3 So it did appear likewise in the sample ballot. 4 As
a result, there was confusion in the minds of independent voters and demoralization in the ranks of
those inclined to favor petitioner. 5 There was a protest but it was not based on this ground; instead
the grievance complained of referred to the alleged electioneering of nuns and a priest as observers
or inspectors on behalf of private respondent. 6 The above notwithstanding, the certification election
took place "on the scheduled date, May 24, 1975 and respondent GATCORD garnered the highest

took place "on the scheduled date, May 24, 1975 and respondent GATCORD garnered the highest
number of votes ...." 7 It was then set forth that despite such defect in the mode of conducting the
election which for petitioner sufficed to cause "the nullity of the election in question," respondent
Director Carmelo Noriel of the Bureau of Labor Relations "[was] about to certify respondent
GATCORD as the sole and exclusive collective bargaining representative of the rank and file
employees [and] workers of Gelmart Industries Philippines, Inc." 8 Hence this petition with its
overtones as indicated of an alleged violation of procedural due process.
The comment to the petition filed on behalf of private respondent National Union of Garments,
Textile, Cordage and Allied Workers of the Philippines (GATCORD) denied the imputation of
irregularity and sought to clarify matters by a factual presentation of what did transpire. At the outset,
however, it made clear that the petitioner, which garnered only 291 votes or 4.5% of the total number
of votes cast as against the 3,970 or 63% of the votes in its favor, certainly could not be heard to
challenge the validity of the certification election. Thus: "1. Pursuant to an order of the Bureau of
Labor Relations of the Department of Labor, a certification election was conducted on 24 May 1975
in Gelmart Industries Philippines, Inc., South Superhighway, Parañaque, Rizal, to choose the
collective bargaining agent of the company's rank and file employees; 2. The certification election
was conducted and supervised by the Bureau of Labor Relations; it took almost the entire personnel
of the Bureau, including the Director himself, to man the election, there were 11 precincts, each of
which was presided over by a med-arbiter of the Bureau, as chairman, and another representation
officer of the Bureau; there was also created a central election committee composed of four top
personnel of the Bureau for optimum supervision; 3. There were some 8,900 eligible voters out of
about 10,000 employees of the company; out of the 8,900 eligible voters, duly agreed upon by all the
parties and approved by the Bureau, 6,309 or 79.7% voted; out of the 6,309 eligible voters
cast,3970 or 63% went to GATCORD, [with UEUGIP placing] only fifth with a measly 291 votes or
barely 4.5% of the total number of votes cast. It may be noted that even if the votes of all seven
losing unions[were added], their total would only be 2,057, which is still 1,823 votes short of
GATCORD's 2,970 votes. It is thus clear that GATCORD won by an overwhelming majority:" 9 It
characterized such votes as an "unassailable majority." 10 On the question of the alleged irregularity,
the comment set forth the following: "Petitioner UEUGIP did not lodge any protest concerning the
alleged misprinting or omission of its name in the Notice of Certification Election in the Sample
Ballot ... before the election, during the election or shortly after the election, [but merely questioned]
the presence of the priests and nuns, over which it filed a protest with the BLR, [not the alleged
misprinting] or omission of its name in the election notice and the sample ballot; 10. The fact is,
when GATCORD petitioned for the certification election (NLRC Case No. LR-4891, later numbered
as BLR Case No. 256) in July, 1974, the United Employees Union of Gelmart Industries
Philippines(UEUGIP) intervened, as represented by Ruben Escreza, the union's duly elected
president, [with] Antonio Diaz, herein alleged representative of UEUGIP, [intervening] then not for
UEUGIP but for UEUGIP-Workers' Faction; 11. Since Mr. Diaz was representing only a faction of
UEUGIP, which faction had no legal personality separate from UEUGIP which was duly represented
by Mr. Escreza, the order of the Bureau dated 15 January 1975 included only UEUGIP as one of the
contending unions, without including UEUGIP-Workers' Faction; 12. Subsequently, the Philippine
Transport and General Workers Organization (PTGWO) intervened and, claiming that UEUGIP had
affiliated with PTGWO, moved for a correction of the name UEUGIP in the order, making it UEUGIP-
PTGWO, ...;13. During the first two pre-election conferences in connection with the certification
election held on February 14 and 17, 1975, Mr. Diaz appeared, but he was no longer representing
UEUGIP-Workers' Faction; he entered a new union - the Philippine Social Security Labor Union
(PSSLU); ... 14. In the succeeding pre-election conferences, however, Mr. Diaz, apparently out to
create trouble, began claiming to represent UEUGIP and abandoned representation of PSSLU [with
the result that] UEUGIP had two representatives often clashing with each other; Mr. Escreza and Mr.
Diaz; 15. On 19 May 1975 the Bureau of Labor Relations caused the posting of 'Notice of
Certification Election' with a 'Sample Ballot', [with said posting being made at a time when] the
parties had not yet agreed as to how their names should appear in the ballot, ... 16. It was only on 20
May 1974, after the election notice was already posted with the original sample ballot, that the
parties came to discuss how their respective names should appear in the ballot,[at which time] the
parties had agreed that the names of the contending unions should be printed in the ballots as they
were printed, that is, with UNITED EMPLOYEES UNION OF GELMART INDUSTRIES PHILIPPINES
(UEUGIP) there and without PSSLU." 11 Private respondent then considered the following as the
pertinent questions: "If Mr. Diaz felt that the posting of the election notice and the original sample
ballot was erroneous and it was prejudicial to his group, why did he not raise this question early
enough? He could have raised it soon after the posting was made, especially considering that two
more pre-election conferences, on May 20, 22 and 23 were held. Or he could have raised the
question during the election day. But he did not. Is it because he did not really care then, is it
because his people inside the company did not really care, or is it because he had really no people

because his people inside the company did not really care, or is it because he had really no people
inside to bother at all about said 'error?' If they were that disinterested in correcting the 'error' at least
during the last four days before the election, how could Mr. Diaz claim now that his group was
adversely affected by the alleged 'error' and that if said 'error' was not made, his group could have
won the election?" 12 The comment ended on a statement rather rhetorical in character: "The truth is,
Mr. Diaz had but a droplet of support, which, dream as he would, could never match, much less
overcome, the raging torrents of GATCORD." 13 The comment on behalf of respondent Director
Noriel and the respondent Representation Officer Eduvala stressed a grave abuse of discretion to
certify an action forcertiorari. Petitioner sought permission to reply and was granted. There was, as
could be expected, a stout denial of the recital of facts of private respondent, but it cannot be said
that it is impressed with a high degree of persuasiveness..
At any rate, after the Court considered the comments as answers and set the case for hearing, with
arguments coming from both counsel Benito Fabie for petitioner and Jose W. Diokno for private
respondent, and with the labor leader Antonio Diaz referred to in the comment of private respondent
being questioned and presenting petitioner's side of the controversy, a much clearer picture
emerged. It was none too favorable for petitioner.
As noted at the outset, we find for respondents. The petition lacks merit.
1. The institution of collective bargaining is, to recall Cox, a prime manifestation of industrial
democracy at work. The two parties to the relationship, labor and management, make their own
rules by coming to terms. That is to govern themselves in matters that really count. As labor,
however, is composed of a number of individuals, it is indispensable that they be represented by a
labor organization of their choice. Thus may be discerned how crucial is a certification election. So
our decisions from the earliest case of PLDT Employees Union v. PLDT Co. Free Telephone
Workers Union 14 to the latest, Philippine Communications, Electronics & Electricity Workers'
Federation (PCWF) v. Court of Industrial Relations, 15 have made clear. Thus is one of the earliest
cases, TheStandard Cigarette Workers' Union v. Court of Industrial Relations, 16 it was made clear in
the opinion of Justice J. B. L. Reyes that "a complaint for unfair labor practice may be considered a
prejudicial question in a proceeding for certification election when it is charged therein that one or
more labor unions participating in the election are being aided, or are controlled, by the company or
employer. The reason is that the certification election may lead to the selection of an employer-
dominated or company union as the employees' bargaining representative, and when the court finds
that said union is employer-dominated in the unfair labor practice case, the union selected would be
decertified and the whole election proceedings would be rendered useless and nugatory." 17 For it is
easily understandable how essential it is, in the language of former Chief Justice Concepcion, in the
leading case of LVN Pictures v. Philippine Musicians Guild 18 "to insure the fair and free choice of
bargaining representatives by employees." 19 There must be such an opportunity to determine which
labor organization shall act on their behalf. 20 It is precisely because respect must be accorded to the
will of labor thus ascertained that a general allegation of duress is not sufficient to invalidate a
certification election; it must be shown by competent and credible proof. 21 That is to give substance
to the principle of majority rule, one of the basic concepts of a democratic polity. 22The matter is
summarized thus in one of the latest decisions of this Court, Federation of the United Workers
Organization v. Court of Industrial Relations: 23 "The slightest doubt cannot therefore be entertained
that what possesses significance in a petition for certification is that through such a device the
employees are given the opportunity to make known who shall have the right to represent them.
What is equally important is that not only some but all of them should have the right to do so." 24 If
heed be paid to the above well-settled principle and applied to the facts disclosed in the present
petition, it would be apparent that the grievance spoken of is more fancied than real, the assertion of
confusion and demoralization based on conjecture rather than reality. The mode and manner in
which Antonio Diaz demonstrated how militant and articulate he could be in presenting his side of
the controversy could hardly argue for the accuracy of his claim that his men did lose heart by what
appeared at the most to be an honest mistake, if it could be characterized as one. Certainly then, the
accusation that there was abuse of discretion, much less a grave one, falls to the ground.
2. Nor need this Court pass upon the ground of protest based on the alleged participation by nuns
and a priest who presumably aided the cause of private respondent. Petitioner did not choose to
press this point. It is understandable why. In the leading case of Victoriano v. Elizalde Rope Workers'
Union, 25 this Court, through Justice Zaldivar, left no doubt as to the privacy of religious freedom, to
which contractual rights, even on labor matters, must yield, thus removing any taint of nullity from the
amendment to the Industrial Peace Act, 26 which would allow exemption from a closed shop on the
part of employees, members of a given religious sect prohibiting its devotees from affiliating with any
labor organization. Subsequently, in Basa v. Federacion Obrera de la Industria Tabaquera, 27 such
doctrine was reaffirmed, thus emphasizing that one's religious convictions may be the basis for an
employee joining or refusing to join a labor union. Certainly, the wide latitude accorded religious
groups in the exercise of their constitutional freedom would caution against reliance on such

groups in the exercise of their constitutional freedom would caution against reliance on such
aground to invalidate a certification election. It thus appears that such an approach is reflected in the
attitude adopted by petitioner, which in effect amounts to an abandonment of such a possible ground
of protest, not at all lodged with this Court but merely mentioned in its recital of background facts.
3. During the hearing of this case, reference was made to the registration of private respondent
allegedly having been revoked. As the pleadings do not touch upon the matter at all, this Court is not
in a position to rule on such a question. The decision therefore leaves that particular aspect of the
litigation open.
WHEREFORE, the petition for certiorari and prohibition is dismissed for lack of merit. The restraining
order issued by this Court is lifted. This decision is immediately executory. No costs.
Barredo, Antonio, Aquino and Martin, JJ., concur.
Concepcion Jr., J, is on leave.
Footnotes
1 He is the Director of the Bureau of Labor Relations. The representation, officer of such Bureau,
George A. Eduvala, was likewise named respondent.
2 Petition, par. 5.
3 Ibid; par. 7.
4 Ibid, par. 8.
5 Ibid, par. 10.
6 Ibid, par. 12.
7 Ibid, par. 13.
8 Ibid, par. 15.
9 Comment of Private Respondent, pars. 1-5.
10 Ibid, par. 6.
11 Ibid, par. 9-16.
12 Ibid, par. 18.
13 Ibid, par. 19.
14 97 Phil. 424 (1955). Cf. Bacolod-Murcia Milling Co., Inc. v. National Employees-Workers Security
Union, 100 Phil. 516 (1956).
15 L-34531, March 29, 1974, 56 SCRA 480. Cf. Compañia Maritima v. Compañia Maritima Labor
Union, L-29504, Feb. 29, 1972, 43 SCRA 464; Philippine Association of Free Labor Unions v. Court
of Industrial Relations, L-33781, Oct. 31, 1972, 47 SCRA 390; Lakas ng Manggagawang Pilipino v.
Benguet Consolidated, Inc., L-35075, Nov. 24, 1972, 48 SCRA 169, B.F. Goodrich Philippines, Inc.
v. B.F. Goodrich Confidential and Salaried Employees Union, L-34069, Feb. 28, 1973, 49 SCRA
532.
16 101 Phil. 126 (1957).
17 Ibid, 128. Cf. Acoje Mines Employees and Acoje United Workers Union v. Acoje Labor Union and
Acoje Mining Co., 814 (1958).
18 10 Phil. 725 (1961).
19 Ibid, 728-729. Cf. Philex Miners Union v. National Mines and Allied Workers Union, L-18019,
Dec. 29, 1962, 6 SCRA 992.
20 Cf. B. F. Goodrich Philippines, Inc. v. B. F. Goodrich Confidential and Salaried Employees Union,
L-34069-70, Feb. 28,1973, 49 SCRA 532.
21 Cf. Acoje Workers' Union v. National Mines and Allied Workers' Union, L-18848, April 23, 1963, 7
SCRA 730.
22 Cf. Allied Workers' Association v. Court of Industrial Relations, L-22580, June 6, 1967, 20 SCRA
364.
23 L-37392, December 19, 1973, 54 SCRA 305.
24 Ibid, 310. Cf. Federation of Free Workers v. Parades, L-36466, Nov. 26, 1973, 54 SCRA 75.
25 L-25246, September 12, 1974, 59 SCRA 54.
26 Republic Act No. 3350 (1961).
27 L-27113, November 19, 1974, 61 SCRA 93.

NATIONAL UNION OF RESTAURANT WORKERS V CIR
12:11 AM
NATIONAL UNION OF RESTAURANT WORKERS V CIR

10 SCRA 843
BAUTISTA ANGELO; APR.30, 1964
NATURE
PETITION for review by certiorari of a resolution of the Court of Industrial Relations.
FACTS
- On June 9, 1960, a complaint for unfair labor practice w as lodged against the ow ners of Tres Hermanas Restaurant, particularly
Mrs. Felisa Herrera, on the ground, among others, that respondents refused to bargain collectively w ith the complaining union;
respondents made a counter-proposal in the sense that they w ould bargain w ith said union and w ould accept its demands if the
same w ould become a company union, and one Martin Briones, an employee, w as separated from the service because he was
found to be the organizer and adviser of the complaining union.
- Responents denied the charges, and they w ere exonerated. The judge found that the charges w ere not proven and dismissed the
complaint.
ISSUES
1. WON respondents refused to bargain collectively w ith the union and committed unfair labor practice
2. WON respondents interfered, coerced or restrained their employees in the exercise of their right to join the complaining union
3. WON respondents dismissed said employee because he w as found to be the organizer and adviser of the complaining union.
HELD
1. NO
Reasoning The court cited several instances that showed respondent’s willingness to bargain w ith the union.
It is true that under Sec 14, RA 875 w henever a party serves a w ritten notice upon the employer making some demands the latter
shall reply thereto not later than 10 days from receipt thereof, but this condition is merely procedural, and as much its non-
compliance cannot be deemed to be an act of unfair labor practice. The fact is respondents did not ignore the letter sent by the
union so much so that they called a meeting to discuss its demands.
The court also pointed out the markings on the letter made by respondent in the meeting w ith the union on May 3, 1960 at their
restaurant in Quezon City, indicating the w illingness and actual bargaining made w ith the union. (Check for agreement, a cross for
disapproval and a circle for demands left open for further discussion)
It is contended that respondents refused to bargain w ith the complaining union as such even if they called a meeting of its officers
and employees hereby concluding that they did not desire to enter into a bargaining agreement w ith said union. It is belied by the
fact that respondents did actually agree and bargain w ith the representatives of the union. Respondents w ere of the impression that
before a union could have that capacity it must first be certified by the CIR as the duly authorized bargaining unit, w hich they also
stated in their answ er to the petition for certification filed by said union before the CIR. In that case, another union known as the
International Labor and Marine Union of the Philippines claimed to represent the majority of the employees of respondent
restaurant, and this is w hat it alleged in a letter sent to the manager of respondents dated May 25, 1962.
2. NO.
Reasoning On this document certain notations w ere made by one Ernesto Tan w hich are indeed derogatory and w hich were
allegedly made by him upon instructions of respondent Felisa Herrera. Thus, the pertinent notation on w hich the union relies is one
w hich states that respondent Herrera would be w illing to recognize the union "if union w ould become company union", w hich w ould
indeed show that Mrs. Herrera interfered w ith the employees' right to self-organization. But respondents denied that they ever
authorized Ernesto Tan to make such notation or to represent them in the negotiations. Although Tan w as the nephew of
respondent Herrera, in the company, he w as merely a bookkeeper w hose duties w ere confined to the keeping and examination of
their books of accounts and sales invoices. It appears that he w as not even invited to the meeting but merely volunteered tobe
present and made those notations on his ow n account and initiative.
3. NO.
Reasoning. Respondents maintain that Briones w as dismissed because of the “smouldering embers of hatred” that Briones had
against Mrs. Herrera, the threats he made, and her fear for her ow n safety being alw ays together with in her car driven by Briones
during business routine. Petitioners maintain that Briones w as dismissed because of his union activities. It appears in Briones’
testimony that he is not the only one w ho organized the union, yet the members w ho are more active in the union and serve as its
officers are still employed at the restaurant.
Disposition CIR decision AFFIRMED.
G.R. No. L-20044 April 30, 1964

NATIONAL UNION OF RESTAURANT WORKERS (PTUC), petitioner,
vs.
COURT OF INDUSTRIAL RELATIONS, ET AL., respondents.
Alejandro C. Villavieja for petitioner.
Padilla Law Office for respondents.
BAUTISTA ANGELO, J.:
On June 9, 1960, a complaint for unfair labor practice was lodged against the owners of Tres Facts:
Hermanas Restaurant, particularly Mrs. Felisa Herrera, on the ground, among others, that -Union filed ULP vs. Tres Hermanas Restaurant (rep by
respondents refused to bargain collectively with the complaining union; respondents made a Felisa Herrera) on the following allegations:
counter-proposal in the sense that they would bargain with said union and would accept its demands • Tres Hermanas made a counter-proposal to the
if the same would become a company union, and one Martin Briones, an employee, was separated
Union, that they would bargain if the Union
from the service because he was found to be the organizer and adviser of the complaining union.
After respondents had filed their answer, wherein they denied the charges of unfair labor practice would be a company union
filed against them, Judge Emiliano C. Tabigne, who was assigned to act on the complaint, received • Martin Briones, an employee was separated from
the evidence, and on July 28, 1961, rendered decision exonerating respondents. He found that the the service because he organized and advised the
charges were not proven and dismissed the complaint. complaining union
The case was taken to the court en banc, where in a split decision the court affirmed the decision of -Tres Hermanas Restaurant denied the allegations
Judge Tabigne. The case is now before us on a petition for review. -Judge Tabigne: exonerated Tres Hermanas
The important findings of the court a quo which are now disputed by the union are: (1) respondents
did not refuse to bargain collectively with the union as in fact they met its members with the only
-CIR en banc: split decision
particularity that they were not able to accept all the demands of the union; (2) respondents did not -subject to review
interfere, coerce or restrain their employees in the exercise of their right to join the complaining
union; and (3) the dismissal of Martin Briones was due to the concern of Mrs. Herrera for her life on Issues:
account of the hatred that Briones had entertained against her, she being always with him in the car 1. WON Tres Hermanas refused to bargain cllectively
he used to drive during their business routine. It is claimed that Judge Tabigne committed a grave 2. WON Tres Hermanas interfered, coerced, or
abuse of discretion in making the above findings. restrained their employees in the exercise of their right
Anent the first issue, the court a quo found that in the letter sent by the union to respondents
containing its demands marked in the case as Exhibit 1, there appears certain marks, opposite each to join the complaining union
demand, such as a check for those demands to which Mrs. Felisa Herrera was agreeable, a cross 3. WON the dismissal of Martin Briones was due to the
signifying the disapproval of Mrs. Herrera, and a circle regarding those demands which were left concern of Mrs. Herrera for her life
open for discussion on some future occasion that the parties may deem convenient. Such markings
were made during the discussion of the demands in the meeting called by respondents on May 3, HELD
1960 at their restaurant in Quezon City. The court a quo concluded that the fact that respondent 1. NO
Herrera had agreed to some of the demands shows that she did not refuse to bargain collectively -in the letter sent by the union to Tres Hermanas, it
with the complaining union.
We can hardly dispute this finding, for it finds support in the evidence. The inference that
contained marks opposite each demand by the union
respondents did not refuse to bargain collectively with the complaining union because they accepted (check for demands to which Mrs. Herrera was
some of the demands while they refused the others even leaving open other demands for future agreeable, Cross for disapproved demands, and circle
discussion is correct, especially so when those demands were discussed at a meeting called by for those left for discussion on some future time)
respondents themselves precisely in view of the letter sent by the union on April 29, 1960. It is true -markings were made during the discussion of the
that under Section 14 of Republic Act 875 whenever a party serves a written notice upon the demands in the meeting at Tres Hermanas Restaurant.
employer making some demands the latter shall reply thereto not later than 10 days from receipt
-the meeting where the markings were made was
thereof, but this rendition is merely procedural and as such its non-compliance cannot be deemed to

-the meeting where the markings were made was
thereof, but this rendition is merely procedural and as such its non-compliance cannot be deemed to
be an act of unfair labor practice. The fact is that respondents did not ignore the letter sent by the called by Tres Hermanas precisely in view of the letter
union so much so that they called a meeting to discuss its demands, as already stated elsewhere. sent by the union
It is contended that respondents refused to bargain with the complaining union as such even if they -Tres Hermanas allegedly refused to bargain with the
called a meeting of its officers and employees thereby concluding that they did not desire to enter union unless they became a company union but it was
into a bargaining agreement with said union. This conclusion has no rational relation with the main shown in the answer of the respondents that they were
premise of the union for it is belied by the fact that respondents did actually agree and bargain with of the impression that before a union could have the
the representatives of the union. While it is true that respondents denied the capacity of the
capacity to bargain with them, they must first be
complaining union to bargain collectively with the respondents this is because they were of the
impression that before a union could have that capacity it must first be certified by the Court of certified by the Court of Industrial Relations as the duly
Industrial Relations as the duly authorized bargaining unit, in fact this is what they stated in their authorized bargaining unit (in another case before CIR,
answer to the petition for certification filed by said union before the Court of Industrial Relations (See INTERNATIONAL LABOR AND MARINE UNION OF THE
Case No. 763-MC). In said case, another union known as the International Labor and Marine Union PHILIPPINES claimed to represent the majority of the
of the Philippines claimed to represent the majority of the employees of respondent restaurant, and employees of Tres Hermanas (yeah right, "marine"
this is what it alleged in a letter sent to the manager of respondents dated May 25, 1962. union in a restaurant)
Anent the second issue, the claim of the complaining union has also no basis. This is premised on a
document marked Exhibit C which contains certain alleged counter-proposals tendered to
complainant union the nature of which would apparently indicate that respondents made use of 2. NO
coercion which interferes with the right of the employees to self-organization. On this document -to prove this, the union showed a document which
certain notations were made by one Ernesto Tan which are indeed derogatory and which were contains the alleged counter-proposals tendered to the
allegedly made by him upon instructions of respondent Felisa Herrera. Thus, the pertinent notation complainant union. This document contained certain
on which the union relies is one which states that respondent Herrera would be willing to recognize notations which were made by one Ernesto Tan which
the union "if union would be willing to recognize the union", which would indeed show that Mrs. are indeed derogatory and which were allegedly made
Herrera interfered with the employees' right to self-organization. But respondents denied that they by him upon instructions of Mrs. Herrera, specifically
ever authorized Ernesto Tan to make such notation or to represent them in the negotiations, for he
was merely a bookkeeper whose duties were confined to the keeping and examination of their books the one which stated that Herrera would be willing to
of accounts and sales invoices. It appears that he was not even invited to the meeting but merely recognize the union "if union would be willing to
volunteered to be present and made those notations on his own account and initiative. The court a recognize the union".
quo gave credence to this stand of respondents, as can be seen in the following finding: "There is no -Tres Hermanas, however, denied that they ever
evidence to show that Ernesto Tan was authorized to represent management in the meeting held on authorized Ernesto Tan to make such notation (merely
May 3, 1960, and that Ernesto Tan, being a mere bookkeeper of respondents, he is not a part of a bookkeeper whose duties were confined to the
management although he is the nephew of Mrs. Herrera." We are not prepared to disturb this finding
keeping and examination of their books of accounts
of the court a quo.
Finally, it is alleged in connection with the third issue that respondent Herrera dismissed Martin and sales invoices.
Briones without sufficient cause other than his being the organizer and adviser of the complaining -Ernesto Tan was not even invited to the meeting. He
union. It however appears from the very testimony of Martin Briones that he is not the only one who also made those notations on his own account and
organized the complaining union but together with Galicano Apiz, Pablo Cabreros and Juan Morales, initiative
with the particularity that, as Briones himself had intimated, Apiz, Cabreros and Morales were more
active than himself in organizing the union so much so that they were appointed officers of that 3. NO
union. And yet, Apiz, Cabreros and Morales were never touched and continued to be employed in
-It appears from Martin Briones himself that he is not
respondents' restaurant. For this reason, the court a quo discredited the claim that Briones was
dismissed because of union activities but rather because of the threats he made on Mrs. Herrera, as the only one who organized the complaining union but
communicated to her by her sister Aureata. The following is the finding made by the court a quo on together with other employees who were more active
this point: "If it is the union activities of complainant's members that Mrs. Herrera did not like, Apiz, than himself. Yet, these employees were never
Cabreros and Morales should have been dismissed by her also, because said persons were more touched and continued to be employed in respondent's
active than Briones in the organization of the union. Verily, it was not the union activities of Martin resturant.
Briones that prompted Mrs. Herrera to dismiss him, but her fear for the safety of her life on account -If it was indeed due to union activities, then the more
of the smouldering members of hatred that the former had against the latter, the said persons being
always together in her car driven by Briones, during business routine." This finding finds support in
active union members should have been dismissed
the evidence. earlier than Briones
On the strength of the foregoing considerations, we find no justification for disturbing the findings of
the court a quo which led to the dismissal of the complaint under consideration. 1äwph
ï1
.ñ
ët Disposition. WHEREFORE, the decision appealed
WHEREFORE, the decision appealed from is affirmed. No costs. from is affirmed. No costs.
Bengzon, C.J., Labrador, Concepcion, Reyes, J.B.L., Barrera, Paredes, Dizon, Regala and
Makalintal, JJ., concur.
Padilla, J., took no part.
Pasted from <http://www.lawphil.net/judjuris/juri1964/apr1964/gr_l-20044_1964.html>

PHILAM Mgt Co. Inc vs. Philam Employees Assn (1973)
1:11 AM
G.R. No. L-35254 May 25, 1973

THE PHILIPPINE AMERICAN MANAGEMENT COMPANY, INC., and PHILIPPINE AMERICAN
LIFE INSURANCE COMPANY, petitioners,
vs.
THE PHILIPPINE AMERICAN MANAGEMENT EMPLOYEES ASSOCIATION (PAMEA-FFW)
COURT OF INDUSTRIAL RELATIONS, respondents.
Cacnio & Pablo Law Office for petitioners.
F. F. Bonifacio, Jr. for respondent The Philippine American Management Employees Association
(PAMEA-FFW).
RESO L U TI O N
FERNANDO, J.:
In our decision promulgated last January, 1 we ruled that where a labor dispute concerning a
minimum wage question results in a strike, the Secretary of Labor in the events his effort at
conciliation fails, may endorse the matter to the Court of Industrial Relations, which under its arbitral
power could issue a return-to-work order pending the final outcome of the controversy before it.
Petitioner would pursue the matter further in a motion for reconsideration filed with us on March 1,
1973, supplemented by a rejoinder filed on April 18, 1973 to the comments previously submitted be
respondent Labor Union on their motion for reconsideration. Even a cursory glance at such
pleadings yield the impression, not that it is unexpected, that they have less than full sympathy for
Laski's observation that in the interpretation of an enactment providing for a statutory minimum as to
wages, the judiciary is called upon to display solicitate for the plight of those afflicted with the
tragedies of existence consequent upon the meager pittance that is their share, not infrequently
hardly enough to keep body and soul together, haunting them with the perpetual fear that the
morrow may bring. Nor is this the reason why their plea is not to be heeded. As will be subsequently
shown, their continued reliance on what for them is the basic foundation of the Industrial Peace
Act, 2 which is to leave the parties to settle as between themselves conditions of labor and their
attempt to erode the doctrine of an act of a department head being attributed to the President, do not
help their cause at all. Our decision stands.
1. There is, to be sure, no inherent objection to parties exhibiting the trait of persistence. It was not
surprising then that in both motion for reconsideration and the rejoinder, there was reference anew
to the view that to allow respondent to issue a return-to-work order would be at war with the basic
philosophy of the Industrial Peace Act, with its retreat the institution of compulsory arbitration and its
adoption regime of free bargaining. This is how such an argument disposed of in our decision:
"Neither does it avail petitioner argue that the basic question as to the jurisdiction respondent Court
to issue a return-to-work order is to be answered in the negative, in view of the alleged repugnancy
between the basic philosophy underlying the Industrial Peace Act, in the main hostile to the concept
of compulsory arbitration, and the Court of Industrial Relations Act. Such a contention, while
possessing a semblance of plausibility cannot prevail against a strict analysis. There is no need to
repeat that the Industrial Peace Act explicitly continues jurisdiction of respondent Court with
reference to a minimum wage controversy endorsed to it by the Secretary of Labor. The power to be
exercised is necessarily one of compulsory arbitration. Should it be emasculated just because there
is explicit conferment of the authority which it did possess under the act of its creation, still in full
force and effect at the time the enactment of the Minimum Wage Law? For petitioners to take that
stand is in effect to advance the view that there is an implied repeal. A recent decision, Villegas v.
Subido, cautions against such an approach. ... Moreover, there is a failure on the part of petitioners
to accord the most careful appraisal of what is implicit in a regime of collective bargaining, the basic
postulate of the present Industrial Peace Act. It thus enshrines industrial democracy in the sense
that the parties, through the collective contract, could determine the rules that regulate labor-
management relations. Even then, there is an area placed beyond the sphere of bargaining between
the parties. Included therein is the question of minimum wages. It is understandable why it should be
so. For legislation of that character proceeds on the premise that there is a floor below which the
amount paid labor should not fall. That is to assure decent living conditions. Such an enactment is
compulsory in nature; not even the consent of the employees themselves suffices to defeat its
operation. More plainly put, the question of minimum wage is not negotiable. What the law decrees
must be obeyed. It is as simple as that. That is why it is obvious that petitioners cannot successfully
invoke the principles associated with the institution of collective bargaining. Nor is this all. The

invoke the principles associated with the institution of collective bargaining. Nor is this all. The
approach followed by petitioners ignores a relevant provision of the Industrial Peace Act. ... With
such an express recognition of the continuance of the role of respondent Court insofar as minimum
wage is concerned, the argument that the crucial issue in this case, namely whether it is within the
jurisdiction of respondent Court to issue a return-to-work order, deserves an answer in the negative,
falls flat."3
There is to be sure no thought of deviating from the basic concept that the area of free play of
bargaining between management and labor is not to be constricted. What cannot be denied,
however, is that neither party in this particular case is at liberty to agree to an amount lower than that
the law requires as to the wages to be paid. To that extent, there is no room for offer and counter
offer. The employer has an obligation to meet. His duty is plain. He must pay what he has to.
Petitioners, with an obduracy worthy of a better cause, would argue that the Industrial Peace Act
which manifests adherence to the principle of contracts freely arrived at, stands in the way of the
respondent Court having the power to issue return-to-work order. Such is not the case. What do they
have to accomplish? Has not the amount as to the bottom scale of payment been legislatively
determined? What good then their reiteration of fealty to the regime of collective bargaining? Nor is
this to set at naught what is implied industrial democracy. A more intense effort at a serious inquiry
into the background and doctrines of American federal labor law, to which the ancestry of the
Industrial Peace could be traced, could have resulted in the realization that even in the United
States, there is room for direct state action excluding participation by management and labor with
giving rise to any question that thereby the integrity of collective bargaining process has been
impaired. 4
2. The second principal ground of the motion reconsideration, as noted, is premised on an attempt
distinction between the act of the Secretary of Labor result from a statute and the exercise of
authority as a subordinate the President. It is much too late in the day to dislodge from the structure
of the law a doctrine so firmly embedded as that attributing to the Executive the authorship of what is
officially by a cabinet member. In our decision, it was noted that an allegation in their very petition
did show that on January 6, 1972, the Secretary of Labor, pursuant to the Minimum Wage Law,
endorsed the controversy to respondent Court. Then came this portion: "What was done by him, as
a department head, in the regular course of business and conformably to a statutory provision is,
according to settled jurisprudence that dates back to an authoritative pronouncement by Justice
Laurel in 1939, inVillena v. Secretary of Interior, presumptively the act of the President, who is the
only dignitary who could, paraphrasing the language of the decisions, disapprove or reprobate
it" 5 With such a premise, the legal consequence was that respondent Court as an arbitral agency,
could make full use of its powers under the law of its creation 6 whenever a case has been sent to it
by the Executive. This is not to deny that even at the time of the enunciation of such a principle, it did
not elicit approval from certain elements. Justice Laurel anticipated in his epochal opinion such a
reaction. Thus: "Fear is expressed. ... that the acceptance of the principle of qualified political
agency in this and similar cases would result in the assumption of responsibility by the President of
the Philippines for acts of any member of his cabinet, however illegal, irregular, or improper may be
theses acts. ... Fear, however, is no valid argument against the system once adopted, established
and operated. Familiarity with the essential background of the type of Government established under
our constitution, in the light of certain well-known principles and practices that go with the system,
should offer the necessary explanation." 7 Not content with the above, this distinguished jurist
emphasized: "With reference to the Executive Department of the government, there is one purpose
which is crystal-clear and is readily visible without the projection of judicial searchlight, and that is,
the establishment of a single, not plural, Executive. The first section of Article VII of the Constitution,
dealing with the Executive Department, begins with the enunciation of the principle that 'The
executive power shall be vested in a President of the Philippines.' This means that the President of
the Philippines is the Executive of the Government of the Philippines, no other. The heads of the
executive departments occupy political positions and hold office in an advisory capacity and in the
language of Thomas Jefferson, 'should be of the bosom confidence' ... 'are, in the language of
Attorney-General Cushing ... are subject to the direction of the President.' Without minimizing the
importance of the heads of the various departments, their personality is in reality but the projection of
that of the President. Stated otherwise, and as forcibly characterized by Chief Justice Taft of the
Supreme Court of the United States, 'each head of a department is, and must be, the President's
alter ego in the matters of that department where President is required by law to exercise
authority.' ... Secretaries of departments, of course, exercise certain powers under the law but the
law cannot impair or in any way affect the constitutional power of control and direction of the
President. As a matter of executive policy, they may be granted departmental autonomy as to certain
matters but is by mere concession of the executive, in the absence of legislation in the particular

matters but is by mere concession of the executive, in the absence of legislation in the particular
field. If the President, then, is authority in the Executive Department, he assumes the corresponding
responsibility. The head of a department is a man of his confidence; he controls and directs his acts;
appoints him and can remove him at pleasure; he is executive, not any of his secretaries. It is
therefore logical that he, the President, should be answerable for the acts administration of the entire
Executive Department before own conscience no less than before that undefined power public
opinion which, in the language of Daniel Webster, is last repository of popular government. These
are the necessary corollaries of the American presidential type of government and if there is any
defect, it is attributable to the system itself. We cannot modify the system unless we modify
Constitution, and we cannot modify the Constitution by any subtle process of judicial interpretation or
construction." 8
As late as the middle of July 1970, this Court had occasion stress anew the continued primacy of
what was held in Villena. Thus in Tecson v. Salas, 9 it was stated: "Insofar, however, the power of
control over all executive departments, bureaus offices is concerned, the Villena ruling applies with
undiminished force. As a matter of fact, the present Chief Justice, in a decision rendered more than
a year later after Hebron v. Reyes, People v. Jolliffe, quoted extensively from the Villena ruling to
stress what Justice Laurel referred to as the 'qualified political agency' concept resulting in the
'assumption of responsibility by the President of the Philippines for acts of any member of his
cabinet.' No doubt can be entertained then as to the continuing vitality of the Villena doctrine
concerning the plenitude of authority lodged in the President implicit in the power of control
expressly granted him by the Constitution." 10
There is no denial, nor can it be denied, that if in legal contemplation, it was the Executive who did
endorse the matter to respondent Court, then no valid objection could be interposed to it exercising
to the full its arbitral powers. No one can question its issuance of a return-to-work order. That is why
petitioners would have us depart from the Villena ruling. It is an insuperable obstacle to their plea.
There is, as made plain, no reason for us to do so. There can be thus only one justifiable outcome to
their motion for reconsideration.
3. The other points raised do not really reach the merits of the controversy. A junior counsel, who
undoubtedly aided the more senior members of the two distinguished law firms appearing for
petitioners in preparing the relevant pleadings, is well-advised not to clutter up the record with
random observations of a former occupant of a seat in respondent Court, uttered at the spur of the
moment in a lecture, without the benefit of hearing arguments on a many-sided legal question.
Moreover, since, to paraphrase Cardozo, the function of a court is "to give the rule or sentence, it is
inappropriate to engage in intellectual jousts with members of the bar learned in the craft even if,
doubtless, it could be mentally stimulating. Or, in the matter-of-fact language of Justice Malcolm. "a
court cannot permit itself to enter into a joint debate with counsel for the losing side who is naturally
superficial," otherwise it could even result in allowing litigation "so stretch out to infinity." 11 That we
should not allow to happen — especially so in a labor case with its gross disparity as to the staying
power of contending parties.
WHEREFORE, the motion for reconsideration filed petitioners is denied.
Makalintal, Zaldivar, Castro, Teehankee, Barredo, Makasiar, Antonio and Esguerra, JJ., concur.
Footnotes
1 Philippine American Management Co., Inc. v. Philippine American Employees Asso., L-35254,
January 29, 1973, 49 SCRA 194.
2 Republic Act No. 875 (1953).
3 49 SCRA 194, 206-208.
4 Cf. Soule, An Economic Constitution for Democracy, 28-64 (1939); Buforn on the Wagner Act,
106 — 124 (1941); Gregory, Labor and the Law, 223-252 (1946); Slitcher, The Challenge of
Industrial Relations, 53 (1949); Millis and Brown From the Wagner Act to Taft Hartley Act, 30-128
(1949); Riensfeld and Maxwell, Modern Social Legislation 585-679 (1950); Chamberlain, Collective
Bargaining, 1-47 (1951); Falcone Labor Law, 31-129 (1962); Summers and Wellington, Labor Law,
140-278 (1968); Cox and Bok, Labor Law, 946-976 (1969).
5 49 SCRA 194, 205. Villena is reported in 67 Phil. 451.
6 Com. Act No. 103 (1936).
7 67 Phil. 451, 464.
8 Ibid, 464-465.
9 L-27524, July 31, 1970, 34 SCRA 275.
10 Ibid, 283-284.
11 United States v. Aztigarraga. 36 Phil., 886, 891 (1917).


KIOK LOY VS NLRC (PAMBANSANG KILUSAN NG PAGGAWA)
12:10 AM
KIOK LOY VS NLRC (PAMBANSANG KILUSAN NG PAGGAWA)

141 SCRA 179
FACTS
CUEVAS: January 22, 1986 - Pambansang Kilusan ng Paggaw a (Kilusan),
a legitimate labor federation, w on cert election
NATURE: Petition for certiorari to annul the decision of the National Labor Relations Commission and w as certified by the BLR as the sole and
exclusive bargaining agent of the rank-and-file
FACTS: employees of Sw eden Ice Cream Plant
- In a certification election held on October 3, 1978, the Pambansang Kilusang Paggaw a (Union for short) w as subsequently (Company).
certified in a resolution dated November 29, 1978 by the Bureau of Labor Relations as the sole and exclusive bargaining
agent of the rank-and-file employees of Sw eden Ice Cream Plant (Company for short). The Company's motion for - Kilusan then gave the Company tw o copies of
reconsideration of the said resolution w as denied on January 25, 1978. its proposed CBA. It requested the Company
- December 7, 1978, the Union furnished the Company w ith tw o copies of its proposed collective bargaining agreement. It for its counter proposals. There w as no
also requested the Company for its counter proposals. Both requests w ere ignored and remained unacted upon by the response from Company. Kilusan again
Company. requested the Company for collective
- The Union, on February 14, 1979, filed a "Notice of Strike", w ith the Bureau of Labor Relations (BLR) on ground of bargaining negotiations and for the Company to
unresolved economic issues in collective bargaining. furnish them w ith its counter proposals. Both
- Conciliation proceedings then follow ed during the thirty -day statutory cooling-off period. requests w ere ignored and remained unacted
- The Bureau of Labor Relations to certify the case to the National Labor Relations Commission for compulsory arbitration. upon by the Company.
- The labor arbiter set the initial hearing for April 29, 1979. For failure how ever, of the parties to submit their respective
position papers as required, the said hearing w as cancelled and reset to another date. -Kilusan on Feb 14, 1979, filed a "Notice of
- The Union submitted its position paper. Strike", w ith the BLR on ground of unresolved
economic issues in collective bargaining.
- On July 20, 1979, the National Labor Relations Commission rendered its decision declaring the respondent guilty of
unjustified refusal to bargain -Conciliation proceedings follow ed but all
- Petitioner contends that the National Labor Relations Commission acted w ithout or in excess of its jurisdiction or w ith grave attempts tow ards an amicable settlement failed.
abuse of discretion amounting to lack of jurisdiction in rendering the challenged decision. BLR certified the case to the NLRC for
- Petitioner further contends that the National Labor Relations Commission's finding of unfair labor practice for refusal to compulsory arbitration. The case w as
bargain is not supported by law reset/postponed several times (mostly
Company’s “request”).
ISSUE/S:
-Then in the scheduled hearing on June 4,
- WON the respondent is guilty of unjustified refusal to bargain 1979, the Company's representative, Mr.
Ching, w ho w as supposed to be examined,
HELD: failed to appear. The Company’s counsel
YES requested for another postponement. The labor
unfair labor practice is committed w hen it is show n that the respondent employer, after having been served w ith a w ritten bar gaining arbiter denied. He ruled that the Company has
proposal by the petitioning Union, did not even bother to submit an answ er or reply to the said proposal w aived its right to present further evidence and,
Ratio therefore, considered the case submitted for
Unfair labor practice is committed w hen it is show n that the respondent employer, after having been served w ith a w ritten bar gaining resolution.
proposal by the petitioning Union, did not even bother to submit an answ er or reply to the said proposal
Reaspmomg - NLRC held: Sw eden Ice Cream guilty of
Collective bargaining w hich is defined as negotiations tow ards a collective agreement, is one of the democratic framew orks un der unjustified refusal to bargain. The draft
the New Labor Code, designed to stabilize the relation betw een labor and management and to create a climate of sound and stab le proposal for a CBA w as found to be reasonable
industrial peace. It is a mutual responsibility of the employer and the Union and is characterized as a legal obligation. So much so under the premises, and declared to be the
that Article 249, par. (g) of the Labor Code makes it an unfair labor practice for an employer to refuse "to meet and convene collective agreement w /c should govern the
promptly and expeditiously in good faith for the purpose of negotiating an agreement w ith respect to w ages, hours of work, an d all relationship betw een the parties.
other terms and conditions of employment including proposals for adjusting any grievance or question arising under such an
agreement and executing a contract incorporating such agreement, if requested by either party. -Petitioner: …its right to procedural due
While it is a mutual obligation of the parties to bargain, the employer, how ever, is not under any legal duty to initiate con tract process has been violated w hen it w as
negotiation. The mechanics of collective bargaining is set in motion only w hen the follow ing jurisdictional preconditions are present, precluded from presenting further evidence in
namely, (1) possession of the status of majority representation of the employees' representative in accordance w ith any of th e support of its stand and w hen its request for
means of selection or designation provided for by the Labor Code; (2) proof of majority representation; and (3) a demand to b argain further postponement w as denied.
under Article 251, par. (a) of the New Labor Code . …that the NLRC’s finding of unfair labor
- From the over-all conduct of petitioner company in relation to the task of negotiation, there can be no doubt that the Union has a practice for refusal to bargain is not supported
valid cause to complain against its (Company's) attitude, the totality of w hich is indicative of the latter's disregard of, a nd failure to by law and the evidence considering that it w as
live up to, w hat is enjoined by the Labor Code to bargain in good faith. only on May 24. 1979 w hen the Union
furnished them w ith a copy of the proposed
DISPOSITION: Petition dismissed CBA and it w as only then that they came to
know of the Union's demands; … that CBA
approved and adopted by the NLRC is
G.R. No. L-54334 January 22, 1986 unreasonable and lacks legal basis.
KIOK LOY, doing business under the name and style SWEDEN ICE CREAM PLANT, petitioner,
vs. ISSUE/S
NATIONAL LABOR RELATIONS COMMISSION (NLRC) and PAMBANSANG KILUSAN NG 1) WON company’s right to due process
PAGGAWA (KILUSAN), respondents. has been violated
Ablan and Associates for petitioner. 2) WON company is guilty of ULP
Abdulcadir T. Ibrahim for private respondent. 3) WON CBA is reasonable
HELD
CUEVAS, J.: 1) NO
Petition for certiorari to annul the decision 1 of the National Labor Relations Commission (NLRC) dated -Considering the various postponements
July 20, 1979 which found petitioner Sweden Ice Cream guilty of unfair labor practice for unjustified granted in its behalf, the claimed denial of due
refusal to bargain, in violation of par. (g) of Article 249 2 of the New Labor Code, 3 and declared the draft process appeared totally bereft of any legal and
factual support. As herein earlier stated,
proposal of the Union for a collective bargaining agreement as the governing collective bargaining petitioner had not even honored respondent
agreement between the employees and the management. union w ith any reply to the latter's successive
The pertinent background facts are as follows: letters, all geared tow ards bringing the
Company to the bargaining table.. Certainly,
In a certification election held on October 3, 1978, the Pambansang Kilusang Paggawa (Union for the moves and overall behavior of company
short), a legitimate late labor federation, won and was subsequently certified in a resolution dated w ere in total derogation of the policy enshrined
November 29, 1978 by the Bureau of Labor Relations as the sole and exclusive bargaining agent of in the Labor Code w hich is aimed tow ards
expediting settlement of economic disputes.
the rank-and-file employees of Sweden Ice Cream Plant (Company for short). The Company's Hence, the Court is not prepared to affix its
motion for reconsideration of the said resolution was denied on January 25, 1978. imprimatur to such an illegal scheme and
dubious maneuvers.
Thereafter, and more specifically on December 7, 1978, the Union furnished 4 the Company with two
2) YES
copies of its proposed collective bargaining agreement. At the same time, it requested the Company for
its counter proposals. Eliciting no response to the aforesaid request, the Union again wrote the Company - Article 249, par. (g) LC makes it an unfair
reiterating its request for collective bargaining negotiations and for the Company to furnish them with its labor practice for an employer to refuse "to
counter proposals. Both requests were ignored and remained unacted upon by the Company. meet and convene promptly and expeditiously
in good faith for the purpose of negotiating an
Left with no other alternative in its attempt to bring the Company to the bargaining table, the Union, on agreement w ith respect to w ages, hours of
February 14, 1979, filed a "Notice of Strike", with the Bureau of Labor Relations (BLR) on ground of w ork, and all other terms and conditions of
unresolved economic issues in collective bargaining. 5 employment including proposals for adjusting
any grievance or question arising under such
an agreement and executing a contract
Conciliation proceedings then followed during the thirty-day statutory cooling-off period. But all incorporating such agreement, if requested by
attempts towards an amicable settlement failed, prompting the Bureau of Labor Relations to certify either party."
the case to the National Labor Relations Commission (NLRC) for compulsory arbitration pursuant to
Presidential Decree No. 823, as amended. The labor arbiter, Andres Fidelino, to whom the case was -Collective bargaining w hich is defined as
negotiations tow ards a collective agreement, is

negotiations tow ards a collective agreement, is
assigned, set the initial hearing for April 29, 1979. For failure however, of the parties to submit their designed to stabilize the relation betw een labor
respective position papers as required, the said hearing was cancelled and reset to another date. and management and to create a climate of
Meanwhile, the Union submitted its position paper. The Company did not, and instead requested for sound and stable industrial peace. It is a mutual
responsibility of the employer and the Union
a resetting which was granted. The Company was directed anew to submit its financial statements and is characterized as a legal obligation.
for the years 1976, 1977, and 1978.
- While it is a mutual obligation of the parties to
bargain, the employer, how ever, is not under
The case was further reset to May 11, 1979 due to the withdrawal of the Company's counsel of any legal duty to initiate contract negotiation.
record, Atty. Rodolfo dela Cruz. On May 24, 1978, Atty. Fortunato Panganiban formally entered his
appearance as counsel for the Company only to request for another postponement allegedly for the -The mechanics of collective bargaining is set
in motion only w hen the ff. jurisdictional
purpose of acquainting himself with the case. Meanwhile, the Company submitted its position paper preconditions are present, namely, (1)
on May 28, 1979. possession of the status of majority
representation of the employees' representative
in accordance w ith any of the means of
When the case was called for hearing on June 4, 1979 as scheduled, the Company's representative, selection or designation provided for by the LC;
Mr. Ching, who was supposed to be examined, failed to appear. Atty. Panganiban then requested for (2) proof of majority representation; and (3) a
another postponement which the labor arbiter denied. He also ruled that the Company has waived demand to bargain under Art 251, par. (a) of
its right to present further evidence and, therefore, considered the case submitted for resolution. the Labor Code . . . all of w hich preconditions
are undisputedly present in the instant case.
On July 18, 1979, labor arbiter Andres Fidelino submitted its report to the National Labor Relations
Commission. On July 20, 1979, the National Labor Relations Commission rendered its decision, the -From the over-all conduct of petitioner
dispositive portion of which reads as follows: company, Kilusan has a valid cause to
complain against Company's attitude, the
totality of w hich is indicative of the latter's
WHEREFORE, the respondent Sweden Ice Cream is hereby declared guilty of unjustified refusal to disregard of, and failure to live up to, w hat is
bargain, in violation of Section (g) Article 248 (now Article 249), of P.D. 442, as amended. Further, enjoined by the Labor Code ---- to bargain in
the draft proposal for a collective bargaining agreement (Exh. "E ") hereto attached and made an good faith.
integral part of this decision, sent by the Union (Private respondent) to the respondent (petitioner -Company is GUILTY of unfair labor practice.
herein) and which is hereby found to be reasonable under the premises, is hereby declared to be the (1) respondent Union w as a duly certified
collective agreement which should govern the relationship between the parties herein. bargaining agent; (2) it made a definite request
SO ORDERED. (Emphasis supplied) to bargain, accompanied w ith a copy of the
proposed CBA, to the Company not only once
but tw ice w hich were left unanswered and
Petitioner now comes before Us assailing the aforesaid decision contending that the National Labor unacted upon; and (3) the Company made no
Relations Commission acted without or in excess of its jurisdiction or with grave abuse of discretion counter proposal w hatsoever all of w hich
conclusively indicate lack of a sincere desire to
amounting to lack of jurisdiction in rendering the challenged decision. On August 4, 1980, this Court negotiate. Even during the period of
dismissed the petition for lack of merit. Upon motion of the petitioner, however, the Resolution of compulsory arbitration before the NLRC,
dismissal was reconsidered and the petition was given due course in a Resolution dated April 1, Company's stalled the negotiation by a series
of postponements, non-appearance at the
1981. hearing conducted
Petitioner Company now maintains that its right to procedural due process has been violated when it
was precluded from presenting further evidence in support of its stand and when its request for -Herald Delivery Carriers Union (PAFLU) vs.
further postponement was denied. Petitioner further contends that the National Labor Relations Herald Publications: "unfair labor practice is
committed w hen it is show n that the respondent
Commission's finding of unfair labor practice for refusal to bargain is not supported by law and the employer, after having been served w ith a
evidence considering that it was only on May 24, 1979 when the Union furnished them with a copy of w ritten bargaining proposal by the petitioning
Union, did not even bother to submit an answ er
the proposed Collective Bargaining Agreement and it was only then that they came to know of the or reply to the said proposal. This doctrine w as
Union's demands; and finally, that the Collective Bargaining Agreement approved and adopted by reiterated in Bradman vs. CIR: "w hile the law
the National Labor Relations Commission is unreasonable and lacks legal basis. does not compel the parties to reach an
The petition lacks merit. Consequently, its dismissal is in order. agreement, it does contemplate that both
parties w ill approach the negotiation w ith an
Collective bargaining which is defined as negotiations towards a collective agreement, 6 is one of the open mind and make a reasonable effort to
democratic frameworks under the New Labor Code, designed to stabilize the relation between labor and reach a common ground of agreement".
management and to create a climate of sound and stable industrial peace. It is a mutual responsibility of
the employer and the Union and is characterized as a legal obligation. So much so that Article 249, par. 3) YES
(g) of the Labor Code makes it an unfair labor practice for an employer to refuse "to meet and convene - The instant case being a certified one, it must
promptly and expeditiously in good faith for the purpose of negotiating an agreement with respect to be resolved by the NLRC pursuant to the
wages, hours of work, and all other terms and conditions of employment including proposals for adjusting mandate of P.D. 873, as amended, w hich
any grievance or question arising under such an agreement and executing a contract incorporating such authorizes the said body to determine the
reasonableness of the terms and conditions of
agreement, if requested by either party. employment embodied in any CBA. To that
While it is a mutual obligation of the parties to bargain, the employer, however, is not under any legal duty extent, utmost deference to its findings of
to initiate contract negotiation. 7 The mechanics of collective bargaining is set in motion only when the reasonableness of any Collective Bargaining
following jurisdictional preconditions are present, namely, (1) possession of the status of majority Agreement as the governing agreement by the
employees and management must be accorded
representation of the employees' representative in accordance with any of the means of selection or due respect by this Court.
designation provided for by the Labor Code; (2) proof of majority representation; and (3) a demand to
bargain under Article 251, par. (a) of the New Labor Code . ... all of which preconditions are undisputedly
present in the instant case. Disposition Petition dismissed.
From the over-all conduct of petitioner company in relation to the task of negotiation, there can be no
doubt that the Union has a valid cause to complain against its (Company's) attitude, the totality of
which is indicative of the latter's disregard of, and failure to live up to, what is enjoined by the Labor
Code — to bargain in good faith.
We are in total conformity with respondent NLRC's pronouncement that petitioner Company is GUILTY of
unfair labor practice. It has been indubitably established that (1) respondent Union was a duly certified
bargaining agent; (2) it made a definite request to bargain, accompanied with a copy of the proposed
Collective Bargaining Agreement, to the Company not only once but twice which were left unanswered
and unacted upon; and (3) the Company made no counter proposal whatsoever all of which conclusively
indicate lack of a sincere desire to negotiate. 8 A Company's refusal to make counter proposal if
considered in relation to the entire bargaining process, may indicate bad faith and this is specially true
where the Union's request for a counter proposal is left unanswered. 9 Even during the period of
compulsory arbitration before the NLRC, petitioner Company's approach and attitude-stalling the
negotiation by a series of postponements, non-appearance at the hearing conducted, and undue delay in
submitting its financial statements, lead to no other conclusion except that it is unwilling to negotiate and
reach an agreement with the Union. Petitioner has not at any instance, evinced good faith or willingness
to discuss freely and fully the claims and demands set forth by the Union much less justify its opposition
thereto. 10
The case at bar is not a case of first impression, for in the Herald Delivery Carriers Union (PAFLU) vs.
Herald Publications 11the rule had been laid down that "unfair labor practice is committed when it is shown
that the respondent employer, after having been served with a written bargaining proposal by the
petitioning Union, did not even bother to submit an answer or reply to the said proposal This doctrine was
reiterated anew in Bradman vs. Court of Industrial Relations 12 wherein it was further ruled that "while the
law does not compel the parties to reach an agreement, it does contemplate that both parties will
approach the negotiation with an open mind and make a reasonable effort to reach a common ground of
agreement
As a last-ditch attempt to effect a reversal of the decision sought to be reviewed, petitioner
capitalizes on the issue of due process claiming, that it was denied the right to be heard and present

its side when the Labor Arbiter denied the Company's motion for further postponement.
Petitioner's aforesaid submittal failed to impress Us. Considering the various postponements granted
in its behalf, the claimed denial of due process appeared totally bereft of any legal and factual
support. As herein earlier stated, petitioner had not even honored respondent Union with any reply to
the latter's successive letters, all geared towards bringing the Company to the bargaining table. It did
not even bother to furnish or serve the Union with its counter proposal despite persistent requests
made therefor. Certainly, the moves and overall behavior of petitioner -company were in total
derogation of the policy enshrined in the New Labor Code which is aimed towards expediting
settlement of economic disputes. Hence, this Court is not prepared to affix its imprimatur to such an
illegal scheme and dubious maneuvers.
Neither are WE persuaded by petitioner-company's stand that the Collective Bargaining Agreement
which was approved and adopted by the NLRC is a total nullity for it lacks the company's consent,
much less its argument that once the Collective Bargaining Agreement is implemented, the
Company will face the prospect of closing down because it has to pay a staggering amount of
economic benefits to the Union that will equal if not exceed its capital. Such a stand and the
evidence in support thereof should have been presented before the Labor Arbiter which is the proper
forum for the purpose.
We agree with the pronouncement that it is not obligatory upon either side of a labor controversy to
precipitately accept or agree to the proposals of the other. But an erring party should not be tolerated and
allowed with impunity to resort to schemes feigning negotiations by going through empty gestures. 13 More
so, as in the instant case, where the intervention of the National Labor Relations Commission was
properly sought for after conciliation efforts undertaken by the BLR failed. The instant case being a
certified one, it must be resolved by the NLRC pursuant to the mandate of P.D. 873, as amended, which
authorizes the said body to determine the reasonableness of the terms and conditions of employment
embodied in any Collective Bargaining Agreement. To that extent, utmost deference to its findings of
reasonableness of any Collective Bargaining Agreement as the governing agreement by the employees
and management must be accorded due respect by this Court.
WHEREFORE, the instant petition is DISMISSED. The temporary restraining order issued on August
27, 1980, is LIFTED and SET ASIDE.
No pronouncement as to costs.
SO ORDERED.
Concepcion, Jr., (Chairman), Abad Santos, Escolin and Alampay, JJ., concur.
Footnotes
1 Pages 23-26, Rollo.
2 Previously Article 248 renumbered as Article 249 by Batas Pambansa Blg. 70, May 1, 1980.
3 P.D. 442, as amended.
4 Thru a letter attached thereto to BLR Resolution.
5 BLR-S-2-692-79.
6 Pampanga Bus Co. vs. Pambusco Employees, 68 Phil. 541.
7 National Labor Relations Board vs. Columbian Enameling & Stamping Co., 306 U.S. 292 '83 L. Ed.
660,59 Ct 501 (1939).
8 National Labor Relations Board vs. George Piling & Sons Co., 119 F. (2nd) 32.
9 Teller, II Labor Disputes & Collective Bargaining 889, citing Glove Cotton Mills vs. NLRB 103 F.
(2nd) 91.
10 Herald Delivery Carriers Union (PAFLU) vs. Herald Publications, Inc., 55 SCRA 713 (1974), citing
NLRB vs. Piling & Sons, Co., 119 F. (2nd) 32 (1941).
11 55 SCRA 713 (1974).
12 78 SCRA 10 (1977), citing Prof. Archibald Cox, "The Duty to Bargain in Good Faith", 71 Harv.
Law Rev. 1401, 1405 (1934).
13 Rothenberg on Labor Relations, p. 435m citing NLRB vs. Boss Mfg. Co., 107 F. (2nd) 574; NLRB
vs. Sunshine Mining Co., 110 F (2nd) 780; NLRB vs. Condenser Corp., 128 F. (2nd) 67.

Divine Word University vs. SOLE (1992)
1:11 AM
SUPREME COURT
THIRD DIVISION
DIVINE WORD UNIVERSITY OF TACLOBAN,
Petitioner,
-versus- G.R. No. 91915
September 11, 1992
SECRETARY OF LABOR AND EMPLOYMENT and DIVINE WORD UNIVERSITY EMPLOYEES UNION-ALU,
Respondents.
x---------------------------------------------------x
DE C I S I O N
ROMERO, J.:
Assailed in this Petition for Certiorari for being violative of the “constitutional right of employees to self-
organization which includes the right to form, join or assist labor organizations of their own choosing for
purposes of collective bargaining,”*1+ are the Orders of May 23, 1989 and January 17, 1990 issued by
then Secretary of Labor and Employment Franklin H. Drilon and Acting Secretary of Labor and
Employment Dionisio D. de la Serna, respectively.
Culled from the records are the following facts which led to the filing of the instant petition:
On September 6, 1984, Med-Arbiter Bienvenido C. Elorcha certified the Divine Word University
Employees Union (DWUEU) as the sole and exclusive bargaining agent of the Divine Word University
(University for brevity). On March 7, 1985, DWUEU submitted its collective bargaining proposals. On
March 26, 1985, the University replied and requested a preliminary conference to be held on May 28,
1985. However, two days before the scheduled conference or on May 26, 1985, DWUEU’s resigned vice-
president Mr. Brigido Urminita (or Urmeneta) wrote a letter addressed to the University unilaterally
withdrawing the CBA proposals. Consequently, the preliminary conference was cancelled.[2]
After almost three years, or on March 11, 1988, DWUEU, which had by then affiliated with the
Associated Labor Union,[3] requested a conference with the University for the purpose of continuing the
collective bargaining negotiations.[4] Not having heard from the University, DWUEU-ALU sent a follow-
up letter on March 23, 1988 reiterating its request for a conference and warning the University against
committing acts of interference through its various meetings with both the academic and non-academic
employees regarding their union affiliation and activities. Despite the letter, the University persisted in
maintaining silence.
On April 25, 1988, DWUEU-ALU filed with the National Conciliation and Mediation Board of the
Department of Labor and Employment a notice of strike on the grounds of bargaining deadlock and
unfair labor practice acts, specifically, refusal to bargain, discrimination and coercion on (sic)
employees.[5] The conferences which were held after the filing of the notice of strike led to the
conclusion of an agreement between the University and DWUEU-ALU on May 10, 1888 with the
following terms:
“1. Union will submit their (sic) CBA proposals on Friday, May 13, 1988 for whatever action management
will take.
2. Union and management agrees (sic) to sit down and determine (sic) the number of employees that
will represent their bargaining unit.
3. Conciliation proceedings is (sic) temporarily suspended until the parties inform this office of further
development.
4. The issues of discrimination: re Ms. Colinayo and Ms. Cinco Flores is settled.
5. Issue (sic) on coercion and refusal to bargain shall be subject of continuing dialogue.
6. Atty. Jacinto shall be given 10 days notice in the next conciliation meeting.”*6+
However, it turned out that an hour before the May 10, 1988 agreement was concluded, the University
had filed a petition for certification election with the Region VIII office of the Department of Labor and
Employment.[7]
On the other hand, on May 19, 1988, DWUEU-ALU, consonant with the agreement, submitted its
collective bargaining proposals. These were ignored by the University. Thereafter, through the National
Conciliation and Mediation Board (NCMB) of Region VIII, marathon conciliation conferences were
conducted but to no avail. Hence, on August 25, 1988, then Secretary of Labor Franklin M. Drilon,
exercising his powers under Art. 263(g) of the Labor Code, issued an Order assuming jurisdiction over
the labor dispute and directing all striking workers to report back to work within twenty-four (24) hours
and the management to accept them back under the same terms and conditions prevailing prior to the
work stoppage. The Secretary also designated the NCMB to hear the case and to submit its report
thereon.[8] chanroblespublishingcompany
On the same day, Med-Arbiter Rodolfo S. Milado, acting on the University’s petition for certification
election, issued an Order directing the conduct of a certification election to be participated in by
DWUEU-ALU and “no union,” after he found the petition to be “well-supported in fact and in law.”*9+
chanroblespublishingcompany
Said Order prompted the DWUEU-ALU to file with the Secretary of Labor an urgent motion seeking to
enjoin Milado from further acting on the matter of the certification election. On September 20, 1988,
the Labor Secretary granted said motion and directed Milado to hold in abeyance any and all
certification election proceedings at the University pending the resolution of the labor dispute.[10] The
Labor Secretary’s Order, predicated on his extraordinary powers under Art. 263 (g) of the Labor Code,
conformed with this Court s Resolution of October 29, 1987 in the Bulletin Today cases (G.R. Nos. 79276
and 79883) where the issue of strong disagreement among the parties on the question of
representation was deemed subsumed in the labor dispute certified for compulsory arbitration. The
Secretary added: chanroblespublishingcompany
“Underscoring the necessity to conform with this settled doctrine is the fact that the dispute over which
this Office assumed jurisdiction arose from the alleged continued refusal by the University to negotiate a
CBA with the Union despite the latter’s certification as exclusive bargaining agent in 1984. Necessarily
related thereto is the representativity issue raised by the University in its certification election petition.

The resolution of these issues in one proceeding is, in the words of the Supreme Court, ‘meet and
proper in view of the very special circumstances obtaining in this case, and will prevent split jurisdiction
and that multiplicity of proceedings which the law abhors’ (24 December 1987 *should be December 17,
1987] resolution of the Supreme Court in the Bulletin Today cases, supra).
Moreover, to allow a certification election to proceed at this point in time might further rupture the
already strained labor-management relations pervading at the University. The assumption order issued
by this Office merely served as a temporary bond to hold together such a fragile relationship. More
importantly, the projected election hastily decreed would preempt the proper resolution of the issues
raised and pursued so zealously by the employees that prompted them to stage their strike.”*11+
The NCMB of Region VIII conducted hearings on the case from October 17-18, 1988. On October 26,
1988, the Divine Word University Independent Faculty and Employees Union (DWUIFEU), which was
registered earlier that day, filed a motion for intervention alleging that it had “at least 20% of the rank
and file employees” of the University.*12+ chanroblespublishingcompany
Exercising once again his extraordinary powers under Art. 263(g) of the Labor Code, the Secretary
consolidated “the entire labor dispute including all incidents arising therefrom, or necessarily related
thereto” in his Order of May 23, 1989*13+ and the following cases were “subsumed or consolidated to
the labor dispute”: the petition for certification election docketed as MED-ARB-Case No. 5-04-88, the
DWUEU’s complaint docketed as NLRC Case No. 8-0321-88, and the University’s complaint docketed as
NLRC Case No. 8-0323-88. Thus, in said Order of May 23, 1989, the Secretary of Labor resolved these
issues: “(1) whether there was refusal to bargain and an impasse in bargaining; (2) whether the
complaints for unfair labor practices against each other filed by both parties, including the legality of the
strike with the NLRC, which later on was subsumed by the assumption Order, are with merits; and, (3)
whether or not the certification election can be passed upon by this Office.”
On the first issue, the Secretary of Labor said:
“It is a matter of record that when the Union filed its Notice of Strike (Exh. A) two of the issues it raised
were bargaining deadlock and refusal to bargain. It is also worth mentioning that the CBA proposals by
the Union were submitted on March 7, 1985 (Exh. 9) after Med-Arbiter Bienvenido Elorcha issued a
certification election Order dated September 6, 1984 (Exh. 4). An examination of the CBA proposals
submitted by the Union of the University showed there was (sic) some negotiations that has (sic) taken
place as indicated on the handwritten notations made in the CBA proposal (Exh. F). The said proposals
include among others, union scope, union recognition, union security, union rights, job security,
practices and privileges, terms and conditions of work, leave of absence, hours of work, compensation
salary and wages, workers’ rights and safety,
workers’ education, retirement longevity pay, strike and lockouts and grievance machinery.
“The said CBA proposals were indorsed by DWU President to Atty. Generosa R. Jacinto, Divine Word
University legal counsel together with a copy of the Union CBA proposals. The submission of the CBA
proposals and the reply letter of the DWU counsel, dated March 26, 1985 to the Union indicated that
the CBA negotiations process was set into motion. DWU’s counsel even suggested that the preliminary
conference between the union and the university be scheduled on 28 May 1985 at 2:30 P.M. which
unfortunately did not take place due to the alleged withdrawal of the CBA proposals.
“Undeniably, the Union and the DWU have not been able to conclude a CBA since its certification on 6
September 1984 by then Med-Arbiter Bienvenido Elorcha. But the non-conclusion of a CBA within one
year, as in this case, does not automatically authorize the holding of a certification election when it
appears that a bargaining deadlock issue has been submitted to conciliation by the certified bargaining
agent. The records show that the Notice of Strike was filed by the Union on 25 April 1988, citing
bargaining deadlock as one of the grounds (Annex ‘1’), while the Petition for Certification Election was
filed by the DWU on 10 May 1988. The filing of the notice of strike was precipitated by the University’s
act of not replying to the Union’s letters of March 11 and March 23, 1988.
“This being the case, Section 3, Rule V, Book V of the Rules Implementing the Labor Code applies and we
quote: chanroblespublishingcompany
‘Sec. 3. When to file. In the absence of a collective bargaining agreement submitted in accordance with
Article 231 of the Code, a petition for certification election may be filed at any time. However, no
certification election may be held within one year from the date of issuance of declaration of a final
certification election result. Neither may a representation question be entertained it (sic) before the
filing of a petition for certification election, a bargaining deadlock to which an
incumbent or certified bargaining agent is a party has been submitted to conciliation or arbitration or
had become the subject of a valid notice of strike or lockout.’
“Clearly, a bargaining deadlock exists and as a matter of fact this is being conciliated by the National
Conciliation and Mediation Board at the time the University filed its Petition for Certification Election on
10 May 1988. In fact the deadlock remained unresolved and was in fact mutually agreed upon to be
conciliated further by the NCMB as per items 1 and 5 of the ‘Agreement’ (Exhibit ‘L’).
“The aforequoted rule clearly barred the Med-Arbiter from further entertaining the petition for
certification election. Furthermore, the various communications sent to the University by the Union
prior to the filing of the notice of strike was enough opportunity for the former to raise the issue of
representation if it really casts doubt to the majority status of the Union. More importantly, if DWU
indeed doubted the status of the union, how come it entered into an agreement with the latter on May
10, 1988. Apparently, the move to file the petition on the same day was an afterthought on the part of
the University which this Office considers as fatal.”*14+ chanroblespublishingcompany
The same Order dismissed not only the case filed by DWUEU-ALU for unfair labor practice on the ground
of the union’s failure to prove the commission of the unfair labor practice acts specifically complained of
(NLRC Case No. 8-0321-88) but also the complaint filed by the University for unfair labor practices and
illegal strike for “obvious lack of merit brought about by its utter failure to submit evidence” (NLRC Case
No. 8-0323-88). chanroblespublishingcompany
Citing the Bulletin Today cases, the said Order pronounced as untenable the University s claim that the
assumption Order earlier issued by the Office of the Secretary of Labor merely held in abeyance the
holding of a certification election and that the representation issue was not deemed consolidated by
virtue of the said assumption Order. Accordingly, the Order has this dispositive portion:

“WHEREFORE, ALL THE FOREGOING PREMISES CONSIDERED, the Divine Word University of Tacloban and
the Divine Word University Employees Union are hereby directed to enter into a collective bargaining
agreement by adopting the Union’s CBA proposals sent to the DWU President on 19 May 1988 (Exhibit
‘6’). DWU is hereby warned that any unwarranted delay in the execution of the collective bargaining
agreement will be construed as an unfair labor practice act. Moreover, the petition for certification
election filed by the University is hereby dismissed for lack of merit and the Order of Med-Arbiter
Rodolfo Milado set aside. Likewise, NLRC CASES Nos. 8-0321-88 and 8-0323 filed by the Union and the
DWU, respectively, are hereby dismissed for lack of merit. chanroblespublishingcompany
SO ORDERED.”*15+
The University filed a motion for the reconsideration of said Order. It was opposed by the DWUEU-ALU.
However, since on May 5, 1989 the DWUEU-ALU had filed a second notice of strike charging the
University with violation of the return-to-work order of the Secretary of Labor and unfair labor practices
such as dismissal of union officers, coercion of employees and illegal suspension,[16] the Office of the
Secretary called for a series of conciliation and mediation conferences between the parties. At the July
5, 1989 conference, the University agreed to submit its proposals on how to settle amicably the labor
dispute on or before July 17, 1989.
On said date, however, the University failed to appear. Instead, its representative phoned in a request
for the resetting of the conference purportedly because its Board of Directors had failed to muster a
quorum. Hence, after so informing ALU’s Eastern Visayas Vice-President, the conference was
rescheduled for July 19, 1989. The University once again failed to appear. chanroblespublishingcompany
In view of the University’s intransigence, the DWUEU-ALU pursued its second notice of strike on
November 24, 1989. Four days later, the University filed with the Office of the Secretary of Labor a
motion praying that said Office assume jurisdiction over the dispute or certify the same to the NLRC for
compulsory arbitration on the ground that the strike affected not only the University but also its other
academic and non-academic employees, the students and their parents. On December 4, 1989, the
Office of the Secretary of Labor received a Resolution passed by the students of the University urging
said Office’s assumption of jurisdiction over the labor dispute and the earliest resolution of the case.
Consequently, on December 29, 1989, Secretary Drilon issued an Order reiterating the August 28, 1988
Order which assumed jurisdiction over the labor dispute. He ordered all striking workers to return to
work within 24 hours and the University to accept them back under the same terms and conditions of
employment; deemed the issues raised in the May 5, 1989 notice of strike as “subsumed in this case”;
ordered the Director of Regional Office No. VIII to hear the issues raised in said notice of strike and to
submit his findings and recommendations within ten days from submission of the case by the parties,
and enjoined the parties to cease and desist from any act that may “aggravate the employer-employee
relationship.” chanroblespublishingcompany
On January 17, 1990, Acting Secretary of Labor Dionisio L. de la Serna, “dismissed” for lack of merit the
University’s motion for reconsideration and affirmed the Order of May 23, 1989. He noted the fact that
the March 7, 1985 collective bargaining proposals of the DWUEU had not been validly withdrawn as the
union’s Vice-President had resigned and the withdrawal was signed only by three of the eight members
of the Executive Board of said union. Granting that the withdrawal was valid, the Acting Secretary
believed that it did not “exculpate the University from the duty to bargain with the Union” because the
collective bargaining processes had been “set in motion from the time the CBA proposals was (sic)
received by the University until the impasse took place on account of its failure to reply to the Union’s
letters pursuing its CBA Proposals dated March 11 and 23, 1988.”
On the University’s assertion that no negotiations took place insofar as the March 7, 1985 collective
bargaining proposals are concerned, the Acting Secretary found that: chanroblespublishingcompany
“The records indicate otherwise Conciliation meetings were conducted precisely to discuss the CBA
proposals the Union submitted to the University on March 7, 1985. As a matter of
fact, the University admitted the existence of the deadlock when a provision was incorporated in the
agreement it signed on May 10, 1988 with the Union which reads: chanroblespublishingcompany
‘a. That on the matter of Bargaining Deadlock —
1. Union will submit their (renewed) CBA proposals on Friday May 13, 1988 for whatever action
management will take. chanroblespublishingcompany
2. Union and Management agree to sit down and determine the number of employees that will
represent (constitute) their bargaining unit. chanroblespublishingcompany
x x x’
On account of the deadlock regarding the March 7, 1985 CBA proposals, it was agreed that the Union
submit a renewed CBA proposal which it did on May 19, 1988. The records indicate that no response
was made by the University. The uncooperative posture of the University to respond and continue with
the negotiations could very well be explained when one (1) hour prior to the start of the conciliation on
May 10, 1988, the University filed a Petition for Certification with (sic) Regional Office. The surreptitious
filing of the petition and at the same time cunningly entering into an agreement which required the
Union to submit a renewed CBA proposal, is patently negotiating in bad faith. The University should
have candidly and timely raised the issue of representation, if it believed that such issue was valid, not
by entering into an agreement. The May 10, 1988 Agreement only served to falsely heighten the
expectations of the Union and this Office that a mutually acceptable settlement of the dispute was in
the offing. This Office cannot tolerate such actuations by the University.”*17+
The Acting Secretary then concluded that for reneging on the agreement of May 10, 1988 and for its
“reluctance and subscription to legal delay,” the University should be “declared in default.” He also
maintained that since under the circumstances the University cannot
claim deprivation of due process, the Office of the Secretary of Labor may rightfully impose the Union’s
May 19, 1988 collective bargaining agreement proposals motu proprio. On the University’s contention
that the motion for intervention of the DWU-IFEU was not resolved, the Acting Secretary ruled that said
motion was in effect denied when the petition for certification election filed by the University was
dismissed in the Order of May 23, 1989. chanroblespublishingcompany
Hence, the University had recourse to instant petition.
In its petition for certiorari and prohibition with preliminary injunction filed on February 9, 1990, the
University raises as grounds therefor the following:
“A. Respondent Secretary committed grave and patent abuse of discretion amounting to lack of
jurisdiction in issuing his order dated 17 January 1990 finally denying petitioner’s motion for

reconsideration in the face of the order dated 29 December 1989 and subsequent acts of DOLE official
subsuming the second notice of strike with the first notice of strike.
B. In the absence of a certified CBA and there having been no certification election held in petitioner
unit for more than five (5) years, a certification election is mandatory. chanroblespublishingcompany
C. Respondent Secretary committed grave and patent abuse of discretion in issuing his orders dated 23
May 1989 and 17 January 1990 disregarding evidence on record, provisions of law and established
jurisprudence.
D. Petitioner was denied due process.”*18+
Citing the dispositive portion of the December 29, 1989 Order of the Secretary of Labor which states
that the issues raised in the May 5, 1989 notice of strike “are ordered subsumed in this case” and
elaborating on the meaning of the word “subsume,” i.e., “to include within a larger class, group, order,
etc.,”*19+ the petitioner University argues that the Secretary of Labor “cannot resolve petitioner’s and
(intervenor) DWU-IFEU’s motions for reconsideration (in the NS. 1)
of the Order dated 23 May 1989 until the proceedings in the subsumed NS. 2 are terminated.” It opines
that since the Regional Director is an extension of the Secretary of Labor, the latter should have waited
for the recommendation of the former on the issues in notices of strike nos. 1 and 2 before the he
issued the Order of January 17, 1990. chanroblespublishingcompany
We agree with the Acting Secretary of Labor’s observation that the action for intervention had in effect
been denied by the dismissal of the petition for certification election in the May 23, 1989 Order. The sub
silencio treatment of the motion for intervention in said Order does not mean that the motion was
overlooked. It only means, as shown by the findings of facts in the same Order, that there was no
Facts:
necessity for the holding of a certification election wherein the DWU-IFEU could participate. In this
-Divine Word University Employees Union was certified
regard, petitioner’s undue interest in the resolution of the DWU-IFEU’s motion for intervention becomes
as the sole and exclusive bargaining agent of Divine
significant since a certification election is the sole concern of employees except where the employer
Word University. Thus, they requested a preliminary
itself has to file a petition for certification election. But once an employer has filed said petition, as the
conference with the University. However, 2 days before
petitioner did in this case, its active role ceases and it becomes a mere bystander. Any uncalled-for
the scheduled conference, the union's vice-president
concern on the part of the employer may give rise to the suspicion that it is batting for a company
wrote a letter to the university unilaterally withdrew
union.[20] chanroblespublishingcompany
the CBA proposals.
-After almost 3 years after, the Union then affiliated
Petitioner’s contention that the Acting Secretary of Labor should have deferred the issuance of the
with ALU requested a conference with the University for
Order of January 17, 1990 until after his receipt of the Regional Director’s recommendation on the
CBA negotiations. No response from the University so
notices of strike is, under the circumstances, untenable. Ideally, a single decision or order should settle
the Union sent a follow-up letter reiterating the request
all controversies resulting from a labor dispute. This is in consonance with the principle of avoiding
for a conference. University still did not reply.
multiplicity of suits. However, the exigencies of a case may also demand that some matters be threshed
-So the Union filed w/ NCMB a Notice of Strike on the
out and resolved ahead of the others. Any contrary interpretation of the Secretary of Labor’s powers
ground of bargaining deadlock and ULP. To stop the
under Art. 263(g) of the Labor Code on this matter would only result in confusion and delay in the
strike, an agreement was entered into by the Union and
resolution of the manageable aspects of the labor dispute. chanroblespublishingcompany
the University wherein they agreed to have
negotiations.
In this case, resolution of the motion for reconsideration at the earliest possible time was urgently
-However, the University filed a petition for certification
needed to set at rest the issues regarding the first notice of strike, the certification election and the
election before the said agreement was entered into.
unfair labor practice cases filed by the University and the DWUEU-ALU. The nature of the business of the
Thus, when the Union submitted its proposals, they
University demanded immediate and effective action on the part of the respondent public officials.
were ignored by the University
Otherwise, not only the contending parties in the dispute would be adversely affected but more
-after a marathon of conciliation conferences wherein
importantly, the studentry and their parents. It should be emphasized that on January 17, 1990, the
nothing happened, SOLE exercised his powers under
second notice of strike could not have been resolved as yet considering that at that time, Regional
Art. 263(g) of LC and assumed jurisdiction over the labor
Director Teddy S. Cabeltes was still conducting the conference between the parties in pursuance of the
dispute.
directive in the Order of December 19, 1989. The Secretary, or for that matter, the Acting Secretary,
-meanwhile, MedArb directed the conduct of
could not have intended the efforts of the Regional Director to be inutile or fruitless. Thus, when he set
certification elections which the union sought to be
aside the issues raised in the second notice of strike, the Acting Secretary was acting in accordance with
enjoined - the SOLE granted it and enjoined the conduct
the exigencies of the circumstances of the case. Hardly can it be said to be an abuse of his discretion.
of the elections.
On the issue of whether or not a certification election should have been ordered by the Secretary of
-SOLE, assuming jurisdiction over the disputes, resolved
Labor, pertinent are the following respective provisions of the Labor Code and Rule V, Book V of the
the issues in favor of the Union, saying that it was not
Implementing Rules and Regulations of the same Code:
proper to conduct a certification election, the failure to
“ART. 258. When an employer may file petition. — When requested to bargain collectively, an employer
negotiate w/n 1 year from election being not a ground
may petition the Bureau for an election. If there is no existing certified collective bargaining agreement
for the conduct of a certification election and that there
in the unit, the Bureau shall, after hearing, order a certification election.” existed a bargaining deadlock
All certification cases shall be decided within twenty (20) working days.
-SOLE also ordered the parties to continue with CBA
The Bureau shall conduct a certification election within twenty (20) days in accordance with the rules
negotiations but nothing happened….
and regulations prescribed by the Secretary of Labor. chanroblespublishingcompany
-SOLE changed (from Drilon to Acting Secretary dela
Sec. 3. When to file. — In the absence of a collective bargaining agreement duly registered in
Serna) but the ruling was still the same. For failure of
accordance with Article 231 of the Code, a petition for certification election may be filed at any time.
the University to negotiate, the proposals of the Union
However, no certification election may be held within one year from the date of issuance of a final
were adopted
certification election
result. Neither may a representation question be entertained if, before the filing of a petition for
1. WON the SOLE correctly assumed jurisdiction over
certification election, a bargaining deadlock to which an incumbent or certified bargaining agent is a
the dispute as one of national interest?
party had been submitted to conciliation or arbitration or had become the subject of valid notice of
YES. The nature of the business of the University
strike or lockout. (Emphasis supplied) chanroblespublishingcompany
demanded immediate and effective action on the part
If a collective bargaining agreement has been duly registered in accordance with Article 231 of the Code,
of the respondent public officials. Otherwise, not only
a petition for certification election or a motion for intervention can only be entertained within sixty (60)
the contending parties in the dispute would be
days prior to the expiry date of such agreement.”
adversely affected but more importantly, the studentry
These provisions make it plain that in the absence of a collective bargaining agreement, an employer and their parents
who is requested to bargain collectively may file a petition for certification election any time except
upon a clear showing that one of these two instances exists: (a) the petition is filed within one year from
2. WON a petition for certification election could be
the date of issuance of a final certification election result or (b) when a bargaining deadlock had been
refused in this case?
submitted to conciliation or arbitration or had become the subject of a valid notice of strike or lockout.
Legally no but cannot reward the ER for BF
-in the absence of a collective bargaining agreement, an
While there is no question that the petition for certification election was filed by the herein petitioner
employer who is requested to bargain collectively may
after almost four years from the time of the certification election and, therefore, there is no question as
file a petition for certification election any time except
to the timeliness of the petition, the problem appears to lie in the fact that the Secretary of Labor had
upon a clear showing that one of these two instances
found that a bargaining deadlock exists.
exists: (a) the petition is filed within one year from the
A “deadlock” is defined as the “counteraction of things producing entire stoppage: a state of inaction or date of issuance of a final certification election result or
of neutralization caused by the opposition of persons or of factions (as in government or a voting body): (b) when a bargaining deadlock had been submitted to

(b) when a bargaining deadlock had been submitted to
standstill.”*21+ There is a deadlock when there is a “complete blocking or stoppage resulting from the conciliation or arbitration or had become the subject of
action of equal and opposed forces; as, the deadlock of a jury or legislature.”*22+ The word is a valid notice of strike or lockout.
synonymous with the word impasse[23] which, within the meaning of the American federal labor laws,
-A “deadlock” is defined as the “counteraction of things
“presupposes reasonable effort at good faith bargaining which, despite noble intentions, does not
producing entire stoppage: a state of inaction or of
conclude in agreement between the parties.”*24+ chanroblespublishingcompany
neutralization caused by the opposition of persons or of
A thorough study of the records reveals that there was no “reasonable effort at good faith bargaining”
factions (as in government or a voting body): standstill.”
specially on the part of the University. Its indifferent attitude towards collective bargaining inevitably
There is a deadlock when there is a “complete blocking
resulted in the failure of the parties to arrive at an agreement. As it was evident that unilateral moves or stoppage resulting from the action of equal and
were being undertaken only by the DWUEU-ALU, there was no “counteraction” of forces or an impasse opposed forces; as, the deadlock of a jury or
to speak of. While collective bargaining should be initiated by the union, there is a corresponding legislature.” The word is synonymous with the word
responsibility on the part of the employer to respond in some manner to such acts. This is clear from the
impasse which, within the meaning of the American
provisions of the Labor Code Art. 250(a) of which states:
federal labor laws, “presupposes reasonable effort at
“ART. 250. Procedure in collective bargaining. — The following procedures shall be observed in
good faith bargaining which, despite noble intentions,
collective bargaining:
does not conclude in agreement between the parties.”
(a) When a party desires to negotiate an agreement, it shall serve a written notice upon the other party
-HERE: No deadlock so legally, can still grant petition for
with a statement of its proposals. The other party shall make a reply thereto not later than ten (10)
certification election: NO "REASONABLE EFFORT AND
calendar days from receipt of such notice.
GOOD FAITH BARGAINING. Its indifferent attitude
(b) Should differences arise on the basis of such notice and reply, either party may request for a
towards collective bargaining inevitably resulted in the
conference which shall begin not later than ten (10) calendar days from the date of request.
failure of the parties to arrive at an agreement. As it was
(c) If the dispute is not settled, the Board shall intervene upon request of either or both parties or at its evident that unilateral moves were being undertaken
own initiative and immediately call the parties to conciliation meetings. The Board shall have the power only by the DWUEU-ALU, there was no “counteraction”
to issue subpoenas requiring the attendance of the parties to such meetings. It shall be the duty of the of forces or an impasse to speak of. While collective
parties to participate fully and promptly in the conciliation meetings the Board may call; bargaining should be initiated by the union, there is a
(d) During the conciliation proceedings in the Board, the parties are prohibited from doing any act which
corresponding responsibility on the part of the
may disrupt or impede the early settlement of the disputes; and chanroblespublishingcompany
employer to respond in some manner to such acts.
(e) The Board shall exert all efforts to settle disputes amicably and encourage the parties to submit their
-BF ON PART OF ER: an hour before the agreement
case to a voluntary arbitrator.” chanroblespublishingcompany
between the ER and the Union was entered, the
petition for certification of election was filed even with
Considering the procedure outlined above, the Court cannot help but notice that the DWUEU was not
the ER knowing that the Union was certified as the EBR
entirely blameless in the matter of the delay in the bargaining process. While it is true that as early as
of its employees
March 7, 1985, said union had submitted its collective bargaining proposals and that, its subsequent
withdrawal by the DWUEU Vice-President being unauthorized and therefore ineffective, the same
3. WON the SOLE committed grave abuse of discretion
proposals could be considered as subsisting, the fact remains that said union remained passive for three
when it "unilaterally imposed" the provisions of the CBA
years. The records do not show that during this three-year period, it exerted any effort to pursue
as proposed by the union.
collective bargaining as a means of attaining better terms of employment.
NO.
The petitioner may not validly assert that its consent
It was only after its affiliation with the ALU that the same union, through the ALU Director for
should be a primordial consideration in the bargaining
Operations, requested an “initial conference” for the purpose of collective bargaining.*25+ That the
process. By its acts, no less than its inaction which
DWUEU abandoned its collective bargaining proposals prior to its affiliation with ALU is further
bespeak its insincerity, it has forfeited whatever rights it
confirmed by the fact that in the aforequoted May 10, 1988 agreement with the University, said Union
could have asserted as an employer. We, therefore, find
bound itself to submit a new set of proposals on May 13, 1988. Under the circumstances, the agreement it superfluous to discuss the two other contentions in its
of May 10, 1988 may as well be considered the written notice to bargain referred to in the aforequoted
petition.
Art. 250(a) of the Labor Code, which thereby set into motion the machinery for collective bargaining, as
Disposition. WHEREFORE, the instant Petition is hereby
in fact, on May 19, 1988, DWUEU-ALU submitted its collective bargaining proposals.
DISMISSED for lack of merit. This Decision is
immediately executory. Costs against the petitioner.
Be that as it may, the Court is not inclined to rule that there has been a deadlock or an impasse in the
collective bargaining process. As the Court earlier observed, there has not been a “reasonable effort at
good faith bargaining” on the part of the University. While DWUEU-ALU was opening all possible
avenues for the conclusion of an agreement, the record is replete with evidence on the University’s
reluctance and thinly disguised refusal to bargain with the duly certified bargaining agent, such that the
inescapable conclusion is that the University evidently had no intention of bargaining with it. Thus, while
the Court recognizes that technically, the University has the right to file the petition for certification
election as there was no bargaining deadlock
to speak of, to grant its prayer that the herein assailed Orders be annulled would put an unjustified
premium on bad faith bargaining.
Bad faith on the part of the University is further exemplified by the fact that an hour before the start of
the May 10, 1988 conference, it surreptitiously filed the petition for certification election. And yet
during said conference, it committed itself to “sit down” with the Union. Obviously, the University tried
to preempt the conference which would have legally foreclosed its right to file the petition for
certification election. In so doing, the University failed to act in accordance with Art. 252 of the Labor
Code which defines the meaning of the duty to bargain collectively as “the performance of a mutual
obligation to meet and convene promptly and expeditiously in good faith.” Moreover, by filing the
petition for certification election while agreeing to confer with the DWUEU-ALU, the University violated
the mandate of Art. 19 of the Civil Code that “(e)very person must, in the exercise of his rights and in the
performance of his duties, act with justice, give everyone his due, and observe honesty and good faith.”
Moreover, the University’s unscrupulous attitude towards the DWUEU-ALU is also betrayed by its
belated questioning of the status of the said union. The communications between them afforded the
University ample opportunity to raise the issue of representation if indeed it was doubtful of the
DWUEU-ALU’s status as a majority union, but it failed to do so. On the other hand, in the agreement of
May 10, 1988, the University even agreed “to sit down and determine the number of employees that
will represent their bargaining unit.” This clearly indicates that the University recognized the DWUEU-
ALU as the bargaining representative of the employees and is, therefore, estopped from questioning the
majority status of the said union. chanroblespublishingcompany
Hence, petitioner’s contention that the DWUEU-ALU’s proposals may not be unilaterally imposed on it
on the ground that a collective bargaining agreement is a contract wherein the consent of both parties is
indispensable is devoid of merit. A similar argument had already been disregarded in the case of Kiok
Loy vs. NLRC,*26+ where we upheld the order of the NLRC declaring the union’s draft CBA proposal as
the collective agreement which should govern the
relationship between the parties. Kiok Loy vs. NLRC is applicable in the instant case considering that the
facts therein have also been indubitably established in this case. These factors are: (a) the union is the
duly certified bargaining agent; (b) it made a definite request to bargain and submitted its collective
bargaining proposals, and (c) the University made no counter proposal whatsoever. As we said in Kiok
Loy, “*a+ company’s refusal to make counter proposal if considered in relation to the entire bargaining
process, may indicate bad faith and this is especially true where the Union’s request for a counter
proposal is left unanswered.”*27+ Moreover, the Court added in the same case that “it is not obligatory

proposal is left unanswered.”*27+ Moreover, the Court added in the same case that “it is not obligatory
upon either side of a labor controversy to precipitately accept or agree to the proposals of the other.
But an erring party should not be tolerated and allowed with impunity to resort to schemes feigning
negotiations by going through empty gestures.”*28+ chanroblespublishingcompany
That being the case, the petitioner may not validly assert that its consent should be a primordial
consideration in the bargaining process. By its acts, no less than its inaction which bespeak its
insincerity, it has forfeited whatever rights it could have asserted as an employer. We, therefore, find it
superfluous to discuss the two other contentions in its petition. chanroblespublishingcompany
WHEREFORE, the instant Petition is hereby DISMISSED for lack of merit. This Decision is immediately
executory. Costs against the petitioner. chanroblespublishingcompany
SO ORDERED.
Bidin, Davide, Jr. and Melo, JJ., concur.
Gutierrez, Jr., J., is on leave. chanroblespublishingcompany
[1] Petition, p. 3; Rollo, p. 4.
[2] Rollo, p. 101. chanroblespublishingcompany
[3] DWUEU became an affiliate of ALU on February 9, 1988 upon the issuance of Charter Certificate No.
347. Rollo, p. 73. chanroblespublishingcompany
[4] DWUEU-ALU’s Comment, p. 2; Rollo, p. 298. chanroblespublishingcompany
*5+ Annex “A” of Petition; Rollo, p. 63. chanroblespublishingcompany
*6+ Annex “B-1” of Petition; Rollo, p. 66.
*7+ Annex “B” of Petition; Rollo, pp. 64-65.
*8+ Annex “C” of Petition; Rollo, pp. 67-69.
*9+ Annex “D” of Petition; Rollo, pp. 70-77.
*10+ Annex “E” of Petition; Rollo, p. 78-79.
[11] Id. chanroblespublishingcompany
*12+ Annex “G” of Petition; Rollo, pp. 97-98.
*13+ Annex “H” of Petition; Rollo, pp. 100-104.
[14] Ibid., pp. 102-103.
[15] Ibid., p. 104. chanroblespublishingcompany
[17] Rollo, pp. 201-202. chanroblespublishingcompany
[18] Petition, p. 18; Rollo, p. 19.
[19] Petition, p. 19; Rollo, p. 20. chanroblespublishingcompany
[20] See: Trade Unions of the Philippines and Allied Services vs. Trajano, G.R. No. 61153, January 17,
1983, 120 SCRA 64, 66. chanroblespublishingcompany
*21+ Webster’s Third New International Dictionary, 1986 Ed., p. 580.
*22+ Webster’s New Twentieth Century Dictionary, 2nd Ed., p. 465.
*23+ William C. Burton’s Legal Thesaurus, 1980 Ed., p. 133.
[24] N.L.R.B. vs. Bancroft, 635 F.2d 492 (1981).
[26] G.R. No. 54334, January 22, 1986, 141 SCRA 179.

GEN. MILLING CORP. v CA (GEN. MILLING CORP. INDEPENDENT
LABOR UNION)
12:13 AM
GEN. MILLING CORP. v CA (GEN. MILLING CORP. INDEPENDENT LABOR UNION)

422 SCRA 514
QUISIMBING; February 11, 2004
NATURE Petition for certiorari assailing the decision of the CA.
FACTS
- Gen. Milling employed 190 employees in its tw o plants in Cebu and Lapu-Lapu. They w ere all members of respondent Gen. Milling
Corp. Independent Labor Union (union), a duly certified bargaining agent.
- April 28, 1989: GMC and the union concluded a CBA w hich included the issue of representation effective for a term of three years.
The CBA w as effective for three years retroactive to December 1, 1988 (expiration: November 30, 1991).
- A day before the expiration, the union to GMC a CBA, w ith a request for a counter-proposal to be returned w ithin 10 days from
receipt.
- GMC received collective and individual letters from w orkers who stated that they had w ithdrawn from their union membership, due
to religious affiliation and personal differences. Believing that the union no longer had standing to negotiate a CBA, GMC did not
send any counter-proposal.
- December 16, 1991: GMC w rote a letter to the union‘s officers, stating that even if there w as no longer a basis for negotiations
(since there w as no union already), management w as still w illing to enter a dialogue w ith the union. The union officers disclaimed
the massive disaffiliation.
- January 13, 1992: GMC dismissed Marcia Tumbiga, a union member, on the ground of incompetence. The union protested and
requested GMC to submit the matter to the grievance procedure provided in the CBA. GMC, how ever, advised the union to ―refer to
our letter dated December 16, 1991.‖
- July 2, 1992: the union filed a complaint against GMC w ith the NLRC, Arbitration Division, Cebu City, alleging unfair labor practice.
The labor arbiter dismissed the case w ith the recommendation that a petition for certification election be held to determine if the
union still enjoyed the support of the w orkers.
- The union appealed to the NLRC. The NLRC set aside the labor arbiter‘s decision, and ordered GMC to abide by the CBA draft
that the union proposed for a period of tw o (2) years. NLRC pointed out that upon the effectivity of Rep. Act No. 6715, the duration
of a CBA, insofar as the representation aspect is concerned, is five (5) years which, in the case of GMC-Independent Labor Union
w as from December 1, 1988 to November 30, 1993; the union remained as the exclusive bargaining agent.
ISSUES
1. WON GMC is guilty of unfair labor practice for violating the duty to bargain collectively and/or interfering with the right of its
em ployees to self-organization;
2. WON CA abused its discretion w hen it imposed upon GMC the draft CBA proposed by the union for tw o years to begin from the
expiration of the original CBA.
HELD
1. YES
Ratio Failing to comply w ith the mandatory obligation to submit a reply to the union‘s proposals, GMC violated its duty to bargain
collectively, making it liable for unfair labor practice. Reasoning
Article 253-A, Labor Code

Terms of a collective bargaining agreement. – Any Collective Bargaining Agreement that the parties may enter into shall,
insofar as the representation aspect is concerned, be for a term of five (5) years. No petition questioning the majority status
of the incumbent bargaining agent shall be entertained and no certification election shall be conducted by the Department of
Labor and Employment outside of the sixty-day period immediately before the date of expiry of such five year term of the
Collective Bargaining Agreement. All other provisions of the Collective Bargaining Agreement shall be renegotiated not later
than three (3) years after its execution....
- The representation provision of a CBA should last for five years. The relation betw een labor and management should be
undisturbed until the last 60 days of the fifth year. It is indisputable that w hen the union requested for a renegotiation of the
economic terms of the CBA on November 29, 1991, it w as still the certified collective bargaining agent of the w orkers, because it
w as seeking said renegotiation w ithin five (5) years from the date of effectivity of the CBA on December 1, 1988.
- For refusing to send a counter-proposal to the union and to bargain anew on the economic terms of the CBA, the
com pany committed an unfair labor practice under Article 248 of the Labor Code:
ART. 248. Unfair labor practices of employers. – It shall be unlaw ful for an employer to commit any of the follow ing unfair labor
practice:
(g) To violate the duty to bargain collectively as prescribed by this Code;
ART. 252. Meaning of duty to bargain collectively. – The duty to bargain collectively means the performance of a m utual
obligation to meet and convene promptly and expeditiously in good faith for the purpose of negotiating an agreement....
- Good faith or bad faith is an inference to be draw n from the facts. The effect of an employer‘s or a union‘s actions individually is not
the test of good-faith bargaining, but the impact of all such occasions or actions, considered as a w hole.
- Under Article 252 both parties are required to perform their mutual obligation to meet and convene promptly and expeditiously in
good faith for the purpose of negotiating an agreement. The union lived up to this obligation w hen it presented proposals for a new
CBA to GMC. On the other hand, GMC failed in its duty under Article 252. What it did w as to devise a flimsy excuse, by questioning
the existence of the union and the status of its membership to prevent any negotiation. GMC‘s failure to make a timely reply to the
proposals presented by the union is indicative of its utter lack of interest in bargaining w ith the union.
- The CA found that the letters betw een February to June 1993 by 13 union members signifying their resignation from the union
clearly indicated that GMC exerted pressure on its employees. Yes, GMC interfered with the right of employees to self-
organization.

2. NO
Ratio The provision mandates the parties to keep the status quo w hile they are still in the process of w orking out their respective
proposal and counter proposal. When one of the parties abuses this grace period by purposely delaying the bargaining process,a
departure from the general rule is w arranted, that is, the court may impose on the erring company the CBA proposed by its
employees‘ union - lock, stock and barrel.
Reasoning By its acts, no less than its action w hich bespeak its insincerity, GMC has forfeited w hatever rights it could have
asserted as an employer.
- Under ordinary circumstances, it is not obligatory upon either side of a labor controversy to precipitately accept or agree to the
proposals of the other. But an erring party should not be allow ed to resort w ith impunity to schemes feigning negotiations by going
through empty gestures.
DISPOSITION Petition is dismissed.
Pasted from <file:///C:\Documents%20and%20Settings\Charisse%20Mae%20Mendoza\My%20Documents\Labor%20Updates

\labor%20rd5%20compiled.doc>
G.R. No. 146728 February 11, 2004

GENERAL MILLING CORPORATION, petitioner,
vs
HON. COURT OF APPEALS, GENERAL MILLING CORPORATION INDEPENDENT LABOR
UNION (GMC-ILU), and RITO MANGUBAT, respondents.
DEC I SI O N
QUISUMBING, J.:
Before us is a petition for certiorari assailing the decision1 dated July 19, 2000, of the Court of
Appeals in CA-G.R. SP No. 50383, which earlier reversed the decision2 dated January 30, 1998 of
the National Labor Relations Commission (NLRC) in NLRC Case No. V-0112-94.
The antecedent facts are as follows:
In its two plants located at Cebu City and Lapu-Lapu City, petitioner General Milling Corporation
(GMC) employed 190 workers. They were all members of private respondent General Milling
Corporation Independent Labor Union (union, for brevity), a duly certified bargaining agent.
On April 28, 1989, GMC and the union concluded a collective bargaining agreement (CBA) which
included the issue of representation effective for a term of three years. The CBA was effective for
three years retroactive to December 1, 1988. Hence, it would expire on November 30, 1991.
On November 29, 1991, a day before the expiration of the CBA, the union sent GMC a proposed
CBA, with a request that a counter-proposal be submitted within ten (10) days.
As early as October 1991, however, GMC had received collective and individual letters from workers
who stated that they had withdrawn from their union membership, on grounds of religious affiliation
and personal differences. Believing that the union no longer had standing to negotiate a CBA, GMC
did not send any counter-proposal.
On December 16, 1991, GMC wrote a letter to the union‘s officers, Rito Mangubat and Victor
Lastimoso. The letter stated that it felt there was no basis to negotiate with a union which no longer
existed, but that management was nonetheless always willing to dialogue with them on matters of
common concern and was open to suggestions on how the company may improve its operations.
In answer, the union officers wrote a letter dated December 19, 1991 disclaiming any massive
disaffiliation or resignation from the union and submitted a manifesto, signed by its members, stating
that they had not withdrawn from the union.
On January 13, 1992, GMC dismissed Marcia Tumbiga, a union member, on the ground of
incompetence. The union protested and requested GMC to submit the matter to the grievance
procedure provided in the CBA. GMC, however, advised the union to "refer to our letter dated
December 16, 1991."3
Thus, the union filed, on July 2, 1992, a complaint against GMC with the NLRC, Arbitration Division,
Cebu City. The complaint alleged unfair labor practice on the part of GMC for: (1) refusal to bargain
collectively; (2) interference with the right to self-organization; and (3) discrimination. The labor
arbiter dismissed the case with the recommendation that a petition for certification election be held to
determine if the union still enjoyed the support of the workers. l awphi 1. nê
t
The union appealed to the NLRC.

On January 30, 1998, the NLRC set aside the labor arbiter‘s decision. Citing Article 253-A of the
Labor Code, as amended by Rep. Act No. 6715, 4 which fixed the terms of a collective bargaining
agreement, the NLRC ordered GMC to abide by the CBA draft that the union proposed for a period
of two (2) years beginning December 1, 1991, the date when the original CBA ended, to November
30, 1993. The NLRC also ordered GMC to pay the attorney‘s fees. 5
In its decision, the NLRC pointed out that upon the effectivity of Rep. Act No. 6715, the duration of a
CBA, insofar as the representation aspect is concerned, is five (5) years which, in the case of GMC-
Independent Labor Union was from December 1, 1988 to November 30, 1993. All other provisions of

Independent Labor Union was from December 1, 1988 to November 30, 1993. All other provisions of
the CBA are to be renegotiated not later than three (3) years after its execution. Thus, the NLRC
held that respondent union remained as the exclusive bargaining agent with the right to renegotiate
the economic provisions of the CBA. Consequently, it was unfair labor practice for GMC not to enter
into negotiation with the union.
The NLRC likewise held that the individual letters of withdrawal from the union submitted by 13 of its
members from February to June 1993 confirmed the pressure exerted by GMC on its employees to
resign from the union. Thus, the NLRC also found GMC guilty of unfair labor practice for interfering
with the right of its employees to self-organization.
With respect to the union‘s claim of discrimination, the NLRC found the claim unsupported by
substantial evidence.
On GMC‘s motion for reconsideration, the NLRC set aside its decision of January 30, 1998, through
a resolution dated October 6, 1998. It found GMC‘s doubts as to the status of the union justified and
the allegation of coercion exerted by GMC on the union‘s members to resign unfounded. Hence, the
union filed a petition for certiorari before the Court of Appeals. For failure of the union to attach the
required copies of pleadings and other documents and material portions of the record to support the
allegations in its petition, the CA dismissed the petition on February 9, 1999. The same petition was
subsequently filed by the union, this time with the necessary documents. In its resolution dated April
26, 1999, the appellate court treated the refiled petition as a motion for reconsideration and gave the
petition due course.
On July 19, 2000, the appellate court rendered a decision the dispositive portion of which reads:
WHEREFORE, the petition is hereby GRANTED. The NLRC Resolution of October 6, 1998 is
hereby SET ASIDE, and its decision of January 30, 1998 is, except with respect to the award of
attorney‘s fees which is hereby deleted, REINSTATED.6
A motion for reconsideration was seasonably filed by GMC, but in a resolution dated October 26,
2000, the CA denied it for lack of merit.
Hence, the instant petition for certiorari alleging that:
I
THE COURT OF APPEALS DECISION VIOLATED THE CONSTITUTIONAL RULE THAT NO
DECISION SHALL BE RENDERED BY ANY COURT WITHOUT EXPRESSING THEREIN
CLEARLY AND DISTINCTLY THE FACTS AND THE LAW ON WHICH IT IS BASED.
II
THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN REVERSING
THE DECISION OF THE NATIONAL LABOR RELATIONS COMMISSION IN THE ABSENCE
OF ANY FINDING OF SUBSTANTIAL ERROR OR GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OR EXCESS OF JURISDICTION.
III
THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN NOT APPRECIATING THAT
THE NLRC HAS NO JURISDICTION TO DETERMINE THE TERMS AND CONDITIONS OF A
COLLECTIVE BARGAINING AGREEMENT. 7
Thus, in the instant case, the principal issue for our determination is whether or not the Court of
Appeals acted with grave abuse of discretion amounting to lack or excess of jurisdiction in (1) finding
GMC guilty of unfair labor practice for violating the duty to bargain collectively and/or interfering with
the right of its employees to self-organization, and (2) imposing upon GMC the draft CBA proposed
by the union for two years to begin from the expiration of the original CBA. l awphi 1. nê
t
On the first issue, Article 253-A of the Labor Code, as amended by Rep. Act No. 6715, states:
ART. 253-A. Terms of a collective bargaining agreement. – Any Collective Bargaining Agreement
that the parties may enter into shall, insofar as the representation aspect is concerned, be for a term
of five (5) years. No petition questioning the majority status of the incumbent bargaining agent shall
be entertained and no certification election shall be conducted by the Department of Labor and
Employment outside of the sixty-day period immediately before the date of expiry of such five year
term of the Collective Bargaining Agreement. All other provisions of the Collective Bargaining
Agreement shall be renegotiated not later than three (3) years after its execution....
The law mandates that the representation provision of a CBA should last for five years. The relation
between labor and management should be undisturbed until the last 60 days of the fifth year. Hence,
it is indisputable that when the union requested for a renegotiation of the economic terms of the CBA
on November 29, 1991, it was still the certified collective bargaining agent of the workers, because it
was seeking said renegotiation within five (5) years from the date of effectivity of the CBA on
December 1, 1988. The union‘s proposal was also submitted within the prescribed 3-year period
from the date of effectivity of the CBA, albeit just before the last day of said period. It was obvious
that GMC had no valid reason to refuse to negotiate in good faith with the union. For refusing to
send a counter-proposal to the union and to bargain anew on the economic terms of the CBA, the
company committed an unfair labor practice under Article 248 of the Labor Code, which provides

company committed an unfair labor practice under Article 248 of the Labor Code, which provides
that:
ART. 248. Unfair labor practices of employers. – It shall be unlawful for an employer to commit
any of the following unfair labor practice:
.. .
.. .
Article 252 of the Labor Code elucidates the meaning of the phrase "duty to bargain collectively,"
thus:
ART. 252. Meaning of duty to bargain collectively. – The duty to bargain collectively means the
performance of a mutual obligation to meet and convene promptly and expeditiously in good faith for
the purpose of negotiating an agreement....
We have held that the crucial question whether or not a party has met his statutory duty to bargain in
good faith typically turn$ on the facts of the individual case.8 There is no per se test of good faith in
bargaining.9 Good faith or bad faith is an inference to be drawn from the facts. 10 The effect of an
employer‘s or a union‘s actions individually is not the test of good-faith bargaining, but the impact of
all such occasions or actions, considered as a whole.11
Under Article 252 abovecited, both parties are required to perform their mutual obligation to meet
and convene promptly and expeditiously in good faith for the purpose of negotiating an agreement.
The union lived up to this obligation when it presented proposals for a new CBA to GMC within three
(3) years from the effectivity of the original CBA. But GMC failed in its duty under Article 252. What it
did was to devise a flimsy excuse, by questioning the existence of the union and the status of its
membership to prevent any negotiation.
It bears stressing that the procedure in collective bargaining prescribed by the Code is mandatory
because of the basic interest of the state in ensuring lasting industrial peace. Thus:
ART. 250. Procedure in collective bargaining. – The following procedures shall be observed in
collective bargaining:
(a) When a party desires to negotiate an agreement, it shall serve a written notice upon the other
party with a statement of its proposals. The other party shall make a reply thereto not later than ten
(10) calendar days from receipt of such notice. (Underscoring supplied.)
GMC‘s failure to make a timely reply to the proposals presented by the union is indicative of its utter
lack of interest in bargaining with the union. Its excuse that it felt the union no longer represented the
workers, was mainly dilatory as it turned out to be utterly baseless.
We hold that GMC‘s refusal to make a counter-proposal to the union‘s proposal for CBA negotiation
is an indication of its bad faith. Where the employer did not even bother to submit an answer to the
bargaining proposals of the union, there is a clear evasion of the duty to bargain collectively. 12
Failing to comply with the mandatory obligation to submit a reply to the union‘s proposals, GMC
violated its duty to bargain collectively, making it liable for unfair labor practice. Perforce, the Court of
Appeals did not commit grave abuse of discretion amounting to lack or excess of jurisdiction in
finding that GMC is, under the circumstances, guilty of unfair labor practice.
Did GMC interfere with the employees‘ right to self-organization? The CA found that the letters
between February to June 1993 by 13 union members signifying their resignation from the union
clearly indicated that GMC exerted pressure on its employees. The records show that GMC
presented these letters to prove that the union no longer enjoyed the support of the workers. The
fact that the resignations of the union members occurred during the pendency of the case before the
labor arbiter shows GMC‘s desperate attempts to cast doubt on the legitimate status of the union.
We agree with the CA‘s conclusion that the ill-timed letters of resignation from the union members
indicate that GMC had interfered with the right of its employees to self-organization. Thus, we hold
that the appellate court did not commit grave abuse of discretion in finding GMC guilty of unfair labor
practice for interfering with the right of its employees to self-organization.
Finally, did the CA gravely abuse its discretion when it imposed on GMC the draft CBA proposed by
the union for two years commencing from the expiration of the original CBA?
The Code provides:
ART. 253. Duty to bargain collectively when there exists a collective bargaining
agreement. – .... It shall be the duty of both parties to keep the status quo and to continue in full
force and effect the terms and conditions of the existing agreement during the 60-day period [prior to
its expiration date] and/or until a new agreement is reached by the parties. (Underscoring supplied.)
The provision mandates the parties to keep the status quo while they are still in the process of
working out their respective proposal and counter proposal. The general rule is that when a CBA
already exists, its provision shall continue to govern the relationship between the parties, until a new
one is agreed upon. The rule necessarily presupposes that all other things are equal. That is, that
neither party is guilty of bad faith. However, when one of the parties abuses this grace period by
purposely delaying the bargaining process, a departure from the general rule is warranted.

purposely delaying the bargaining process, a departure from the general rule is warranted.
In Kiok Loy vs. NLRC,13 we found that petitioner therein, Sweden Ice Cream Plant, refused to submit
any counter proposal to the CBA proposed by its employees‘ certified bargaining agent. We ruled
that the former had thereby lost its right to bargain the terms and conditions of the CBA. Thus, we
did not hesitate to impose on the erring company the CBA proposed by its employees‘ union - lock,
stock and barrel. Our findings in Kiok Loy are similar to the facts in the present case, to wit:
… petitioner Company‘s approach and attitude – stalling the negotiation by a series of
postponements, non-appearance at the hearing conducted, and undue delay in submitting its
financial statements, lead to no other conclusion except that it is unwilling to negotiate and reach an
agreement with the Union. Petitioner has not at any instance, evinced good faith or willingness to
discuss freely and fully the claims and demands set forth by the Union much less justify its objection
thereto.14
Likewise, in Divine Word University of Tacloban vs. Secretary of Labor and Employment,15 petitioner
therein, Divine Word University of Tacloban, refused to perform its duty to bargain collectively. Thus,
we upheld the unilateral imposition on the university of the CBA proposed by the Divine Word
University Employees Union. We said further:
That being the said case, the petitioner may not validly assert that its consent should be a primordial
consideration in the bargaining process. By its acts, no less than its action which bespeak its
insincerity, it has forfeited whatever rights it could have asserted as an employer.16
Applying the principle in the foregoing cases to the instant case, it would be unfair to the union and
its members if the terms and conditions contained in the old CBA would continue to be imposed on
GMC‘s employees for the remaining two (2) years of the CBA‘s duration. We are not inclined to
gratify GMC with an extended term of the old CBA after it resorted to delaying tactics to prevent
negotiations. Since it was GMC which violated the duty to bargain collectively, based on Kiok
Loy and Divine Word University of Tacloban, it had lost its statutory right to negotiate or renegotiate
the terms and conditions of the draft CBA proposed by the union.
We carefully note, however, that as strictly distinguished from the facts of this case, there was no
pre-existing CBA between the parties in Kiok Loy and Divine Word University of Tacloban.
Nonetheless, we deem it proper to apply in this case the rationale of the doctrine in the said two
cases. To rule otherwise would be to allow GMC to have its cake and eat it too.
Under ordinary circumstances, it is not obligatory upon either side of a labor controversy to
precipitately accept or agree to the proposals of the other. But an erring party should not be allowed
to resort with impunity to schemes feigning negotiations by going through empty gestures. 17 Thus, by
imposing on GMC the provisions of the draft CBA proposed by the union, in our view, the interests of
equity and fair play were properly served and both parties regained equal footing, which was lost
when GMC thwarted the negotiations for new economic terms of the CBA.
The findings of fact by the CA, affirming those of the NLRC as to the reasonableness of the draft
CBA proposed by the union should not be disturbed since they are supported by substantial
evidence. On this score, we see no cogent reason to rule otherwise. Hence, we hold that the Court
of Appeals did not commit grave abuse of discretion amounting to lack or excess of jurisdiction when
it imposed on GMC, after it had committed unfair labor practice, the draft CBA proposed by the union
for the remaining two (2) years of the duration of the original CBA. Fairness, equity, and social
justice are best served in this case by sustaining the appellate court‘s decision on this issue.
WHEREFORE, the petition is DISMISSED and the assailed decision dated July 19, 2000, and the
resolution dated October 26, 2000, of the Court of Appeals in CA-G.R. SP No. 50383,
are AFFIRMED. Costs against petitioner.
SO ORDERED.
Puno, (Chairman), Austria-Martinez, Callejo, Sr., and Tinga, JJ., concur.
Footnotes
1 Rollo, pp. 172-179. Penned by Associate Justice Conchita Carpio Morales (now a member of this
Court), with Associate Justices Teodoro P. Regino and Mercedes Gozo-Dadole.

2
Id. at 34-48.
3 Id. at 175; See also CA Rollo, CA G.R. No. 51763, p. 83.
4 Effective March 21, 1989.
5
Rollo, p. 44.
6
Id. at 178.
7 Id. at 10.
8 Hongkong and Shanghai Banking Corporation Employees Union v. National Labor Relations
Commission, G.R. No. 125038, 6 November 1997, 281 SCRA 509, 518.
9
Ibid.
10 Ibid.
11 Ibid.
12
Colegio De San Juan De Letran v. Association of Employees and Faculty of Letran, G.R. No.

12
Colegio De San Juan De Letran v. Association of Employees and Faculty of Letran, G.R. No.
141471, 18 September 2000, 340 SCRA 587, 595.
13 No. L-54334, 22 January 1986, 141 SCRA 179, 188.
14
Supra.
15
213 SCRA 759, 11 September 1992.
16 Supra.
17 Ibid., citing H. Rothenberg, Rothenberg on Labor Relations 435 (1949), NLRB v. Sunshine Mining
Co., 110 F. 2d 780, NLRB v. Condenser Corp., 128 F. 2d 67.
Pasted from <http://www.lawphil.net/judjuris/juri2004/feb2004/gr_146728_2004.html>

Lepanto Mining vs. Lepanto Local Union (2008)
1:31 AM
LEPANTO CONSOLIDATED G.R. No. 161713

MINING COMPANY,
Petitioner,
Present:
PUNO, C.J., Chairperson,
CARPIO,
- versus - CORONA,
AZCUNA, and
LEONARDO-DE CASTRO, JJ.
LEPANTO LOCAL STAFF UNION, Promulgated:

Respondent. August 20, 2008
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
RE S OL U T I ON
CARPIO, J.:
The Case
Before the Court is a petition for review[1][1] assailing the 22 July 2003
Decision[2][2] and 20 January 2004 Resolution[3][3] of the Court of Appeals in
CA-G.R. SP No. 60644.
The Antecedent Facts
Lepanto Consolidated Mining Company[4][4] (petitioner) is a domestic mining

corporation. Lepanto Local Staff Union (respondent) is the duly certified
bargaining agent of petitioner‟s employees occupying staff positions.
On 28 November 1998, petitioner and respondent entered into their fourth

Collective Bargaining Agreement (4th CBA) for the period from 1 July 1998
to 30 June 2000. The 4th CBA provides:
ARTICLE VIII – NIGHT SHIFT DIFFERENTIAL
Section 3. Night Differential pay. - The Company shall continue to pay nightshift
differential for work during the first and third shifts to all covered employees within the
bargaining unit as follows:

For the First Shift (11:00 p.m. to 7:00 a.m.), the differential pay will be 20% of the basic
rate. For the Third Shift (3:00 p.m. to 11:00 p.m.), the differential pay will be 15% of the
basic rate.
However, for overtime work, which extends beyond the regular day shift (7:00 a.m. to 3:00
p.m.), there [will] be no night differential pay added before the overtime pay is calculated.
ARTICLE XII – RIGHTS, PRIVILEGES AND OTHER BENEFITS
Section 9. Longevity pay – The company shall grant longevity pay of P30.00 per month
effective July 1, 1998 and every year thereafter.[5][5]
On 23 April 2000, respondent filed a complaint with the National Conciliation

and Mediation Board, Cordillera Administrative Region (NCMB-CAR)
alleging that petitioner failed to pay the night shift differential and longevity
pay of respondent‟s members as provided in the 4th CBA. Petitioner and
respondent failed to amicably settle the dispute. They agreed to submit the
issues to Voluntary Arbitrator Norma B. Advincula (Voluntary Arbitrator) for
resolution.
The Ruling of the Voluntary Arbitrator
In a Decision dated 26 May 2000, [6][6] the Voluntary Arbitrator ruled in favor
of respondent as follows:
WHEREFORE, foregoing considered, this Office holds and so orders respondent
Lepanto Consolidated Mining Corporation (LCMC) to grant complainant Lepanto
Local Staff Union (LLSU) the following benefits:
Longevity pay of P30.00 per month which shall be reckoned form July 1, 1998 and
every year thereafter in consonance with their contract; and
Night shift differential pay of 15% of the basic rate for hours of work rendered
beyond 3:00 p.m. for the following shifts: 7:00 A.M. to 4:00 P.M., 7:30 A.M. to 4:30
P.M. and 8:00 A.M. to 5:00 P.M. to be reckoned from the date of the effectivity of the
4th CBA which was on July 1, 1998.
SO ORDERED.[7][7]
The Voluntary Arbitrator ruled that petitioner had the legal obligation to pay
longevity pay of P30 per month effective 1 July 1998. The Voluntary
Arbitrator rejected petitioner‟s contention that “effective” should be
understood as the reckoning period from which the employees start earning
their right to longevity pay, and that the longevity pay should be paid only on
1 July 1999. The Voluntary Arbitrator ruled that 1 July 1998 was the
reckoning date that indicated when the amounts due were to be given.
The Voluntary Arbitrator agreed with respondent that surface workers on the

second shift who performed work after 3:00 p.m. should be given an
additional night shift differential pay equivalent to 15% of their basic rate.
Interpreting paragraph 3, Section 3, Article VIII of the 4th CBA, the Voluntary
Arbitrator ruled that it only meant that an employee who extends work beyond
the second shift shall receive overtime pay which shall be computed before
the night shift differential pay. In other words, it excludes the night shift
differential in the computation of overtime pay.
The Voluntary Arbitrator ruled that the inclusion of paragraph 3, Section 3,

Article VIII of the 4th CBA disclosed the intent of the parties to grant night
shift differential benefits to employees who rendered work beyond the regular
day shift. The Voluntary Arbitrator ruled that if the intention were otherwise,
paragraph 3 would have been deleted.
Finally, the Voluntary Arbitrator ruled that the respondent‟s claim for night
shift differential arising from the 1st , 2nd, and 3rd CBAs had already prescribed.
Petitioner filed a motion for reconsideration. In her Resolution dated 5 August

2000,[8][8] the Voluntary Arbitrator denied the motion for reconsideration for
lack of merit.
Petitioner filed a petition for review before the Court of Appeals.
The Ruling of the Court of Appeals
In its 22 July 2003 Decision, the Court of Appeals affirmed the Voluntary
Arbitrator‟s Decision.
The Court of Appeals ruled that paragraph 3, Section 3, Article VIII was clear
and unequivocal. It grants night shift differential pay to employees of the
second shift for work rendered beyond their regular day shift. However, the
night shift differential was excluded in the computation of the overtime pay.
The Court of Appeals further ruled that the records of the case revealed that
during the effectivity of the 4th CBA, petitioner voluntarily complied with
paragraph 3, Section 3, Article VIII by paying night shift differential to
employees for hours worked beyond 3:00 p.m. Petitioner‟s act disclosed the
parties‟ intent to include employees in the second shift in the payment of night
shift differential. The Court of Appeals rejected petitioner‟s claim that the
payment was due to error and mere inadvertence on the part of petitioner‟s
accounting employees. The Court of Appeals noted that the records revealed
that petitioner still continued to pay night shift differential for hours worked
beyond 3:00 p.m. after the Voluntary Arbitrator rendered the 26 May 2000
Decision. Thus, petitioner is estopped from claiming erroneous payment.
Petitioner filed a motion for reconsideration. In its 20 January 2004

Resolution, the Court of Appeals denied the motion for lack of merit.

Hence, the petition before this Court.
The Issue
The sole issue in this case is whether the Court of Appeals erred in affirming
the Voluntary Arbitrator‟s interpretation of the 4th CBA that the employees in
the second shift are entitled to night shift differential.
The Ruling of this Court
The terms and conditions of a collective bargaining contract constitute the law
between the parties.[9][9] If the terms of the CBA are clear and have no doubt
upon the intention of the contracting parties, the literal meaning of its
stipulation shall prevail. [10][10]
The disputed provision of the 4th CBA provides:

ARTICLE VIII – NIGHT SHIFT DIFFERENTIAL
Section 3. Night Differential pay. - The Company shall continue to pay nightshift
differential for work during the first and third shifts to all covered employees within the
For the First Shift (11:00 p.m. to 7:00 a.m.), the differential pay will be 20% of the basic
rate. For the Third Shift (3:00 p.m. to 11:00 p.m.), the differential pay will be 15% of the
basic rate.
However, for overtime work, which extends beyond the regular day shift (7:00 a.m. to 3:00
p.m.), there [will] be no night differential pay added before the overtime pay is calculated.
There is no question that workers are entitled to night shift differential of 20%
of the basic rate for work performed during the first shift from 11:00 p.m. to
7:00 a.m. Workers are also entitled to night shift differential of 15% of the
basic rate for work performed during the third shift from 3:00 p.m. to 11:00
p.m. The issue is whether workers are entitled to night shift differential for
work performed beyond the regular day shift, from 7:00 a.m. to 3:00 p.m.
We sustain the interpretation of both the Voluntary Arbitrator and the Court of
Appeals. The first paragraph of Section 3 provides that petitioner shall
continue to pay night shift differential to workers of the first and third shifts. It
does not provide that workers who performed work beyond the second shift
shall not be entitled to night shift differential. The inclusion of the third
paragraph is not intended to exclude the regular day shift workers from
receiving night shift differential for work performed beyond 3:00 p.m. It only
provides that the night shift differential pay shall be excluded in the
computation of the overtime pay.

It is settled that in order to ascertain the intention of the contracting parties,
the Voluntary Arbitrator shall principally consider their contemporaneous and
subsequent acts as well as their negotiating and contractual history and
evidence of past practices. [11][11] In this case, the Voluntary Arbitrator and the
Court of Appeals both found that the provision in question was contained in
the 1st , 2nd, and 3rd CBAs between petitioner and respondent. During the
effectivity of the first three CBAs, petitioner paid night shift differentials to
other workers who were members of respondent for work performed beyond
3:00 p.m. Petitioner also paid night shift differential for work beyond 3:00
p.m. during the effectivity of the 4th CBA. Petitioner alleges that the payment
of night shift differential for work performed beyond 3:00 p.m. during the 4th
CBA was a mistake on the part of its accounting department. However, the
Court of Appeals correctly ruled that petitioner failed to present any
convincing evidence to prove that the payment was erroneous. In fact, the
Court of Appeals found that even after the promulgation of the Voluntary
Arbitrator‟s decision and while the case was pending appeal, petitioner still
paid night shift differential for work performed beyond 3:00 p.m. It affirms
the intention of the parties to the CBA to grant night shift differential for work
performed beyond 3:00 p.m.
WHEREFORE, we DENY the petition. We AFFIRM the 22 July 2003

Decision and 20 January 2004 Resolution of the Court of Appeals in CA-G.R.
SP No. 60644. Costs against petitioner.
SO ORDERED.
ANTONIO T. CARPIO
Associate Justice
WE CONCUR:
REYNATO S. PUNO
Chief Justice
Chairperson
RENATO C. CORONA ADOLFO S. AZCUNA

Associate Justice Associate Justice

TERESITA J. LEONARDO-DE CASTRO
Associate Justice
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, I hereby certify that
the conclusions in the above Resolution had been reached in consultation
before the case was assigned to the writer of the opinion of the Court‟s
Division.
REYNATO S. PUNO
Chief Justice
[12][1] Under Rule 45 of the 1997 Rules of Civil Procedure.

[13][2] Rollo, pp. 46-54. Penned by Associate Justice Ruben T. Reyes (now a member of this Court) with
Associate Justices Elvi John S. Asuncion and Lucas P. Bersamin, concurring.
[14][3] Id. at 56.
[15][4] Referred to as Lepanto Consolidated Mining Corporation by the Voluntary Arbitrator.
[16][5] CA rollo, p. 25.
[17][6] Id. at 24-30.
[18][7] Id. at 30.
[19][8] Id. at 31-34.
[20][9] Holy Cross of Davao College, Inc. v. Holy Cross of Davao Faculty Union-KAMAPI, G.R. No. 156098, 27
June 2005, 461 SCRA 319.
[21][10] United Kimberly-Clark Employees Union Philippine Transport General Workers’ Organization v.
Kimberly-Clark Phils., Inc., G.R. No. 162965, 6 March 2006, 484 SCRA 187.
[22][11] Id.
[1][1] Under Rule 45 of the 1997 Rules of Civil Procedure002E

[2][2] Rollo, pp. 46-54. Penned by Associate Justice Ruben T. Reyes (now a member of this Court) with
Associate Justices Elvi John S. Asuncion and Lucas P. Bersamin, concurring.
[3][3] Id. at 56.
[4][4] Referred to as Lepanto Consolidated Mining Corporation by the Voluntary Arbitrator.
[5][5] CA rollo, p. 25.
[6][6] Id. at 24-30.
[7][7] Id. at 30.

[6][6] Id. at 24-30.
[7][7] Id. at 30.
[8][8] Id. at 31-34.
[9][9] Holy Cross of Davao College, Inc. v. Holy Cross of Davao Faculty Union-KAMAPI, G.R. No. 156098, 27
June 2005, 461 SCRA 319.
[10][10] United Kimberly-Clark Employees Union Philippine Transport General Workers’ Organization v.
Kimberly-Clark Phils., Inc., G.R. No. 162965, 6 March 2006, 484 SCRA 187.
[11][11] Id.

\Labor%20Updates\6,%2010%20LEPANTO%20CONSOLIDATED%20G.doc>

COLEGIO DE SAN JUAN DE LETRAN V ASSOCIATION OF
EMPLOYEES AND FACULTY OF LETRAN
12:36 AM
COLEGIO DE SAN JUAN DE LETRAN V ASSOCIATION OF EMPLOYEES AND FACULTY OF

LETRAN
00 SCRA 00
KAPUNAN; September 18, 2000
NATURE
Petition for review on certiorari decision of CA
FACTS
- Letran and the labor union (AEFL) w ere in the process of negotiating a new CBA. How ever, the negotiations w ere suspended by
Letran after it purportedly received information that a new group of employees ha filed a petition for certification election
(there are other facts involved, but only these are relevant to the topic)
ISSUE/S
1. WON Letran is guilty of ULP by refusing to bargain w ith the union w hen it unilaterally suspended the ongoing negotiations for a
new CBA upon mere information that a petition for certification has been filed by another legitimate labor organization
HELD
1. YES
Ratio The filing of the petition for certification election w as barred by the existence of a valid and existing CBA. Consequently, there
is no legitimate representation issue and, as such, the filing of the petition for certification election did not constitute a bar to the
ongoing negotiation. There is no doubt that petitioner is guilty of ULP by its stern refusal to bargain in good faith w ith respondent
union.
Reasoning Art.252, LC: The duty to bargain collectively means the performance of a mutual obligation to meet and convene
promptly and expeditiously in good faith for the purpose of negotiating an agreement w ith respect to w ages, hours of work and all
other terms and conditions of employment including proposals for adjusting any grievances or questions arising under such
agreement and executing a contract incorporating such agreements if requested by either party but such duty does not compel any
party to agree to a proposal or to make any concession.
- the parties have the mutual obligation to meet and convene promptly and expeditiously in good faith for the purpose of negotiating
an agreement. Undoubtedly, the union lived up to this requisite w hen it presented its proposals for the CBA to Letran. On the other
hand, petitioner devised w ays and means in order to prevent the negotiation.
- Letran’s utter lack of interest in bargaining w ith the union is obvious in its failure to make a timely reply to the proposals presented
by the latter. More than a month after the proposals w ere submitted by the union, petitioner still had not made any counter-
proposals. This inaction on the part of Letran prompted the union to file its second notice of strike on March 13, 1996. Petitioner
could only offer a feeble explanation that the Board of Trustees had not yet convened to discuss the matter as its excuse for failing
to file its reply. This is a clear violation of Art.250, governing the procedure in collective bargaining[1]
- company's refusal to make counter-proposal to the union's proposed CBA is an indication of its bad faith. Where the employer did
not even bother to submit an answ er to the bargaining proposals of the union, there is a clear evasion of the duty to bargain
collectively. Here, Letran’s actuations show lack of sincere desire to negotiate (thus guilty of ULP).
- the claim that the suspension of negotiation w as proper since by the filing of the petition for certification election the issue on
majority representation of the employees had arose is untenable. According to petitioner, the authority of the union to negotiate on
behalf of the employees w as challenged w hen a rival union filed a petition for certification election.
- In order to allow the employer to validly suspend the bargaining process there must be a valid petition for certification election
raising a legitimate representation issue. Hence, the mere filing of a petition for certification election does not ipso facto justify the
suspension of negotiation by the employer. The petition must first comply w ith the provisions of the LC and its IRR. Foremost is that
a petition for certification election must be filed during the 60-day freedom period. The “Contract Bar Rule” under Sec.3, Rule XI,
Book V, of the Omnibus Rules Implementing the Labor Code, provides that: “.… If a CBA has been duly registered in accordance
w ith Article 231, a petition for certification election or a motion for intervention can only be entertained w ithin 60 days prior to the
expiry date of such agreement.” No petition for certification election for any representation issue may be filed after the lapse of the
60-day freedom period. The old CBA is extended until a new one is signed. The rule is that despite the lapse of the formal effectivity
of the CBA the law still considers the same as continuing in force and effect until a new CBA shall have been validly executed.
Hence, the contract bar rule still applies. The purpose is to ensure stability in the relationship of the w orkers and the company by
preventing frequent modifications of any CBA earlier entered into by them in good faith and for the stipulated original period.
- In the case at bar, the lifetime of the previous CBA w as from 1989-1994. The petition for certification election by ACEC, allegedly a
legitimate labor organization, w as filed w ith DOLE only on May 1996. Clearly, the petition w as filed outside the 60-day freedom
period. Hence, the filing thereof w as barred by the existence of a valid and existing CBA. Consequently, there is no legitimate
representation issue and, as such, the filing of the petition for certification election did not constitute a bar to the ongoing negotiation.
Reliance, therefore, by petitioner of the ruling in Lakas Ng Manggagawang Makabayan v. Marcelo Enterprises is misplaced since
that case involved a legitimate representation issue w hich is not present in the case at bar.
- Significantly, the same petition for certification election w as dismissed by the Labor Secretary.
Disposition Petition is dismissed.
[1] Art.250:Procedure in collective bargaining. - The following procedures shall be observed in collective bargaining:
(a) When a party desires to negotiate an agreement, it shall serve a written notice upon the other party with a statement of its proposals. The other party shall make a reply thereto not
later than ten (10) calendar days from receipt of such notice.

FIRST DIVISION
[G.R. No. 141471. September 18, 2000]

COLEGIO DE SAN JUAN DE LETRAN, petitioner, vs. ASSOCIATION OF EMPLOYEES
AND FACULTY OF LETRAN and ELEONOR AMBAS,respondents.
DECISIO N
KAPUNAN, J.:
This is a petition for review on certiorari seeking the reversal of the Decision of the Court
of Appeals, promulgated on 9 August 1999, dismissing the petition filed by Colegio de San
Juan de Letran (hereinafter, "petitioner") and affirming the Order of the Secretary of Labor,
dated December 2, 1996, finding the petitioner guilty of unfair labor practice on two (2)
counts.
The facts, as found by the Secretary of Labor and affirmed by the Court of Appeals, are as
follows:
"On December 1992, Salvador Abtria, then President of respondent union, Association of
Employees and Faculty of Letran, initiated the renegotiation of its Collective Bargaining
Agreement with petitionerColegio de San Juan de Letran for the last two (2) years of the CBA's
five (5) year lifetime from 1989-1994. On the same year, the union elected a new set of officers
wherein private respondent Eleanor Ambas emerged as the newly elected President (Secretary
of Labor and Employment's Order dated December 2, 1996, p. 12).
Ambas wanted to continue the renegotiation of the CBA but petitioner, through Fr. Edwin Lao,
claimed that the CBA was already prepared for signing by the parties. The parties submitted the
disputed CBA to a referendum by the union members, who eventually rejected the said CBA
(Ibid, p. 2).
Petitioner accused the union officers of bargaining in bad faith before the National Labor
Relations Commission (NLRC). Labor Arbiter Edgardo M. Madriaga decided in favor of
petitioner. However, the Labor Arbiter's decision was reversed on appeal before the NLRC (Ibid,
p. 2).
On January 1996, the union notified the National Conciliation and Mediation Board (NCMB) of

On January 1996, the union notified the National Conciliation and Mediation Board (NCMB) of
its intention to strike on the grounds (sic) of petitioner's: non-compliance with the NLRC (1)
order to delete the name of Atty. Federico Leynes as the union's legal counsel; and (2) refusal
to bargain (Ibid, p. 1).
On January 18, 1996, the parties agreed to disregard the unsigned CBA and to start negotiation
on a new five-year CBA starting 1994-1999. On February 7, 1996, the union submitted its
proposals to petitioner, which notified the union six days later or on February 13, 1996 that the
same had been submitted to its Board of Trustees. In the meantime, Ambas was informed
through a letter dated February 15, 1996 from her superior that her work schedule was being
changed from Monday to Friday to Tuesday to Saturday. Ambas protested and requested
management to submit the issue to a grievance machinery under the old CBA (Ibid, p. 2-3).
Due to petitioner's inaction, the union filed a notice of strike on March 13, 1996. The parties met
on March 27, 1996 before the NCMB to discuss the ground rules for the negotiation. On March
29, 1996, the union received petitioner's letter dismissing Ambas for alleged insubordination.
Hence, the union amended its notice of strike to include Ambas' dismissal. (Ibid, p. 2-3).
On April 20, 1996, both parties again discussed the ground rules for the CBA renegotiation.
However, petitioner stopped the negotiations after it purportedly received information that a new
group of employees had filed a petition for certification election (Ibid, p. 3).
On June 18, 1996, the union finally struck. On July 2, 1996, public respondent the Secretary of
Labor and Employment assumed jurisdiction and ordered all striking employees including the
union president to return to work and for petitioner to accept them back under the same terms
and conditions before the actual strike. Petitioner readmitted the striking members except
Ambas. The parties then submitted their pleadings including their position papers which were
filed on July 17, 1996 ( Ibid, pp. 2-3).
On December 2, 1996, public respondent issued an order declaring petitioner guilty of unfair
labor practice on two counts and directing the reinstatement of private respondent Ambas with
backwages. Petitioner filed a motion for reconsideration which was denied in an Order dated
May 29, 1997 (Petition, pp. 8-9)."[1]
Having been denied its motion for reconsideration, petitioner sought a review of the order
of the Secretary of Labor and Employment before the Court of Appeals. The appellate
court dismissed the petition and affirmed the findings of the Secretary of Labor and
Employment. The dispositive portion of the decision of the Court of Appeals sets forth:
WHEREFORE, foregoing premises considered, this Petition is DISMISSED, for being without
merit in fact and in law.
With cost to petitioner.
SO ORDERED.[2]
Hence, petitioner comes to this Court for redress.
Petitioner ascribes the following errors to the Court of Appeals:
I
THE HONORABLE COURT OF APPEALS ERRED AND ACTED WITH GRAVE ABUSE OF
DISCRETION IN AFFIRMING THE RULING OF THE SECRETARY OF LABOR AND
EMPLOYMENT WHICH DECLARES PETITIONER LETRAN GUILTY OF REFUSAL TO
BARGAIN (UNFAIR LABOR PRACTICE) FOR SUSPENDING THE COLLECTIVE
BARGAINING NEGOTIATIONS WITH RESPONDENT AEFL, DESPITE THE FACT THAT THE
SUSPENSION OF THE NEGOTIATIONS WAS BROUGHT ABOUT BY THE FILING OF A
PETITION FOR CERTIFICATION ELECTION BY A RIVAL UNION WHO CLAIMED TO
COMMAND THE MAJORITY OF THE EMPLOYEES WITHIN THE BARGAINING UNIT.
II
THE HONORABLE COURT OF APPEALS ERRED AND ACTED WITH GRAVE ABUSE OF
DISCRETION IN AFFIRMING THE RULING OF THE SECRETARY OF LABOR AND -Union, through its president, initiated the
EMPLOYMENT WHICH DECLARES PETITIONER LETRAN GUILTY OF UNFAIR LABOR renegotiation fort the last 2 years of the CBA's 5 year
PRACTICE FOR DISMISSING RESPONDENT AMBAS, DESPITE THE FACT THAT HER lifetime. On the same year, Ambas was newly
DISMISSAL WAS CAUSED BY HER INSUBORDINATE ATTITUDE, SPECIFICALLY, HER elected as president
REFUSAL TO FOLLOW THE PRESCRIBED WORK SCHEDULE.[3] -Ambas wanted to continue the renegotiation but
The twin questions of law before this Court are the following: (1) whether petitioner is guilty LETRAN claimed that a CBA was already prepared.
of unfair labor practice by refusing to bargain with the union when it unilaterally suspended The said CBA was submitted for referendum by the
the ongoing negotiations for a new Collective Bargaining Agreement (CBA) upon mere union members but was rejected by the UNION
information that a petition for certification has been filed by another legitimate labor -LETRAN accused UNION of bargaining in BF
organization? (2) whether the termination of the union president amounts to an LA: for LETRAN
interference of the employees' right to self-organization?
NLRC: reversed for UNION
The petition is without merit.
After a thorough review of the records of the case, this Court finds that petitioner has not -UNION notified NCMB of intention to strike:
shown any compelling reason sufficient to overturn the ruling of the Court of Appeals 1. Non-compliance w/NLRC's order to delete
affirming the findings of the Secretary of Labor and Employment. It is axiomatic that the Atty. Leynes's name as the union's counsel
findings of fact of the Court of Appeals are conclusive and binding on the Supreme Court 2. Refusal to bargain
and will not be reviewed or disturbed on appeal. In this case, the petitioner failed to show -Parties eventually agreed to renegotiate the terms
any extraordinary circumstance justifying a departure from this established doctrine. of the CBA. UNION submitted its proposal to
As regards the first issue, Article 252 of the Labor Code defines the meaning of the phrase petitioner, which allegedly was submitted to the
"duty to bargain collectively," as follows: Board of Trustees of LETRAN. Meanwhile:
Art. 252. Meaning of duty to bargain collectively. - The duty to bargain collectively means the 1. Ambas was informed of the change of her
performance of a mutual obligation to meet and convene promptly and expeditiously in good work schedule, to which Ambas protested,
faith for the purpose of negotiating an agreement with respect to wages, hours of work and all
requested that the issue be submitted to
other terms and conditions of employment including proposals for adjusting any grievances or
questions arising under such agreement and executing a contract incorporating such grievance procedure
agreements if requested by either party but such duty does not compel any party to agree to a 2. Union filed notice to strike after LETRAN did
proposal or to make any concession. not act upon the request of the union
Noteworthy in the above definition is the requirement on both parties of the performance of 3. Union received LETRAN's letter dismissing
the mutual obligation to meet and convene promptly and expeditiously in good faith for the Ambas for insubordination
purpose of negotiating an agreement. Undoubtedly, respondent Association of Employees -renegotiation started again. But LETRAN stopped
and Faculty of Letran (AEFL) (hereinafter, "union") lived up to this requisite when it the negotiations on the allegation that a new group
presented its proposals for the CBA to petitioner on February 7, 1996. On the other hand, of employees filed a petition for certification election
petitioner devised ways and means in order to prevent the negotiation. -Union finally struck. Return to work order. Letran
Petitioner's utter lack of interest in bargaining with the union is obvious in its failure to
readmitted the striking employees except AMBAS
make a timely reply to the proposals presented by the latter. More than a month after the
proposals were submitted by the union, petitioner still had not made any counter- -NLRC: declared LETRAN guilty of ULP
proposals. This inaction on the part of petitioner prompted the union to file its second
notice of strike on March 13, 1996. Petitioner could only offer a feeble explanation that the ISSUES
Board of Trustees had not yet convened to discuss the matter as its excuse for failing to 1. WON petitioner is guilty of ULP by refusing to
file its reply. This is a clear violation of Article 250 of the Labor Code governing the bargain w/ the union when it unilaterally suspended

file its reply. This is a clear violation of Article 250 of the Labor Code governing the bargain w/ the union when it unilaterally suspended
procedure in collective bargaining, to wit: the ongoing negotiations for a new CBA upon mere
Art. 250. Procedure in collective bargaining. - The following procedures shall be observed in information that a petition for certification has been
collective bargaining: filed by another legitimate labor organization
(a) When a party desires to negotiate an agreement, it shall serve a written notice upon the 2. WON the termination of union president amounts to
other party with a statement of its proposals. The other party shall make a reply thereto not later an interference of employees' right to self -
than ten (10) calendar days from receipt of such notice.[4]
organization
xx x
As we have held in the case of Kiok Loy vs. NLRC,[5] the company's refusal to make
counter-proposal to the union's proposed CBA is an indication of its bad faith. Where the HELD
employer did not even bother to submit an answer to the bargaining proposals of the 1. YES
union, there is a clear evasion of the duty to bargain collectively.[6] In the case at bar, -Art 252 MEANING OF DUTY TO BARGAIN
petitioner's actuation show a lack of sincere desire to negotiate rendering it guilty of unfair COLLECTIVELY
labor practice. -Requirement on both parties of the performance of
Moreover, the series of events that transpired after the filing of the first notice of strike in the mutual obligation to meet and convene promptly
January 1996 show petitioner's resort to delaying tactics to ensure that negotiation would and expeditiously in GF for the purpose of
not push through. Thus, on February 15, 1996, or barely a few days after the union negotiation an agreement
proposals for the new CBA were submitted, the union president was informed by her -Unin lived up to this requisite by presenting its
superior that her work schedule was being changed from Mondays to Fridays to Tuesdays
proposals to LETRAN. LETRAN on the other hand
to Saturdays. A request from the union president that the issue be submitted to a
grievance machinerywas subsequently denied. Thereafter, the petitioner and the union devised ways and means to prevent the negotiation.
met on March 27, 1996 to discuss the ground rules for negotiation. However, just two days -Petitioner's utter lack of interest in bargaining with
later, or on March 29, 1996, petitioner dismissed the union president for alleged the union is obvious in its failure to make a timely
insubordination. In its final attempt to thwart the bargaining process, petitioner suspended reply to the proposals presented by the latter. More
the negotiation on the ground that it allegedly received information that a new group of than a month after the proposals were submitted by
employees called the Association of Concerned Employees of Colegio (ACEC) had filed a the union, petitioner still had not made any counter-
petition for certification election. Clearly, petitioner tried to evade its duty to bargain proposals. This inaction on the part of petitioner
collectively. prompted the union to file its second notice of strike
Petitioner, however, argues that since it has already submitted the union's proposals to the on March 13, 1996. Petitioner could only offer a
Board of Trustees and that a series of conferences had already been undertaken to feeble explanation that the Board of Trustees
discuss the ground rules for negotiation such should already be considered as acts
had not yet convened to discuss the matter as its
indicative of its intention to bargain. As pointed out earlier, the evidence on record belie
the assertions of petitioner. excuse for failing to file its reply.
Petitioner, likewise, claims that the suspension of negotiation was proper since by the filing -applied Kiok Loy: refusal to make a counter-propsal
of the petition for certification election the issue on majority representation of the is an indication of BF
employees has arose. According to petitioner, the authority of the union to negotiate on -delaying tactics by LETRAN:
behalf of the employees was challenged when a rival union filed a petition for certification 1. Days after the union submitted its proposals,
election. Citing the case of Lakas Ng Manggagawang Makabayan v. Marcelo LETRAN changed work schedule of the UNION
Enterprises,[7] petitioner asserts that in view of the pendency of the petition for certification PRESIDENT
election, it had no duty to bargain collectively with the union. 2. Two days after LETRAN and the UNION met to
We disagree. In order to allow the employer to validly suspend the bargaining process set the ground rules for negotiation, LETRAN
there must be a valid petition for certification election raising a legitimate representation dismissed the union president for alleged
issue. Hence, the mere filing of a petition for certification election does not ipso facto justify
insubordination.
the suspension of negotiation by the employer. The petition must first comply with the
provisions of the Labor Code and its Implementing Rules. Foremost is that a petition for 3. LETRAN now suspends the bargaining on the
certification election must be filed during the sixty-day freedom period. The "Contract Bar allegation that a new group of employees
Rule" under Section 3, Rule XI, Book V, of the Omnibus Rules Implementing the Labor (ASSOCIATION OF CONCERNED EMPLOYEES OF
Code, provides that: " .… If a collective bargaining agreement has been duly registered in COLLEGIO) has filed a petition for certification
accordance with Article 231 of the Code, a petition for certification election or a motion for election
intervention can only be entertained within sixty (60) days prior to the expiry date of such -on suspension of negotiations on alleged petition
agreement." The rule is based on Article 232,[8] in relation to Articles 253, 253-A and 256 for certification election: In order to allow the
of the Labor Code. No petition for certification election for any representation issue may be employer to validly suspend the bargaining process
filed afterthe lapse of the sixty-day freedom period. The old CBA is extended until a new there must be a valid petition for certification
one is signed. The rule is that despite the lapse of the formal effectivity of the CBA the law
election raising a legitimate representation issue.
still considers the same as continuing in force and effect until a new CBA shall have been
Hence, the mere filing of a petition for certification
validly executed.[9] Hence, the contract bar rule still applies.[10] The purpose is to ensure
stability in the relationship of the workers and the company by preventing frequent election does not ipso facto justify the suspension of
modifications of any CBA earlier entered into by them in good faith and for the stipulated negotiation by the employer.
original period.[11] …must also comply with LABOR CODE PROVISIONS
In the case at bar, the lifetime of the previous CBA was from 1989-1994. The petition for • A petition for certification election must be
certification election by ACEC, allegedly a legitimate labor organization, was filed with the filed durign the 60-day freedom period prior to
Department of Labor and Employment (DOLE) only on May 26, 1996. Clearly, the petition the expiry of the CBA (contract bar rule). No
was filed outside the sixty-day freedom period. Hence, the filing thereof was barred by the petition should be filed after the lapse of the
existence of a valid and existing collective bargaining agreement. Consequently, there is 60-day period
no legitimate representation issue and, as such, the filing of the petition for certification • Old CBA extended for stability purposes
election did not constitute a bar to the ongoing negotiation. Reliance, therefore, by
…here no clear reprsentation issue, the petition
petitioner of the ruling in Lakas Ng Manggagawang Makabayan v. Marcelo
Enterprises[12] is misplaced since that case involved a legitimate representation issue being filed 2 years after the lifetime of the previous
which is not present in the case at bar. CBA.
Significantly, the same petition for certification election was dismissed by the Secretary of …the same petition was also dismissed by SOLE,
Labor on October 25, 1996. The dismissal was upheld by this Court in a Resolution, dated upheld by SC
April 21, 1997.[13]
In view of the above, there is no doubt that petitioner is guilty of unfair labor practice by its 2. YES
stern refusal to bargain in good faith with respondent union. -While we recognize the right of the employer to
Concerning the issue on the validity of the termination of the union president, we hold that terminate the services of an employee for a just or
the dismissal was effected in violation of the employees' right to self-organization. authorized cause, nevertheless, the dismissal of
To justify the dismissal, petitioner asserts that the union president was terminated for employees must be made within the parameters of
cause, allegedly for insubordination for her failure to comply with the new working
law and pursuant to the tenets of equity and fair
schedule assigned to her, and pursuant to its managerial prerogative to discipline and/or
play.The employer's right to terminate the services
dismiss its employees. While we recognize the right of the employer to terminate the
services of an employee for a just or authorized cause, nevertheless, the dismissal of of an employee for just or authorized cause must be
employees must be made within the parameters of law and pursuant to the tenets of exercised in good faith. More importantly, it must
equity and fair play.[14] The employer's right to terminate the services of an employee for not amount to interfering with, restraining or
just or authorized cause must be exercised in good faith.[15] More importantly, it must not coercing employees in the exercise of their right to
amount to interfering with, restraining or coercing employees in the exercise of their right self-organization because it would amount to, as in
to self-organization because it would amount to, as in this case, unlawful labor practice this case, unlawful labor practice under Article 248 of
under Article 248 of the Labor Code. the Labor Code.
The factual backdrop of the termination of Ms. Ambas leads us to no other conclusion that -The factual backdrop of the termination of Ms.
she was dismissed in order to strip the union of a leader who would fight for the right of her Ambas leads us to no other conclusion that she was
co-workers at the bargaining table. Ms. Ambas, at the time of her dismissal, had been
dismissed in order to strip the union of a leader who
working for the petitioner for ten (10) years already. In fact, she was a recipient of a loyalty
would fight for the right of her co-workers at the

award. Moreover, for the past ten (10) years her working schedule was from Monday to would fight for the right of her co-workers at the
Friday. However, things began to change when she was elected as union president and bargaining table. Ms. Ambas, at the time of her
when she started negotiating for a new CBA. Thus, it was when she was the union dismissal, had been working for the petitioner for
president and during the period of tense and difficult negotiations when her work schedule ten (10) years already. In fact, she was a recipient of
was altered from Mondays to Fridays to Tuesdays to Saturdays. When she did not budge, a loyalty award. Moreover, for the past ten (10)
although her schedule was changed, she was outrightly dismissed for alleged years her working schedule was from Monday to
insubordination.[16] We quote with approval the following findings of the Secretary of Labor Friday. However, things began to change when she
on this matter, to wit: was elected as union president and when she started
"Assuming arguendo that Ms. Ambas was guilty, such disobedience was not, however, a valid negotiating for a new CBA. Thus, it was when she
ground to teminate her employment. The disputed management action was directly connected was the union president and during the period of
with Ms. Ambas' determination to change the complexion of the CBA. As a matter of fact, Ms.
tense and difficult negotiations when her work
Ambas' unflinching position in faithfully and truthfully carrying out her duties and responsibilities
to her Union and its members in getting a fair share of the fruits of their collective endeavors schedule was altered from Mondays to Fridays to
was the proximate cause for her dismissal, the charge of insubordination being merely a ploy to Tuesdays to Saturdays. When she did not budge,
give a color of legality to the contemplated management action to dismiss her. Thus, the although her schedule was changed, she was
dismissal of Ms. Ambas was heavily tainted with and evidently done in bad faith. Manifestly, it outrightly dismissed for alleged insubordination.
was designed to interfere with the members' right to self-organization.
Admittedly, management has the prerogative to discipline its employees for insubordination. But Disposition. WHEREFORE, premises considered, the
when the exercise of such management right tends to interfere with the employees' right to self- petition is DENIED for lack of merit. SO ORDERED.
organization, it amounts to union-busting and is therefore a prohibited act. The dismissal of Ms.
Ambas was clearly designed to frustrate the Union in its desire to forge a new CBA with the
College that is reflective of the true wishes and aspirations of the Union members. Her dismissal
was merely a subterfuge to get rid of her, which smacks of a pre-conceived plan to oust her
from the premises of the College. It has the effect of busting the Union, stripping it of its strong-
willed leadership. When management refused to treat the charge of insubordination as a
grievance within the scope of the Grievance Machinery, the action of the College in finally
dismissing her from the service became arbitrary, capricious and whimsical, and therefore
violated Ms. Ambas' right to due process."[17]
In this regard, we find no cogent reason to disturb the findings of the Court of Appeals
affirming the findings of the Secretary of Labor and Employment. The right to self-
organization of employees must not be interfered with by the employer on the pretext of
exercising management prerogative of disciplining its employees. In this case, the totality
of conduct of the employer shows an evident attempt to restrain the employees from fully
exercising their rights under the law. This cannot be done under the Labor Code.
WHEREFORE, premises considered, the petition is DENIED for lack of merit.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Puno, and Pardo, JJ., concur.
Ynares-Santiago, J., on leave.
[1] Rollo, pp. 32-34.

[2] Id., at 37-38.
[3]
Id., at 16.
[4] Underscoring supplied.
[5]
141 SCRA 179, 186 (1986).
[6]
The Bradman Co., Inc. vs. Court of Industrial Relations, 78 SCRA 10, 15 (1977).
[7] 118 SCRA 422 (1982).
[8]
Article 232. Prohibition on Certification Election. -- The Bureau shall not entertain any petition
for certification election or any other action which may disturb the administration of duly
registered existing collective bargaining agreements affecting the parties except under Articles
253, 253-A and 256 of this Code.
[9] Pier 8 Arrastre and Stevedoring Services, Inc. vs. Roldan-Confesor, 241 SCRA 294, 307
(1995).
[10]
National Congress of Unions in the Sugar Industry of the Philippines vs. Ferrer-Calleja, 205
SCRA 478, 485 (1992).
[11]
Ibid.
[12] Supra; note 6.
[13] G.R. No 128483, Association of Concerned Employees of Colegio (ACEC) vs. Secretary of
Labor and Employment, et al.

[14] Philippine Singapore Transport Services, Inc. vs. NLRC, 277 SCRA 506, 512 (1997).
[15]
Samar II Electric Cooperative, Inc. vs. NLRC, 270 SCRA 290, 295 (1997).
[16]
Rollo, p. 45.
[17] Id., at 46.
Pasted from <http://sc.judiciary.gov.ph/jurisprudence/2000/sept2000/141471.htm>

MANILA FASHIONS, INC. V NLRC (ZAMORA AND NAGKAKAISANG
MANGGAGAWA NG MANILA FASHIONS, INC.)
12:14 AM
MANILA FASHIONS, INC. V NLRC (ZAMORA AND NAGKAKAISANG MANGGAGAWA NG MANILA

FASHIONS, INC.)
G.R. No. 117878
BELLOSILLO; November 13, 1996
FACTS
- respondent Nagkakaisang Manggagaw a ng Manila Fashions, Inc., through its president, respondent Nonito Zamora, filed a
complaint before the Labor Arbiter on behalf of its one hundred and fifty (150) members w ho w ere regular employees of petitioner
Manila Fashions, Inc. The complaint charged petitioner w ith non-compliance, w ith Wage Order No NCR-02 and 02-A mandating a
P12- increase in w ages effective 8 January 1991. As a result, complainants' basic pay, 13th month pay, service incentive leave pay,
legal holiday pay, night shift differential and overtime pay w ere all underpaid
- Petitioner countered that the failure to comply w ith the pertinent Wage Order w as brought about by the tremendous losses suffered
by it w hich were aggravated when the workers staged a strike on account of the non-adjustment of their basic pay. To forestall
continuous suspension/closure of business operations, which petitioner did for three (3) months, the strikers sent a notice that they
w ere willing to condone the implementation of the increase. The condonation w as distinctly stated in Sec. 3, Art. VIII, of the
Collective Bargaining Agreement (CBA) dated 4 February 1992, w hich w as voluntarily entered into by the parties and representsa
reasonable settlement “The Union realizes the company’s closeness to insolvency and, as such , sympathizes w ith the company’s
condition. Therefore, the Union has agreed, as it hereby agrees, to condone the implementation of Wage Order o. NCR-02 and 02-
A.
- The complainants admitted the existence of the aforementioned provision in the CBA; how ever they denied the validity thereof
inasmuch as it w as not reached after due consultation w ith the members.
- The Labor Arbiter sustained the claim that the subject provision of the CBA w as void but based its conclusion on a different
ground :
. . . While it is true that both union officers/members and (petitioner) signed the agreement, how ever, the same is not
enforceable since said agreement is null and void, it being contrary to law . It is only the Tripartite Wage Productivity Boar d of
(the) Department of Labor and Employment (DOLE) that could approve exemption (of) an establishment from coverage of
(a) Wage Order . . .
ISSUES
1. WON the condonation of the implementation of Wage Order No. NCR-02 and 02-A contained in Sec. 3, Art. VIII, of the CBA w as
valid
HELD
1. NO
Reasoning A Collective Bargaining Agreement refers to the negotiated contract betw een a legitimate labor organization and the
employer concerning w ages, hours of work and all other terms and conditions of employment in a bargaining unit, including
mandatory provisions for grievances and arbitration machineries. As in all other contracts, the parties in a CBA may establish such
stipulations, clauses, terms and conditions as they may deem convenient provided they are not contrary to law , morals, good
customs, public order or public policy. Section 3, Art. VIII, of the CBA is a void provision because by agreeing to condone the
implementation of the Wage Order the parties thereby contravened its mandate on w age increase of P12.00 effective 8 January
1991. Also, as stated by the Labor Arbiter, it is only the Tripartite Wage Productivity Board of the DOLE that could approve
exemption of an establishment from coverage of a Wage Order.
If petitioner is a financially distressed company then it should have applied for a w age exemption so that it could meet its labor costs
w ithout endangering its viability or its very existence upon w hich both management and labor depend for a living. The Officeof the
Solicitor General emphasizes the point that parties to a CBA may not by themselves, set a wage lower than the minimum wage. To
do so would render nugatory the purpose of a wage exemption, not to mention the possibility that employees may be unwittinglyput
in a position to accept a lower wage.
The cases that petitioner relies on are simply inapplicable because, unlike the present case w hich involves a stipulation in the CBA
in contravention of law , they are concerned w ith compromise settlements as a means to end labor disputes recognized by Art. 227
of the Labor Code and considered not against public policy by doctrinal rules established by this Court.
Disposition Petition is dismissed.

G.R. No. 117878 November 13, 1996

MANILA FASHIONS, INC., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, NONITO ZAMORA and NAGKAKAISANG
MANGGAGAWA NG MANILA FASHIONS, INC., respondents.
BELLOSILLO, J.:
On 15 March 1993 respondent Nagkakaisang Manggagawa ng Manila Fashions, Inc., through its
president, respondent Nonito Zamora, filed a complaint before the Labor Arbiter on behalf of its one
hundred and fifty (150) members who were regular employees of petitioner Manila Fashions, Inc.
The complaint charged petitioner with non-compliance, with Wage Order No NCR-02 and 02-A
mandating a P12- increase in wages effective 8 January 1991. As a result, complainants' basic pay,
13th month pay, service incentive leave pay, legal holiday pay, night shift differential and overtime Facts:
pay were all underpaid. -The workers of Manila Fashions Inc. went on strike. Manila
Fashions Inc. (ER) allegedly suffered losses so the workers
Petitioner countered that the failure to comply with the pertinent Wage Order was brought about by allegedly sent a notice to them condoning the implementation
the tremendous losses suffered by it which were aggravated when the workers staged a strike on of Wage Order Increase, as contained in Section 3, Article 8 of
account of the non-adjustment of their basic pay. To forestall continuous suspension/closure of the 1992 CBA (though the Wage Order covered were only
business operations, which petitioner did for three (3) months, the strikers sent a notice that they Wage Order No. NCR-02 and 02-A)
were willing to condone the implementation of the increase. The condonation was distinctly stated in
Sec. 3, Art. VIII, of the Collective Bargaining Agreement (CBA) dated 4 February 1992, which was -For the nonpayment of the corresponding increase in wage, as
voluntarily entered into by the parties and represents a reasonable settlement — ordered by the said wage orders, the employees as
Sec. 3. The Union realizes the company's closeness to insolvency and, as such, sympathizes with represented by the union, filed before the Labor Arbiter a
the company's financial condition. Therefore, the Union has agreed, as it hereby agrees, to condone complaint for noncompliance of the wage orders. They did
the implementation of Wage Order No. NCR-02 and 02-A. admit the existence of the provision in the CBA but denied the
The complainants admitted the existence of the aforementioned provision in the CBA; however they validity of the said provision, on the ground that it was not
denied the validity thereof inasmuch as it was not reached after due consultation with the members.
reached after due consultation with the members
The Labor Arbiter sustained the claim that the subject provision of the CBA was void but based its
conclusion on a different ground — LA: CBA provision VOID, not enforceable, it being contrary to
. . . While it is true that both union officers/members and (petitioner) signed the agreement, however, the law.
same is not enforceable since said agreement is null and void, it being contrary to law. It is only the …only the Tripartite Wge Productivity Board of DOLE could
Tripartite Wage Productivity Board of (the) Department of Labor and Employment (DOLE) that could approve the exemption of an establishment from coverage of
approve exemption (of) an establishment from coverage of (a) Wage Order . . . 1 the Wage Order
Thus on 30 June 1993 petitioner was adjudged liable to each of the complainants for underpayment
of salary, 13th month pay, vacation leave pay and legal holiday pay in the total amount of
NLRC: affirmed LA
P900,012.00. All other claims were dismissed for lack of merit. 2
Both parties were unsatisfied with the decision, prompting them to seek relief from respondent ISSUE
National Labor Relations Commission (NLRC). The basis of petitioner's appeal was that the ruling Was the condonation of the Wage Order contained in the CBA
was not in accordance with the facts and the law. On the part of the private respondents, they valid?
assailed the computation of the award erroneous.
Respondent NLRC was not persuaded by petitioner. On the other hand, the appeal of private HELD
respondents was no longer considered as it was filed beyond the reglementary period. Thus on 31
May 1994 the disputed decision was affirmed. 3
NO. Parties to a CBA may not by themselves, set a wage lower
Was the condonation of the implementation of Wage Order No. NCR-02 and 02-A contained in Sec. than the minimum wage. To do so would render nugatory the
3, Art. VIII, of the CBA valid? purpose of a wage exemption, not to mention the possibility
Petitioner maintains that the condonation is valid. In support thereof, it invokes cases decided by this that employees may be unwittingly put in a position to accept a

Petitioner maintains that the condonation is valid. In support thereof, it invokes cases decided by this that employees may be unwittingly put in a position to accept a
Court applying the rule that if the agreement was voluntarily entered into and represents a lower wage.
reasonable settlement it is binding on the parties and may not be disowned simply because of a -A Collective Bargaining Agreement refers to the negotiated
change of mind. 4 Granting the CBA provision is indeed void, petitioner offers the alternative contract between a legitimate labor organization and the
argument that the computation of the award was erroneous and arbitrary.
We sustain the decision of the Labor Arbiter as affirmed by respondent NLRC that the condonation
employer concerning wages, hours of work and all other terms
appearing in Sec. 3, Art. VIII, of the CBA did not exempt petitioner from compliance with Wage Order and conditions of employment in a bargaining unit, including
No. NCR-02 and 02-A.. mandatory provisions for grievances and arbitration
A Collective Bargaining Agreement refers to the negotiated contract between a legitimate labor machineries.
organization and the employer concerning wages, hours of work and all other terms and conditions -As in all other contracts, the parties in a CBA may establish
of employment in a bargaining unit, including mandatory provisions for grievances and arbitration such stipulations, clauses, terms and conditions as they may
machineries. 5 As in all other contracts, the parties in a CBA may establish such stipulations, deem convenient provided they are not contrary to law,
clauses, terms and conditions as they may deem convenient provided they are not contrary to law,
morals, good customs, public order or public policy. 6 Section 3, Art. VIII, of the CBA is a void morals, good customs, public order or public policy.
provision because by agreeing to condone the implementation of the Wage Order the parties -HOWEVER, Section 3, Art. VIII, of the CBA is a void provision
thereby contravened its mandate on wage increase of P12.00 effective 8 January 1991. Also, as because by agreeing to condone the implementation of the
stated by the Labor Arbiter, it is only the Tripartite Wage Productivity Board of the DOLE that could Wage Order the parties thereby contravened its mandate on
approve exemption of an establishment from coverage of a Wage Order. wage increase of P12.00 effective 8 January 1991.
If petitioner is a financially distressed company then it should have applied for a wage exemption so -Also, as stated by the Labor Arbiter, it is only the Tripartite
that it could meet its labor costs without endangering its viability or its very existence upon which
Wage Productivity Board of the DOLE that could approve
both management and labor depend for a living. 7 The Office of the Solicitor General emphasizes the
point that parties to a CBA may not by themselves, set a wage lower than the minimum wage. To do exemption of an establishment from coverage of a Wage
so would render nugatory the purpose of a wage exemption, not to mention the possibility that Order. If petitioner is a financially distressed company then it
employees may be unwittingly put in a position to accept a lower wage. 8 should have applied for a wage exemption so that it could meet
The cases that petitioner relies on are simply inapplicable because, unlike the present case which its labor costs without endangering its viability or its very
involves a stipulation in the CBA in contravention of law, they are concerned with compromise existence upon which both management and labor depend for
settlements as a means to end labor disputes recognized by Art. 227 of the Labor Code and a living.
considered not against public policy by doctrinal rules established by this Court. 9
As regards the alternative argument of petitioner that the computation of the award was erroneous
and arbitrary, it must be rejected outright as it was apparently never brought to the attention of
respondent NLRC. Consequently, it cannot be raised for the first time before this Court since that
would be offensive to the basic rule of fair play, justice and due process. 10 Moreover, the original
end exclusive jurisdiction of this Court to review a decision of respondent NLRC in a petition
for certiorari under Rule 65 does not normally include an inquiry into the correctness of its evaluation
of the evidence but confined merely to issues of jurisdiction or grave abuse of discretion. 11
WHEREFORE, the petition is DISMISSED. The order of respondent National Labor Relations
Commission which affirmed the decision of the Labor Arbiter awarding the total amount of
P900,012.00 to the complainants is likewise AFFIRMED.
SO ORDERED.
Padilla, Vitug, Kapunan and Hermosisima, Jr., JJ., concur.
Footnotes
1 Rollo, p. 29.
2 Decision penned by Labor Arbiter Fatima Jambaro-Franco; Rollo, pp. 30-33.
3 Decision penned by Presiding Commissioner Edna Bonto-Perez, concurred in by Commissioner
Rogelio I. Rayala; Rollo, p. 26.
4 Cruz v. NLRC, G.R. No. 98273, 28 October 1991, 203 SCRA 286; Olaybar v. NLRC, G.R. No.
108713, 28 October 1994, 237 SCRA 819; Siangco v. NLRC, G.R. No. 110261, 4 August 1994, 235
SCRA 96; and, Jag & Haggar Jeans and Sportswear Corporation v. NLRC, G.R. No. 105710, 23
February 1995, 241 SCRA 635.
5 Sec. jj, Rule I, Bk. V, Omnibus Rules Implementing the Labor Code.
6 Art. 1306, Civil Code.
7 Radio Communications of the Philippines, Inc. v. National Wages Council, G.R. No. 93044, 26
March 1992, 207 SCRA 581.
8 Rollo, p. 90.
9 See note 4.
10 Huang v. CA, G.R. No. 108525, 13 September 1994, 236 SCRA 420.
11 Sta. Fe Construction Co. v. NLRC, G.R. No. 101280, 2 March 1994, 230 SCRA 593.
Pasted from <http://www.lawphil.net/judjuris/juri1996/nov1996/gr_117878_1996.html>

REPUBLIC SAVINGS BANK v. CIR
12:14 AM
REPUBLIC SAVINGS BANK v. CIR

21 SCRA 226
CASTRO; September 27, 1967
NATURE
Appeal of CIR decision
FACTS
- Republic Savings Bank (now Republic Bank or RB) discharged/terminated private respondents Resuello, Jola et al, for having
w ritten and published "a patently libelous letter, tending to cause the dishonor, discredit or contempt not only of officers and
employees of this bank, but also of your employer, the bank itself." Respondents had w ritten to the bank president, Ramon Racelis,
a letter-charge, demanding his resignation on the grounds of immorality, nepotism in the appointment and favoritism as w ell as
discrimination in the promotion of RB employees.
- CIR ruled that RB’s act of dismissing the 8 respondent employees constituted an unfair labor practice w ithin the meaning and
intendment of the Industrial Peace Act (RA 875). RB appealed. It still maintains that the discharge w as for cause.
- RB’s defense: CIR should have dismissed the complaint because the discharge of the respondents had nothing to do w ith their
union activities as the latter in fact admitted at the hearing that the w riting of the letter-charge w as not a "union action" but merely
their "individual" act.
ISSUE
WON the dismissal of the 8 employees by RB constituted unfair labor practice w ithin the meaning and intendment of the Industrial
Peace Act
HELD
YES.
- Even assuming that respondents acted in their individual capacities w hen they w rote the letter-charge they were nonetheless
protected for they w ere engaged in concerted activity, in the exercise of their right of self-organization that includes concerted
activity for mutual aid and protection, interference w ith which constitutes an unfair labor practice. The joining in protests or demands,
even by a small group of employees, if in furtherance of their interests, is a concerted activity protected by the IndustrialPeace Act.
It is not necessary that union activity be involved or that collective bargaining be contemplated.
- NLRC v. Phoenix Mutual Life Insurance Co is case in point. Held: An insurance company w as guilty of an unfair labor practice in
interfering w ith this right of concerted activity by discharging two agents employed in a branch office. The agents acts of meeting
and joining in a letter to the home office objecting to the transfer to their branch office of a cashier from another branch, for further
discussion, approval and signature, is a concerted activity that is protected.
Re Meaning of Duty to Bargain
- What the RB should have done w as to refer the letter-charge to the grievance committee. This w as its duty, failing w hich it
committed an unfair labor practice RA 875 w hich makes it an unfair labor practice for an employer "to dismiss, discharge or
otherw ise prejudice or discriminate against an employee for having filed charges or for having given or being about to give testimony
under this Act."
- Collective bargaining does not end with the execution of an agreement. It is a continuous process. The duty to bargain imposes on
the parties during the term of their agreement the mutual obligation “to meet and confer promptly and expeditiously and in good faith
for the purpose of adjusting any grievances or question arising under such agreement” and a violation of this obligation is an unfair
labor practice.
- Instead of stifling criticism, RB should have allow ed the respondents to air their grievances. Good faith bargaining required of the
Bank an open mind and a sincere desire to negotiate over grievances. The grievance committee, created in the CBA, w ould have
been an appropriate forum for such negotiation. Indeed, the grievance procedure is a part of the continuous process of collective
bargaining. It is intended to promote a friendly dialogue betw een labor and management as a means of maintaining industrial peace.
Disposition Appealed decision is AFFIRMED
FERNANDO, CONCURRING
- Collective bargaining presupposes the give-and-take of discussion. No party adopts, at least in its initial stages, a hard-line
position, from w hich there can be no retreat. That w as not the situation here. Respondents as labor leaders w ere quite certain that
the President of RB had offended most grievously. They w anted him out. There w as no room for discussion.
- That for me is not bargaining as traditionally and commonly understood. It is for that reason that I find it difficult to agree fully w ith
the view that their dismissal could be construed as a refusal to bargain collectively. Moreover, they did not as adverted to in the
opinion of the Court, follow the procedure set forth for adjusting grievances. It is my view therefore that the dismissal amounted to
"interference, restraint or coercion" as prohibited in the Industrial Peace Act, and not refusal to bargain collectively.

G.R. No. L-20303 September 27, 1967

REPUBLIC SAVINGS BANK (now REPUBLIC BANK), petitioner,
vs.
COURT OF INDUSTRIAL RELATIONS, ROSENDO T. RESUELLO, BENJAMIN JARA,
FLORENCIO ALLASAS, DOMINGO B. JOLA, DIOSDADO S. MENDIOLA, TEODORO DE LA
CRUZ, NARCISO MACARAEG and MAURO A. ROVILLOS, respondents.
Lichauco, Picaso & Agcaoili and R. Santayana for petitioner.
G. E. Fajardo for respondents.
CASTRO, J.:
The vital issue in this case is whether the dismissal of the eight (8) respondent employees by
the petitioner Republic Bank (hereinafter referred to as the Bank) constituted an unfair labor practice
within the meaning and intendment of the Industrial Peace Act (Republic Act 875). The Court of
Industrial Relations (CIR) found it did and its decision is now on appeal before us. The Bank
maintains that the discharge was for cause.
The Bank had in its employ the respondents Rosendo T. Resuello, Benjamin Jara, Florencio
Allasas, Domingo B. Jola, Diosdado S. Mendiola, Teodoro de la Cruz, Narciso Macaraeg and Mauro
A. Rovillos. On July 12, 1958 it discharged Jola and, a few days after (July 18, 1958), the rest of
respondents, for having written and published "a patently libelous letter . . . tending to cause the
dishonor, discredit or contempt not only of officers and employees of this bank, but also of your
employer, the bank itself."
The letter referred to was a letter-charge which the respondents had written to the bank
president, demanding his resignation on the grounds of immorality, nepotism in the appointment and
favoritism as well as discrimination in the promotion of bank employees. The letter, dated July 9,
1958, is hereunder reproduced in full:
Mr. Ramon Racelis
President, Republic Savings Bank
Man ila
"Dear Mr. President:
We, the undersigned, on behalf of all our members and employees of the Republic
Savings Bank, who have in our hearts only the most honest and sincere motive to conserve
and protect the interest of the institution and its 200,000 depositors, do hereby, demand the
much needed resignation of His Excellency, Mr. Ramon Racelis as President and Member of
the Board of Directors of the Bank.
Mr. President, you have already, in so many occasions, placed the Bank on the verge of
danger, that now we deem it right and justifiable for you to leave this Bank and let other more
capable presidents continue the work you have not well accomplished.
In the above instance, we are presenting charges which in our humble contention

In the above instance, we are presenting charges which in our humble contention
properly justifies incapacity on your part to continue and assume the position as top executive
of the huge institution:
(1) That you Mr. President, have tolerated and practiced immorality in this Bank. We have
been expecting you to do something about this malpractice which is very disgraceful and
affects the morale of the hundreds of your employees. But so far, Mr. President, you have just
let this thing passed through. As a matter of fact, you have even promoted these women like
Misses Pacita Mato and Edita Castro. These women are of questionable characters, Mr.
President, and should have had no place in the Bank as managers or even as mere
employees. We know Mr. President, because it is an open secret in the Bank, that you have
illicit relations with one of them — Miss Edita Castro. As top officer and as father of the
employees of the Bank, you have shown this bad example to your employees. Mr. President,
we are really ashamed of you.
(2) That you have allowed the practice of nepotism in this Bank. You have employed relatives
of yours like Honorio Ravida; Bienvenido Ravida; Antonio Racelis; Jesus Antonio; and
Argentina Racelis. Not only that Mr. President. You have also given those nieces and nephews
of yours good positions at the expense of the more capable employees. Mr. President, if we
have to mention all of them, one page will not be enough.
(3) With regards to promotion, you have given more preferences to your close relatives. When
the Bank advocated the sending of pensionados to States, you have only limited your choice
among your nieces, nephews, and querida, namely, Miss Argentina Racelis, Mr. Jesus
Antonio, Miss Edita Castro, and her brother-in-law, Mr. Pedro Garcia, Jr. In doing this, Mr.
President, you have only lowered the reputation and standing of the Republic Savings Bank.
There is really no sense in sending high school and B.S.E. graduates to States to study
advanced banking. Because of this silly decision, it took one pensionado six months and cost
the Bank a total of P10,000.00 just to study Christmas savings. That subject is very simple;
one need not go to States to study savings; that you know full well, Mr. President. The reason
why you sent Miss Castro to States was because you were also there. Are we not right?
(4) That you Mr. President, tolerated and still tolerating grave dishonesty in this Bank as
evidenced by the following irregularities and anomalies;
(a) In one of our branches, around P200,000.00 was mulcted and embezzled by a certain
Maximo Donado by doctoring the ledgers and records of that particular office. To the present,
the amount is still increasing and some more are being dug up from the records everyday ever
since its discovery in February 1957. In this case you dismissed Mr. M. Donado, immediately.
But this was all that you did. If you have to go back to the history of the case, you will find out
that your beloved nieces and nephews are also involved having been managers of that
particular office. Another nephew, the Vice President-Operations, then Vice President,
Personnel, was also involved for valid reasons that he did not even shift this particular
employee to other branches or departments since the beginning when it has been the policy of
the Bank to reshuffle its personnel. If you want to know why your good nephew did not transfer
this employee, we will tell you. "Your good nephew has eaten too many baskets of delicious
alimango." Mr. President, if there is someone to be blamed in this particular case, it is your
good nephews and nieces for their gross negligence.
(b) Aside from the one mentioned above, we have also Mr. Rodolfo Francisco, who in April
1955, maliciously withdraw (sic) P970.00 in two withdrawal slips from the account of one
depositor in one of our provincial offices, inserting his name as co-depositor in the savings
account ledger.
(c) In January 1958, Mr. Jose de los Santos expended and approved representation expense
in the amount of P300.00 in one of our provincial offices.
(d) Mr. Federico M. Dabu, the ex-cashier and now Personnel Manager, incurred a shortage in
the amount of P1,240.00 in the course of the audit on August 3, 1954.
(e) Mr. Jose S. Guevara, Vice-President on Personnel have (sic) been accepting bribe
moneys. One of these amounts to P4,000.00 which was delivered by a messenger sometime
during the last quarter of 1957.
Mr. President, the anomalies are only a partial list of the irregularities which so far you
have not acted upon. This type of people should have been fired out from the Bank; yet on the
contrary, you promoted them to higher and responsible positions, thus, resulting in the
demoralization of the more capable employees.
Mr. President, we hope that you have still a little sense of decency and propriety left. So,
for goodsake and for the welfare of the Bank, DO RESIGN NOW as President and as Member
of the Board of Directors of the Republic Savings Bank.
Very respectfully yours,
(Sgd.) Rosendo T. Resuello
President, RSB Supervisors' Union (FFW),
(Sgd.) Benjamin Jara
Vice-President RSB Supervisors' Union (FFW)
(Sgd.) Florencio Allasas
Treasurer, RSB Supervisors' Union (FFW)
(Sdg) Domingo B. Jola
Chairman, Executive Committee, RSB Employees' Union (FFW)
(Sgd.) Diosdado S. Mendiola
Vice-President, RSB Employees Union (FFW)
(Sgd.) Teodoro de la Cruz
Member, Executive Committee, RSB Employees' Union (FFW)
(Sgd.) Angelino Quiambao
President, RSB Security Guard Union (FFW)
(Sgd.) Narciso Macaraeg
Vice-President, RSB Security Guard Union (FFW)
(Sgd.) Alfredo Bautista
Treasurer, RSB Security Guard Union (FFW)
(Sgd.) Pacifico A. Argao
PRO, RSB Employees' Union (FFW)
(Sgd.) Toribio B. Garcia
Secretary, RSB Security Guard Union (FFW)
(Sgd.) Mauro A. Rovillos
Member, Executive Committee, RSB Supervisors' Union (FFW)
Copies of this letter were admittedly given to the chairman of the board of directors of the
Bank, and the Governor of the Central Bank.
At the instance of the respondents, prosecutor A. Tirona filed a complaint in the CIR on -8 employees of the bank wrote to the President of
September 15, 1958, alleging that the Bank's conduct violated section 4(a) (5) of the Industrial the bank, demanding his resignation on the
Peace Act which makes it an unfair labor practice for an employer "to dismiss, discharge or grounds of immorality, nepotism in appointment
otherwise prejudice or discriminate against an employee for having filed charges or for having given and favoritism, as well as discrimination in the

and favoritism, as well as discrimination in the
or being about to give testimony under this Act." promotion of bank employees. Copies of the said
The Bank moved for the dismissal of the complaint, contending that respondents were letter were given to the Chairman of the Board of
discharged not for union activities but for having written and published a libelous letter against the
the Bank and the Governor of Central Bank
bank president. The court denied the motion on the basis of its decision in another case 1 in which it
ruled that section 4(a) (5) applies to cases in which an employee is dismissed or discriminated -based on the alleged "patently libelous letter",
against for having filed "any charges against his employer." Whereupon the case was heard. the said employees were discharged.
In 1960, however, this Court overruled the decision of the CIR in the Royal Interocean case -Employees filed a case for ULP before the CIR,
and held that "the charge, the filing of which is the cause of the dismissal of the employee, must be alleging that the dismissal was due to union
related to his right to self-organization in order to give rise to unfair labor practice on the part of the activities
employer," because "under subsection 5 of section 4(a), the employee's (1) having filed charges or -ER denied, moved for dismissal
(2) having given testimony or (3) being about to give testimony, are modified by 'under this Act'
CIR: For the employees: Section 4 (a) applies to
appearing after the last item."2 The Bank therefore renewed its motion to dismiss, but the court held
the motion in abeyance and proceeded with the hearing. cases in which an employee is dismissed or
On July 4, 1962 the court rendered a decision finding the Bank guilty of unfair labor practice discriminated against for having filed "any charges
and ordering it to reinstate the respondents, with full back wages and without loss of seniority and against his employer"
other privileges. This decision was affirmed by the courten banc on August 9, 1962.
Relying upon Royal Interocean Lines v. CIR,3 and Lakas ng Pagkakaisa sa Peter Paul v. ISSUE
CIR,4 the Bank argues that the court should have dismissed the complaint because the discharge of WON the BANK dismissed the employees for
the respondents had nothing to do with their union activities as the latter in fact admitted at the
cause, and not for union activities as they wrote
hearing that the writing of the letter-charge was not a "union action" but merely their "individual" act.
It will avail the Bank none to gloat over this admission of the respondents. Assuming that the the letter in their individual capacities and not
latter acted in their individual capacities when they wrote the letter-charge they were nonetheless related to their right to self-organization?
protected for they were engaged in concerted activity, in the exercise of their right of self-
organization that includes concerted activity for mutual aid and protection,5interference with which HELD
constitutes an unfair labor practice under section 4(a)(1). This is the view of some members of this NO. Still ULP!
Court. For, as has been aptly stated, the joining in protests or demands, even by a small group of -Definition of INTERFERENCE: interference with
employees, if in furtherance of their interests as such, is a concerted activity protected by the
which constitutes an unfair labor practice under
Industrial Peace Act. It is not necessary that union activity be involved or that collective bargaining
be contemplated.6 section 4(a)(1). This is the view of some members
Indeed, when the respondents complained against nepotism, favoritism and other of this Court. For, as has been aptly stated, the
management practices, they were acting within an area marked out by the Act as a proper sphere of joining in protests or demands, even by a small
collective bargaining. Even the reference to immorality was not irrelevant as it was made to support group of employees, if in furtherance of their
the respondents' other charge that the bank president had failed to provide wholesome working interests as such, is a concerted activity protected
conditions, let alone a good moral example, for the employees by practicing discrimination and by the Industrial Peace Act. It is not necessary that
favoritism in the appointment and promotion of certain employees on the basis of illicit relations or
blood relationship with them.
union activity be involved or that collective
In many respects, the case at bar is similar to National Labor Relations Board v. Phoenix bargaining be contemplated.
Mutual Life Insurance Co.7 The issue in that case was whether an insurance company was guilty of -Here, even when the employees acted in their
an unfair labor practice in interfering with this right of concerted activity by discharging two agents individual capacities, a proper construction is that
employed in a branch office. The cashier of that office had resigned. The ten agents employed there the employees shall have the right to engage in
held a meeting and agreed to join in a letter to the home office objecting to the transfer to their concerted activities for their mutual aid or
branch office of a cashier from another branch office to fill the position. They discussed also the protection even though no union activity be
question whether to recommend the promotion of the assistant cashier of their office as the proper
involved, for collective bargaining be
alternative. They then chose one of their number to compose a draft of the letter and submit it to
them for further discussion, approval and signature. The agent selected to write the letter and contemplated.
another were discharged for their activities in this respect as being, so their notices stated, -As to grievance procedure: Some other members
completely unpleasant and far beyond the periphery of their responsibility. In holding the company of this Court believe, without necessarily
liable for unfair labor practice, the Circuit Court of Appeals said: expressing approval of the way the respondents
A proper construction is that the employees shall have the right to engage in concerted expressed their grievances, that what the Bank
activities for their mutual aid or protection even though no union activity be involved, for collective should have done was to refer the letter-charge to
bargaining be contemplated. Here Davis and Johnson and other salesmen were properly concerned
the grievance committee. This was its duty, failing
with the identity and capability of the new cashier. Conceding they had no authority to appoint a new
cashier or even recommend anyone for the appointment, they had a legitimate interest in acting which it committed an unfair labor practice under
concertedly in making known their views to management without being discharged for that interest. section 4(a) (6). For collective bargaining does not
The moderate conduct of Davis and Johnson and the others bore a reasonable relation to conditions end with the execution of an agreement. It is a
of their employment. It was therefore an unfair labor practice for respondent to interfere with the continuous process. The duty to bargain imposes
exercise of the right of Davis and Johnson and the other salesmen to engage in concerted activities on the parties during the term of their agreement
for their mutual aid or protection. the mutual obligation "to meet and confer
Other members of this Court agreed with the CIR that the Bank's conduct violated section 4(a)
(5) which makes it an unfair labor practice for an employer to dismiss an employee for having filed promptly and expeditiously and in good faith . . .
charges under the Act. for the purpose of adjusting any grievances or
Some other members of this Court believe, without necessarily expressing approval of the question arising under such agreement" and a
way the respondents expressed their grievances, that what the Bank should have done was to refer violation of this obligation is, by section 4 (a) (6)
the letter-charge to the grievance committee. This was its duty, failing which it committed an unfair and (b) (3) an unfair labor practice.
labor practice under section 4(a) (6). For collective bargaining does not end with the execution of an - Collective bargaining . . . normally takes the
agreement. It is a continuous process. The duty to bargain imposes on the parties during the term of form of negotiations when major conditions of
their agreement the mutual obligation "to meet and confer promptly and expeditiously and in good
faith . . . for the purpose of adjusting any grievances or question arising under such agreement"8 and employment to be written into an agreement are
a violation of this obligation is, by section 4 (a) (6) and (b) (3) an unfair labor practice.9 As Professors under consideration and of grievance committee
Cox and Dunlop point out: meetings and arbitration when questions arising in
Collective bargaining . . . normally takes the form of negotiations when major conditions of the administration of an agreement are at stake.
employment to be written into an agreement are under consideration and of grievance committee - Instead of stifling criticism, the Bank should have
meetings and arbitration when questions arising in the administration of an agreement are at stake. 10 allowed the respondents to air their grievances.
Instead of stifling criticism, the Bank should have allowed the respondents to air their Good faith bargaining required of the Bank an
grievances. Good faith bargaining required of the Bank an open mind and a sincere desire to
negotiate over grievances.11 The grievance committee, created in the collective bargaining open mind and a sincere desire to negotiate over
agreements, would have been an appropriate forum for such negotiation. Indeed, the grievance grievances.The grievance committee, created in
procedure is a part of the continuous process of collective bargaining.12 It is intended to promote, as the collective bargaining agreements, would have
it were, a friendly dialogue between labor and management as a means of maintaining industrial been an appropriate forum for such negotiation.
peace. Indeed, the grievance procedure is a part of the
The Bank defends its action by invoking its right to discipline for what it calls the respondents' continuous process of collective bargaining. It is
libel in giving undue publicity to their letter-charge. To be sure, the right of self-organization of
intended to promote, as it were, a friendly
employees is not unlimited,13 as the right of an employer to discharge for cause 14 is undenied. The
Industrial Peace Act does not touch the normal exercise of the right of an employer to select his dialogue between labor and management as a
employees or to discharge them. It is directed solely against the abuse of that right by interfering means of maintaining industrial peace.
with the countervailing right of self-organization.15 But the difficulty arises in determining whether in Disposition. ACCORDINGLY, the decision of July 4,
fact the discharges are made because of such a separable cause or because of some other 1962 and the resolution of August 9, 1962 of the
activities engaged in by employees for the purpose of collective bargaining.16 Court of Industrial Relations are affirmed, at
It is for the CIR, in the first instance, to make the determination, "to weigh the employer's petitioner's cost.
expressed motive in determining the effect on the employees of management's otherwise equivocal
act." For the Act does not undertake the impossible task of specifying in precise and unmistakable
17
language each incident which constitutes an unfair labor practice. Rather, it leaves to the court the

work of applying the Act's general prohibitory language in the light of infinite combinations of events
which may be charged as violative of its terms.18 As the Circuit Court of Appeals puts it:
Determining the legality of a dismissal necessarily involves an appraisal of the employer's
motives. In these cases motivations are seldom expressly avowed and avowals are not always
candid. There thus must be a measure of reliance on the administrative agency knowledgeable in
labor-management relations and on the Trial Examiner who receives the evidence firsthand and is
therefore in a unique position to determine the credibility of the witnesses. Where Examiner and
Board are in agreement there is an increased presumption in favor of their resolution of the issue. 19
What we have just essayed underscores at once the difference between Royal
Interocean and Lakas ng Pagkakaisa on the one hand and this case on the other. In Royal
Interocean, the employee's letter to the home office, for writing which she was dismissed,
complained of the local manager's "inconsiderate and untactful attitude"20 — a grievance which, the
court found, "had nothing to do with or did not arise from her union activities." Nor did the court find
evidence of discriminatory discharge in Lakas ng Pagkakaisa as the letter, which the employee
wrote to the mother company in violation of the local company's rule, denounced "wastage of
company funds." In contrast, the express finding of the court in this case was that the dismissal of
the respondents was made on account of the letter they had written, in which they demanded the
resignation of the bank president for a number of reasons touching labor-management relations —
reasons which not even the Bank's judgment that the respondents had committed libel could excuse
it for making summary discharges21 in disregard of its duty to bargain collectively.
In final sum and substance, this Court is in unanimity that the Bank's conduct, identified as an
interference with the employees' right of self-organization, or as a retaliatory action, and/or as a
refusal to bargain collectively, constituted an unfair labor practice within the meaning and intendment
of section 4(a) of the Industrial Peace Act.
ACCORDINGLY, the decision of July 4, 1962 and the resolution of August 9, 1962 of the
Court of Industrial Relations are affirmed, at petitioner's cost.
Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez and Angeles, JJ., concur.
Bengzon, J.P., J., took no part.
Separate Opinions
FERNANDO, J., concurring:
The opinion of the Court in this highly significant unfair labor practice case, one of first
impression, easily commends itself for approval. The relevant facts are set forth in all fullness and
with due care. The position of the Court united as it is on an unfair labor practice having been
committed, but not quite fully agreed as to which particular subsection of the legal provision was
violated, is delineated with precision. With the explicit acknowledgement there made that some
members of the Court are of the belief that what was done by the Republic Bank here amounted to
"interference" and with the writer being of the persuasion that it could be categorized in line with the
statute as "interference, restraint or coercion," a few words as to why this view is entertained may
not be inappropriate.
No one can doubt that we are in the process of evolving an indigenous labor jurisprudence.
Notwithstanding the clearly American background of the Industrial Peace Act, based as it is mainly
on the Wagner Act,1 labor relations in the Philippines with their peculiar problems and the ingenuity
of Filipino lawyers have resulted in a growing body of decisions notable for their suitability to local
condition and their distinctly local flavor. This is as it should be.
The present case affords one such instance. The wealth of adjudication by both judicial and
administrative agencies in the United States notwithstanding the diligent and earnest search for a
ruling based on a similar fact-situation yielded no case precisely in point. What does it signify? At the
very least, it may indicate that while the problem posed could have arisen there, this particular
response of labor was quite unique. On the assumption which I have here hypothetically made that
there was indeed a valid cause for grievance, a more diplomatic approach could have been
attempted. Or at the very least the procedure indicated for the adjustment of a grievance could have
been followed. That was not done. What respondents did was to issue an ultimatum.
Collective bargaining whether in its formative stage preparatory to a labor contract or in the
adjustment of a labor problem in accordance with the procedure set forth in an existing agreement
presupposes the give-and-take of discussion. No party adopts, at least in its initial stages, a hard-
line position, from which there can be no retreat. That was not the situation here. Respondents as
labor leaders appeared adamantine in their attitude to terminate the services of the then president of
the Republic Savings Bank. Nor did they mince words in describing his alleged misdeeds. They were
quite certain that he had offended most grievously. They wanted him out. There was no room for
discussion.
That for me is not bargaining as traditionally and commonly understood. It is for that reason
that I find it difficult to agree fully with the view that their dismissal could be construed as a refusal to
bargain collectively. Moreover, they did not as adverted to in the opinion of the Court, follow the
procedure set forth for adjusting grievances. Nor considering the explicit language of the Industrial
Peace Act may such dismissal fall within the prohibition against dismissing employees for having
filed charges or about to give testimony "under the Act." As a matter of fact, if the letter were indeed
libelous, their dismissal would not have been unjustified. There was an admission as noted in the
opinion "that the writing of the letter charged was not a 'union' action but merely their 'individual' act."
Nonetheless, concurrence with the decision arrived at by the Court is called for in view of their
mass dismissal. Under the circumstances, the supervisors union, the Republic Savings Bank
employees union, the Republic Savings Bank security guards union, and the Republic Savings Bank
supervisors union were left leaderless. For collective bargaining to be meaningful, there must be two
parties, one representing management and the other representing the union. Nor could management
select who would represent the latter or with whom to deal, otherwise in effect there would be only
one party. Obviously there would then be no bargaining. 1awphîl .n
èt
It is my view therefore that the dismissal amounted to "interference, restraint or coercion" as

prohibited in the Industrial Peace Act. To repeat, this Section 4(a), with the exception of subsection
(2), was taken from the Wagner Act. There is as stated by Bufford in his treatise for the Wagner Act
"an overlap" as this particular subsection deals "with additional labor practice besides containing
incidental provisions concerning related matters."2 As noted further by such commentator: "As
expressed by the Senate Committee: 'The four succeeding unfair labor practices are designed not to
impose limitations or restrictions upon the general guarantees of the first, but rather to spell out with
particularity some of the practices that have been most prevalent and most troublesome.'"
Teller is in agreement. This subsection according to him "involves the widest varieties of
activities." The other unfair labor practices condemned fall within its terms. Thus: "That the Board
has taken this position is evidenced both by the Board decisions and by express statement to such
effect contained in its first annual report, the language of which in this connection is as follows: 'At
the outset it should be explained that the Board has held that a violation by an employer of any of
the other four subdivisions of Section 8 of the act is, by the same token, a violation of Section 8(1).
Such a conclusion is too obvious to require explanation. In fact, almost all of the cases in which the
Board has found a violation of Section 8(1) are cases in which the principal offense charged fell
within some other subdivision of Section 8. The explanation for this is, apparently, that even though

an employer may be engaging in anti-union activities in violation of Section 8(1), unions do not seek
protection of the act until such activities take such drastic form as bring them within the provisions of
some other subdivisions, as, for example, the discriminatory discharge of union members (which
comes within subdivision [3]), the domination of or interference with the formation or administration
of a labor organization (which comes within subdivision [2]). or a refusal to bargain collectively
(which comes within subdivision [5]."3
In the Philippines as in the United States then, the first subsection on "interference, restraint or
coercion" covering as it does such a broad range of undesirable practices on the part of employers
could easily be seized upon, where a borderline case, inimical to the right of self-organization or to
collective bargaining, presents itself as justifying a finding of an unfair labor practice.
1awphî l.nè
t
Footnotes
1
Mariano v. Royal Interocean Lines, Case 527-ULP.
2
Royal Interocean Lines v. CIR, L-11745, Oct. 31, 1960.
3Note 2, supra.
4L-10130, Sept. 30, 1957.
5
Section 3 of the industrial Peace Act provides: "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 or 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."
6Annot., 6 A.L.R. 2d 416 (1949).
7
167 F. 2d 983 (7th Cir 1948).
8Industrial Peace Act, sec. 13.
9NLRB v. Highland Shoe, Inc., 119 F. 2d 218 (1st Cir. 1941); NLRB v. Bachelder, 120 F. 2d 574 (7th
Cir. 1941).
10
The Duty to Bargain Collectively During the Term of an Existing Agreement, 63 Harv. L. Rev. 1097,
1105 (1950).
11Cf. id. at 1110.
12United Steelworkers of America v. Warrior & Gulf Navigation Co., 363 U.S. 574 (1960); accord,
United Steelworkers of America v. Enterprise Wheel & Car Corp., 363 U.S. 593 (1960).
13Republic Aviation Corp. v. NLRB, 324 U.S. 793 (1945).
14E.g., Philippine Educ. Co. v. Union of Phil. Educ. Employees, L-13773, April 29, 1960.
15Phelps Dodge Corp. v. NLRB, 313 U.S. 177 (1941).
16
NLRB v. Local 1229, IBEW, 346 U.S. 464 (1953).
17NLRB v. Stowe Spinning Co., 336 U.S. 226 (1949).
18Republic Aviation Corp. v. NLRB, supra note 13.
19NLRB v. M & B Headwear Co., 349 F. 2d 170 (4th Cir. 1965).
20
See second Royal Interocean case, L-12429, Feb. 27, 1961.
21"Considering the actualities of the collective bargaining and grievance procedures, we think the
employer must realize that far-fetched and overstated claims, easily dissuadable, are often made
initially by one side in a labor dispute (especially when it is inexperienced in labor relations). Such
claims may well evaporate on discussion and negotiation, and never become an integral part of the
union's real purposes. We think that the employer cannot seize upon this kind of claim — made by
ignorant workers in their initial demands — in order to justify retaliatory measures against them. He
must make some effort to find out if the employees mean in fact to pursue these claims, to stick to
demands which are not protected by sec. 7. Summary discharge seems especially premature here."
NLRB v. Electronics Equip. Co., 194 F. 2d 650 (2nd Cir. 1952).
Cf. Abaya v. Villegas, L-25641, Dec. 17, 1966.
1
The National Labor Relations Act (1935) 49 Stat. 457.
2Bufford on the Wagner Act (1941), 169.
32 Teller, Labor disputes and Collective Bargaining (1940), 762.
Pasted from <http://www.lawphil.net/judjuris/juri1967/sep1967/gr_l-20303_1967.html>

NESTLE PHIL V NLRC (Union of FIL-IPRO Employees)
12:15 AM
NESTLE PHIL V NLRC (Union of FIL-IPRO Employees)

193 SCRA 504
GRINO-AQUINO; February 4, 1999
NATURE
Petition for certiorari
FACTS
- Four CBAs w ith Nestle Philippines (Nestle) expired on June 30, 1987. While the parties w ere negotiating, the employees resorted
to a "slow down" and w alk-outs prompting Nestle to shut dow n the factory. Marathon collective bargaining negotiations betw een the
parties ensued.
- The UFE declared a bargaining deadlock. The Secretary of Labor assumed jurisdiction and issued a return to w ork order. In spite
of that order, the union struck, w ithout notice. Nestle retaliated by dismissing the union officers and members of the negotiating
panel w ho participated in the illegal strike. The NLRC affirmed the dismissals. UFE filed a notice of strike on the same ground of
CBA deadlock and ULP.
- After conciliation efforts of the NCMB yielded negative results, the dispute w as certified to the NLRC by the Secretary of Labor.
The NLRC issued a resolution regarding the union's demand for liberalization of the company's retirement plan for its w orkers. Both
the parties’ MFR w ere denied.
- Nestle filed this petition for certiorari alleging that since its retirement plan is non-contributory, it has the sole and exclusive
prerogative to define the terms of the plan because the w orkers have no vested and demandable rights there under, the grant being
not a contractual obligation but merely gratuitous. At most the company can only be directed to maintain the same but not to change
its terms. It should be left to the discretion of the company on how to improve or modify the same.
ISSUE
WON the Retirement Plan is a collective bargaining issue
HELD
YES.
Ratio The fact that the retirement plan is non-contributory, i.e., that the employees contribute nothing to the operation of the plan,
does not make it a non-issue in the CBA negotiations.
Reasoning Almost all of the benefits granted to its employees under the CBA (salary increases, rice allow ances, midyear bonuses,
13th & 14th month pay, seniority pay, medical and hospitalization plans, health and dental services, vacation, sick & other leaves
w ith pay) are non-contributory benefits. Since the retirement plan has been an integral part of the CBA since 1972, the Union's
demand to increase the benefits due the employees under said plan is a valid CBA issue.
- The improvement of the existing Retirement Plan w as one of the original CBA proposals submitted by the UFE to Nestle. The
union's original proposal w as to modify the existing plan by including a provision for early retirement. The company did not question
the validity of that proposal as a collective bargaining issue but merely offered to maintain the existing noncontributory retirement
plan w hich it believed to be still adequate for the needs of its employees and competitive w ith those existing in the industry. The
union thereafter modified its proposal, but the company w as adamant. Consequently, the impasse on the retirement plan became
one of the issues certified to the NLRC for compulsory arbitration.
- The inclusion of the retirement plan in the CBA as part of the package of economic benefits extended by the company to its
employees gives it "a consensual character" so that it may not be terminated or modified at w ill by either party. Employees have a
vested and demandable right over existing benefits voluntarily granted to them by their employer. The latter may not unilaterally
w ithdraw, eliminate or diminish such benefits.
Disposition Petition is DISMISSED.

G.R. No. 91231 February 4, 1991

NESTLÉ PHILIPPINES, INC., petitioner,
vs.
THE NATIONAL LABOR RELATIONS COMMISSION and UNION OF FILIPRO
EMPLOYEES, respondents.
Banzuela, Flores, Miralles, Raneses, Sy, Taquio & Associates for private respondent.
GRIÑO-AQUINO, J.:p
Nestlé Philippines, Inc., by this petition for certiorari, seeks to annul, on the ground of grave abuse of
discretion, the decision dated August 8, 1989 of the National Labor Relations Commission (NLRC),
Second Division, in Cert. Case No. 0522 entitled, "In Re: Labor Dispute of Nestlé Philippines, Inc."
insofar as it modified the petitioner's existing non-contributory Retirement Plan.
Four (4) collective bargaining agreements separately covering the petitioner's employees in its:
1. Alabang/Cabuyao factories;
2. Makati Administration Office. (Both Alabang/Cabuyao factories and Makati office were

represented by the respondent, Union of Filipro Employees [UFE]);
3. Cagayan de Oro Factory represented by WATU; and
4. Cebu/Davao Sales Offices represented by the Trade Union of the Philippines and Allied Services
(TUPAS),
all expired on June 30, 1987.
Thereafter, UFE was certified as the sole and exclusive bargaining agent for all regular rank-and-file
employees at the petitioner's Cagayan de Oro factory, as well as its Cebu/Davao Sales Office.
In August, 1987, while the parties, were negotiating, the employees at Cabuyao resorted to a
"slowdown" and walk-outs prompting the petitioner to shut down the factory. Marathon collective
bargaining negotiations between the parties ensued.
On September 2, 1987, the UFE declared a bargaining deadlock. On September 8, 1987, the
Secretary of Labor assumed jurisdiction and issued a return to work order. In spite of that order, the
union struck, without notice, at the Alabang/Cabuyao factory, the Makati office and Cagayan de Oro
factory on September 11, 1987 up to December 8, 1987. The company retaliated by dismissing the
union officers and members of the negotiating panel who participated in the illegal strike. The NLRC
affirmed the dismissals on November 2, 1988.
On January 26, 1988, UFE filed a notice of strike on the same ground of CBA deadlock and unfair
labor practices. However, on March 30, 1988, the company was able to conclude a CBA with the
union at the Cebu/Davao Sales Office, and on August 5, 1988, with the Cagayan de Oro factory
workers. The union assailed the validity of those agreements and filed a case of unfair labor practice
against the company on November 16, 1988.
After conciliation efforts of the National Conciliation and Mediation Board (NCMB) yielded negative
results, the dispute was certified to the NLRC by the Secretary of Labor on October 28, 1988.
After the parties had filed their pleadings, the NLRC issued a resolution on June 5, 1989, whose
pertinent disposition regarding the union's demand for liberalization of the company's retirement plan
for its workers, provides as follows:
xxx xxx xxx
7. Retirement Plan
The company shall continue implementing its retirement plan modified as follows:
a) for fifteen years of service or less — an amount equal to 100% of the employee's monthly salary
for every year of service;
b) more than 15 but less than 20 years — 125% of the employee's monthly salary for every year of
service;
c) 20 years or more — 150% of the employee's monthly salary for every year of service. (pp.
58-59,Rollo.)
Both parties separately moved for reconsideration of the decision.
On August 8, 1989, the NLRC issued a resolution denying the motions for reconsideration. With
regard to the Retirement Plan, the NLRC held:
Anent management's objection to the modification of its Retirement Plan, We find no cogent reason
to alter our previous decision on this matter.
While it is not disputed that the plan is non-contributory on the part of the workers, tills does not
automatically remove it from the ambit of collective bargaining negotiations. On the contrary, the
plan is specifically mentioned in the previous bargaining agreements (Exhibits "R-1" and "R-4"),
thereby integrating or incorporating the provisions thereof to the agreement. By reason of its
incorporation, the plan assumes a consensual character which cannot be terminated or modified at
will by either party. Consequently, it becomes part and parcel of CBA negotiations.
However, We need to clarify Our resolution on this issue. When we increased the emoluments in the
plan, the conditions for the availment of the benefits set forth therein remain the same. (p. 32, Rollo.)
On December 14, 1989, the petitioner filed this petition for certiorari, alleging that since its retirement
plan is non-contributory, it (Nestlé) has the sole and exclusive prerogative to define the terms of the
plan "because the workers have no vested and demandable rights thereunder, the grant thereof
being not a contractual obligation but merely gratuitous. At most the company can only be directed
to maintain the same but not to change its terms. It should be left to the discretion of the company on
how to improve or mollify the same" (p. 10, Rollo).
The Court agrees with the NLRC's finding that the Retirement Plan was "a collective bargaining
issue right from the start" (p. 109, Rollo) for the improvement of the existing Retirement Plan was
one of the original CBA proposals submitted by the UFE on May 8, 1987 to Arthur Gilmour, president
of Nestlé Philippines. The union's original proposal was to modify the existing plan by including a
provision for early retirement. The company did not question the validity of that proposal as a
collective bargaining issue but merely offered to maintain the existing non-contributory retirement
plan which it believed to be still adequate for the needs of its employees, and competitive with those
existing in the industry. The union thereafter modified its proposal, but the company was adamant.
Consequently, the impassé on the retirement plan become one of the issues certified to the NLRC

for compulsory arbitration.
The company's contention that its retirement plan is non-negotiable, is not well-taken. The NLRC
correctly observed that the inclusion of the retirement plan in the collective bargaining agreement as
part of the package of economic benefits extended by the company to its employees to provide them
a measure of financial security after they shall have ceased to be employed in the company, reward
their loyalty, boost their morale and efficiency and promote industrial peace, gives "a consensual
character" to the plan so that it may not be terminated or modified at will by either party (p.
32, Rollo).
The fact that the retirement plan is non-contributory, i.e., that the employees contribute nothing to
the operation of the plan, does not make it a non-issue in the CBA negotiations. As a matter of fact,
almost all of the benefits that the petitioner has granted to its employees under the CBA — salary
increases, rice allowances, mid-year bonuses, 13th and 14th month pay, seniority pay, medical and
hospitalization plans, health and dental services, vacation, sick & other leaves with pay — are non-
contributory benefits. Since the retirement plan has been an integral part of the CBA since 1972, the
Union's demand to increase the benefits due the employees under said plan, is a valid CBA issue.
The deadlock between the company and the union on this issue was resolvable by the Secretary of
Labor, or the NLRC, after the Secretary had assumed jurisdiction over the labor dispute (Art. 263,
subparagraph [i] of the Labor Code).
The petitioner's contention, that employees have no vested or demandable right to a non-
contributory retirement plan, has no merit for employees do have a vested and demandable right
over existing benefits voluntarily granted to them by their employer. The latter may not unilaterally
withdraw, eliminate or diminish such benefits (Art. 100, Labor Code; Tiangco, et al. vs. Hon.
Leogardo, et al., 122 SCRA 267).
This Court ruled similarly in Republic Cement Corporation vs. Honorable Panel of Arbitrators, G.R.
No. 89766, Feb. 19, 1990:
. . . Petitioner's claim that retirement benefits, being noncontributory in nature, are not proper
subjects for voluntary arbitration is devoid of merit. The expired CBA previously entered into by the
parties included provisions for the implementation of a "Retirement and Separation Plan." it is only to
be expected that the parties would seek a renewal or an improvement of said item in the new CBA.
In fact, the parties themselves expressly included retirement benefits among the economic issues to
be resolved by voluntary arbitration. Petitioner is estopped from now contesting the validity of the
increased award granted by the arbitrators. (p. 145, Rollo.)
The NLRC's resolution of the bargaining deadlock between Nestlé and its employees is neither
arbitrary, capricious, nor whimsical. The benefits and concessions given to the employees were
based on the NLRC's evaluation of the union's demands, the evidence adduced by the parties, the
financial capacity of the Company to grant the demands, its longterm viability, the economic
conditions prevailing in the country as they affect the purchasing power of the employees as well as
its concommitant effect on the other factors of production, and the recent trends in the industry to
which the Company belongs (p. 57, Rollo). Its decision is not vitiated by abuse of discretion.
WHEREFORE, the petition for certiorari is dismissed, with costs against the petitioner.
SO ORDERED.
Narvasa, Gancayco and Medialdea, JJ., concur.

LUZON DEVELOPMENT BANK V ASSOCIATION OF DEVELOPMENT
BANK EMPLOYEES
12:15 AM
LUZON DEVELOPMENT BANK V ASSOCIATION OF DEVELOPMENT BANK EMPLOYEES

249 SCRA 162
ROMERO; October 6, 1995
NATURE
Petition for certiorari and prohibition seeking to set aside the decision of the Voluntary Arbitrator and to prohibit her from enforcing
the same
FACTS
-Luzon Development Bank (LDB) and the Association of Luzon Development Bank Employees (ALDBE) submitted to arbitration to
resolve WON the company has violated the Collective Bargaining Agreement provision and the Memorandum of Agreement dated
April 1994, on promotion
-The parties agreed to submit their respective Position Papers on December 1-15, 1994.
-Atty. Ester S. Garcia, in her capacity as Voluntary Arbitrator, received ALDBE's Position Paper on January 18, 1995.
-LDB, on the other hand, failed to submit its Position Paper
-On May 24, 1995, w ithout LDB's Position Paper, the Voluntary Arbitrator rendered a decision finding that the Bank has not adhered
to the Collective Bargaining Agreement provision nor the Memorandum of Agreement on promotion.
-Hence, this petition
ISSUE
WON the Voluntary Arbitrator erred in finding that the Bank has not adhered to the Collective Bargaining Agreement provision nor
the Memorandum of Agreement on promotion
(the Court referred the case to the CA so the issue w asn’t resolved…it said that elevating a decision or aw ard of a voluntary
arbitrator to the Supreme Court on a petition for certiorari is in effect equating the voluntary arbitrator with the NLRC or the Court of
Appeals, w hich in its view is illogical and imposes an unnecessary burden upon it)
HELD
(only obiter… pertaining to topic)
-In labor law context, arbitration is the reference of a labor dispute to an impartial third person for determination on the basis of
evidence and arguments presented by such parties w ho have bound themselves to accept the decision of the arbitrator as final and
binding.
-Arbitration may either be compulsory or voluntary.
-Compulsory arbitration is a system w hereby the parties to a dispute are compelled by the government to forego their right to strike
and are compelled to accept the resolution of their dispute through arbitration by a third party.
-Under voluntary arbitration, on the other hand, referral of a dispute by the parties is made, pursuant to a voluntary
arbitration clause in their collective agreement, to an im partial third person for a final and binding resolution.
-Ideally, arbitration aw ards are supposed to be complied w ith by both parties w ithout delay, such that once an aw ard has been
rendered by an arbitrator, nothing is left to be done by both parties but to comply w ith the same. After all, they are presumed to have
freely chosen arbitration as the mode of settlement for that particular dispute. Pursuant thereto, they have chosen a mutually
acceptable arbitrator w ho shall hear and decide their case. Above all, they have mutually agreed to de bound by said arbitrator's
decision.
-In the Philippine context, the parties to a Collective Bargaining Agreement (CBA) are required to include therein provisions
for a m achinery for the resolution of grievances arising from the interpretation or implementation of the CBA or company
personnel policies.
-For this purpose, parties to a CBA shall name and designate therein a voluntary arbitrator or a panel of arbitrators, or include a
procedure for their selection, preferably from those accredited by the National Conciliation and Mediation Board (NCMB).
Disposition
The Court resolved to REFER this case to the Court of Appeals

G.R. No. 120319 October 6, 1995

LUZON DEVELOPMENT BANK, petitioner,
vs.
ASSOCIATION OF LUZON DEVELOPMENT BANK EMPLOYEES and ATTY. ESTER S. GARCIA
in her capacity as VOLUNTARY ARBITRATOR, respondents.
ROMERO, J.:
From a submission agreement of the Luzon Development Bank (LDB) and the Association of Luzon
Development Bank Employees (ALDBE) arose an arbitration case to resolve the following issue:
Whether or not the company has violated the Collective Bargaining Agreement provision and the
Memorandum of Agreement dated April 1994, on promotion.
At a conference, the parties agreed on the submission of their respective Position Papers on
December 1-15, 1994. Atty. Ester S. Garcia, in her capacity as Voluntary Arbitrator, received
ALDBE's Position Paper on January 18, 1995. LDB, on the other hand, failed to submit its Position

Paper despite a letter from the Voluntary Arbitrator reminding them to do so. As of May 23, 1995 no
Position Paper had been filed by LDB.
On May 24, 1995, without LDB's Position Paper, the Voluntary Arbitrator rendered a decision
disposing as follows:
WHEREFORE, finding is hereby made that the Bank has not adhered to the Collective Bargaining
Agreement provision nor the Memorandum of Agreement on promotion.
Hence, this petition for certiorari and prohibition seeking to set aside the decision of the Voluntary
Arbitrator and to prohibit her from enforcing the same.
In labor law context, arbitration is the reference of a labor dispute to an impartial third person for
determination on the basis of evidence and arguments presented by such parties who have bound
themselves to accept the decision of the arbitrator as final and binding.
Arbitration may be classified, on the basis of the obligation on which it is based, as either
compulsory or voluntary.
Compulsory arbitration is a system whereby the parties to a dispute are compelled by the
government to forego their right to strike and are compelled to accept the resolution of their dispute
through arbitration by a third party. 1The essence of arbitration remains since a resolution of a
dispute is arrived at by resort to a disinterested third party whose decision is final and binding on the
parties, but in compulsory arbitration, such a third party is normally appointed by the government.
Under voluntary arbitration, on the other hand, referral of a dispute by the parties is made, pursuant
to a voluntary arbitration clause in their collective agreement, to an impartial third person for a final
and binding resolution. 2Ideally, arbitration awards are supposed to be complied with by both parties
without delay, such that once an award has been rendered by an arbitrator, nothing is left to be done
by both parties but to comply with the same. After all, they are presumed to have freely chosen
arbitration as the mode of settlement for that particular dispute. Pursuant thereto, they have chosen
a mutually acceptable arbitrator who shall hear and decide their case. Above all, they have mutually
agreed to de bound by said arbitrator's decision.
In the Philippine context, the parties to a Collective Bargaining Agreement (CBA) are required to
include therein provisions for a machinery for the resolution of grievances arising from the
interpretation or implementation of the CBA or company personnel policies. 3 For this purpose,
parties to a CBA shall name and designate therein a voluntary arbitrator or a panel of arbitrators, or
include a procedure for their selection, preferably from those accredited by the National Conciliation
and Mediation Board (NCMB). Article 261 of the Labor Code accordingly provides for exclusive
original jurisdiction of such voluntary arbitrator or panel of arbitrators over (1) the interpretation or
implementation of the CBA and (2) the interpretation or enforcement of company personnel policies.
Article 262 authorizes them, but only upon agreement of the parties, to exercise jurisdiction over
other labor disputes.
On the other hand, a labor arbiter under Article 217 of the Labor Code has jurisdiction over the
following enumerated cases:
. . . (a) Except as otherwise provided under this Code the Labor Arbiters shall have original and
exclusive jurisdiction to hear and decide, within thirty (30) calendar days after the submission of the
case by the parties for decision without extension, even in the absence of stenographic notes, the
following cases involving all workers, whether agricultural or non-agricultural:
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases that workers may file involving wages,
rates of pay, hours of work and other terms and conditions of employment;
4. Claims for actual, moral, exemplary and other forms of damages arising from the employer-
employee relations;
5. Cases arising from any violation of Article 264 of this Code, including questions involving the
legality of strikes and lockouts;
6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all
other claims, arising from employer-employee relations, including those of persons in domestic or
household service, involving an amount exceeding five thousand pesos (P5,000.00) regardless of
whether accompanied with a claim for reinstatement.
xxx xxx xxx
It will thus be noted that the jurisdiction conferred by law on a voluntary arbitrator or a panel of such
arbitrators is quite limited compared to the original jurisdiction of the labor arbiter and the appellate
jurisdiction of the National Labor Relations Commission (NLRC) for that matter. 4 The state of our
present law relating to voluntary arbitration provides that "(t)he award or decision of the Voluntary
Arbitrator . . . shall be final and executory after ten (10) calendar days from receipt of the copy of the
award or decision by the parties," 5 while the "(d)ecision, awards, or orders of the Labor Arbiter are
final and executory unless appealed to the Commission by any or both parties within ten (10)

calendar days from receipt of such decisions, awards, or orders." 6 Hence, while there is an express
mode of appeal from the decision of a labor arbiter, Republic Act No. 6715 is silent with respect to
an appeal from the decision of a voluntary arbitrator.
Yet, past practice shows that a decision or award of a voluntary arbitrator is, more often than not,
elevated to the Supreme Court itself on a petition for certiorari, 7 in effect equating the voluntary
arbitrator with the NLRC or the Court of Appeals. In the view of the Court, this is illogical and
imposes an unnecessary burden upon it.
In Volkschel Labor Union, et al. v. NLRC, et al., 8 on the settled premise that the judgments of courts
and awards of quasi-judicial agencies must become final at some definite time, this Court ruled that
the awards of voluntary arbitrators determine the rights of parties; hence, their decisions have the
same legal effect as judgments of a court. In Oceanic Bic Division (FFW), et al. v. Romero, et
al., 9 this Court ruled that "a voluntary arbitrator by the nature of her functions acts in a quasi-judicial
capacity." Under these rulings, it follows that the voluntary arbitrator, whether acting solely or in a
panel, enjoys in law the status of a quasi-judicial agency but independent of, and apart from, the
NLRC since his decisions are not appealable to the latter. 10
Section 9 of B.P. Blg. 129, as amended by Republic Act No. 7902, provides that the Court of
Appeals shall exercise:
xxx xxx xxx
(B) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders or awards
of Regional Trial Courts and quasi-judicial agencies, instrumentalities, boards or commissions,
including the Securities and Exchange Commission, the Employees Compensation Commission and
the Civil Service Commission, except those falling within the appellate jurisdiction of the Supreme
Court in accordance with the Constitution, the Labor Code of the Philippines under Presidential
Decree No. 442, as amended, the provisions of this Act, and of subparagraph (1) of the third
paragraph and subparagraph (4) of the fourth paragraph of Section 17 of the Judiciary Act of 1948.
xxx xxx xxx
Assuming arguendo that the voluntary arbitrator or the panel of voluntary arbitrators may not strictly
be considered as a quasi-judicial agency, board or commission, still both he and the panel are
comprehended within the concept of a "quasi-judicial instrumentality." It may even be stated that it
was to meet the very situation presented by the quasi-judicial functions of the voluntary arbitrators
here, as well as the subsequent arbitrator/arbitral tribunal operating under the Construction Industry
Arbitration Commission, 11 that the broader term "instrumentalities" was purposely included in the
above-quoted provision.
An "instrumentality" is anything used as a means or agency. 12 Thus, the terms governmental
"agency" or "instrumentality" are synonymous in the sense that either of them is a means by which a
government acts, or by which a certain government act or function is performed. 13 The word
"instrumentality," with respect to a state, contemplates an authority to which the state delegates
governmental power for the performance of a state function. 14 An individual person, like an
administrator or executor, is a judicial instrumentality in the settling of an estate, 15 in the same
manner that a sub-agent appointed by a bankruptcy court is an instrumentality of the court, 16 and a
trustee in bankruptcy of a defunct corporation is an instrumentality of the state. 17
The voluntary arbitrator no less performs a state function pursuant to a governmental power
delegated to him under the provisions therefor in the Labor Code and he falls, therefore, within the
contemplation of the term "instrumentality" in the aforequoted Sec. 9 of B.P. 129. The fact that his
functions and powers are provided for in the Labor Code does not place him within the exceptions to
said Sec. 9 since he is a quasi-judicial instrumentality as contemplated therein. It will be noted that,
although the Employees Compensation Commission is also provided for in the Labor Code, Circular
No. 1-91, which is the forerunner of the present Revised Administrative Circular No. 1-95, laid down
the procedure for the appealability of its decisions to the Court of Appeals under the foregoing
rationalization, and this was later adopted by Republic Act No. 7902 in amending Sec. 9 of B.P. 129.
A fortiori, the decision or award of the voluntary arbitrator or panel of arbitrators should likewise be
appealable to the Court of Appeals, in line with the procedure outlined in Revised Administrative
Circular No. 1-95, just like those of the quasi-judicial agencies, boards and commissions enumerated
therein.
This would be in furtherance of, and consistent with, the original purpose of Circular No. 1-91 to
provide a uniform procedure for the appellate review of adjudications of all quasi-judicial
entities 18 not expressly excepted from the coverage of Sec. 9 of B.P. 129 by either the Constitution
or another statute. Nor will it run counter to the legislative intendment that decisions of the NLRC be
reviewable directly by the Supreme Court since, precisely, the cases within the adjudicative
competence of the voluntary arbitrator are excluded from the jurisdiction of the NLRC or the labor
arbiter.
In the same vein, it is worth mentioning that under Section 22 of Republic Act No. 876, also known

as the Arbitration Law, arbitration is deemed a special proceeding of which the court specified in the
contract or submission, or if none be specified, the Regional Trial Court for the province or city in
which one of the parties resides or is doing business, or in which the arbitration is held, shall have
jurisdiction. A party to the controversy may, at any time within one (1) month after an award is made,
apply to the court having jurisdiction for an order confirming the award and the court must grant such
order unless the award is vacated, modified or corrected. 19
In effect, this equates the award or decision of the voluntary arbitrator with that of the regional trial
court. Consequently, in a petition for certiorari from that award or decision, the Court of Appeals
must be deemed to have concurrent jurisdiction with the Supreme Court. As a matter of policy, this
Court shall henceforth remand to the Court of Appeals petitions of this nature for proper disposition.
ACCORDINGLY, the Court resolved to REFER this case to the Court of Appeals.
SO ORDERED.
Padilla, Regalado, Davide, Jr., Bellosillo, Puno, Vitug, Kapunan, Mendoza, Francisco and
Hermosisima, Jr., JJ., concur.
Feliciano, J., concurs in the result.
Narvasa, C.J. and Melo, J. are on leave.
Footnotes
1 Seide, A Dictionary of Arbitration (1970).
2 Ibid.
3 Art. 260, Labor Code.
5 Art. 262-A, par. 4, Labor Code.
7 Oceanic Bic Division (FFW), et al. v. Romero, et al., 130 SCRA 392 (1984); Sime Darby Pilipinas,
Inc. v. Magsalin, et al., 180 SCRA 177 (1989).
8 98 SCRA 314 (1980).
9 Supra.
10 Art. 262-A, in relation to Art. 217 (b) and (c), Labor Code, as amended by Sec. 9, R.A. 6715.
11 Executive Order No. 1008.
12 Laurens Federal Sav. and Loan Ass'n v. South Carolina Tax Commission, 112 S.E. 2d 716, 719,
236 S.C. 2.
13 Govt. of P.I. v. Springer, et al., 50 Phil. 259, 334 (1927).
14 Ciulla v. State, 77 N.Y.S. 2d 545, 550, 191 Misc. 528.
15 In re Turncock's Estate, 300 N.W. 155, 156, 238 Wis. 438.
16 In re Brown Co., D.C. Me., 36 F. Supp. 275, 277.
17 Gagne v. Brush, D.C.N.H., 30 F. Supp. 714, 716.
18 First Lepanto Ceramics, Inc. v. CA, et al., 231 SCRA 30 (1994).
19 Section 23, R.A. No. 876.
Pasted from <http://www.lawphil.net/judjuris/juri1995/oct1995/gr_120319_1995.html>

Suarez vs. National Steel (2008)
1:25 AM
[G.R. No. 150180, October 17, 2008]
FLAVIO S. SUAREZ, JR., RENATO A. DE ASIS, FRANCISCO G. ADORABLE, JOVEN ANDALOC,

ONOFRE G. BAGAYO, GENITO J. BANGGO, WENDELINO L. BERONDO, NAPOLEON P. BULOS,
ISIDRO S. DADANG, TEODORO P. DOTARO, NOIDA T. DUNGOG, EROLITO A. EDROZO,
ROBERTO A. EMPHASIS, GIDEON S. GEONZON, LAMBERTO S. GEONZON, JAIME A. HERRERA,
CARLOS V. JACINTO, JERRY B. JUMAMIL, ALLAN P. LACIDA, CLAUDIO B. LACIDA, EDWIN L.
LAGBAS, VERONICA H. LEUTERIO, EDILBERTO L. LUCOT, AVELINO S. MANQUIQUIS, LYDIO
R. NOVISES, ROGELIO T. PANSACALA, BERNARDINO N. PERNIA, JOAQUIN R. QUINDO,
CARMELO A. RABOR, RODOLFO C. REYNES, PRIMO C. SUERTE, TEODULO D. TANUDRA,
MYRNA E. VALDEHUEZA, RAMON T. VERSOLA, PABLEO S. LOZANO, SE MARTINEZ, JH
TORRION, CA TAMIROY AND AR ANTIPOLO; PETITIONERS, VS. NATIONAL STEEL
CORPORATION, RESPONDENT
DEC I SI ON
LEONARDO-DE CASTRO, J.:

In this petition for review on certiorari under Rule 45 of the 1997 Rules of C ivil Procedure, petitioners seek to
set aside and annul the Decision[1] dated November 29, 2000 and the Resolution[2] dated August 28, 2001
rendered by the C ourt of Appeals (C A), Fifteenth Division, in CA-G.R. No. 51734.
The C A decision set aside an earlier resolution[3] of the National Labor Relations C ommission (NLRC) dated
March 12, 1998 which ruled in favor of herein petitioners.
The factual antecedents are as follows:
Respondent National Steel C orporation was engaged in the business of manufacturing steel products needed for
pipe making, ship building, can-making and production of appliances. Sometime in 1994, respondent suffered
substantial financial losses due to an increase in the volume of steel products manufactured by foreign
countries. With this development, respondent adopted an organizational streamlining program that resulted in
the retrenchment of seven hundred (700) employees in its main plant in Iligan C ity, among whom were herein
petitioners. At that time, respondent and the National Steel Labor Union-Federation of Free Workers (NASLU-
FFW), the certified collective bargaining agent of respondent's rank-and-file employees, were negotiating for
the renewal of the C ollective Bargaining Agreement (C BA) which expired on June 30, 1994.
On July 18, 1994, respondent sent out individual notices to the seven hundred (700) employees affected by the
retrenchment, including petitioners. The notices specifically stated that their services were terminated effective
August 18, 1994 and they will each receive a separation package in accordance with the retrenchment
program. The separation package consisted of the following: (1) separation pay equivalent to two (2) months
salary for every year of service; (2) leave balance credits; (3) 13th month pay; and (4) uniform plus rice
subsidy differential. After having been paid their separation benefits, the employees, including herein
petitioners, each executed and signed a release and quitclaim, written in English and containing a translation in
the Visayan dialect in the same document. The release and quitclaims were acknowledged before a notary
public.
On October 27, 1994, respondent and NASLU-FFW signed a new C BA, retroactive to July 1, 1994 and effective
until June 30, 1996. Pursuant thereto, the retrenched employees were given their salary differentials, for which
they executed and signed another release and quitclaim.
Nothing was heard from the retrenched employees, until February 1997 or about two and half years after their
separation from the company, when herein petitioners wrote respondent demanding payment of retirement
benefits under the C BA. They claimed that they were qualified for optional retirement after having rendered
services for at least ten (10) years when they were retrenched on August 18, 1994. Respondent rejected
petitioners' claim, forcing petitioners to file a complaint for payment of retirement benefits against respondent
docketed as NLRC CA No. M-003642-97.[4]
On August 27, 1997, Labor Arbiter Nicodemus Palangan dismissed the complaint for lack of merit.[5] As
expected, petitioners filed an appeal with the NLRC . Subsequently, this appeal was consolidated
with NLRC CA No. M-003666-97, entitled "Abella, et al. vs. National Steel Corporation and NASLU-FFW,
Simplicio Vallarta, et al." The complainants in Abella were also retrenched employees of respondent.

In a consolidated resolution dated March 12, 1998, the Fifth Division of the NLRC granted the appeal and
reversed the ruling of the Labor Arbiter.
Aggrieved with the NLRC resolution, respondent company elevated the matter to the C A by way of a petition for
certiorari, docketed as CA-G.R. No. 51734.
On November 29, 2000, the C A, Fifteenth Division, promulgated its assailed decision granting respondent's
petition. In so ruling, the C A declared that petitioners were no longer entitled to retirement benefits after
having received the separation pay, and were precluded from claiming such benefits because of their
quitclaims. Petitioners' subsequent motion for reconsideration was likewise denied by the appellate court in its
resolution dated August 28, 2001.
The present petition was filed with this C ourt by thirty-nine of hundreds of private respondents involved in C A-
G.R. No. 51734. After the filing of the parties' memoranda in this case, two groups of other private
respondents in C A-G.R. No. 51734 (Maria Theresa Labastida, et al. and Alexander Bongcawel, et al.) filed
separate motions for intervention. These two groups of intervenors are petitioners in G.R. No. 150072 which
involved a petition for review of the same November 29, 2000 Decision of the C A, Fifteenth Division, subject of
this petition. However, the intervenors' own petition was already denied due to various procedural infirmities
by this C ourt's Third Division in a Resolution dated November 14, 2001 and their motion for reconsideration was
likewise denied with finality in a Resolution dated March 4, 2002. In their motion for intervention, Maria
Theresa Labastida, et al. prayed that "should [this C ourt] decide in favor to (sic) the petitioners the same award
should also apply to other complainants-appellants before the 5th Division, NLRC " while Alexander Bongcawel,
et al. prayed that they be allowed to intervene in the proceedings herein and/or be included as petitioners in
this case.
In the instant petition, petitioners raised the following arguments:

I. THE C ONSOLIDATED DECISIONS OF THE 5TH DIVISION, NLRC , C AGAYAN DE ORO C ITY WAS
AFFIRMED BY THE 12TH DIVISION, C A WHILE THE SAME WAS SET ASIDE BY THE 15TH DIVISION,
C A. WHIC H OF THE TWO DEC ISIONS IS IN C ONSONANT WITH THE LAW AND JURISPRUDENCE.
THE 15TH DIVISION, C A HAS DECIDED THE C ASE IN A WAY PROBABLY NOT IN AC CORD WITH LAW
OR WITH THE APPLIC ABLE DEC ISIONS OF THE SUPREME C OURT.
II. THE DEC ISION OF THE 15TH DIVISION, C A RELIED ON THE AFFIDAVIT OF SOME OF THE NASLU-
FFW OFFIC ERS IN DENYING PETITIONERS' C LAIM FOR RETIREMENT BENEFITS. THE SAID
AFFIDAVIT IS C ONTRARY TO LAW SPEC IFICALLY, THE RETIREMENT PAY LAW AND PAROL
EVIDENC E RULE.
III. THE 15TH DIVISION, C A HAS SO FAR DEPARTED FROM THE AC CEPTED AND USUAL C OURSE OF
JUDIC IAL PROCEEDINGS, OR SO FAR SANCTIONED SUCH DEPARTURE BY A LOWER C OURT, AS TO
C ALL FOR AN EXERC ISE OF THE POWERS OF SUPERVISION BY THE SUPREME C OURT.[6]
Petitioners contend that they are entitled to retirement benefits in addition to the separation pay they received
from respondent pursuant to Article XIV of the existing C BA providing for retirement benefits. They likewise
call our attention to Aquino v. NLRC,[7] holding that payment of separation benefits does not exclude payment
of retirement benefits in the absence of a specific prohibition in the retirement plan and the C BA.
For its part, respondent maintains that its retirement plan expressly prohibits the payment of retirement
benefits to employees terminated for cause. Thus, retrenched employees who were granted their separation
package are already precluded from receiving retirement benefits. Moreover, petitioners executed valid
quitclaims.
From the facts, it is clear that the core issue hinges on whether petitioners who were retrenched employees
that had already received their separation pay can still recover retirement benefits.
While the main issue in this case involves a question of fact, which ordinarily cannot be raised in a petition for
review under Rule 45, we find reason to review the factual findings made by the NLRC and the C A considering
that they are at variance with each other.[8]
Petitioners anchor their claim on the cases Aquino v. NLRC,[9] University of the East v. Minister of
Labor,[10] and Batangas Laguna Tayabas Bus Co. v. Court of Appeals.[11] In these cases, this C ourt ruled that in
the absence of a specific prohibition in the retirement plan and the C BA, the employee has the right to recover
from the employer both his separation pay and retirement benefits. The C ourt further held therein that if the
employer really intended to make the separation pay and the retirement benefits mutually exclusive, it should
have sought inclusion of the corresponding provision in the retirement plan and the C BA so as to remove all
possible ambiguity regarding this matter.
Evidently, petitioners' entitlement to retirement benefits in addition to the separation pay they already received
would depend upon the provisions of respondent's retirement plan and its C BA with NASLU-FFW.
C ontrary to the stance taken by petitioners, the retirement plan[12] of respondent company reveals that an
employee who was terminated for cause is not entitled to retirement benefits, thus:
X. OTHER GENERAL PROVISIONS

X. OTHER GENERAL PROVISIONS
xxx xxx xxx
E. Resignations and Terminations. No retirement benefits are payable in instances of

resignations or terminations for cause; provided, however, that an employee who resigns voluntarily
after he has qualified for optional early retirement under Article IV, B, 2 or 3 shall be deemed to have
opted to avail of such early retirement and paid the applicable and corresponding retirement pay/benefit
provided therein. All terminations other than for cause will be governed by the applicable provisions of
the Labor C ode of the Philippines.(Emphasis supplied) [13]
From the foregoing, it is clear that respondent's retirement plan explicitly prohibits the recovery of retirement
benefits in cases of terminations for cause. Here, there is no dispute that petitioners were separated from the
service for cause, as it was due to a valid retrenchment undertaken by respondent company. Unarguably,
retrenchment is recognized as one of the authorized causes for termination of employment under Article 283 of
the Labor C ode, which states:
The employer may also terminate the employment of any employee due to the installation of labor -
saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operations of
the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of
this title, by serving a written notice on the workers and the Department of Labor and Employment at
least one (1) month before the intended date thereof. In case of termination due to the installation of
labor-saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay
equivalent to at least one (1) month pay or to at least one (1) month pay for every year of service,
whichever is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of
operations of establishment or undertaking not due to serious business losses or financial reverses, the
separation pay shall be equivalent to at least one (1) month pay or at least one -half (1/2) month pay for
every year of service, whichever is higher. A fraction of at least six (6) months shall be considered as
one (1) whole year.
Having been separated from employment due to an authorized cause, petitioners are barred from receiving
retirement benefits pursuant to Article X(E) of respondent's retirement plan. With the inclusion of such
provision in the retirement plan, respondent categorically disallows payment of retirement benefits to
retrenched employees. They are only entitled to payment of separation pay in accordance with Article 283 of
the Labor C ode.
In their Reply, petitioners argue that the term "terminations for cause" under Article X(E) of the retirement plan
should be read to only include terminations for "just cause" under Article 282 of the Labor C ode, or to situations
wherein it is the employee that is at fault. This C ourt is not persuaded by this argument. Petitioners concede
that the Labor C ode allows terminations by the employer for "just causes" under Article 282 or "authorized
causes" under Articles 283 and 284. Terminations covered by Articles 282 to 284 are all terminations by the
employer for a lawful cause. In the past, this C ourt has had occasion to use the term "dismissal for cause" to
refer to dismissals for just and/or authorized cause.[14] Respondent's retirement plan in referring to
"terminations for cause" plainly does not distinguish between just cause and authorized causes for
termination. Moreover, there is nothing in the said retirement plan which limits the term "terminations for
cause" to terminations under Article 282.
Apart from the abovementioned provision in the retirement plan, provisions of the 1994-1996 C BA between the
company and its employees further militate against petitioners' contention that they are entitled to both
separation pay and retirement benefits. The 1994-1996 C BA pertinently provides:
ARTIC LE XIV
RETIREMENT BENEFITS
SEC TION 1. The C OMPANY shall grant retirement benefits under its existing retirement plan one and one -
half months (1.5) basic pay for every year of service for those retiring with at least ten (10) years of
service credits who are qualified for normal retirement. Employees with at least ten (10) years of service
credits shall be qualified for optional early retirement and granted partial benefits beginning at fifty
(50%) of normal retirement benefits as follows:
xxx xxx xxx
SEC TION 2. Employees placed on Medical Retirement/Permanent Total Disability shall be granted benefits
as may be provided for in the C ompany Retirement Policy.
SEC TION 3. Employees laid-off by the Company pursuant to a retrenchment program shall be
given two (2) months base pay per year of service credits.
SEC TION 4. Length of service, is counted on terms of years from date of hire as probationary to date of
retirement, with each fraction of year of six (6) months or more counted as full year. A pro rata
computation of retirement benefit/pay shall be applied to service credits of less than six (6)
months.(Emphasis supplied)[15]
A perusal of Article XIV of the parties' 1994-1996 C BA readily shows that retirement benefits shall be granted
only to those employees who, after rendering at least ten (10) years of continuous services, would retire upon

only to those employees who, after rendering at least ten (10) years of continuous services, would retire upon
reaching the mandatory retirement age, or would avail of optional voluntary retirement. Nowhere can it be
deduced from the C BA that those employees whose employment was terminated through one of the authorized
causes are entitled to retirement benefits. In fact, Section 3 of the afore-quoted Article XIV specifically
provides that retrenched employees shall be given two (2) months pay for every year of service. Section 3
shows the intention of the parties to exclude retrenched employees, like herein petitioners, from receiving
retirement benefits under the existing retirement plan as set forth in Section 1.
We note the finding of the C A that under respondent and NASLU-FFW's 1991-1994 C BA, "both benefits [i.e.
separation pay and retirement benefits] should be given to retrenched employees, with the ratification of the
1994-1996 C BA, National Steel Labor Union-FFW, which is their [the employees'] authorized bargaining agent
changed their proposed one and a half month basic pay for every year of service to two-month salary
retrenchment package regardless of the number of years actually served by the employee." The records show
that the provision in the 1991-1994 C BA (Section 2, Article XIV thereof) which states that "[e]mployees laid off
by the C OMPANY pursuant to a retrenchment program shall be given the same retirement benefits provided for
under the retirement plan"[16] was deleted in the 1994-1996 C BA and replaced by Section 3, Article XIV quoted
above. The deletion of Section 2, Article XIV under the 1991-1994 C BA and its transformation into Section 3,
Article XIV of the 1994-1996 C BA indicate the intention of the parties in the 1994-1996 C BA to increase the
retrenchment compensation to two months salary for every year of service regardless of the number of years of
service, in lieu of the retirement benefits under the retirement plan.
The intention of the parties to the 1994-1996 C BA to make the retrenchment compensation/package and the
retirement benefits mutually exclusive of each other is further evidenced by the affidavits executed by members
of management and the union.
Petitioners object to the C A's reliance on the said affidavits as violations of the parol evidence rule under
Section 9, Rule 130 of the Rules of C ourt[17] and the waiver clause of the 1994-1996 C BA. We find petitioners'
contentions on this point untenable.
A C BA is more than a contract; it is a generalized code to govern a myriad of cases which the draftsmen cannot
wholly anticipate. It covers the whole employment relationship and prescribes the rights and duties of the
parties.[18] If the terms of the C BA are clear and have no doubt upon the intention of the contracting parties,
the literal meaning of its stipulation shall prevail. However, if the C BA imports ambiguity, then the parties'
intention as shown by their conduct, words, actions and deeds -- prior to, during, and after executing the
agreement, must be ascertained. That there is an apparent ambiguity or a failure to express the true intention
of the parties, especially with regard to the retirement provisions of the 1994-1996 C BA, is evident in the
opposing interpretations of the same by the Labor Arbiter and the C A on one hand and the NLRC on the
other. It is settled that the parole evidence rule admits of exceptions. A party may present evidence to
modify, explain or add to the terms of the written agreement if he raises as an issue, among others, an intrinsic
ambiguity in the written agreement or its failure to express the true intent and agreement of the parties
thereto.[19]
In this instance to resolve all doubts as to the proper interpretation of the relevant C BA provisions, it was
imperative for the C A to determine the true intent of the parties to the agreement. The C A committed no error
in considering the affidavits as contemporaneous and subsequent acts from which the intention of the parties to
the C BA can be inferred. This juristic principle is supported by the following provision of law found in the New
C ivil C ode:
Article 1371. In order to judge the intention of the contracting parties, their contemporaneous and
subsequent acts shall be principally considered.
Thus, while the C BA, on its face, does not contain an express prohibition of payment of retirement benefits to
retrenched employees, the parties may still prove it by means of contemporaneous and subsequent acts of the
parties to the agreement, such as the execution of the affidavits by the NASLU-FFW officers and respondent's
managers.
It bears stressing that no less than the officers of NASLU-FFW, the duly certified bargaining agent of
respondent's rank-and-file employees, confirmed that in drafting the C BA, the intent of the parties was to make
payment of the separation package for retrenched employees exclusive of retirement benefits. These officers
were members of the negotiating panel for the 1991-1994 C BA and the 1994-1996 C BA between NASLU-FFW
and the management. In their affidavits, they attested that under the C BA, an employee who is separated
pursuant to a retrenchment program and who received the corresponding separation package is completely
proscribed from demanding and claiming payment of retirement benefits provided under Section 1, Article XIV
of the said C BA.[20] The members of the management panel during the C BA negotiations also executed their
own affidavits and confirmed that payment of separation pay precludes entitlement to retirement
benefits.[21] Petitioners claim that the union officers were acting "in connivance" with management in executing
the said affidavits. However, petitioners presented no proof whatsoever that the union officers were acting in
bad faith in executing their affidavits. It is elementary that bad faith is never presumed while good faith is
always presumed. Therefore, he who claims bad faith must prove it.[22] For this reason, the C A correctly
considered and relied upon the affidavits in determining the true intent of the parties to the 1994-1996
C BA. Neither do these affidavits constitute a violation of the waiver clause of the 1994-1996 C BA which merely
states that "no event prior or subsequent to the effective date hereof shall amend nor shall it be the basis for
any procedure under this Agreement." The questioned affidavits do not attempt to amend the C BA or to insert

any procedure under this Agreement." The questioned affidavits do not attempt to amend the C BA or to insert
any new terms or procedure into the C BA but only serve to confirm the management and the union's true
intention in entering into the existing provisions of the said C BA.
We likewise uphold the C A's finding that petitioners voluntarily executed and signed a release and quitclaim
after receiving their separation package, acknowledging full and final payment of all benefits that they may be
entitled to in relation to their employment. The validity of quitclaims executed by laborers has long been
recognized in this jurisdiction. In Periquet v. National Labor Relations Commission,[23] this C ourt ruled that not
all waivers and quitclaims are invalid as against public policy. If the agreement was voluntarily entered into
and represents a reasonable settlement of the claims of the employee, it is binding on the parties and may not
later be disowned simply because of a change of mind. Such legitimate waivers resulting from voluntary
settlements of laborer's claims should be treated and upheld as the law between the parties.
In the instant case, there is no showing that petitioners were forced or duped by respondent into signing the
release and quitclaim. In their sworn quitclaim, they freely declared that they received full separation pay as
well as all other amounts due them by reason of their employment. Petitioners further stated that they were
voluntarily releasing respondent National Steel C orporation from all claims in respect to their
employment.[24] They even executed not just one but two sets of quitclaims. Each quitclaim was written in
English and in the Visayan dialect which petitioners very well understand. For sure, petitioners signed the
quitclaim with full understanding of the fact that this was in complete satisfaction of all their entitlements and
that it amounted to a waiver of their right to claim all other benefits, including retirement pay. Besides, the
quitclaim represents a reasonable and fair settlement of petitioners' claims as the separation package consisted
of two (2) months salary for every year of service, leave balance credits, 13th month pay, uniform plus rice
subsidy differential, salary differential and signing bonus. Indeed, nothing on the face of their quitclaim has
been shown as unconscionable. In the absence of evidence showing coercion or intimidation in its execution,
we are constrained to uphold the appellate court's conclusion that the execution of the release and quitclaim
was valid.
Indubitably, payment to petitioners of both separation pay and retirement benefits is proscribed under Article X
of respondent's retirement plan, as well as under Article XIV of the C BA. Both the retirement plan and the C BA
are binding agreements, not being contrary to law, morals, good customs, public order or public policy and
must therefore be upheld. Hence, petitioners' theory that there is nothing in the retirement plan and the C BA
that prohibits them from receiving the retirement pay over and above their separation package must obviously
fail. Their reliance on the casesAquino v. NLRC,[25] University of the East v. Minister of Labor,[26] and Batangas
Laguna Tayabas Bus Co. v. Court of Appeals,[27] is therefore misplaced.
In a futile attempt to persuade this C ourt, petitioners sought refuge in the decision rendered by the C A, Twelfth
Division in CA-G.R. SP No. 55034 entitled "National Steel Labor Union (NASLU-FFW), et al. vs. NLRC." The said
case was an appeal made by NASLU-FFW from the same consolidated decision of the NLRC in NLRC CA No.
M-003642-97 and NLRC CA No. M-003666-97. The C A, Twelfth Division affirmed the NLRC decision and ruled
that the retrenched employees are entitled to retirement benefits even after receiving their separation
pay. Petitioners now contend that the decision of the C A, Twelfth Division binds respondent and the same
decision should have been adopted by the C A, Fifteenth Division.
Petitioners' contention has no leg to stand on. It is undisputed that respondent company was not a party to the
case decided by the C A, Twelfth Division. Well-settled is the rule that one who is not a party to a case is not
bound by any decision of the court; otherwise he will be deprived of his right to due process.[28] Respondent
was never impleaded nor did it intervene in the said case relied upon by petitioners. Thus, the decision
rendered by the C A, Twelfth Division cannot be enforced against respondent consistent with the rule enunciated
by this C ourt that a person who was not impleaded in a case could not be bound by the decision rendered
thereon for no man shall be affected by any proceeding to which he is a stranger.[29] We agree with the C A that
for its Fifteenth Division to simply adopt the findings of its Twelfth Division in a case wherein respondent was
not impleaded as a party and did participate therein violates respondent's right to due process. Respondent had
the right to have its own appeal evaluated by the appellate court on its own merits and not on the merits of
another party's appeal.
On the charge of forum shopping against respondent, the same lacks merit. InDevelopment Bank of the
Philippines v. Court of Appeals, we held that:
xxx Forum shopping is the act of a party, against whom an adverse judgment has been rendered in one
forum, of seeking another and possibly favorable opinion in another forum by appeal or a special civil
action of certiorari. xxx
...Even assuming that separate actions have been filed by two different parties involving essentially the
same subject matter, no forum shopping is committed where the parties did not resort to multiple judicial
remedies.
The case pending before the C A, Twelfth Division, was the petition for review filed by NASLU-FFW wherein
respondent was not impleaded as a party. Respondent's failure to disclose the existence of such a case in its
certification against forum shopping, assuming respondent already had notice of the filing of the said case at
the time it filed its own C A petition, is not fatal to its petition before the C A.
As for intervenors, it is undisputed that their own appeal/petition for review of the C A's Decision in CA-G.R. No.

As for intervenors, it is undisputed that their own appeal/petition for review of the C A's Decision in CA-G.R. No.
51734 has already been denied with finality by this C ourt's Third Division. They cannot now re-open their case
or recover their lost appeal by intervention in the present case. In any event, intervenors' interest in the
present case is only insofar as a judgment in favor of petitioners might inure to their benefit. C onsidering that
our Decision is adverse to petitioners, we see no cogent reason for allowing said motions for intervention.
WHEREFORE, the petition for review is hereby DENIED. The assailed decision and resolution of the C ourt of
Appeals in CA-G.R. No. 51734 are hereby AFFIRMED. The motions for intervention are DENIED for lack of
merit.
SO ORDERED.
Puno, C.J., (Chairperson), Carpio, Corona, and Azcuna, JJ., concur.
Penned by Associate Justice Rebecca De Guia-Salvador, with Associate Justices Ruben T. Reyes (now a
[1]
member of this C ourt) and Mariano M. Umali (now ret.), concurring; rollo, pp. 31-43.
[2] Id. at 64-65.
[3] Id. at 75-85.
[4] Entitled "Bongcawel, et al. v. National Steel Corporation"
[5] Records, pp. 165-188.
[6] Rollo, p. 14.
[7] G.R. No. 87653, February 11, 1992, 206 SC RA 118.
[8] Siguan v. Lim, G.R. No. 134685, November 19, 1999, 318 SC RA 725, 734-735.
[9] Supra at note 7.
[10] G.R. No. L-74007, June 31, 1987, 152 SC RA 676.
[11] G.R. No. L-38482, June 18, 1976, 71 SC RA 470.
[12] Records, pp. 86-91.
[13] Id. at 90.
Ruben Serrano v. National Labor Relations Commission, G.R. No. 117040, May 4, 2000, 331 SC RA
[14]
331; Jenny M. Agabon v. National Labor Relations Commission, G.R. No. 158693, November 17, 2004, 442
SC RA 573.
[15] Records, pp. 93-94.
[16] C A rollo, p. 85.
Rule 130, Section 9 - When the terms of an agreement have been reduced to writing, it is considered as
[17]
containing all the terms agreed upon and there can be, between the parties and their successors-in-interest, no
evidence of such terms other than the contents of the written agreement.
However, a party may present evidence to modify, explain or add to the terms of the written agreement if he
puts in issue in his pleading:
a. An intrinsic ambiguity, mistake or imperfection in the written agreement;

b. The failure of the written agreement to express the true intent and agreement of the parties thereto;
c. The validity of the written agreement; or
d. The existence of other terms agreed to by the parties or their successors in interest after the execution of
the written agreement.
The term "agreement" includes wills.

The term "agreement" includes wills.
United Kimberly-Clark Employees Union-Philippine Transport General Workers' Organization v. Kimberly-

[18]
Clark Phils., Inc., G.R. No. 162957, March 6, 2006, 484 SC RA 187, 201.
Supra, note 17. See also Asiatrust Development Bank v. Concepts Trading Corporation, G.R. No. 130759,
[19]
June 20, 2003, 404 SC RA 449, 456; American Home Assurance Company v. Tantuco Enterprises, Inc., G.R. No.
138941, October 8, 2001, 366 SC RA 740, 746-747.
[20] Records, pp. 265-270.
[21] Id. at 271-274.
[22] Principio v. Barrientos, G.R. No. 167025, December 19, 2005, 478 SC RA 639, 650.
[23] G.R. No. 91298, June 22, 1990, 186 SC RA 724, 730-731.
[24] Records, pp. 82-83.
[28] Aron v. Realon, G.R. No. 159156, January 31, 2005, 450 SC RA 372, 389.
[29] Heirs of Antonio Pael v. Court of Appeals, G.R. No. 133547, February 10, 2000, 325 SC RA 341, 366.
Pasted from <http://elibrary.judiciary.gov.ph/decisions.php?doctype=Decisions%20/%20Signed%20Resolutions&docid=

1224812495586571081>

LEPANTO CONSOLIDATED V. LEPANTO LOCAL STAFF UNION
12:18 AM
[G.R. No. 161713, August 20, 2008]
LEPANTO CONSOLIDATED MINING COMPANY, PETITIONER, VS. LEPANTO LOCAL STAFF

UNION, RESPONDENT.
RE S O LU T I O N
CARPIO, J.:
The Case
Before the C ourt is a petition for review[1] assailing the 22 July 2003 Decision[2] and 20 January 2004
Resolution[3] of the C ourt of Appeals in C A-G.R. SP No. 60644.
The Antecedent Facts
Lepanto C onsolidated Mining C ompany[4] (petitioner) is a domestic mining corporation. Lepanto Local Staff
Union (respondent) is the duly certified bargaining agent of petitioner's employees occupying staff positions.
On 28 November 1998, petitioner and respondent entered into their fourth C ollective Bargaining Agreement
(4th C BA) for the period from 1 July 1998 to 30 June 2000. The 4th C BA provides:
ARTIC LE VIII - NIGHT SHIFT DIFFERENTIAL
Section 3. Night Differential pay. - The C ompany shall continue to pay nightshift differential for work
during the first and third shifts to all covered employees within the bargaining unit as follows:
For the First Shift (11:00 p.m. to 7:00 a.m.), the differential pay will be 20% of the basic rate. For the
Third Shift (3:00 p.m. to 11:00 p.m.), the differential pay will be 15% of the basic rate.
However, for overtime work, which extends beyond the regular day shift (7:00 a.m. to 3:00 p.m.), there
[will] be no night differential pay added before the overtime pay is calculated.
ARTIC LE XII - RIGHTS, PRIVILEGES AND OTHER BENEFITS
Section 9. Longevity pay - The company shall grant longevity pay of P30.00 per month effective July 1,
1998 and every year thereafter. [5]
On 23 April 2000, respondent filed a complaint with the National C onciliation and Mediation Board, C ordillera
Administrative Region (NC MB-CAR) alleging that petitioner failed to pay the night shift differential and longevity
pay of respondent's members as provided in the 4th C BA. Petitioner and respondent failed to amicably settle the
dispute. They agreed to submit the issues to Voluntary Arbitrator Norma B. Advincula (Voluntary Arbitrator) for
resolution.
The Ruling of the Voluntary Arbitrator
In a Decision dated 26 May 2000,[6] the Voluntary Arbitrator ruled in favor of respondent as follows:
WHEREFORE, foregoing considered, this Office holds and so orders respondent Lepanto C onsolidated
Mining C orporation (LC MC) to grant complainant Lepanto Local Staff Union (LLSU) the following benefits:
Longevity pay of P30.00 per month which shall be reckoned form July 1, 1998 and every year thereafter
in consonance with their contract; and
Night shift differential pay of 15% of the basic rate for hours of work rendered beyond 3:00 p.m. for the
following shifts: 7:00 A.M. to 4:00 P.M., 7:30 A.M. to 4:30 P.M. and 8:00 A.M. to 5:00 P.M. to be
reckoned from the date of the effectivity of the 4 th C BA which was on July 1, 1998.
SO ORDERED.[7]
The Voluntary Arbitrator ruled that petitioner had the legal obligation to pay longevity pay of P30 per month
effective 1 July 1998. The Voluntary Arbitrator rejected petitioner's contention that "effective" should be
understood as the reckoning period from which the employees start earning their right to longevity pay, and
that the longevity pay should be paid only on 1 July 1999. The Voluntary Arbitrator ruled that 1 July 1998 was
the reckoning date that indicated when the amounts due were to be given.

the reckoning date that indicated when the amounts due were to be given.
The Voluntary Arbitrator agreed with respondent that surface workers on the second shift who performed work
after 3:00 p.m. should be given an additional night shift differential pay equivalent to 15% of their basic rate.
Interpreting paragraph 3, Section 3, Article VIII of the 4th C BA, the Voluntary Arbitrator ruled that it only meant
that an employee who extends work beyond the second shift shall receive overtime pay which shall be
computed before the night shift differential pay. In other words, it excludes the night shift differential in the
computation of overtime pay.
The Voluntary Arbitrator ruled that the inclusion of paragraph 3, Section 3, Article VIII of the 4th C BA disclosed
the intent of the parties to grant night shift differential benefits to employees who rendered work beyond the
regular day shift. The Voluntary Arbitrator ruled that if the intention were otherwise, paragraph 3 would have
been deleted.
Finally, the Voluntary Arbitrator ruled that the respondent's claim for night shift differential arising from the 1st,
2nd, and 3rd C BAs had already prescribed.
Petitioner filed a motion for reconsideration. In her Resolution dated 5 August 2000,[8]the Voluntary Arbitrator
denied the motion for reconsideration for lack of merit.
Petitioner filed a petition for review before the C ourt of Appeals.
In its 22 July 2003 Decision, the C ourt of Appeals affirmed the Voluntary Arbitrator's Decision.
The C ourt of Appeals ruled that paragraph 3, Section 3, Article VIII was clear and unequivocal. It grants night
shift differential pay to employees of the second shift for work rendered beyond their regular day shift.
However, the night shift differential was excluded in the computation of the overtime pay.
The C ourt of Appeals further ruled that the records of the case revealed that during the effectivity of the
4th C BA, petitioner voluntarily complied with paragraph 3, Section 3, Article VIII by paying night shift
differential to employees for hours worked beyond 3:00 p.m. Petitioner's act disclosed the parties' intent to
include employees in the second shift in the payment of night shift differential. The C ourt of Appeals rejected
petitioner's claim that the payment was due to error and mere inadvertence on the part of petitioner's
accounting employees. The Court of Appeals noted that the records revealed that petitioner still continued to
pay night shift differential for hours worked beyond 3:00 p.m. after the Voluntary Arbitrator rendered the 26
May 2000 Decision. Thus, petitioner is estopped from claiming erroneous payment.
Petitioner filed a motion for reconsideration. In its 20 January 2004 Resolution, the C ourt of Appeals denied the
motion for lack of merit.
Hence, the petition before this C ourt.
The Issue
The sole issue in this case is whether the C ourt of Appeals erred in affirming the Voluntary Arbitrator's
interpretation of the 4th C BA that the employees in the second shift are entitled to night shift differential.
The Ruling of this Court
The terms and conditions of a collective bargaining contract constitute the law between the parties.[9] If the
terms of the C BA are clear and have no doubt upon the intention of the contracting parties, the literal meaning
of its stipulation shall prevail.[10]
The disputed provision of the 4th C BA provides:

ARTIC LE VIII - NIGHT SHIFT DIFFERENTIAL
Section 3. Night Differential pay. - The C ompany shall continue to pay nightshift differential for work
during the first and third shifts to all covered employees within the bargaining unit as follows:
For the First Shift (11:00 p.m. to 7:00 a.m.), the differential pay will be 20% of the basic rate. For the
Third Shift (3:00 p.m. to 11:00 p.m.), the differential pay will be 15% of the basic rate.

[will] be no night differential pay added before the overtime pay is calculated.
There is no question that workers are entitled to night shift differential of 20% of the basic rate for work
performed during the first shift from 11:00 p.m. to 7:00 a.m. Workers are also entitled to night shift differential
of 15% of the basic rate for work performed during the third shift from 3:00 p.m. to 11:00 p.m. The issue is
whether workers are entitled to night shift differential for work performed beyond the regular day shift, from
7:00 a.m. to 3:00 p.m.
We sustain the interpretation of both the Voluntary Arbitrator and the C ourt of Appeals. The first paragraph of
Section 3 provides that petitioner shall continue to pay night shift differential to workers of the first and third
shifts. It does not provide that workers who performed work beyond the second shift shall not be entitled to
night shift differential. The inclusion of the third paragraph is not intended to exclude the regular day shift
workers from receiving night shift differential for work performed beyond 3:00 p.m. It only provides that the
night shift differential pay shall be excluded in the computation of the overtime pay.
It is settled that in order to ascertain the intention of the contracting parties, the Voluntary Arbitrator shall
principally consider their contemporaneous and subsequent acts as well as their negotiating and contractual
history and evidence of past practices.[11] In this case, the Voluntary Arbitrator and the C ourt of Appeals both
found that the provision in question was contained in the 1st, 2nd, and 3rd C BAs between petitioner and
respondent. During the effectivity of the first three C BAs, petitioner paid night shift differentials to other
workers who were members of respondent for work performed beyond 3:00 p.m. Petitioner also paid night shift
differential for work beyond 3:00 p.m. during the effectivity of the 4th C BA. Petitioner alleges that the payment
of night shift differential for work performed beyond 3:00 p.m. during the 4th C BA was a mistake on the part of
its accounting department. However, the C ourt of Appeals correctly ruled that petitioner failed to present any
convincing evidence to prove that the payment was erroneous. In fact, the C ourt of Appeals found that even
after the promulgation of the Voluntary Arbitrator's decision and while the case was pending appeal, petitioner
still paid night shift differential for work performed beyond 3:00 p.m. It affirms the intention of the parties to
the C BA to grant night shift differential for work performed beyond 3:00 p.m.
WHEREFORE, we DENY the petition. We AFFIRM the 22 July 2003 Decision and 20 January 2004 Resolution
of the C ourt of Appeals in C A-G.R. SP No. 60644. C osts against petitioner.
SO ORDERED.
Puno, C.J., (Chairperson), Corona, Azcuna, and Leonardo-De Castro, JJ., concur.
[1] Under Rule 45 of the 1997 Rules of C ivil Procedure.
Rollo, pp. 46-54. Penned by Associate Justice Ruben T. Reyes (now a member of this C ourt) with Associate
[2]
Justices Elvi John S. Asuncion and Lucas P. Bersamin, concurring.
[3] Id. at 56.
[4] Referred to as Lepanto C onsolidated Mining C orporation by the Voluntary Arbitrator.
[5] C A rollo, p. 25.
[6] Id. at 24-30.
[7] Id. at 30.
[8] Id. at 31-34.
Holy Cross of Davao College, Inc. v. Holy Cross of Davao Faculty Union-KAMAPI, G.R. No. 156098, 27 June
[9]
2005, 461 SC RA 319.
United Kimberly-Clark Employees UnionPhilippine Transport General Workers' Organization v. Kimberly-

[10]
Clark Phils., Inc., G.R. No. 162965, 6 March 2006, 484 SC RA 187.
[11] Id.

1220420757840874065>

ALMARIO V. PAL
12:18 AM
SECOND DIVISION
VICENTE S. ALMARIO, G.R. No. 170928

Petitioner,
Present:
QUISUMBING,* J., Chairperson,

SANDOVAL-GUTIERREZ,**
- versus - CARPIO,***
CARPIO MORALES,
TINGA, and
VELASCO, JR., JJ.
PHILIPPINE AIRLINES, INC.,

Respondent. Promulgated:
September 11, 2007
x- - - -- - - - - - - -- - - - - - - - - -- - - - - - - -- - - - - - - - -- - - - - - - -- - - x
DE C I S I ON
CARPIO MORALES, J.:
On October 21, 1988, petitioner, Vicente S. Almario (Almario), was hired by

respondent, Philippine Airlines, Inc. (PAL), as a Boeing 747 Systems
Engineer.
On April 28, 1995, Almario, then about 39 years of age[1] and a Boeing 737
(B-737) First Officer at PAL, successfully bid for the higher position of
Airbus 300 (A-300) First Officer.[2] Since said higher position required
additional training, he underwent, at PAL‟s expense, more than five months of
training consisting of ground schooling in Manila and flight simulation
in Melbourne, Australia.[3]
After completing the training course, Almario served as A-300 First Officer of
PAL, but after eight months of service as such or on September 16, 1996, he
tendered his resignation, for “personal reasons,” effective October 15, 1996. [4]

On September 27, 1996, PAL‟s Vice President for Flight Operations
sent Almario a letter, the pertinent portions of which read:
xx x x
2. Our records show that you have been trained by the Company as A300 First Officer
starting on 04 September 1995 and have completed said training on 08 February 1996. As
you are aware the Company invested heavily on your professional training in the estimated
amount of PHP786,713.00 on the basis that you continue to serve the Company for a
definite period of time which is approximately three (3) years or thirty-six (36)
months.
3. In view of the foregoing, we urge you to reconsider your proposed resignation

otherwise you will be required to reimburse the Company an amount equivalent to the cost
of your professional training and the damaged [sic] caused to the Company.[5] (Emphasis
and underscoring supplied)
Despite receipt of the letter, Almario pushed through with his resignation.
By letter of October 9, 1996, Almario‟s counsel sought PAL‟s explanation

behind its September 27, 1996 letter considering that Almario “did not sign
anything regarding any reimbursement.”[6] PAL did not
reply, prompting Almario‟s counsel to send two letters dated January 6,
1997 and February 10, 1997 following-upPAL‟s reply, as well as the release
of Almario‟s clearances which he needed to avail of his benefits. [7]
On February 11, 1997, PAL filed a Complaint[8] against Almario before the
Makati Regional Trial Court (RTC), for reimbursement of P851,107 worth of
training costs, attorney‟s fees equivalent to 20% of the said amount, and costs
of litigation. PAL invoked the existence of an innominate contract of do ut
facias (I give that you may do) with Almario in that by spending for his
training, he would render service to it until the costs of training were
recovered in at least three (3) years. [9] Almario having resigned before the 3-
year period, PAL prayed that he should be ordered to reimburse the costs for
his training.
In his Answer with Special and Affirmative Defenses and Compulsory

Counterclaims,[10] Almario denied the existence of any agreement with PAL
that he would have to render service to it for three years after his training
failing which he would reimburse the training costs. He pointed out that the
1991-1994 Collective Bargaining Agreement (CBA) between PAL and the
Airline Pilot‟s Association of the Philippines (ALPAP), of which he was a
member,[11] carried no such agreement.
Almario thus prayed for the award of actual damages on account

of PAL‟s withholding of the necessary clearances which he needed in order to
obtain his lawful benefits, and moral and exemplary damages for malicious

obtain his lawful benefits, and moral and exemplary damages for malicious
prosecution and unjust harassment. [12]
PAL, in its Reply to Defendant‟s Answer and Answer to

Counterclaim,[13] argued as follows:
The right of PAL to be reimbursed for training expenses is based on Article XXIII,
Section 1 of the 1991-1994 Collective Bargaining Agreement (CBA, for brevity)
and which was taken from the decision of the Secretary of Labor.
[The Secretary of Labor] ruled that a pilot should remain in the position where he is
upon reaching the age of fifty-seven (57), irrespective of whether or not he has
previously qualified in the Company‟s turbo-jet operations. The rationale behind this
is that a pilot who will be compulsorily retired at age sixty (60) should no longer be
burdened with training for a new position.
Thus, Article XXIII, Section 1 of the CBA provide[s]:
“Pilots fifty-seven (57) years of age shall be frozen in their

position. Pilots who are less than fifty-seven (57) years of age provided
they have previously qualified in any company‟s turbo-jet aircraft shall be
permitted to occupy any position in the company‟s turbo-jet fleet.
The reason why pilots who are 57 years of age are no longer qualified to bid for a
higher position is because they have only three (3) years left before the mandatory
retirement age [of 60] and to send them to training at that age, PAL would no
longer be able to recover whatever training expenses it will have to incur.
Simply put, the foregoing provision clearly and unequivocally recognizes the
prohibitive training cost principle such that it will take a period of at least three (3)
years before PAL could recover from the training expenses it incurred.[14] (Emphasis
and underscoring supplied)
By Decision[15] of October 25, 2000, Branch 147 of the Makati RTC, finding
no provision in the CBA between PAL and ALPAP stipulating that a pilot
who underwent a training course for the position of A-300 First Officer must
serve PAL for at least three years failing which he should reimburse the
training expenses, rendered judgment in favor of Almario.
The trial court denied Almario‟s claim for moral damages, however. [16] It
denied too Almario‟s claim for the monetary equivalent of his family trip pass
benefits (worth US$49,824), it holding that the same had been forfeited as he
did not avail of them within one year from the date of his separation.
Thus the trial court disposed:
WHEREFORE, in view of the foregoing, the Court hereby renders judgment in favor
of defendant Vicente Almario and against the plaintiff:
1- Dismissing the plaintiff‟s complaint;

2- Ordering the plaintiff to pay the defendant:

1- Dismissing the plaintiff‟s complaint;
2- Ordering the plaintiff to pay the defendant:
a- the amount of P312,425.00 as actual damages with legal interest from

the filing of the counterclaim;
b- the amount of P500,000.00 as exemplary damages;
c- the amount of P150,000.00 as attorney‟s fees;
d- the costs of the suit.
SO ORDERED.[17]
On appeal by both parties,[18] the Court of Appeals, by

Decision[19] dated March 31, 2005, reversed the trial court‟s decision. It
found Almario liable under the CBA between PAL and ALPAP and, in any
event, under Article 22 of the Civil Code. Thus it disposed:
WHEREFORE, the appealed Decision is REVERSED and SET ASIDE. In lieu

thereof, a new judgment is hereby ENTERED, as follows: (a) Appellee Vicente
Almario is hereby ordered to pay appellant Philippine Airlines, Inc. the sum of Five
Hundred Fifty Nine Thousand, Seven Hundred [T]hirty Nine & 9/100 Pesos (P559,
739.90) with six percent (6%) interest as above-computed; and (b) the award of
exemplary damages and attorney‟s fees in favor of appellee is
hereby DELETED.[20] (Emphasis in the original; underscoring supplied)
His Motion for Reconsideration[21] having been denied,[22] Almario filed the
instant Petition for Certiorari [sic] (Under Rule 45),[23] raising the following
issues:
A. Whether the Court of Appeals committed reversible error in interpreting the

Collective Bargaining Agreement between Philippine Airlines, Inc. (PAL) and the Airline
Pilots Association of the Philippines (ALPAP) as an ordinary civil law contract applying
ordinary contract law principles which is contrary to the ruling of the Supreme Court
in Samahang Manggagawa saTop Form Manufacturing-United Workers of the
Philippines (SMTFM-UWP) v. NLRC and, therefore, erroneously reading into the CBA a
clause that was not agreed to during the negotiation and not expressly stated in the CBA;
B. Whether the Court of Appeals committed reversible error in holding that Article 22
of the Civil Code can be applied to recover training costs which were never agreed to nor
included as reimbursable expenses under the CBA;
C. Whether the availing by petitioner of a required training is a legal ground justifying

the entitlement to a benefit and therefore, negating claims of unjust enrichment;
D. Whether the failure of private respondent to honor and provide the Family Trip Pass
Benefit in the equivalent amount of US$ 49,824.00 which petitioner and his family were
not able to avail of within the one (1) year from date of separation due to the actions of
PAL amounts to unjust enrichment;
E. Whether or not respondent is liable for malicious prosecution[.][24] (Underscoring

supplied)

Almario insists on the absence of any written contract or explicit provision in
the CBA obliging him to reimburse the costs incurred by PAL for his
training. And he argues:
[T]here can be no unjust enrichment because petitioner was entitled to the benefit of
training when his bid was accepted, and x x x PAL did not suffer any injury because
the failure to include a reimbursement provision in the CBA was freely entered into
by the negotiating parties;
xx x x
It is not disputed that the petitioner merely entered a bid for a higher position, and
that when he was accepted based on seniority and qualification, the position was
awarded to him. It is also not disputed that petitioner [had] not asked, requested, or
demanded for the training. It came when his bid was accepted by PAL;
Because the training was provided when the bid was accepted, the acceptance of the
bid was the basis and legal ground for the training;
Therefore, since there is a legal ground for the entitlement of the training, contrary to
the ruling of the Court of Appeals, there can be no unjust
enrichment;[25] (Underscoring supplied)
The petition fails.
As reflected in the above-enumerated issues raised by Almario, he cites the

case of Samahang Manggagawa sa Top Form Manufacturing-United Workers
of the Philippines (SMTFM-UWP) v. NLRC[26] (Manggagawa) in support of
his claim that the appellate court erred in interpreting the CBA as an ordinary
civil law contract and in reading into it “a clause that was not agreed to during
the negotiation and not expressly stated in the CBA.”
On the contrary, the ruling in Manggagawa supports PAL‟s position. Thus

this Court held:
The CBA is the law between the contracting parties – the collective
bargaining representative and the employer-company. Compliance with a
CBA is mandated by the expressed policy to give protection to labor. In
the same vein, CBA provisions should be “construed liberally rather than
narrowly and technically, and the courts must place a practical and
realistic construction upon it, giving due consideration to the context in
which it is negotiated and purpose which it is intended to serve .” This
is founded on the dictum that a CBA is not an ordinary contract but one
impressed with public interest. It goes without saying, however, that only
provisions embodied in the CBA should be so interpreted and
complied with. Where a proposal raised by a contracting party does not
find print in the CBA, it is not a part thereof and the proponent has no
claim whatsoever to its implementation. [27] (Emphasis and underscoring
supplied)

In N.S. Case No. 11-506-87, “In re Labor Dispute at the Philippine Airlines,
Inc.,” the Secretary of the Department of Labor and Employment (DOLE),
passing on the failure of PAL and ALPAP to agree on the terms and
conditions for the renewal of their CBA which expired on December 31, 1987
and construing Section 1 of Article XXIII of the 1985-1987 CBA, held:
xx x x
Section 1, Article XXIII of the 1985-1987 CBA provides:
Pilots fifty- five (55) years of age or over who have not previously
qualified in any Company turbo-jet aircraft shall not be permitted to bid
into the Company‟s turbo-jet operations. Pilots fifty- five (55) years of age
or over who have previously qualified in the company‟s turbo-jet
operations may be by-passed at Company option, however, any such pilot
shall be paid the by-pass pay effective upon the date a junior pilot starts to
occupy the bidded position.
x x x PAL x x x proposed to amend the provision in this wise:
The compulsory retirement age for all pilots is sixty (60) years. Pilots
who reach the age of fifty-five (55) years and over without having
previously qualified in any Company turbo-jet aircraft shall not be
permitted to occupy any position in the Company‟s turbo-jet fleet. Pilots
fifty-four (54) years of age and over are ineligible for promotion to any
position in Group I. Pilots reaching the age of fifty- five (55) shall be
frozen in the position they currently occupy at that time and shall be
ineligible for any further movement to any other positions.
PAL‟s contention is basically premised on prohibitive training costs. The return

on this investment in the form of the pilot promoted is allegedly five (5)
years. Considering the pilot‟s age, the chances of full recovery [are] asserted to be
quite slim.
ALPAP opposed the proposal and argued that the training cost is offset by the pilot‟s
maturity, expertise and experience.
By way of compromise, we rule that a pilot should remain in the position where he is
upon reaching age fifty-seven (57), irrespective of whether or not he has previously
qualified in the Company‟s turbo-jet operations. The rationale behind this is that a
pilot who will be compulsorily retired at age sixty (60) should no longer be burdened
with training for a new position. Butif a pilot is only at age fifty- five (55), and
promotional positions are available, he should still be considered and promoted if
qualified, provided he has previously qualified in any company turbo-jet aircraft. In
the latter case, the prohibitive training costs are more than offset by the maturity,
expertise, and experience of the pilot.
Thus, the provision on age limit should now read:
Pilots fifty-seven (57) years of age shall be frozen in their positions. Pilots
fifty-five (55) [sic] years of age provided they have previously qualified in
any company turbo-jet aircraft shall be permitted to occupy any position in

any company turbo-jet aircraft shall be permitted to occupy any position in
the company‟s turbo-jet fleet.[28] (Emphasis and underscoring supplied)
The above-quoted provision of Section 1 of Article XXIII of the 1985-1987

CBA, as construed by the DOLE Secretary, was substantially incorporated in
the 1991-1994 CBA between PAL and ALPAP [29] as follows:
Pilots fifty-seven (57) years of age shall be frozen in their position. Pilots who are
less than fifty-seven (57) years of age provided they have previously qualified in any
company‟s turbo-jet aircraft shall be permitted to occupy any position in the
company‟s turbo-jet fleet.[30]
The same section of Article XXIII of the 1991-1994 CBA was reproduced in the
1994-2000 CBA.[31]
Arturo Gabanton, PAL‟s Senior Vice President for Flight Operations,

testifying on PAL‟s “policy or practice” on underwriting the training costs of
its pilots at the time Almario was trained, with the “expectation” of
benefiting therefrom “in order to recover the cost of training,” explained:
Atty. Parinas:
Q: At the time the defendant was accepted for training as A300 First Officer, would
you know what was the governing policy or practice of Philippine Airlines that was being
employed regarding the training cost[s] for the pilots?
Witness:
A: The company has to spend for the training of the pilots and after that
the company expecting that services will be rendered in order to recover the cost[s] of
training.
Atty. Parinas:
Q: You stated that the pilot must serve the company after completing the training, for
how long after completing the training?
Witness:
A: At least for three (3) years.
Atty. Parinas:
Q: What is your basis in saying that a pilot must serve the company after completing
the training?
Witness:
A: That is embodied in the Collective Bargaining Agreement between Philippine
Airlines and the Airline Pilot Association of the Philippines.[32]
xx x x
Atty. Parinas:

Atty. Parinas:
Q: Can you point to the provision in this agreement relating to the three (3) year period
you stated a while ago?
NOTE: Witness going over the document shown to him by counsel.
Witness:
A: It is on page 99 of the Collective Bargaining Agreement, Article
23, Miscellaneous.
Atty. Parinas: I would like to manifest that this provision pointed out by the witness is
already marked as Exhibit B-1 by the plaintiff.
xx x x
[Atty. Parinas]
Q: Mr. witness, Exhibit B-1 states in part that “Pilots, 57 years of age shall be frozen
in their position. Pilots who are less than 57 years of age provided they have been
previously qualified in any company‟s Turbo-Jet Aircraft shall be permitted to occupy any
position in the company‟s Turbo-jet Fleet”, why do you say this is the basis for the three
(3) year period within which a pilot must render service to the company after completing
the training?
[Witness]
A: The reason why 57 years old is placed here in the Collective Bargaining
Agreement [is that] it is expected that you serve the position for three (3) years because
the retirement age is at 60, therefore, if you are past 57 years old, it will fall short of the
three (3) years recovery period for the company. So it was established that [anyone] past
57 years old will not be allowed to train for another position.[33] (Emphasis and
underscoring supplied)
It bears noting that when Almario took the training course, he was about 39
years old, 21 years away from the retirement age of 60. Hence, with the
maturity, expertise, and experience he gained from the training course, he was
expected to serve PAL for at least three years to offset “the prohibitive costs”
thereof.
The pertinent provision of the CBA and its rationale aside, contrary
to Almario‟s claim, Article 22 of the Civil Code which reads:
Art. 22. Every person who through an act of performance by another, or any other
means, acquires or comes into possession of something at the expense of the latter
without just or legal ground, shall return the same to him,
applies.
This provision on unjust enrichment recognizes the principle that one may
not enrich himself at the expense of another. An authority on Civil Law[34] writes
on the subject, viz:
Enrichment of the defendant consists in every patrimonial, physical, or moral

advantage, so long as it is appreciable in money. It may consist of some positive

advantage, so long as it is appreciable in money. It may consist of some positive
pecuniary value incorporated into the patrimony of the defendant, such as: (1) the
enjoyment of a thing belonging to the plaintiff; (2) the benefits from service
rendered by the plaintiff to the defendant; (3) the acquisition of a right, whether real
or personal; (4) the increase of value of property of the defendant; (5) the
improvement of a right of the defendant, such as the acquisition of a right of
preference; (6) the recognition of the existence of a right in the defendant; and (7)
the improvement of the conditions of life of the defendant.
xx x x
The enrichment of the defendant must have a correlative prejudice, disadvantage, or

injury to the plaintiff. This prejudice may consist, not only of the loss of property or
the deprivation of its enjoyment, but also of non-payment of compensation for
a prestation or service rendered to the defendant without intent to donate on the part
of the plaintiff, or the failure to acquire something which the latter would have
obtained. The injury to the plaintiff, however, need not be the cause of the
enrichment of the defendant. It is enough that there be some relation between them,
that the enrichment of the defendant would not have been produced had it not been
for the fact from which the injury to the plaintiff is derived. (Underscoring supplied)
[35]
Admittedly, PAL invested for the training of Almario to enable him to acquire
a higher level of skill, proficiency, or technical competence so that he could
efficiently discharge the position of A-300 First Officer. Given that, PAL
expected to recover the training costs by availing of Almario‟s services for at
least three years. The expectation of PAL was not fully realized, however,
due to Almario‟s resignation after only eight months of service following the
completion of his training course. He cannot, therefore, refuse to reimburse
the costs of training without violating the principle of unjust enrichment.
Following the computation by the appellate court which was arrived at by

offsetting the respective claims of the parties, viz:
Training Cost P851,107.00

Less: Appellee‟s corresponding 8 months
Service after training [P850,107.00
divided by 36 months (3 years)
= P23,640.86 x 8 months] 189,126.88
Equals P661,980.12
Less: Accrued Benefits 102,240.22
Net Reimbursable Amount or P559,739.90[36]
Appellee’s Outstanding Account **********,
Almario must pay PAL the sum of P559,739.90, to bear the legal interest rate of
6% per annum from the filing of PAL‟s complaint on February 11, 1997 until the
finality of this decision.
In light of the foregoing discussions on the main issue, the Court finds it
unnecessary to dwell on the other issues raised by Almario. Suffice it to state

unnecessary to dwell on the other issues raised by Almario. Suffice it to state
that the appellate court‟s disposition thereof is, as its decision reflects, well-
taken.
WHEREFORE, the petition is DENIED and the decision appealed from

is AFFIRMED.
Costs against petitioner.
SO ORDERED.
CONCHITA CARPIO MORALES

Associate Justice
WE CONCUR:
(ON LEAVE)
LEONARDO A. QUISUMBING
Associate Justice
Chairperson
ANGELINA SANDOVAL-GUTIERREZ ANTONIO T. CARPIO

Acting Chairperson
DANTE O. TINGA PRESBITERO J. VELASCO, JR.


ATTESTATION
I attest that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the
Court‟s Division.
ANTONIO T. CARPIO
Associate Justice
Acting Chairperson
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution and the Division
Chairperson‟s Attestation, I certify that the conclusions in the above decision were
reached in consultation before the case was assigned to the writer of the opinion of
the Court‟s Division.
REYNATO S. PUNO
Chief Justice
* On Leave.
** Designated member pursuant to Administrative Circular No. 75-2007.
*** Acting Chairperson.
[1] When he testified on July 16, 1998, he gave his age as 42 (TSN, July 16, 1998, p. 4).
[2] RTC records, Vol. I, p. 5.
[3] TSN, February 10, 2000, p. 13; RTC records, Vol. III, pp. 43E-45E.
[4] RTC records, Vol. I, p. 6.
[5] Id. at 7.
[6] Id. at 30.
[7] Id. at 32-33.
[8] Id. at 1-4.
[9] Id. at 2.
[10] Id. at 12-24.
[11] Id. at 14, 16.
[12] Id. at 20-23.
[13] Id. at 56-59.
[14] Id. at 57-58.
[15] RTC records, Vol. II, pp. 262-268. Penned by Judge Teofilo L. Guadiz, Jr.
[16] Id. at 267.
[17] Id. at 267-268.
[18] Id. at 269-273.
[19] Penned by Associate Justice Magdangal M. de Leon, with the concurrences of Associate Justices Salvador J.

[19] Penned by Associate Justice Magdangal M. de Leon, with the concurrences of Associate Justices Salvador J.
Valdez, Jr. and Mariano C. del Castillo; CA rollo, pp. 123-132.
[20] Id. at 132.
[21] Id. at 136-153.
[22] Id. at 192-193.
[23] Rollo, pp. 3-28.
[24] Id. at 5-6. Citation omitted.
[25] Id. at 19-20.
[26] 356 Phil. 480 (1998).
[27] Id. at 490-491.
[28] RTC records, Vol. III, pp. 29E-30E (Exhibit “G-1”).
[29] Exhibits “B” (id. at 6-E), “B-1” (p. 99 of Exhibit “B”).
[30] Exhibit “B-1,” p. 99 of Exhibit “B.”
[31] Exhibit “14” (RTC records, Vol. III, p. 52-E), p. 99.
[32] TSN, February 10, 2000, pp. 13-14.
[33] Id. at 16-18.
[34] Arturo Tolentino.
[35] Tolentino, COMMENTARIES AND JURISPRUDENCE, Vol. I, pp. 80, 81, 83, 2nd ed.
[36] CA rollo, p. 131.
Pasted from <http://sc.judiciary.gov.ph/jurisprudence/2007/september2007/170928.htm>

Notes_June 23, 2010
12:57 AM
In labor relations, we frequently encounter the initials "LMC"
3 meanings:
a. Labor management cooperation
b. Labor management committee
c. Labor managemnt commission
-but it really doesn't matter. LMC, we have in mind labor and management and of necessity, we recall the provisions found in the labor code and rules and regulations
implementing the labor code mandating the department of labor, specifically the NCMB, to conduct awareness campaigns
What do you think is the rationale/justification for encouraging labor and management to form LMCs w/ n the work place?
>To achieve industrial peace
How to determine employee membership in the LMC?

Section 2, IRR (Rule XXI)
• If organized establishment: nominated by the exclusive bargaining representative
• If unorganized establishment: workers at large directly elects the members of the LMCs
*don't you find it weird that an LMC exists in an organized establishment?

No, LMCs complements the union
>but usually, Unions don't want LMCs on the notion that it replaces the unions…based on the old notion/traditional notion of an adversarial relationship between
management and labor
>makes it appear on some notion that the UNION is incompetent to serve the interests of its members
Issues in LMCs usually different with what the Union usually deals with:
-in the article, LMCs are allowed to deal with policies of the company as to solicit proposals from the side of labor to promote the productivity of the establishment
-in reality, all too often, disagreements arise between ER and union when the union submits a set of proposals in the course of CB negotiations. The ER would defer it
to another forum, maybe in the LMC. When that happens, the union does not look to kindly on such move of the employer.
-Unions are not fully aware that they can put up LMCs
-the perception was that the NCMB grabs the business of the Union: delivers a message that one don't need a union, LMCs are enough. As a result, DOLE's campaign
for LMCs became nill…bumagal. (as featured in Foz's article)
AZUCENA ARTICLE:
-written in the 1980s, at a time when the NCMB was promoting the concept of LMCs, among others
-highlighted the importance of values: he mentioned the Filipino values of cooperation vs. confrontation: Filipinos are nonadversarial, as opposed to the traditional
notion of the relationship between management and employees which is adversarial
FOZ ARTICLE:
-traced the roots of worker's participation in the determination of policy and decision-making processes affecting their rights and benefits as may be provided by law:
from the concon records to congress
-emphasized the fact that, as born out of the deliberations of the Concon, what they had in mind were processes like the grievance procedure, conciliation,
mediation, voluntary arbitration - all of which are integral parts of the so-called alternative modes of dispute resolution
-comments on PAL v. NLRC: the court misapplied the constitutional and labor code provisions on worker's participation.
• Overlooked or ignored Art 255 as to LMCs
• Misread Art 211(d) policy on education and enlightenment of union members as employees
• LMC's sphere of intervention, in accordance w/ Art255, does not cover areas covered by the CBA or collective bargaining areas
• The court could have just invoked management prerogatives: so not try to discuss the consti provision on participation of wor kers in policy and decision-making
processes?
Article 255. Exclusive bargaining representation and workers' participation in policy and decision-making. - The labor organization designated or selected by the
majority of the employees in an appropriate collective bargaining unitshall be the exclusive representative of the employees in such unit for the purpose of collective
bargaining. However, an individual employee or group of employeesshall have theright at any time to present grievances to their employer.
"Any provision of law to the contrary notwithstanding, workers shall have the right, subject to such rules and regulations as the Secretary ofLaborand Employment
may promulgate, to participate in policy and decision-making processes of the establishment where they are employed insofar as said processes will directly affect
their rights, benefits and welfare. For this purpose, workers and employers may formlabor-management councils: Provided, That the representatives of the workers
in such labor-management councils shall be elected by at least the majority of all employees in said establishment."
-"However, an individual employee or group of employeesshallhave theright at any time to present grievances to their employer." Does an ER have the same right?
-no? Because of the inherent relationship between the employer and employee where the employer stand in a higher level vis a vis the employee
-when an ER deals directly to the Ees, to the exclusion of the EBR, it is committing ULP
PAL v. NLRC
SUMMARY: PAL revised its 1966 Code of Discipline in 1985, without sufficient notice to its employees, thereby subjecting some of its employees to disciplinary measures and even
dismissing some of them. PALEA filed a ULP case before NLRC. LA was for PAL, though she did not find any ULP or BF bargainingon PAL’s part. NLRC affirmed said decision. SC upheld
the said decisions, saying that PAL should have involved the employees in the revision of the Code of Discipline as it is notpurely management prerogative, the act involving
repercussions to the employees’ security of tenure. Shared responsibility between management and labor also highlighted as already an existing state policy even before the
amendment of the LC.
-if you were the personnel manager, HR director and you want to change some policy which would involve the rights and welfare (tardiness, absences…) of the
employees. What steps should you undertake?
• If these would affect the security of tenure of the employees, due process should be observed
• Even before you start touching any of the provisions, consult with the union or the employees, make known to them what you de sire to achieve, furnish them
copy of the specific changes. Give them then the opportunity to comment thereon. Here them out. If you were able to resolve i t, reach an agreement, furnish

union leadership a copy of the final draft. It is always safe to post it on the bulletin board for all to see. Give the emplo yees a certain period of time to
comment, to study it. After a lapse of a reasonable period of time, advise them of the effectivity date of the changes.
• If the parties are unable to reach an agreement on the proposed changes, the union will challenge the management to go throug h grievance, then voluntary
arbitration
When you become lawyers and you handle a case where the employee or union questions certain rights that, to the thinking of the employer, falls within the bundle
of rights called management prerogative, always invoke the case of SAN MIGUEL BREWERY SALES FORCE UNION V. OPLE, 170 SCRA 25 (1989):
SUMMARY: PTGWO and SMC entered into a CBA in April 1978 (effective May 1, 1978-January 31, 1981) which provided that employees would receive an additional commission
based on their respective sales. However, in 1979, SMC adopted the “Complementary Distribution System” (CDS) wherein beer products were sold directly to wholesalers, thereby
removing any chance for the employees to gain commission. PTGWO filed a case for ULP. Minister of Labor absolved SMC. SC upheld the CDS, ruling that it was a valid exercise of
management prerogative. Besides, SMC offered to compensate those who would be affected by paying them “back adjustment commission”.
-So long as a company's management prerogatives are exercised in good faith for the advancement of the employer's interest and not for the purpose of defeating or circumventing
the rights of the employees under special laws or under valid agreements, this Court will uphold them - HIGHLIGHTED BY SIR
-what does CDS mean: where its beer products were offered for sale directly to wholesalers through SMC offices.
GTE DIRECTORIES CORP V. SANCHEZ, 197 SCRA 452 (1991)

SUMMARY: GTE through the years adopted several Sales evaluation policies. Pursuant to the latest sales policy, GTE issued 6 memoranda to its employees which required the
Premise Sales Reps (PSRs) to submit individual reports reflecting target revenues as of deadlines set. None of these memoranda were followed by the employees, arguing that they
were not consulted. As a result, 14 employees (some of them Union officers) were dismissed. Union also filed notice of strikebefore the 4th memo was issued. Court held that GTE’s
sales policy was pursuant to the valid exercise of management prerogatives and that its implementation is not suspended merely because of pending negotiations initiated by the
Union.
HOW DOES THE LABOR CODE DEFINE A LABOR DISPUTE - MEMORIZE BECAUSE IT'S USUALLY A BAR QUESTION
LABOR DISPUTE INCLUDES
ANY CONTROVERSY OR MATTER CONCERNING
TERMS AND CONDITIONS OF EMPLOYMENT OR
THE ASSOCIATION OR REPRESENTATION OF PERSONS
IN NEGOTIATING,
FIXING,
MAINTAINING,
CHANGING OR ARRANGING THE TERMS AND CONDITIONS OF EMPLOYMENT,
REGARDLESS OF WHETHER THE DISPUTANTS STAND IN THE PROXIMATE RELATION OF EMPLOYER AND EMPLOYEE
SMC Employees Union vs. Bersamira, 186 SCRA 496 (1990)
SUMMARY: RTC issued Writ of Preliminary Injunction, on the assumption that it had jurisdiction over the dispute between SMC and the Union, there being no EER. Court held that
even if there is no EER, there can still be a labor dispute.
(note: Sir must be interested in this case, he wrote "Lipercon" on the board eh - Later on, we found out that sir handled this case for SMC!)
-break up essential ingredients of a labor arbitration
a. Terms and conditions of employement
b. THE ASSOCIATION OR REPRESENTATION OF PERSONS
IN NEGOTIATING,
FIXING,
MAINTAINING,
CHANGING OR ARRANGING THE TERMS AND CONDITIONS OF EMPLOYMENT,
c. REGARDLESS OF WHETHER THE DISPUTANTS STAND IN THE PROXIMATE RELATION OF EMPLOYER AND EMPLOYEE
-SC found for the union in this case. How did the supreme court point out the applicability of Art 212 (l)
-history:
*prior to the promulgation of this San Miguel case, in cases involving regularization (when the employees seek to be regularemployees of the company), all the ER
had to do was to prove that there was no EER, especially exercise of control over the employees:
1. Power to hire
2. Power to fire
3. Power to control and supervision
4. Power to pay wages
-AL-Lagathan v. PIGAN (1956? Case decided by ROBERTO CONCEPCION): SC enumerated the attributes of EER (4-pronged test)
-VIANA v. AL-lagathan:
-right after the war, there were many vessels of the navy. There was a small fishing boat fishing in Manila Bay between Manil a and province of Bataan. US ship
rammed through the fishing boat, killing the persons on the small fishing boat. The issue was who would be liable: the owner of the fishing boat or wala? Claim
was under Workmen's Compensation Act
• Owner of the fishing boat argued that there was no EER
-SC held that the workmen's compensation bureaucrats did not do their homework. Based on the essential elements of the EER, th ere was no EER?
-BUT IN THIS CASE, even if SMC was able to convince the regular court that there was no EER, SC still held that there was a labor dispute even if there was no EER
between the parties, following Art212
Why: the issues raised by the union and the employees were:
• Representation and association
• Terms and conditions of employment
GOLD CITY INTEGRATED PORT SERVICE V. NLRC, 245 SCRA 627 (1995)
SUMMARY: Workers of INPORT staged a strike, filing individual notice of strike w/ MOLE (which EEs alleged to have been done through fraud on part of the union officers), expressing
grievances regarding wages, 13th month pay, and hazard pay. INPORT complained that the strike was illegal. NLRC issued TRO, return-to-work order (majority of workers returned to
work). LA declared strike as illegal (failed to comply w/ Art 264-265,LC). NLRC affirmed w/ modification, characterizing the strike as a “protest action”. Court held that there was a
strike – stemming from a labor dispute – but it was illegal for not complying w/ the cooling-off period, 7-day strike ban after the strike vote report. Main issue of the petition for
review is actually the separation pay and backwages which Court recalled the payment of backwages, reduced separation pay.
-A strike, considered as the most effective weapon of labor,is defined as any temporary stoppage of work by the concerted action of employees as a result of an industrial or labor
dispute. A labor dispute includes any controversy or matter concerning terms or 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 standin the proximate relation of employers and
employees.
-Employees stopped working and held the mass action on April 30, 1985 to press for their wages and other benefits. What transpired then was clearly a strike, for the cessation of
work by concerted action resulted from a labor dispute.
2 types of labor dispute

1. Rights dispute
-includes a violation of a right based on Law or the CBA or an existing employer practice or employment contract
2. Interest dispute
-involves an economic or bargaining dispute
What if you were suspended by the ER w/o any cause, what dispute arises?
-rights dispute because right to due process violated, right to security of tenure
UNITED EMPLOYEES UNION OF GELMART INDUSTRIES PHILIPPINES V. NORIEL, 67 SCRA 267 (1975)
SUMMARY: Union wants to nullify the certification election held due to the allegation that its name was misspelled in the ballot, thus the other union won by landslide. Court held
that one needs competent and credible proof – not general allegation of duress – to invalidate a certification election. Highlighted on the importance of Certification election.
Importance of CB merely introduction to Certification election.
-statement of Archibald Cox: The institution of collective bargaining is, to recall Cox, a prime manifestation of industrial democracy at work. The two parties to the relationship,
labor and management, make their own rules by coming to terms. That is to govern themselves in matters that really count. As labor, however, is composed of a number of
individuals, it is indispensable that they be represented by a labor organization of their choice. Thus may be discerned how crucial is a certification election.
-a droplet of support vs. a raging torrent of support
Continue with lesson...

National Union of Restaurant Workers
12:01 AM
SUMMARY: NURW filed a complaint for ULP against Tres Hermanas Restaurant, specifically against Mrs. Felisa
Herrera, for 3 grounds: (1)refusal to bargain with them, (2) that NURW be a company union first before the ER
entered CBA with them; (3) that ER terminated one MARTIN BRIONES for union activities. Court found that the said
allegations are baseless. On first allegation, it was found that upon the demand to negotiate by the union, the ERs
called a meeting with them in a restaurant in QC and negotiated the demands of the Union, making some markings
on the proposals (  if agreeable;  if not agreeable;  if open for discussions). This fact shows that the ER was
agreeable to negotiations. The fact that it did not give a reply to its demands is merely procedural and could not be
deemed an ULP with the efforts to negotiate shown by the ER. As to the 2nd allegation, it appears that another
union - International Labor and Marine Union of the Philippines – claimed to represent majority of the workers in
the company so the ER wanted to make sure that the union had capacity to be the authorized bargaining unit. As
to the third contention, it was found that other active members of the union were not terminated so the
termination of Briones could not have been based on union activities.
lawphil
Today is
Thursda
y, July
01, 2004

SUPREME COURT
Manila
EN BANC
G.R. No. L-20044 April 30, 1964
NATIONAL UNION OF RESTAURANT WORKERS (PTUC), petitioner,
vs.
COURT OF INDUSTRIAL RELATIONS, ET AL., respondents.
Alejandro C. Villavieja for petitioner.
Padilla Law Office for respondents.
BAUTISTA ANGELO, J.:
On June 9, 1960, a complaint for unfair labor practice was lodged against the
owners of Tres Hermanas Restaurant, particularly Mrs. Felisa Herrera, on the
ground, among others, that respondents refused to bargain collectively with the
complaining union; respondents made a counter-proposal in the sense that they
would bargain with said union and would accept its demands if the same would
become a company union, and one Martin Briones, an employee, was separated
from the service because he was found to be the organizer and adviser of the
complaining union.
After respondents had filed their answer, wherein they denied the charges of unfair
labor practice filed against them, Judge Emiliano C. Tabigne, who was assigned to
act on the complaint, received the evidence, and on July 28, 1961, rendered

act on the complaint, received the evidence, and on July 28, 1961, rendered
decision exonerating respondents. He found that the charges were not proven and
dismissed the complaint.
The case was taken to the court en banc, where in a split decision the court
affirmed the decision of Judge Tabigne. The case is now before us on a petition for
review.
The important findings of the court a quo which are now disputed by the union are:
(1) respondents did not refuse to bargain collectively with the union as in fact they
met its members with the only particularity that they were not able to accept all the
demands of the union; (2) respondents did not interfere, coerce or restrain their
employees in the exercise of their right to join the complaining union; and (3) the
dismissal of Martin Briones was due to the concern of Mrs. Herrera for her life on
account of the hatred that Briones had entertained against her, she being always
with him in the car he used to drive during their business routine. It is claimed that
Judge Tabigne committed a grave abuse of discretion in making the above findings.
Anent the first issue, the court a quo found that in the letter sent by the union to
respondents containing its demands marked in the case as Exhibit 1, there appears
certain marks, opposite each demand, such as a check for those demands to which
Mrs. Felisa Herrera was agreeable, a cross signifying the disapproval of Mrs.
Herrera, and a circle regarding those demands which were left open for discussion
on some future occasion that the parties may deem convenient. Such markings
were made during the discussion of the demands in the meeting called by
respondents on May 3, 1960 at their restaurant in Quezon City. The court a
quo concluded that the fact that respondent Herrera had agreed to some of the
demands shows that she did not refuse to bargain collectively with the complaining
union.
We can hardly dispute this finding, for it finds support in the evidence. The
inference that respondents did not refuse to bargain collectively with the
complaining union because they accepted some of the demands while they refused
the others even leaving open other demands for future discussion is correct,
especially so when those demands were discussed at a meeting called by
respondents themselves precisely in view of the letter sent by the union on April 29,
1960. It is true that under Section 14 of Republic Act 875 whenever a party serves a
written notice upon the employer making some demands the latter shall reply
thereto not later than 10 days from receipt thereof, but this rendition is merely
procedural and as such its non-compliance cannot be deemed to be an act of unfair
labor practice. The fact is that respondents did not ignore the letter sent by the
union so much so that they called a meeting to discuss its demands, as already
stated elsewhere.
It is contended that respondents refused to bargain with the complaining union as
such even if they called a meeting of its officers and employees thereby concluding
that they did not desire to enter into a bargaining agreement with said union. This
conclusion has no rational relation with the main premise of the union for it is belied
by the fact that respondents did actually agree and bargain with the representatives
of the union. While it is true that respondents denied the capacity of the complaining
union to bargain collectively with the respondents this is because they were of the
impression that before a union could have that capacity it must first be certified by
the Court of Industrial Relations as the duly authorized bargaining unit, in fact this is
what they stated in their answer to the petition for certification filed by said union
before the Court of Industrial Relations (See Case No. 763-MC). In said case,
another union known as the International Labor and Marine Union of the Philippines
claimed to represent the majority of the employees of respondent restaurant, and
this is what it alleged in a letter sent to the manager of respondents dated May 25,
1962.
Anent the second issue, the claim of the complaining union has also no basis. This
is premised on a document marked Exhibit C which contains certain alleged
counter-proposals tendered to complainant union the nature of which would
apparently indicate that respondents made use of coercion which interferes with the
right of the employees to self-organization. On this document certain notations were
made by one Ernesto Tan which are indeed derogatory and which were allegedly
made by him upon instructions of respondent Felisa Herrera. Thus, the pertinent
notation on which the union relies is one which states that respondent Herrera
would be willing to recognize the union "if union would be willing to recognize the

would be willing to recognize the union "if union would be willing to recognize the
union", which would indeed show that Mrs. Herrera interfered with the employees'
right to self-organization. But respondents denied that they ever authorized Ernesto
Tan to make such notation or to represent them in the negotiations, for he was
merely a bookkeeper whose duties were confined to the keeping and examination
of their books of accounts and sales invoices. It appears that he was not even
invited to the meeting but merely volunteered to be present and made those
notations on his own account and initiative. The court a quo gave credence to this
stand of respondents, as can be seen in the following finding: "There is no evidence
to show that Ernesto Tan was authorized to represent management in the meeting
held on May 3, 1960, and that Ernesto Tan, being a mere bookkeeper of
respondents, he is not a part of management although he is the nephew of Mrs.
Herrera." We are not prepared to disturb this finding of the court a quo.
Finally, it is alleged in connection with the third issue that respondent Herrera
dismissed Martin Briones without sufficient cause other than his being the organizer
and adviser of the complaining union. It however appears from the very testimony
of Martin Briones that he is not the only one who organized the complaining union
but together with Galicano Apiz, Pablo Cabreros and Juan Morales, with the
particularity that, as Briones himself had intimated, Apiz, Cabreros and Morales
were more active than himself in organizing the union so much so that they were
appointed officers of that union. And yet, Apiz, Cabreros and Morales were never
touched and continued to be employed in respondents' restaurant. For this reason,
the court a quo discredited the claim that Briones was dismissed because of union
activities but rather because of the threats he made on Mrs. Herrera, as
communicated to her by her sister Aureata. The following is the finding made by the
court a quo on this point: "If it is the union activities of complainant's members that
Mrs. Herrera did not like, Apiz, Cabreros and Morales should have been dismissed
by her also, because said persons were more active than Briones in the
organization of the union. Verily, it was not the union activities of Martin Briones that
prompted Mrs. Herrera to dismiss him, but her fear for the safety of her life on
account of the smouldering members of hatred that the former had against the
latter, the said persons being always together in her car driven by Briones, during
business routine." This finding finds support in the evidence.
On the strength of the foregoing considerations, we find no justification for
disturbing the findings of the court a quo which led to the dismissal of the complaint
under consideration. 1äwp
hï1.ñ
ët
WHEREFORE, the decision appealed from is affirmed. No costs.

Bengzon, C.J., Labrador, Concepcion, Reyes, J.B.L., Barrera, Paredes, Dizon,
Regala and Makalintal, JJ., concur.
Pasted from <http://www.lawphil.net/judjuris/juri1964/apr1964/gr_l-20044_1964.html>

Kiok Loy
12:06 AM
FACTS
- Pambansang Kilusan ng Paggaw a (Kilusan), a legitimate labor federation, w on cert election and w as certified by the BLR as the sole and
exclusive bargaining agent of the rank-and-file employees of Sw eden Ice Cream Plant (Company).
- Kilusan then gave the Company tw o copies of its proposed CBA. It requested the Company for its counter proposals. There w as n o response
from Company. Kilusan again requested the Company for collective bargaining negotiations and for the Company to furnish them w ith its
counter proposals. Both requests were ignored and remained unacted upon by the Company.
-Kilusan on Feb 14, 1979, filed a "Notice of Strike", w ith the BLR on ground of unresolved economic issues in collective barga ining.
-Conciliation proceedings follow ed but all attempts tow ards an amicable settlement failed. BLR certified the case to the NLRC for compulsory
arbitration. The case w as reset/postponed several times (mostly Company’s “request”).
-Then in the scheduled hearing on June 4, 1979, the Company's representative, Mr. Ching, w ho w as supposed to be examined, failed to
appear. The Company’s counsel requested for another postponement. The labor arbiter denied. He ruled that the Company has w aived its
right to present further evidence and, therefore, considered the case submitted for resolution.
- NLRC held: Sw eden Ice Cream guilty of unjustified refusal to bargain. The draft proposal for a CBA w as found to be reasonable under the
premises, and declared to be the collective agreement w /c should govern the relationship betw een the parties.
-Petitioner: …its right to procedural due process has been violated w hen it w as precluded from presenting further evidence in support of i ts
stand and w hen its request for further postponement w as denied.
…that the NLRC’s finding of unfair labor practice for refusal to bargain is not supported by law and the evidence considering that it w as only on
May 24. 1979 w hen the Union furnished them w ith a copy of the proposed CBA and it w as only then that they came to know of the Union's
demands; … that CBA approved and adopted by the NLRC is unreasonable and lacks legal basis.
ISSUE/S
1) WON company’s right to due process has been violated
2) WON company is guilty of ULP
3) WON CBA is reasonable
HELD
1) NO
-Considering the various postponements granted in its behalf, the claimed denial of due process appeared totally bereft of any legal and factual
support. As herein earlier stated, petitioner had not even honored respondent union w ith any reply to the latter's successive letters, all geared
tow ards bringing the Company to the bargaining table.. Certainly, the moves and overall behavior of company w ere in total der ogation of the
policy enshrined in the Labor Code w hich is aimed tow ards expediting settlement of economic disputes. Hence, the Court is not prepared to
affix its imprimatur to such an illegal scheme and dubious maneuvers.
2) YES
- Article 249, par. (g) LC makes it an unfair labor practice for an employer to refuse "to meet and convene promptly and expeditiously in good
faith for the purpose of negotiating an agreement w ith respect to w ages, hours of work, and all other terms and conditions of employment
including proposals for adjusting any grievance or question arising under such an agreement and executing a contract incorpor ating such
agreement, if requested by either party."
-Collective bargaining w hich is defined as negotiations tow ards a collective agreement, is designed to stabilize the relation betw een labor and
management and to create a climate of sound and stable industrial peace. It is a mutual responsibility of the employer and the Union and is
characterized as a legal obligation.
- While it is a mutual obligation of the parties to bargain, the employer, how ever, is not under any legal duty to initiate contract negotiation.
-The mechanics of collective bargaining is set in motion only w hen the ff. jurisdictional preconditions are present, namely, ( 1) possession of the
status of majority representation of the employees' representative in accordance w ith any of the means of selection or design ation provided for
by the LC; (2) proof of majority representation; and (3) a demand to bargain under Art 251, par. (a) of the Labor Code . . . all of w hich
preconditions are undisputedly present in the instant case.
-From the over-all conduct of petitioner company, Kilusan has a valid cause to complain against Company's attitude, the totality of w hich is
indicative of the latter's disregard of, and failure to live up to, w hat is enjoined by the Labor Code ---- to bargain in good faith.
-Company is GUILTY of unfair labor practice. (1) respondent Union w as a duly certified bargaining agent; (2) it made a definit e request to
bargain, accompanied w ith a copy of the proposed CBA, to the Company not only once but tw ice w hich were left unanswered and u nacted
upon; and (3) the Company made no counter proposal w hatsoever all of w hich conclusively indicate lack of a sincere desire to negotiate. Even
during the period of compulsory arbitration before the NLRC, Company's stalled the negotiation by a series of postponements, non-appearance
at the hearing conducted
-Herald Delivery Carriers Union (PAFLU) vs. Herald Publications: "unfair labor practice is committed w hen it is show n that the respondent
employer, after having been served w ith a w ritten bargaining proposal by the petitioning Union, did not even bother to submit an answ er or
reply to the said proposal. This doctrine w as reiterated in Bradman vs. CIR: "w hile the law does not compel the parties to reach an agreement,
it does contemplate that both parties w ill approach the negotiation w ith an open mind and make a reasonable effort to reach a common ground
of agreement".
3) YES
- The instant case being a certified one, it must be resolved by the NLRC pursuant to the mandate of P.D. 873, as amended, w hic h authorizes
the said body to determine the reasonableness of the terms and conditions of employment embodied in any CBA. To that extent, utmost
deference to its findings of reasonableness of any Collective Bargaining Agreement as the governing agreement by the employee s and
management must be accorded due respect by this Court.

management must be accorded due respect by this Court.
Disposition Petition dismissed.

Colegio de San Juan de letran
12:06 AM
Summary: College refused to bargain, arguing that a new group of union filed a petition for certification
election.

July 7_Labor Arbitration Class Notes
12:04 AM
Inaugural speech of Noynoy

Anti-wangwang campaign
United Employees Union of Gelmart v. Noriel

-in Collective bargaining (CB), we witness a situation where labor, management agree on a set of rules
that would govern their relationship in respect of wages, terms and conditions of employments, hours
of work…
-delineation of rights and responsibilities of both parties
-management prerogatives vs. employees' right to security of tenure: cannot be avoided
-two attempt to spell out in the CBA, the law between the two parties, these items
NATIONAL UNION OF RESTAURANT WORKERS V. CIR (Tres Hermanas Restaurant Case)

F: Union accused Tres Hermanas of ULP for refusal to bargain collectively. Union wanted to negotiate
CBA, sent its proposal. Tres Hermanas called for a meeting, and during the meeting, the owner of the
restaurant marked the proposals to what she was amenable to, what she was not amenable to, and
what are subject to further negotiations. No counter proposal submitted. Eventually, the ER refused to
bargain with them, absent a certification from the CIR that they were the duly authorized bargaining
representative of the Ees.
H: NO ULP
-failure to submit a counter proposal, there being already a meeting set by the ER
Under normal circumstances, when a set of proposals are submitted, the ER is supposed to send a
counter proposal:
-the following proposals
…we accept
…we reject
…willing to discuss further
-in this case, it was not strictly complied with. But SC absolved employer of ULP because of substantial
compliance
Vs. Kiok loy

-absolute application of the Labor Code provision on the 10 day period
-here, no effort at all from the ER. Plus delaying
-so the Court applied the CBA proposed by the Labor Union
Vs. Divine Word University

-same: no counter proposal
-same: court applied the CBA proposed by the labor to the ER
*Ers in Sweden Ice cream and Divine Word University closed down!!!
*sir commented on chances of granting continuance: if you are from a big law firm, the court would
least likely allow the continuance on the ground that there are many counsels in the law firm!
*on 10-day period: hard to come up with a counterproposal w/n 10-day period. So can ask for additional
time. Should acknowledge receipt first of receipt plus request that additional time may be given to give
counterproposal. Most definitely not refusal to bargain in GF.
-can also reply w/n 10 day period, saying what the ER considers approved and then segregate the issues
into political and economic issues. When it's time to start negotiations, normally the parties deal with
political issues first on the justification that they are less controversial and agreement can be reached on
those points easier than in economic issues like wages and other benefits like sick leave, vacation leave,

etc.
General Milling Corporation vs. CA

-Union sent proposals for renegotiation of CBA 1 day before its expiration. Company questioned its
status to represent the status of the union: it received letters from individual members saying that they
had resigned from the union
-Company did not send any counterproposal
H: CBA proposed of the union was applied
Suarez vs. National Steel

-National steel retrenched employees, gave them separation benefits. CBA was being negotiated and
was adopted right before the employees were retrenched. Employees availed of separation benefits,
executed quitclaims.
-after 2.5 years, these employees claimed that they were entitled to the retirement benefits in the CBA
-ER refused to grant them the retirement benefits, arguing that they already got separation benefits,
thus barred from receiving the retirement benefits
H: CBA was amended, with affidavits from the Union members who were part of the negotiating panel
attesting that the intention of the parties were to give exclusively separation benefits but increased it.
Thus, since they already received separation benefits, then cannot claim retirement benefits anymore
• In Suarez, note that the SC kept on referring to the case of UE and Otiz Elevator Case. These cases can be
used as arguments ifo of the position that, yes, it is possible for the employees to receive BOTH
retirement and separation benefits:
○ UE: Faculty and administrative personnel were dismissed. SC found there was illegal dismissal. In
Labor Court, there was a claim for both retirement and separation benefits. SC also granted these.
It is strongly recommended that the employer already state in the retirement plan WON both
benefits can be recovered, or WON receipt of one benefit would cancel out receipt of the other.
○ Otis Elevator: Ees who have been illegally dismissed by the company were entitled also to
retirement benefits and separation benefits
-as a result of these rules, ERs changed their retirement plans to provide merely 1 benefit. Not both.
Almario v. PAL
-Almario, then 39 years old, was qualified to fly a Boeing 737. He qualified to fly an Air Bus 300, but
which required additional training, the cost of which was P800k at the expense of PAL.
-He qualified, but resigned from PAL 8 months after.
-PAL argued that he should reimburse the company, based on the PROHIBITIVE TRAINING COSTS
PRINCIPLE in the CBA. Almario alleged no such provision is found in the CBA
RTC: for Almario. No provision in the CBA
CA: there is a provision in the CBA
SC: There is a provision in the CBA, and the CBA is the law between the parties.
-court explained the rationale why PAL provided that at a certain age, pilots are no longer entitled for
promotion because of the costs of training them - which cannot be recovered by PAL because they
would retire soon.
-court also said there would be unjust enrichment on the part of Almario if he resigned.
-There ER-EE relationship BUT PAL went to the RTC. WHY? No relief from Labor Code, but from a
contract
-Almario vigorously denied having signed any agreement providing that he should serve 3 years for the
training which PAL paid for. He was right, but SC still held that he was liable.
Book V: labor relations

Payment of Agency Fee: Holy Cross of Davao
-employees in general (not members of the union) pay agency fee for representing them before the
Employer and management - no freeloader. Pay for whatever benefits received due to the efforts of the
union
-union fees are paid by the union members

-union fees are paid by the union members
-back to Holy Cross case, issue was WON non-union members were obligated to pay agency fees to the
union. Answer in the affirmative. But SC, in deciding a labor case, relied on a civil law provision - that of
UNJUST ENRICHMENT. So same with Almario Case
*as a consequence of this Almario case, management wisened up by pointing out in black and white that
when the company trains you, you have to serve them for a certain number of years, or else reimburse
the company for the training costs - like that in call centers
*issue on restrictive covenants:

When you leave the company, you sever your ties with the employer/company. Since your skills are in
demand, other corporations would fight against each other to get you. But with restrictive covenants,
you cannot work for a competitor w/n a certain year, or else you would be liable.

Manila Fashions, Inc. vs. NLRC
2:01 AM

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 117878 November 13, 1996

MANILA FASHIONS, INC., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, NONITO ZAMORA and NAGKAKAISANG
MANGGAGAWA NG MANILA FASHIONS, INC., respondents.
BELLOSILLO, J.:
On 15 March 1993 respondent Nagkakaisang Manggagawa ng Manila Fashions, Inc., through its
president, respondent Nonito Zamora, filed a complaint before the Labor Arbiter on behalf of its one
hundred and fifty (150) members who were regular employees of petitioner Manila Fashions, Inc.
The complaint charged petitioner with non-compliance, with Wage Order No NCR-02 and 02-A
mandating a P12- increase in wages effective 8 January 1991. As a result, complainants' basic pay,
13th month pay, service incentive leave pay, legal holiday pay, night shift differential and overtime
pay were all underpaid.
Petitioner countered that the failure to comply with the pertinent Wage Order was brought about by
the tremendous losses suffered by it which were aggravated when the workers staged a strike on
account of the non-adjustment of their basic pay. To forestall continuous suspension/closure of
business operations, which petitioner did for three (3) months, the strikers sent a notice that they
were willing to condone the implementation of the increase. The condonation was distinctly stated in
Sec. 3, Art. VIII, of the Collective Bargaining Agreement (CBA) dated 4 February 1992, which was
voluntarily entered into by the parties and represents a reasonable settlement —
Sec. 3. The Union realizes the company's closeness to insolvency and, as such, sympathizes with
the company's financial condition. Therefore, the Union has agreed, as it hereby agrees, to condone
the implementation of Wage Order No. NCR-02 and 02-A.
The complainants admitted the existence of the aforementioned provision in the CBA; however they
denied the validity thereof inasmuch as it was not reached after due consultation with the members.
The Labor Arbiter sustained the claim that the subject provision of the CBA was void but based its
conclusion on a different ground —
. . . While it is true that both union officers/members and (petitioner) signed the agreement, however, the
same is not enforceable since said agreement is null and void, it being contrary to law. It is only the
Tripartite Wage Productivity Board of (the) Department of Labor and Employment (DOLE) that could
approve exemption (of) an establishment from coverage of (a) Wage Order . . . 1
Thus on 30 June 1993 petitioner was adjudged liable to each of the complainants for underpayment
of salary, 13th month pay, vacation leave pay and legal holiday pay in the total amount of
P900,012.00. All other claims were dismissed for lack of merit. 2
Both parties were unsatisfied with the decision, prompting them to seek relief from respondent
National Labor Relations Commission (NLRC). The basis of petitioner's appeal was that the ruling
was not in accordance with the facts and the law. On the part of the private respondents, they
assailed the computation of the award erroneous.
Respondent NLRC was not persuaded by petitioner. On the other hand, the appeal of private
respondents was no longer considered as it was filed beyond the reglementary period. Thus on 31
May 1994 the disputed decision was affirmed. 3
Was the condonation of the implementation of Wage Order No. NCR-02 and 02-A contained in Sec.
3, Art. VIII, of the CBA valid?
Petitioner maintains that the condonation is valid. In support thereof, it invokes cases decided by this
Court applying the rule that if the agreement was voluntarily entered into and represents a
reasonable settlement it is binding on the parties and may not be disowned simply because of a
change of mind. 4 Granting the CBA provision is indeed void, petitioner offers the alternative
argument that the computation of the award was erroneous and arbitrary.
We sustain the decision of the Labor Arbiter as affirmed by respondent NLRC that the condonation
appearing in Sec. 3, Art. VIII, of the CBA did not exempt petitioner from compliance with Wage Order
No. NCR-02 and 02-A..

No. NCR-02 and 02-A..
A Collective Bargaining Agreement refers to the negotiated contract between a legitimate labor
organization and the employer concerning wages, hours of work and all other terms and conditions
of employment in a bargaining unit, including mandatory provisions for grievances and arbitration
machineries. 5 As in all other contracts, the parties in a CBA may establish such stipulations,
clauses, terms and conditions as they may deem convenient provided they are not contrary to law,
morals, good customs, public order or public policy. 6 Section 3, Art. VIII, of the CBA is a void
provision because by agreeing to condone the implementation of the Wage Order the parties
thereby contravened its mandate on wage increase of P12.00 effective 8 January 1991. Also, as
stated by the Labor Arbiter, it is only the Tripartite Wage Productivity Board of the DOLE that could
approve exemption of an establishment from coverage of a Wage Order.
If petitioner is a financially distressed company then it should have applied for a wage exemption so
that it could meet its labor costs without endangering its viability or its very existence upon which
both management and labor depend for a living. 7 The Office of the Solicitor General emphasizes the
point that parties to a CBA may not by themselves, set a wage lower than the minimum wage. To do
so would render nugatory the purpose of a wage exemption, not to mention the possibility that
employees may be unwittingly put in a position to accept a lower wage. 8
The cases that petitioner relies on are simply inapplicable because, unlike the present case which
involves a stipulation in the CBA in contravention of law, they are concerned with compromise
settlements as a means to end labor disputes recognized by Art. 227 of the Labor Code and
considered not against public policy by doctrinal rules established by this Court. 9
As regards the alternative argument of petitioner that the computation of the award was erroneous
and arbitrary, it must be rejected outright as it was apparently never brought to the attention of
respondent NLRC. Consequently, it cannot be raised for the first time before this Court since that
would be offensive to the basic rule of fair play, justice and due process. 10 Moreover, the original
end exclusive jurisdiction of this Court to review a decision of respondent NLRC in a petition
for certiorari under Rule 65 does not normally include an inquiry into the correctness of its evaluation
of the evidence but confined merely to issues of jurisdiction or grave abuse of discretion. 11
WHEREFORE, the petition is DISMISSED. The order of respondent National Labor Relations
Commission which affirmed the decision of the Labor Arbiter awarding the total amount of
P900,012.00 to the complainants is likewise AFFIRMED.
SO ORDERED.
Padilla, Vitug, Kapunan and Hermosisima, Jr., JJ., concur.
Footnotes
1 Rollo, p. 29.
2 Decision penned by Labor Arbiter Fatima Jambaro-Franco; Rollo, pp. 30-33.
3 Decision penned by Presiding Commissioner Edna Bonto-Perez, concurred in by Commissioner
Rogelio I. Rayala; Rollo, p. 26.
4 Cruz v. NLRC, G.R. No. 98273, 28 October 1991, 203 SCRA 286; Olaybar v. NLRC, G.R. No.
108713, 28 October 1994, 237 SCRA 819; Siangco v. NLRC, G.R. No. 110261, 4 August 1994, 235
SCRA 96; and, Jag & Haggar Jeans and Sportswear Corporation v. NLRC, G.R. No. 105710, 23
February 1995, 241 SCRA 635.
5 Sec. jj, Rule I, Bk. V, Omnibus Rules Implementing the Labor Code.
6 Art. 1306, Civil Code.
7 Radio Communications of the Philippines, Inc. v. National Wages Council, G.R. No. 93044, 26
March 1992, 207 SCRA 581.
8 Rollo, p. 90.
9 See note 4.
10 Huang v. CA, G.R. No. 108525, 13 September 1994, 236 SCRA 420.
11 Sta. Fe Construction Co. v. NLRC, G.R. No. 101280, 2 March 1994, 230 SCRA 593.

Republic Savings Bank vs. CIR
2:01 AM
This is Google's cache of http://www.lawphil.net/judjuris/juri1967/sep1967/gr_l-20303_1967.html. It is a

snapshot of the page as it appeared on 19 Jun 2010 12:51:44 GMT. The current page could have changed
in the meantime. Learn more
Text-only version
These search terms are highlighted: republic savings bank vs court industrial relations 1967
lawphil
Today is
Thursday
, July 01,
2004

SUPREME COURT
Manila
EN BANC
G.R. No. L-20303 September 27, 1967
REPUBLIC SAVINGS BANK (now REPUBLIC BANK), petitioner,
vs.
COURT OF INDUSTRIAL RELATIONS, ROSENDO T. RESUELLO, BENJAMIN
JARA, FLORENCIO ALLASAS, DOMINGO B. JOLA, DIOSDADO S. MENDIOLA,
TEODORO DE LA CRUZ, NARCISO MACARAEG and MAURO A.
ROVILLOS, respondents.
Lichauco, Picaso & Agcaoili and R. Santayana for petitioner.
G. E. Fajardo for respondents.
CASTRO, J.:
The vital issue in this case is whether the dismissal of the eight (8)
respondent employees by the petitionerRepublic Bank (hereinafter referred to as
the Bank) constituted an unfair labor practice within the meaning and intendment of
the Industrial Peace Act (Republic Act 875).
The Court of Industrial Relations (CIR) found it did and its decision is now on
appeal before us. The Bank maintains that the discharge was for cause.
The Bank had in its employ the respondents Rosendo T. Resuello, Benjamin
Jara, Florencio Allasas, Domingo B. Jola, Diosdado S. Mendiola, Teodoro de la
Cruz, Narciso Macaraeg and Mauro A. Rovillos. On July 12, 1958 it discharged
Jola and, a few days after (July 18, 1958), the rest of respondents, for having
written and published "a patently libelous letter . . . tending to cause the dishonor,
discredit or contempt not only of officers and employees of this bank, but also of
your employer, the bank itself."
The letter referred to was a letter-charge which the respondents had written
to the bank president, demanding his resignation on the grounds of immorality,
nepotism in the appointment and favoritism as well as discrimination in the
promotion of bank employees. The letter, dated July 9, 1958, is hereunder
reproduced in full:
Mr. Ramon Racelis
President, Republic Savings Bank
Man ila
"Dear Mr. President:
We, the undersigned, on behalf of all our members and employees of
the RepublicSavings Bank, who have in our hearts only the most honest
and sincere motive to conserve and protect the interest of the institution and
its 200,000 depositors, do hereby, demand the much needed resignation of
His Excellency, Mr. Ramon Racelis as President and Member of the Board of
Directors of the Bank.
Mr. President, you have already, in so many occasions, placed
the Bank on the verge of danger, that now we deem it right and justifiable for
you to leave this Bank and let other more capable presidents continue the
work you have not well accomplished.
In the above instance, we are presenting charges which in our humble
contention properly justifies incapacity on your part to continue and assume
the position as top executive of the huge institution:
(1) That you Mr. President, have tolerated and practiced immorality in
this Bank. We have been expecting you to do something about this
malpractice which is very disgraceful and affects the morale of the hundreds
of your employees. But so far, Mr. President, you have just let this thing
passed through. As a matter of fact, you have even promoted these women
like Misses Pacita Mato and Edita Castro. These women are of questionable
characters, Mr. President, and should have had no place in the Bank as
managers or even as mere employees. We know Mr. President, because it is
an open secret in the Bank, that you have illicit relations with one of them —
Miss Edita Castro. As top officer and as father of the employees of the Bank,
you have shown this bad example to your employees. Mr. President, we are

you have shown this bad example to your employees. Mr. President, we are
really ashamed of you.
(2) That you have allowed the practice of nepotism in this Bank. You have
employed relatives of yours like Honorio Ravida; Bienvenido Ravida; Antonio
Racelis; Jesus Antonio; and Argentina Racelis. Not only that Mr. President.
You have also given those nieces and nephews of yours good positions at
the expense of the more capable employees. Mr. President, if we have to
mention all of them, one page will not be enough.
(3) With regards to promotion, you have given more preferences to your close
relatives. When the Bank advocated the sending of pensionados to States,
you have only limited your choice among your nieces, nephews, and querida,
namely, Miss Argentina Racelis, Mr. Jesus Antonio, Miss Edita Castro, and
her brother-in-law, Mr. Pedro Garcia, Jr. In doing this, Mr. President, you
have only lowered the reputation and standing of
theRepublic Savings Bank. There is really no sense in sending high school
and B.S.E. graduates to States to study advanced banking. Because of this
silly decision, it took one pensionado six months and cost the Bank a total of
P10,000.00 just to study Christmassavings. That subject is very simple; one
need not go to States to study savings; that you know full well, Mr. President.
The reason why you sent Miss Castro to States was because you were also
there. Are we not right?
(4) That you Mr. President, tolerated and still tolerating grave dishonesty in
this Bank as evidenced by the following irregularities and anomalies;
(a) In one of our branches, around P200,000.00 was mulcted and embezzled
by a certain Maximo Donado by doctoring the ledgers and records of that
particular office. To the present, the amount is still increasing and some more
are being dug up from the records everyday ever since its discovery in
February 1957. In this case you dismissed Mr. M. Donado, immediately. But
this was all that you did. If you have to go back to the history of the case, you
will find out that your beloved nieces and nephews are also involved having
been managers of that particular office. Another nephew, the Vice President-
Operations, then Vice President, Personnel, was also involved for valid
reasons that he did not even shift this particular employee to other branches
or departments since the beginning when it has been the policy of
the Bank to reshuffle its personnel. If you want to know why your good
nephew did not transfer this employee, we will tell you. "Your good nephew
has eaten too many baskets of delicious alimango." Mr. President, if there is
someone to be blamed in this particular case, it is your good nephews and
nieces for their gross negligence.
(b) Aside from the one mentioned above, we have also Mr. Rodolfo
Francisco, who in April 1955, maliciously withdraw (sic) P970.00 in two
withdrawal slips from the account of one depositor in one of our provincial
offices, inserting his name as co-depositor in the savings account ledger.
(c) In January 1958, Mr. Jose de los Santos expended and approved
representation expense in the amount of P300.00 in one of our provincial
offices.
(d) Mr. Federico M. Dabu, the ex-cashier and now Personnel Manager,
incurred a shortage in the amount of P1,240.00 in the course of the audit on
August 3, 1954.
(e) Mr. Jose S. Guevara, Vice-President on Personnel have (sic) been
accepting bribe moneys. One of these amounts to P4,000.00 which was
delivered by a messenger sometime during the last quarter of 1957.
Mr. President, the anomalies are only a partial list of the irregularities
which so far you have not acted upon. This type of people should have been
fired out from the Bank; yet on the contrary, you promoted them to higher
and responsible positions, thus, resulting in the demoralization of the more
capable employees.
Mr. President, we hope that you have still a little sense of decency and
propriety left. So, for goodsake and for the welfare of the Bank, DO RESIGN
NOW as President and as Member of the Board of Directors of
the Republic Savings Bank.
Very respectfully yours,
(Sgd.) Rosendo T. Resuello
President, RSB Supervisors' Union (FFW),
(Sgd.) Benjamin Jara
Vice-President RSB Supervisors' Union (FFW)
(Sgd.) Florencio Allasas
Treasurer, RSB Supervisors' Union (FFW)
(Sdg) Domingo B. Jola
Chairman, Executive Committee, RSB Employees' Union (FFW)
(Sgd.) Diosdado S. Mendiola
Vice-President, RSB Employees Union (FFW)
(Sgd.) Teodoro de la Cruz
Member, Executive Committee, RSB Employees' Union (FFW)
(Sgd.) Angelino Quiambao
President, RSB Security Guard Union (FFW)
(Sgd.) Narciso Macaraeg
Vice-President, RSB Security Guard Union (FFW)
(Sgd.) Alfredo Bautista
Treasurer, RSB Security Guard Union (FFW)
(Sgd.) Pacifico A. Argao
PRO, RSB Employees' Union (FFW)
(Sgd.) Toribio B. Garcia Summary:
Secretary, RSB Security Guard Union (FFW) -Employees wrote to the President of the
(Sgd.) Mauro A. Rovillos bank demanding his resignation, on the
Member, Executive Committee, RSB Supervisors' Union (FFW) grounds of immorality, nepotism in the
Copies of this letter were admittedly given to the chairman of the board of directors

grounds of immorality, nepotism in the
Copies of this letter were admittedly given to the chairman of the board of directors appointment and favoritism as well as
of the Bank, and the Governor of the Central Bank.
At the instance of the respondents, prosecutor A. Tirona filed a complaint in the discrimination in the promotion of bank
CIR on September 15, 1958, alleging that the Bank's conduct violated section 4(a) (5) of employees.
the Industrial Peace Act which makes it an unfair labor practice for an employer "to -the said letter was also given to the
dismiss, discharge or otherwise prejudice or discriminate against an employee for having Chairman of the BOD + Governor of the
filed charges or for having given or being about to give testimony under this Act." Central Bank
The Bank moved for the dismissal of the complaint, contending that respondents -the bank dismissed the said employees
were discharged not for union activities but for having written and published a libelous
(officers of various Unions in the bank) "
letter against the bank president. The court denied the motion on the basis of its
for having written and published "a
decision in another case 1 in which it ruled that section 4(a) (5) applies to cases in which
patently libelous letter . . . tending to
an employee is dismissed or discriminated against for having filed "any charges against
cause the dishonor, discredit or
his employer." Whereupon the case was heard.
contempt not only of officers and
In 1960, however, this Court overruled the decision of the CIR in the Royal
employees of this bank, but also of your
Interocean case and held that "the charge, the filing of which is the cause of the
employer, the bank itself.""
dismissal of the employee, must be related to his right to self-organization in order to give
-Employees filed a complaint in the CIR,
rise to unfair labor practice on the part of the employer," because "under subsection 5 of
alleging that the bank violated the
section 4(a), the employee's (1) having filed charges or (2) having given testimony or (3)
industrial Peace Act (ULP for an
being about to give testimony, are modified by 'under this Act' appearing after the last
item."2 The Bank therefore renewed its motion to dismiss, but the court held the motion employer "to dismiss, discharge or
otherwise prejudice or discriminate
in abeyance and proceeded with the hearing.
against an employee for having filed
On July 4, 1962 the court rendered a decision finding the Bank guilty of unfair
charges or for having given or being
labor practice and ordering it to reinstate the respondents, with full back wages and
about to give testimony under this Act.")
without loss of seniority and other privileges. This decision was affirmed by the courten
-Bank moved to dismiss: employees
banc on August 9, 1962.
discharged not for Union activities but for
Relying upon Royal Interocean Lines v. CIR,3 and Lakas ng Pagkakaisa sa Peter
having written and published a libelous
Paul v. CIR,4 the Bank argues that thecourt should have dismissed the complaint
letter against the bank president
because the discharge of the respondents had nothing to do with their union activities as
-CIR: denied MTD: an employee is
the latter in fact admitted at the hearing that the writing of the letter-charge was not a
dismissed or discriminated against for
"union action" but merely their "individual" act.
having filed "any charges against his
It will avail the Bank none to gloat over this admission of the respondents.
Assuming that the latter acted in their individual capacities when they wrote the letter - employer" (based on the Royal
Interocean Case)
charge they were nonetheless protected for they were engaged in concerted activity, in
• The Royal Interocean Case was
the exercise of their right of self-organization that includes concerted activity for mutual
overruled by the SC in saying that
aid and protection, 5interference with which constitutes an unfair labor practice under
the charge must be related to the
section 4(a)(1). This is the view of some members of thisCourt. For, as has been aptly
stated, the joining in protests or demands, even by a small group of employees, if in EE's right to self-organization in
order to give rise to ULP ...
furtherance of their interests as such, is a concerted activity protected by
• Pursuant to this, Bank renewed its
the Industrial Peace Act. It is not necessary that union activity be involved or that
MTD - court held the motion in
collective bargaining be contemplated. 6
abeyance
Indeed, when the respondents complained against nepotism, favoritism and other
CIR: BANK GUILTY OF ULP,
management practices, they were acting within an area marked out by the Act as a
ORDERED REINSTATEMENT OF
proper sphere of collective bargaining. Even the reference to immorality was not
EMPLOYEES W/ FULL BACK WAGES
irrelevant as it was made to support the respondents' other charge that
CIR en banc: affirmed
the bank president had failed to provide wholesome working conditions, let alone a good
-so this appeal on the ground that the
moral example, for the employees by practicing discrimination and favoritism in the
employees were not dismissed in
appointment and promotion of certain employees on the basis of illicit relations or blood
connection with their union activities but
relationship with them.
due to their "individual" acts
In many respects, the case at bar is similar to National Labor Relations Board v.
Phoenix Mutual Life Insurance Co. 7The issue in that case was whether an insurance
WON THE EMPLOYEES WERE
company was guilty of an unfair labor practice in interfering with this right of concerted
DISMISSED DUE TO THEIR UNION
activity by discharging two agents employed in a branch office. The cashier of that office
ACTIVITIES?
had resigned. The ten agents employed there held a meeting and agreed to join in a
HELD: indirectly, it related to their union
letter to the home office objecting to the transfer to their branch office of a cashier from
activiites (because they acted in a
another branch office to fill the position. They discussed also the question whether to
CONCERTED MANNER)
recommend the promotion of the assistant cashier of their office as the proper
-"Assuming that the latter acted in their
alternative. They then chose one of their number to compose a draft of the letter and
individual capacities when they wrote the
submit it to them for further discussion, approval and signature. The agent selected to
letter-charge they were nonetheless
write the letter and another were discharged for their activities in this respect as being, so
protected for they were engaged in
their notices stated, completely unpleasant and far beyond the periphery of their
concerted activity, in the exercise of their
responsibility. In holding the company liable for unfair labor practice, the Circuit Court of
right of self-organization that includes
Appeals said:
concerted activity for mutual aid and
A proper construction is that the employees shall have the right to engage in
protection,5interference with which
concerted activities for their mutual aid or protection even though no union activity be
constitutes an unfair labor practice under
involved, for collective bargaining be contemplated. Here Davis and Johnson and other
section 4(a)(1). This is the view of some
salesmen were properly concerned with the identity and capability of the new cashier.
members of thisCourt. For, as has been
Conceding they had no authority to appoint a new cashier or even recommend anyone
aptly stated, the joining in protests or
for the appointment, they had a legitimate interest in acting concertedly in making known
demands, even by a small group of
their views to management without being discharged for that interest. The moderate
employees, if in furtherance of their
conduct of Davis and Johnson and the others bore a reasonable relation to conditions of
interests as such, is a concerted activity
their employment. It was therefore an unfair labor practice for respondent to interfere with
protected by the Industrial Peace Act. It
the exercise of the right of Davis and Johnson and the other salesmen to engage in
is not necessary that union activity be
concerted activities for their mutual aid or protection.
involved or that collective bargaining be
Other members of this Court agreed with the CIR that the Bank's conduct violated
contemplated."
section 4(a) (5) which makes it an unfair labor practice for an employer to dismiss an
-court compared the case to NLRB v.
employee for having filed charges under the Act.
Phoenix Mutual Life Insurance Co:
Some other members of this Court believe, without necessarily expressing
F: employees wrote a letter to the
approval of the way the respondents expressed their grievances, that what
branch office contesting the
the Bank should have done was to refer the letter-charge to the grievance committee.
transfer to their branch office of a
This was its duty, failing which it committed an unfair labor practice under section 4(a)
cashier from another branch office
(6). For collective bargaining does not end with the execution of an agreement. It is a
to fill the position. These
continuous process. The duty to bargain imposes on the parties during the term of their
employees were discharged for
agreement the mutual obligation "to meet and confer promptly and expeditiously and in
their activities.
good faith . . . for the purpose of adjusting any grievances or question arising under such
-Court held that the company was
agreement"8 and a violation of this obligation is, by section 4 (a) (6) and (b) (3) an unfair
liable for ULP: "the employees
labor practice.9 As Professors Cox and Dunlop point out:
shall have the right to engage in
Collective bargaining . . . normally takes the form of negotiations when major

shall have the right to engage in
Collective bargaining . . . normally takes the form of negotiations when major
concerted activities for their mutual
conditions of employment to be written into an agreement are under consideration and of
aid or protection even though no
grievance committee meetings and arbitration when questions arising in the
union activity be involved, for
administration of an agreement are at stake. 10 collective bargaining be
Instead of stifling criticism, the Bank should have allowed the respondents to air
contemplated."
their grievances. Good faith bargaining required of the Bank an open mind and a sincere
- Some other members of
desire to negotiate over grievances. 11 The grievance committee, created in the collective
this Court believe, without necessarily
bargaining agreements, would have been an appropriate forum for such negotiation.
expressing approval of the way the
Indeed, the grievance procedure is a part of the continuous process of collective
respondents expressed their grievances,
bargaining.12 It is intended to promote, as it were, a friendly dialogue between labor and
that what the Bank should have done
management as a means of maintaining industrial peace.
was to refer the letter-charge to the
The Bank defends its action by invoking its right to discipline for what it calls the
grievance committee. This was its duty,
respondents' libel in giving undue publicity to their letter-charge. To be sure, the right of
failing which it committed an unfair labor
self-organization of employees is not unlimited, 13 as the right of an employer to discharge
practice under section 4(a) (6). For
for cause14 is undenied. The Industrial Peace Act does not touch the normal exercise of
collective bargaining does not end
the right of an employer to select his employees or to discharge them. It is directed solely
with the execution of an agreement. It
against the abuse of that right by interfering with the countervailing right of self -
organization.15 But the difficulty arises in determining whether in fact the discharges are is a continuous process. The duty to
bargain imposes on the parties during
made because of such a separable cause or because of some other activities engaged in
the term of their agreement the
by employees for the purpose of collective bargaining. 16
mutual obligation "to meet and confer
It is for the CIR, in the first instance, to make the determination, "to weigh the
promptly and expeditiously and in
employer's expressed motive in determining the effect on the employees of
good faith . . . for the purpose of
management's otherwise equivocal act." 17 For the Act does not undertake the impossible
adjusting any grievances or question
task of specifying in precise and unmistakable language each incident which constitutes
arising under such agreement" 8 and a
an unfair labor practice. Rather, it leaves to the court the work of applying the Act's
violation of this obligation is, by
general prohibitory language in the light of infinite combinations of events which may be
section 4 (a) (6) and (b) (3) an unfair
charged as violative of its terms. 18 As the Circuit Court of Appeals puts it:
labor practice.9
Determining the legality of a dismissal necessarily involves an appraisal of the
employer's motives. In these cases motivations are seldom expressly avowed and -AS TO ARGUMENT OF THE BANK THAT IT
avowals are not always candid. There thus must be a measure of reliance on the WAS MERELY EXERCISING ITS RIGHT TO
administrative agency knowledgeable in labor-management relations and on the Trial DISCIPLINE EMPLOYEES:
Examiner who receives the evidence firsthand and is therefore in a unique position to The Industrial Peace Act does not touch
determine the credibility of the witnesses. Where Examiner and Board are in agreement the normal exercise of the right of an
there is an increased presumption in favor of their resolution of the issue. 19 employer to select his employees or to
What we have just essayed underscores at once the difference between Royal discharge them. It is directed solely
Interocean and Lakas ng Pagkakaisa on the one hand and this case on the other. against the abuse of that right by
In Royal Interocean, the employee's letter to the home office, for writing which she was interfering with the countervailing right of
dismissed, complained of the local manager's "inconsiderate and untactful attitude" 20 — a self-organization.15 But the difficulty
grievance which, the courtfound, "had nothing to do with or did not arise from her union arises in determining whether in fact the
activities." Nor did the court find evidence of discriminatory discharge in Lakas ng discharges are made because of such a
Pagkakaisa as the letter, which the employee wrote to the mother company in violation of separable cause or because of some
the local company's rule, denounced "wastage of company funds." In contrast, the other activities engaged in by employees
express finding of the court in this case was that the dismissal of the respondents was for the purpose of collective bargaining.
made on account of the letter they had written, in which they demanded the resignation -RE: ROYAL INTEROCEAN RULING: in
of thebank president for a number of reasons touching labor-management relations — Interocean, the employee wrote a letter
reasons which not even the Bank's judgment that the respondents had committed libel complaining of the local manager's
could excuse it for making summary discharges 21 in disregard of its duty to bargain inconsiderate and untactful attitude
collectively. (which the court later found to have
In final sum and substance, this Court is in unanimity that the Bank's conduct, nothing to do with or did not arise from
identified as an interference with the employees' right of self-organization, or as a her union activities)
retaliatory action, and/or as a refusal to bargain collectively, constituted an unfair labor -RE LAKAS NG PAGKAKAISA CASE:
practice within the meaning and intendment of section 4(a) of the Industrial Peace Act. union wrote a letter to the mother
ACCORDINGLY, the decision of July 4, 1962 and the resolution of August 9, 1962 company denouncing the wastage of
of the Court of Industrial Relationsare affirmed, at petitioner's cost. company funds - which was contrary to
Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez and Angeles, JJ., the local company's rule
concur. -HERE: dismissal of the employees was
Bengzon, J.P., J., took no part. made on account of a letter they had
Separate Opinions written, demanding the resignation of the
FERNANDO, J., concurring: bank president ofr a number of reason
The opinion of the Court in this highly significant unfair labor practice case, one of TOUCHING LABOR-MANAGEMENT
first impression, easily commends itself for approval. The relevant facts are set forth in all RELATIONS...reasons which not even
fullness and with due care. The position of the Court united as it is on an unfair labor the Bank's judgment that the
practice having been committed, but not quite fully agreed as to which particular respondents had committed libel could
subsection of the legal provision was violated, is delineated with precision. With the excuse it for making summary
explicit acknowledgement there made that some members of theCourt are of the belief discharges21 in disregard of its duty to
that what was done by the Republic Bank here amounted to "interference" and with the bargain collectively.
writer being of the persuasion that it could be categorized in line with the statute as
"interference, restraint or coercion," a few words as to why this view is entertained may SO DIFFERENCE WITH NAVARRO V.
not be inappropriate. DAMASCO: here, the act complained of
No one can doubt that we are in the process of evolving an indigenous labor concerned labor-management relations,
jurisprudence. Notwithstanding the clearly American background of the Industrial Peace as opposed to the Navarro case wherein
Act, based as it is mainly on the Wagner Act, 1 labor relations in the Philippines with their the dispute was between co-employees
peculiar problems and the ingenuity of Filipino lawyers have resulted in a growing body and the management was only dragged
of decisions notable for their suitability to local condition and their distinctly local flavor. into the issue when the management, in
This is as it should be. accordance with its rules of conduct,
The present case affords one such instance. The wealth of adjudication by both adjudged the petitioner to be guilty of
judicial and administrative agencies in the United States notwithstanding the diligent and violating its rules of conduct and
earnest search for a ruling based on a similar fact-situation yielded no case precisely in dismissed him. So in short, the different
point. What does it signify? At the very least, it may indicate that while the problem posed lies in the root of the problem and what
could have arisen there, this particular response of labor was quite unique. On the relationship was involved:
assumption which I have here hypothetically made that there was indeed a valid cause Republic bank Navarro
for grievance, a more diplomatic approach could have been attempted. Or at the very
least the procedure indicated for the adjustment of a grievance could have been Employees vs. Employee vs.
followed. That was not done. What respondents did was to issue an ultimatum. Management, Employee,
Collective bargaining whether in its formative stage preparatory to a labor contract management dismissed dismissed the
or in the adjustment of a labor problem in accordance with the procedure set forth in an the employees erring
existing agreement presupposes the give-and-take of discussion. No party adopts, at employee

existing agreement presupposes the give-and-take of discussion. No party adopts, at employee
least in its initial stages, a hard-line position, from which there can be no retreat. That
was not the situation here. Respondents as labor leaders appeared adamantine in their
attitude to terminate the services of the then president of the Republic Savings Bank.
Nor did they mince words in describing his alleged misdeeds. They were quite certain
that he had offended most grievously. They wanted him out. There was no room for
discussion.
That for me is not bargaining as traditionally and commonly understood. It is for
that reason that I find it difficult to agree fully with the view that their dismissal could be
construed as a refusal to bargain collectively. Moreover, they did not as adverted to in
the opinion of the Court, follow the procedure set forth for adjusting grievances. Nor
considering the explicit language of the Industrial Peace Act may such dismissal fall
within the prohibition against dismissing employees for having filed charges or about to
give testimony "under the Act." As a matter of fact, if the letter were indeed libelous, their
dismissal would not have been unjustified. There was an admission as noted in the
opinion "that the writing of the letter charged was not a 'union' action but merely their
'individual' act."
Nonetheless, concurrence with the decision arrived at by the Court is called for in
view of their mass dismissal. Under the circumstances, the supervisors union,
the Republic Savings Bank employees union, the Republic Savings Banksecurity
guards union, and the Republic Savings Bank supervisors union were left leaderless.
For collective bargaining to be meaningful, there must be two parties, one representing
management and the other representing the union. Nor could management select who
would represent the latter or with whom to deal, otherwise in effect there would be only
one party. Obviously there would then be no bargaining. 1awphîl .n
èt
It is my view therefore that the dismissal amounted to "interference, restraint or

coercion" as prohibited in the IndustrialPeace Act. To repeat, this Section 4(a), with the
exception of subsection (2), was taken from the Wagner Act. There is as stated by
Bufford in his treatise for the Wagner Act "an overlap" as this particular subsection deals
"with additional labor practice besides containing incidental provisions concerning related
matters."2 As noted further by such commentator: "As expressed by the Senate
Committee: 'The four succeeding unfair labor practices are designed not to impose
limitations or restrictions upon the general guarantees of the first, but rather to spell out
with particularity some of the practices that have been most prevalent and most
troublesome.'"
Teller is in agreement. This subsection according to him "involves the widest
varieties of activities." The other unfair labor practices condemned fall within its terms.
Thus: "That the Board has taken this position is evidenced both by the Board decisions
and by express statement to such effect contained in its first annual report, the language
of which in this connection is as follows: 'At the outset it should be explained that the
Board has held that a violation by an employer of any of the other four subdivisions of
Section 8 of the act is, by the same token, a violation of Section 8(1). Such a conclusion
is too obvious to require explanation. In fact, almost all of the cases in which the Board
has found a violation of Section 8(1) are cases in which the principal offense charged fell
within some other subdivision of Section 8. The explanation for this is, apparently, that
even though an employer may be engaging in anti-union activities in violation of Section
8(1), unions do not seek protection of the act until such activities take such drastic form
as bring them within the provisions of some other subdivisions, as, for example, the
discriminatory discharge of union members (which comes within subdivision [3]), the
domination of or interference with the formation or administration of a labor organization
(which comes within subdivision [2]). or a refusal to bargain collectively (which comes
within subdivision [5]."3
In the Philippines as in the United States then, the first subsection on "interference,
restraint or coercion" covering as it does such a broad range of undesirable practices on
the part of employers could easily be seized upon, where a borderline case, inimical to
the right of self-organization or to collective bargaining, presents itself as justifying a
finding of an unfair labor practice.
1awphî l. n
èt
Footnotes
1
Mariano v. Royal Interocean Lines, Case 527-ULP.
2
Royal Interocean Lines v. CIR, L-11745, Oct. 31, 1960.
3Note 2, supra.
4L-10130, Sept. 30, 1957.
5
Section 3 of the industrial Peace Act provides: "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 or 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."
6
Annot., 6 A.L.R. 2d 416 (1949).
7167 F. 2d 983 (7th Cir 1948).
8
Industrial Peace Act, sec. 13.
9NLRB v. Highland Shoe, Inc., 119 F. 2d 218 (1st Cir. 1941); NLRB v. Bachelder, 120 F.
2d 574 (7th Cir. 1941).

10The Duty to Bargain Collectively During the Term of an Existing Agreement, 63 Harv. L.
Rev. 1097, 1105 (1950).

11
Cf. id. at 1110.
12
United Steelworkers of America v. Warrior & Gulf Navigation Co., 363 U.S. 574
(1960); accord, United Steelworkers of America v. Enterprise Wheel & Car Corp., 363
U.S. 593 (1960).
13Republic Aviation Corp. v. NLRB, 324 U.S. 793 (1945).
14E.g., Philippine Educ. Co. v. Union of Phil. Educ. Employees, L-13773, April 29, 1960.
15Phelps Dodge Corp. v. NLRB, 313 U.S. 177 (1941).
16NLRB v. Local 1229, IBEW, 346 U.S. 464 (1953).
17NLRB v. Stowe Spinning Co., 336 U.S. 226 (1949).
18
Republic Aviation Corp. v. NLRB, supra note 13.

18Republic Aviation Corp. v. NLRB, supra note 13.
19NLRB v. M & B Headwear Co., 349 F. 2d 170 (4th Cir. 1965).
20See second Royal Interocean case, L-12429, Feb. 27, 1961.
21
"Considering the actualities of the collective bargaining and grievance procedures, we
think the employer must realize that far-fetched and overstated claims, easily
dissuadable, are often made initially by one side in a labor dispute (especially when it is
inexperienced in labor relations). Such claims may well evaporate on discussion and
negotiation, and never become an integral part of the union's real purposes. We think
that the employer cannot seize upon this kind of claim — made by ignorant workers in
their initial demands — in order to justify retaliatory measures against them. He must
make some effort to find out if the employees mean in fact to pursue these claims, to
stick to demands which are not protected by sec. 7. Summary discharge seems
especially premature here." NLRB v. Electronics Equip. Co., 194 F. 2d 650 (2nd Cir.
1952).
Cf. Abaya v. Villegas, L-25641, Dec. 17, 1966.
1The National Labor Relations Act (1935) 49 Stat. 457.
2
Bufford on the Wagner Act (1941), 169.
32 Teller, Labor disputes and Collective Bargaining (1940), 762.
Pasted from <http://webcache.googleusercontent.com/u/lawphil?

q=cache:pbgf0CTQIjUJ:www.lawphil.net/judjuris/juri1967/sep1967/gr_l-20303_1967.html+Republic+Savings+Bank+vs.
+Court+of+Industrial+Relations+1967&cd=3&hl=en&ct=clnk&ie=UTF-8>

Nestle Phils, Inc. vs. NLRC
2:02 AM

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 91231 February 4, 1991

NESTLÉ PHILIPPINES, INC., petitioner,
vs.
THE NATIONAL LABOR RELATIONS COMMISSION and UNION OF FILIPRO
EMPLOYEES, respondents.
Banzuela, Flores, Miralles, Raneses, Sy, Taquio & Associates for private respondent.
GRIÑO-AQUINO, J.:p
Nestlé Philippines, Inc., by this petition for certiorari, seeks to annul, on the ground of grave abuse of
discretion, the decision dated August 8, 1989 of the National Labor Relations Commission (NLRC),
Second Division, in Cert. Case No. 0522 entitled, "In Re: Labor Dispute of Nestlé Philippines, Inc."
insofar as it modified the petitioner's existing non-contributory Retirement Plan.
Four (4) collective bargaining agreements separately covering the petitioner's employees in its:
1. Alabang/Cabuyao factories;
2. Makati Administration Office. (Both Alabang/Cabuyao factories and Makati office were
represented by the respondent, Union of Filipro Employees [UFE]);
3. Cagayan de Oro Factory represented by WATU; and
4. Cebu/Davao Sales Offices represented by the Trade Union of the Philippines and Allied Services
(TUPAS),
all expired on June 30, 1987.
Thereafter, UFE was certified as the sole and exclusive bargaining agent for all regular rank-and-file
employees at the petitioner's Cagayan de Oro factory, as well as its Cebu/Davao Sales Office.
In August, 1987, while the parties, were negotiating, the employees at Cabuyao resorted to a
"slowdown" and walk-outs prompting the petitioner to shut down the factory. Marathon collective
bargaining negotiations between the parties ensued.
On September 2, 1987, the UFE declared a bargaining deadlock. On September 8, 1987, the
Secretary of Labor assumed jurisdiction and issued a return to work order. In spite of that order, the
union struck, without notice, at the Alabang/Cabuyao factory, the Makati office and Cagayan de Oro
factory on September 11, 1987 up to December 8, 1987. The company retaliated by dismissing the
union officers and members of the negotiating panel who participated in the illegal strike. The NLRC
affirmed the dismissals on November 2, 1988.
On January 26, 1988, UFE filed a notice of strike on the same ground of CBA deadlock and unfair
labor practices. However, on March 30, 1988, the company was able to conclude a CBA with the
union at the Cebu/Davao Sales Office, and on August 5, 1988, with the Cagayan de Oro factory
workers. The union assailed the validity of those agreements and filed a case of unfair labor practice
against the company on November 16, 1988.
After conciliation efforts of the National Conciliation and Mediation Board (NCMB) yielded negative
results, the dispute was certified to the NLRC by the Secretary of Labor on October 28, 1988.
After the parties had filed their pleadings, the NLRC issued a resolution on June 5, 1989, whose
pertinent disposition regarding the union's demand for liberalization of the company's retirement plan
for its workers, provides as follows:
xxx xxx xxx
7. Retirement Plan
The company shall continue implementing its retirement plan modified as follows:
a) for fifteen years of service or less — an amount equal to 100% of the employee's monthly salary
for every year of service;
b) more than 15 but less than 20 years — 125% of the employee's monthly salary for every year of
service;
c) 20 years or more — 150% of the employee's monthly salary for every year of service. (pp.
58-59,Rollo.)

On August 8, 1989, the NLRC issued a resolution denying the motions for reconsideration. With
regard to the Retirement Plan, the NLRC held:
Anent management's objection to the modification of its Retirement Plan, We find no cogent reason
to alter our previous decision on this matter.
While it is not disputed that the plan is non-contributory on the part of the workers, tills does not
automatically remove it from the ambit of collective bargaining negotiations. On the contrary, the
plan is specifically mentioned in the previous bargaining agreements (Exhibits "R-1" and "R-4"),
thereby integrating or incorporating the provisions thereof to the agreement. By reason of its
incorporation, the plan assumes a consensual character which cannot be terminated or modified at
will by either party. Consequently, it becomes part and parcel of CBA negotiations.
However, We need to clarify Our resolution on this issue. When we increased the emoluments in the
plan, the conditions for the availment of the benefits set forth therein remain the same. (p. 32, Rollo.)
On December 14, 1989, the petitioner filed this petition for certiorari, alleging that since its retirement
plan is non-contributory, it (Nestlé) has the sole and exclusive prerogative to define the terms of the
plan "because the workers have no vested and demandable rights thereunder, the grant thereof
being not a contractual obligation but merely gratuitous. At most the company can only be directed
to maintain the same but not to change its terms. It should be left to the discretion of the company on
how to improve or mollify the same" (p. 10, Rollo).
The Court agrees with the NLRC's finding that the Retirement Plan was "a collective bargaining
issue right from the start" (p. 109, Rollo) for the improvement of the existing Retirement Plan was
one of the original CBA proposals submitted by the UFE on May 8, 1987 to Arthur Gilmour, president
of Nestlé Philippines. The union's original proposal was to modify the existing plan by including a
provision for early retirement. The company did not question the validity of that proposal as a
collective bargaining issue but merely offered to maintain the existing non-contributory retirement
plan which it believed to be still adequate for the needs of its employees, and competitive with those
existing in the industry. The union thereafter modified its proposal, but the company was adamant.
for compulsory arbitration.
The company's contention that its retirement plan is non-negotiable, is not well-taken. The NLRC
correctly observed that the inclusion of the retirement plan in the collective bargaining agreement as
part of the package of economic benefits extended by the company to its employees to provide them
a measure of financial security after they shall have ceased to be employed in the company, reward
their loyalty, boost their morale and efficiency and promote industrial peace, gives "a consensual
character" to the plan so that it may not be terminated or modified at will by either party (p.
32, Rollo).
The fact that the retirement plan is non-contributory, i.e., that the employees contribute nothing to
the operation of the plan, does not make it a non-issue in the CBA negotiations. As a matter of fact,
almost all of the benefits that the petitioner has granted to its employees under the CBA — salary
increases, rice allowances, mid-year bonuses, 13th and 14th month pay, seniority pay, medical and
hospitalization plans, health and dental services, vacation, sick & other leaves with pay — are non-
contributory benefits. Since the retirement plan has been an integral part of the CBA since 1972, the
Union's demand to increase the benefits due the employees under said plan, is a valid CBA issue.
The deadlock between the company and the union on this issue was resolvable by the Secretary of
Labor, or the NLRC, after the Secretary had assumed jurisdiction over the labor dispute (Art. 263,
subparagraph [i] of the Labor Code).
The petitioner's contention, that employees have no vested or demandable right to a non-
contributory retirement plan, has no merit for employees do have a vested and demandable right
over existing benefits voluntarily granted to them by their employer. The latter may not unilaterally
withdraw, eliminate or diminish such benefits (Art. 100, Labor Code; Tiangco, et al. vs. Hon.
Leogardo, et al., 122 SCRA 267).
This Court ruled similarly in Republic Cement Corporation vs. Honorable Panel of Arbitrators, G.R.
No. 89766, Feb. 19, 1990:
. . . Petitioner's claim that retirement benefits, being noncontributory in nature, are not proper
subjects for voluntary arbitration is devoid of merit. The expired CBA previously entered into by the
parties included provisions for the implementation of a "Retirement and Separation Plan." it is only to
be expected that the parties would seek a renewal or an improvement of said item in the new CBA.
In fact, the parties themselves expressly included retirement benefits among the economic issues to
be resolved by voluntary arbitration. Petitioner is estopped from now contesting the validity of the
increased award granted by the arbitrators. (p. 145, Rollo.)
The NLRC's resolution of the bargaining deadlock between Nestlé and its employees is neither
arbitrary, capricious, nor whimsical. The benefits and concessions given to the employees were

financial capacity of the Company to grant the demands, its longterm viability, the economic
conditions prevailing in the country as they affect the purchasing power of the employees as well as
its concommitant effect on the other factors of production, and the recent trends in the industry to
which the Company belongs (p. 57, Rollo). Its decision is not vitiated by abuse of discretion.
WHEREFORE, the petition for certiorari is dismissed, with costs against the petitioner.
SO ORDERED.
Narvasa, Gancayco and Medialdea, JJ., concur.

Luzon Development Bank vs. ALDBE
2:04 AM

SUPREME COURT
Manila
EN BANC
G.R. No. 120319 October 6, 1995

vs.
ASSOCIATION OF LUZON DEVELOPMENT BANK EMPLOYEES and ATTY. ESTER S. GARCIA
in her capacity as VOLUNTARY ARBITRATOR, respondents.
ROMERO, J.:
From a submission agreement of the Luzon Development Bank (LDB) and the Association of Luzon
Development Bank Employees (ALDBE) arose an arbitration case to resolve the following issue:
Paper despite a letter from the Voluntary Arbitrator reminding them to do so. As of May 23, 1995 no
Position Paper had been filed by LDB.
Hence, this petition for certiorari and prohibition seeking to set aside the decision of the Voluntary
Arbitrator and to prohibit her from enforcing the same.
determination on the basis of evidence and arguments presented by such parties who have bound
themselves to accept the decision of the arbitrator as final and binding.
government to forego their right to strike and are compelled to accept the resolution of their dispute
through arbitration by a third party. 1The essence of arbitration remains since a resolution of a
dispute is arrived at by resort to a disinterested third party whose decision is final and binding on the
parties, but in compulsory arbitration, such a third party is normally appointed by the government.
Under voluntary arbitration, on the other hand, referral of a dispute by the parties is made, pursuant
to a voluntary arbitration clause in their collective agreement, to an impartial third person for a final
and binding resolution. 2Ideally, arbitration awards are supposed to be complied with by both parties
without delay, such that once an award has been rendered by an arbitrator, nothing is left to be done
by both parties but to comply with the same. After all, they are presumed to have freely chosen
arbitration as the mode of settlement for that particular dispute. Pursuant thereto, they have chosen
a mutually acceptable arbitrator who shall hear and decide their case. Above all, they have mutually
agreed to de bound by said arbitrator's decision.
parties to a CBA shall name and designate therein a voluntary arbitrator or a panel of arbitrators, or
include a procedure for their selection, preferably from those accredited by the National Conciliation
and Mediation Board (NCMB). Article 261 of the Labor Code accordingly provides for exclusive
original jurisdiction of such voluntary arbitrator or panel of arbitrators over (1) the interpretation or
implementation of the CBA and (2) the interpretation or enforcement of company personnel policies.
Article 262 authorizes them, but only upon agreement of the parties, to exercise jurisdiction over
other labor disputes.

. . . (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:
3. If accompanied with a claim for reinstatement, those cases that workers may file involving wages,
employee relations;
legality of strikes and lockouts;
xxx xxx xxx
It will thus be noted that the jurisdiction conferred by law on a voluntary arbitrator or a panel of such
arbitrators is quite limited compared to the original jurisdiction of the labor arbiter and the appellate
jurisdiction of the National Labor Relations Commission (NLRC) for that matter. 4 The state of our
present law relating to voluntary arbitration provides that "(t)he award or decision of the Voluntary
Arbitrator . . . shall be final and executory after ten (10) calendar days from receipt of the copy of the
award or decision by the parties," 5 while the "(d)ecision, awards, or orders of the Labor Arbiter are
calendar days from receipt of such decisions, awards, or orders." 6 Hence, while there is an express
mode of appeal from the decision of a labor arbiter, Republic Act No. 6715 is silent with respect to
an appeal from the decision of a voluntary arbitrator.
Yet, past practice shows that a decision or award of a voluntary arbitrator is, more often than not,
elevated to the Supreme Court itself on a petition for certiorari, 7 in effect equating the voluntary
arbitrator with the NLRC or the Court of Appeals. In the view of the Court, this is illogical and
imposes an unnecessary burden upon it.
In Volkschel Labor Union, et al. v. NLRC, et al., 8 on the settled premise that the judgments of courts
and awards of quasi-judicial agencies must become final at some definite time, this Court ruled that
the awards of voluntary arbitrators determine the rights of parties; hence, their decisions have the
same legal effect as judgments of a court. In Oceanic Bic Division (FFW), et al. v. Romero, et
al., 9 this Court ruled that "a voluntary arbitrator by the nature of her functions acts in a quasi-judicial
capacity." Under these rulings, it follows that the voluntary arbitrator, whether acting solely or in a
panel, enjoys in law the status of a quasi-judicial agency but independent of, and apart from, the
NLRC since his decisions are not appealable to the latter. 10
xxx xxx xxx
(B) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders or awards
of Regional Trial Courts and quasi-judicial agencies, instrumentalities, boards or commissions,
including the Securities and Exchange Commission, the Employees Compensation Commission and
the Civil Service Commission, except those falling within the appellate jurisdiction of the Supreme
Court in accordance with the Constitution, the Labor Code of the Philippines under Presidential
Decree No. 442, as amended, the provisions of this Act, and of subparagraph (1) of the third
paragraph and subparagraph (4) of the fourth paragraph of Section 17 of the Judiciary Act of 1948.
xxx xxx xxx
Assuming arguendo that the voluntary arbitrator or the panel of voluntary arbitrators may not strictly
be considered as a quasi-judicial agency, board or commission, still both he and the panel are
comprehended within the concept of a "quasi-judicial instrumentality." It may even be stated that it
was to meet the very situation presented by the quasi-judicial functions of the voluntary arbitrators
here, as well as the subsequent arbitrator/arbitral tribunal operating under the Construction Industry
Arbitration Commission, 11 that the broader term "instrumentalities" was purposely included in the
above-quoted provision.
"agency" or "instrumentality" are synonymous in the sense that either of them is a means by which a
government acts, or by which a certain government act or function is performed. 13 The word
"instrumentality," with respect to a state, contemplates an authority to which the state delegates

administrator or executor, is a judicial instrumentality in the settling of an estate, 15 in the same
manner that a sub-agent appointed by a bankruptcy court is an instrumentality of the court, 16 and a
trustee in bankruptcy of a defunct corporation is an instrumentality of the state. 17
delegated to him under the provisions therefor in the Labor Code and he falls, therefore, within the
contemplation of the term "instrumentality" in the aforequoted Sec. 9 of B.P. 129. The fact that his
functions and powers are provided for in the Labor Code does not place him within the exceptions to
said Sec. 9 since he is a quasi-judicial instrumentality as contemplated therein. It will be noted that,
although the Employees Compensation Commission is also provided for in the Labor Code, Circular
No. 1-91, which is the forerunner of the present Revised Administrative Circular No. 1-95, laid down
the procedure for the appealability of its decisions to the Court of Appeals under the foregoing
rationalization, and this was later adopted by Republic Act No. 7902 in amending Sec. 9 of B.P. 129.
A fortiori, the decision or award of the voluntary arbitrator or panel of arbitrators should likewise be
appealable to the Court of Appeals, in line with the procedure outlined in Revised Administrative
Circular No. 1-95, just like those of the quasi-judicial agencies, boards and commissions enumerated
therein.
provide a uniform procedure for the appellate review of adjudications of all quasi-judicial
entities 18 not expressly excepted from the coverage of Sec. 9 of B.P. 129 by either the Constitution
or another statute. Nor will it run counter to the legislative intendment that decisions of the NLRC be
reviewable directly by the Supreme Court since, precisely, the cases within the adjudicative
competence of the voluntary arbitrator are excluded from the jurisdiction of the NLRC or the labor
arbiter.
as the Arbitration Law, arbitration is deemed a special proceeding of which the court specified in the
contract or submission, or if none be specified, the Regional Trial Court for the province or city in
which one of the parties resides or is doing business, or in which the arbitration is held, shall have
jurisdiction. A party to the controversy may, at any time within one (1) month after an award is made,
apply to the court having jurisdiction for an order confirming the award and the court must grant such
order unless the award is vacated, modified or corrected. 19
In effect, this equates the award or decision of the voluntary arbitrator with that of the regional trial
court. Consequently, in a petition for certiorari from that award or decision, the Court of Appeals
must be deemed to have concurrent jurisdiction with the Supreme Court. As a matter of policy, this
Court shall henceforth remand to the Court of Appeals petitions of this nature for proper disposition.
SO ORDERED.
Footnotes
2 Ibid.
7 Oceanic Bic Division (FFW), et al. v. Romero, et al., 130 SCRA 392 (1984); Sime Darby Pilipinas,
Inc. v. Magsalin, et al., 180 SCRA 177 (1989).
8 98 SCRA 314 (1980).
9 Supra.
12 Laurens Federal Sav. and Loan Ass'n v. South Carolina Tax Commission, 112 S.E. 2d 716, 719,
236 S.C. 2.
19 Section 23, R.A. No. 876.

19 Section 23, R.A. No. 876.

National Union of Restaurant Workers, supra
2:04 AM

Kiok Loy, supra
2:05 AM

Colegio De San Juan de letran v. Assn of Employees and Faculty of
Letran
2:05 AM

Samahan sa Permex v. SoLE
12:46 AM

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 107792 March 2, 1998

SAMAHANG MANGGAGAWA SA PERMEX (SMP-PIILU-TUCP), petitioners,
vs.
THE SECRETARY OF LABOR, NATIONAL FEDERATION OF LABOR, PERMEX PRODUCER
AND EXPORTER CORPORATION, respondents.
MENDOZA, J.:
This is a petition for review on certiorari of the decision, dated October 8, 1992 and order dated
November 12, 1992, of Undersecretary of Labor and Employment Bienvenido Laguesma, ordering a
certification election to be conducted among the employees of respondent company.
The facts of the case are as follows. On January 15, 1991, a certification election was conducted
among employees of respondent Permex Producer and Exporter Corporation (hereafter referred to
as Permex Producer). The results of the elections were as follows:
National Federation of Labor (NFL) 235

No Union 466
Spoiled Ballots 18
Marked Ballots 9
Challenged Ballots 7
However, some employees of Permex Producer formed a labor organization known as the
Samahang Manggagawa sa Permex (SMP) which they registered with the Department of Labor and
Employment on March 11, 1991. The union later affiliated with the Philippine Integrated Industries
Labor Union (PIILU).
On August 16, 1991, Samahang Manggagawa sa Permex-Philippine Integrated Industries Labor
Union (SMP-PIILU), wrote the respondent company requesting recognition as the sole and exclusive
bargaining representative of employees at the Permex Producer. On October 19, 1991 Permex
Producer recognized SMP-PIILU and, on December 1, entered into a collective bargaining
agreement with it. The CBA was ratified between December 9 and 10, 1991 by the majority of the
rank and file employees of Permex Producer. On December 13, 1991, it was certified by the DOLE.
On February 25, 1992, respondent NFL filed a petition for certification election, but it was dismissed
by Med-Arbiter Edgar B. Gongalos in an order dated August 20, 1992. Respondent NFL then
appealed the order to the Secretary of Labor and Employment. On October 8, 1992, the Secretary of
Labor, through Undersecretary Bienvenido Laguesma, set aside the order of the Med-Arbiter and
ordered a certification election to be conducted among the rank and file employees at the Permex
Producer, with the following choices:
1. National Federation of Labor
2. Samahang Manggagawa sa Permex
3. No union
Petitioner moved for a reconsideration but its motion was denied in an order dated November 12,
1992. Hence, this petition.
Two arguments are put forth in support of the petition. First, it is contended that petitioner has been
recognized by the majority of the employees at Permex Producer as their sole collective bargaining
agent. Petitioner argues that when a group of employees constituting themselves into an
organization and claiming to represent a majority of the work force requests the employer to bargain
collectively, the employer may do one of two things. First, if the employer is satisfied with the
employees' claim the employer may voluntarily recognize the union by merely bargaining collectively
with it. The formal written confirmation is ordinarily stated in the collective bargaining agreement.
Second, if on the other hand, the employer refuses to recognize the union voluntarily, it may petition
the Bureau of Labor Relations to conduct a certification election. If the employer does not submit a

the Bureau of Labor Relations to conduct a certification election. If the employer does not submit a
petition for certification election, the union claiming to represent the employees may submit the
petition so that it may be directly certified as the employees' representative or a certification election
may be held.
The case of Ilaw at Buklod ng Manggagawa v. Ferrer-Calleja, 1 cited by the Solicitor General in his
comment filed in behalf of the NLRC, is particularly apropos. There, the union also requested
voluntary recognition by the company. Instead of granting the request, the company petitioned for a
certification election. The union moved to dismiss on the ground that it did not ask the company to
bargain collectively with it. As its motion was denied, the union brought the matter to this Court. In
sustaining the company's stand, this Court ruled:
. . . Ordinarily, in an unorganized establishment like the Calasiao Beer Region, it is the union that
files a petition for a certification election if there is no certified bargaining agent for the workers in the
establishment. If a union asks the employer to voluntarily recognize it as the bargaining agent of the
employees, as the petitioner did, it in effect asks the employer to certify it as the bargaining
representative of the employees — A CERTIFICATION WHICH THE EMPLOYER HAS NO
AUTHORITY TO GIVE, for it is the employees' prerogative (not the employer's) to determine
whether they want a union to represent them, and, if so, which one it should be. (emphasis supplied)
In accordance with this ruling, Permex Producer should not have given its voluntary recognition to
SMP-PIILU-TUCP when the latter asked for recognition as exclusive collective bargaining agent of
the employees of the company. The company did not have the power to declare the union the
exclusive representative of the workers for the purpose of collective bargaining,
Indeed, petitioner's contention runs counter to the trend towards the holding of certification election.
By virtue of Executive Order No. 111, which became effective on March 4, 1987, the direct
certification previously allowed under the Labor Code had been discontinued as a method of
selecting the exclusive bargaining agents of the workers. 2 Certification election is the most effective
and the most democratic way of determining which labor organization can truly represent the
working force in the appropriate bargaining unit of a company. 3
Petitioner argues that of the 763 qualified employees of Permex Producer, 479 supported its
application for registration with the DOLE and that when petitioner signed the CBA with the
company, the CBA was ratified by 542 employees. Petitioner contends that such support by the
majority of the employees justifies its finding that the CBA made by it is valid and binding.
But it is not enough that a union has the support of the majority of the employees. It is equally
important that everyone in the bargaining unit be given the opportunity to express himself. 4
This is especially so because, in this case, the recognition given to the union came barely ten (10)
months after the employees had voted "no union" in the certification election conducted in the
company. As pointed out by respondent Secretary of Labor in his decision, there can be no
determination of a bargaining representative within a year of the proclamation of the results of the
certification election. 5 Here the results, which showed that 61% of the employees voted for "no
union," were certified only on February 25, 1991 but on December 1, 1991 Permex Producer already
recognized the union and entered into a CBA with it.
There is something dubious about the fact that just ten (10) months after the employees had voted
that they did not want any union to represent them, they would be expressing support for petitioner.
The doubt is compounded by the fact that in sworn affidavits some employees claimed that they had
either been coerced or misled into signing a document which turned out to be in support of petitioner
as its collective bargaining agent. Although there were retractions, we agree with the Solicitor
General that retractions of statements by employees adverse to a company (or its favored union) are
oftentimes tainted with coercion and intimidation. For how could one explain the seeming flip-
flopping of position taken by the employees? The figures claimed by petitioner to have been given to
it in support cannot readily be accepted as true.
Second. Petitioner invokes the contract-bar rule. They contend that under Arts. 253, 253-A and 256
of the Labor Code and Book V, Rule 5, §3 of its Implementing Rules and Regulations, a petition for
certification election or motion for intervention may be entertained only within 60 days prior to the
date of expiration of an existing collective bargaining agreement. The purpose of the rule is to
ensure stability in the relationships of the workers and the management by preventing frequent
modifications of any collective bargaining agreement earlier entered into by them in good faith and
for the stipulated original period. Excepted from the contract-bar rule are certain types of contracts
which do not foster industrial stability, such as contracts where the identity of the representative is in
doubt. Any stability derived from such contracts must be subordinated to the employees' freedom of
choice because it does not establish the kind of industrial peace contemplated by the law. 6 Such
situation obtains in this case. The petitioner entered into a CBA with Permex Producer when its
status as exclusive bargaining agent of the employees had not been established yet.
WHEREFORE, the challenged decision and order of the respondent Secretary of Labor are
AFFIRMED.

AFFIRMED.
SO ORDERED.
Regalado, Melo, Puno and Martinez, JJ., concur.
Footnotes
1 182 SCRA 561 (1990).
2 Central Negros Electric Cooperative v. Secretary of Labor and Employment, 201 SCRA 591
(1991).
3 National Mines and Allied Workers Union v. Secretary of Labor, 227 SCRA 821 (1993); Associated
Trade Unions v. Trajano, 162 SCRA 319 (1988).
4 Central Negros Electric Cooperative, Inc. v. Secretary of DOLE, 201 SCRA at 592.
5 IMPLEMENTING RULES, Bk V, Rule V, §3.
6 Firestone Tire and Rubber Company Employees Union v. Estrella, 81 SCRA 49 (1978).
Pasted from <http://www.lawphil.net/judjuris/juri1998/mar1998/gr_107792_1998.html>

ALU v. Ferrer-Calleja
12:46 AM

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-77282 May 5, 1989
ASSOCIATED LABOR UNIONS (ALU) petitioner,
vs.
HON. PURA FERRER-CALLEJA, as Director of the Bureau of Labor Relations, Ministry of
Labor and Employment; PHILIPPINE SOCIAL SECURITY LABOR UNION (PSSLU); SOUTHERN
PHILIPPINES FEDERATION OF LABOR (SPFL) and GAW TRADING, INC., respondents.
Romeo S. Occena, Leonard U. Sawal, Edgemelo C. Rosales and Ernesto Carreon for petitioner.
Henrick F. Gingoyon for respondent SPFL.
Wilfredo L. Orcullo for respondent Southern Philippines Federation of Labor.
Miguel A. Enrique, Jr. for respondent GAW Trading, Inc.
REGALADO, J.:
Petitioner Associated Labor Unions (ALU, for brevity) instituted this special civil action
for certiorari and prohibition to overturn the decision of the respondent direcstor 1 dated December
10, 1986, which ordered the holding of a certification election among the rank-and-file workers of the
private respondent GAW Trading, Inc. The averments in the petition therefor, which succinctly but
sufficiently detail the relevant factual antecedents of this proceedings, justify their being quoted in
full, thus:
1. The associated Labor Unions (ALU) thru its regional Vice-Presidents Teofanio C. Nuñez, in a
letter dated May 7, 1986 (ANNEX C) informed GAW Trading, Inc. that majority of the latter's
employees have authorized ALU to be their sole and exclusive bargaining representative, and
requested GAW Trading Inc., in the same Letter for a conference for the execution of an initial
Collective Bargaining Agreement (CBA);
2. GAW Trading Inc. received the Letter of ALU aforesaid on the same day of May 7, 1986 as
acknowledged thereunder and responded (sic) ALU in a letter dated May 12, 1986 (Annex D)
indicating its recognition of ALU as the sole and exclusive bargaining agent for the majority of its
employees and for which it set the time for conference and/or negotiation at 4:00 P.M. on May 12,
1986 at the Pillsbury Office, Aboitiz Building Juan Luna Street, Cebu City;
3. On the following day of May13, 1986, ALU in behalf of the majority of the employees of GAW
Trading Inc. signed and excuted the Collective Bargaining (ANNEX F) ...
4. On May 15, 1986, ALU in behalf of the majority of the employees of GAW Trading Inc. and GAW
Trading Inc. signed and executed the Collective Bargaining Agreements (ANNEX F) . . . .
5. In the meantime, at about 1:00 P.M. of May 9, 1986, the Southern Philippines Federation of Labor
(SPFL) together with Nagkahiusang Mamumuo sa GAW (NAMGAW) undertook a ... Strike ... after it
failed to get the management of GAW Trading Inc. to sit for a conference respecting its demands
presented at 11: A.M. on the same day in an effort to pressure GAW Trading Inc. to make a
turnabout of its standign recognition of ALU as the sole and exclusive bargaining representative of
its employees, as to which strike GAW Trading Inc. filed a petition for Restraining Order/Preliminary
Injunction, dfated June 1, 1986 (Annex H) and which strike Labor Arbiter Bonifacio B. Tumamak held
as illegal in a decision dated August 5, 1986 (ANNEX I);
6. On May 19, 1986, GAW Lumad Labor Union (GALLU-PSSLU) Federation ... filed a Certification
Election petition (ANNEX J), but as found by Med-Arbiter Candido M. Cumba in its (sic) Order dated
Ju ne 11, 1986 (ANNEX K), without having complied (sic) the subscription requirement for which it
was merely considered an intervenor until compliance thereof in the other petition for direct
recogbnition as bargaining agent filed on MAy 28, 1986 by southern Philippines Federation of Labor
(SPFL) as found in the same order (ANNEX K);
7. Int he meantime, the Collective Bargaining Agreement executed by ALU and GAW Trading Inc.
(ANNEX F) was duly filed May 27, 1986 with the Ministry of Labor and Employment in Region VII,
Cebu city;
8. Nevertheless, Med-Arbiter Candido M. Cumba in his order of June 11, 1986 (Annex K) ruled for
the holding of a ceritfication election in all branches of GAW Trading Inc. in Cebu City, as to which
ALU filed a Motion for Reconsideration dated June 19, 1986 (ANNEX L) which was treated as an
appeal on that questioned Order for which reason the entire record of subject certification case was

appeal on that questioned Order for which reason the entire record of subject certification case was
forwarded for the Director, Bureau of LAbor Relations, Ministry of Labor and Employment, Manila
(ANNEX M);
9. Bureau of Labor Relations Director Cresencio B. Trajano, rendered a Decision on August 13,
1986 (Annex B) granting ALU's appeal (Motion for Reconsideration) and set aside the questioned
Med-Arbiter Order of June 11, 1986 (Annex K), on the ground that the CBA has been effective and
valid and the contract bar rule applicable;
10. But the same Decision of Director Crecensio B. Trajano was sought for reconsideratrion both by
Southern Philippines Federation of Labor (SPFL) on August 26, 1986 (ANNEX N), supplemented by the
'SUBMISSION OD ADDITIONA L EVIDENCE' dated September 29, 1986 (ANNEX O), and the Philppine
Social Security Labor Union (PSSLU) on October 2, 1986 (ANNEX P), which were opposed by both GAW
Trading, Inc. on September 2, 1986 (ANNEX Q) and ALU on September 12, 1986 (ANNEX R); 2
The aforesaid decision of then Director Trajano was thereafter reversed by respondent director in
her aforecited decision which is now assailed in this action. A motion for reconsideration of
ALU 3 appears to have been disregarded, hence, its present resort grounded on grave abuse of
discretion by public respondent.
Public respondent ordered the holding of a certification election ruling that the "contract bar rule"
relied upon by her predecessor does not apply in the present controversy. According to the decision
of said respondent, the collective bargaining agreement involved herein is defective because it "was
not duly submitted in accordance with Section I, Rule IX, Book V of the Implementing Rules of Batas
Pambansa Blg. 130." It was further observed that "(t)here is no proof tending to show that the CBA
has been posted in at least two conspicuous places in the 1 establishment at least five days before
its ratification and that it has been ratified by the majority of the employees in the bargaining unit."
We find no reversible error in the challenged decision of respondent director. A careful consideration
of the facts culled from the records of this case, especially the allegations of petitioner itself as
hereinabove quoted, yields the conclusion that the collective bargaining agreement in question is
indeed defective hence unproductive of the legal effects attributed to it by the former director in his
decision which was subsequently and properly reversed.
We have previously held that the mechanics of collective bargaining are set in motion only when the
following jurisdictional preconditions are present, namely, (1) possession of the status of majority
representation by the employees' representative in accordance with any of the means of selection
and/or designation provided for by the Labor Code; (2) proof of majority representation; and (3) a
demand to bargain under Article 251, paragraph (a), of the New Labor Code. 4 In the present case,
the standing of petitioner as an exclusive bargaining representative is dubious, to say the least. It
may be recalled that respondent company, in a letter dated May 12, 1986 and addressed to
petitioner, merely indicated that it was "not against the desire of (its) workers" and required petitioner
to present proof that it was supported by the majority thereof in a meeting to be held on the same
date. 5 The only express recognition of petitioner as said employees' bargaining representative that
We see in the records is in the collective bargaining agreement entered into two days
thereafter. 6 Evidently, there was precipitate haste on the part of respondent company in recognizing
petitioner union, which recognition appears to have been based on the self-serving claim of the latter
that it had the support of the majority of the employees in the bargaining unit. Furthermore, at the
time of the supposed recognition, the employer was obviously aware that there were other unions
existing in the unit. As earlier stated, respondent company's letter is dated May 12, 1986 while the
two other unions, Southern Philippine Federation of Labor (hereafter, SPFL and Philippine Social
Security Labor Union (PSSLU, for short), went on strike earlier on May 9, 1986. The unusual
promptitude in the recognition of petitioner union by respondent company as the exclusive
bargaining representative of the workers in GAW Trading, Inc. under the fluid and amorphous
circumstances then obtaining, was decidedly unwarranted and improvident.
It bears mention that even in cases where it was the then Minister of Labor himself who directly
certified the union as the bargaining representative, this Court voided such certification where there
was a failure to properly determine with legal certainty whether the union enjoyed a majority
representation. In such a case, the holding of a certification election at a proper time would not
necessarily be a mere formality as there was a compelling reason not to directly and unilaterally
certify a union. 7
An additional infirmity of the collective bargaining agreement involved was the failure to post the
same in at least two (2) conspicuous places in the establishment at least five days before its
ratification. 8 Petitioners rationalization was that "(b)ecause of the real existence of the illegal strike
staged by SPFL in all the stores of GAW Trading, Inc. it had become impossible to comply with the
posting requirement in so far as the realization of tits purpose is concerned as there were no
impartial members of the unit who could be appraised of the CBA's contents. " 9 This justification is
puerile and unacceptable.
In the first place, the posting of copies of the collective bargaining agreement is the responsibility of

In the first place, the posting of copies of the collective bargaining agreement is the responsibility of
the employer which can easily comply with the requirement through a mere mechanical act. The fact
that there were "no impartial members of the unit" is immaterial. The purpose of the requirement is
precisely to inform the employees in the bargaining unit of the contents of said agreement so that
they could intelligently decide whether to accept the same or not. The assembly of the members of
ALU wherein the agreement in question was allegedly explained does not cure the defect. The
contract is intended for all employees and not only for the members of the purpoted representative
alone. It may even be said the the need to inform the non-members of the terms thereof is more
exigent and compelling since, in all likehood, their contact with the persons who are supposed to
represent them is limited. Moreover, to repeat, there was an apparent and suspicious hurry in the
formulation and finalization of said collective bargaining accord. In the sforementioned letter where
respondent company required petitioner union to present proof of its support by the employees, the
company already suggested that petitioner ALU at the same time submit the proposals that it
intended to embody in the projected agreement. This was on May 12, 1986, and prompltly on thre
following day the negoltiation panel; furnish respondent company final copies of the desired
agreement whcih, with equal dispatch, was signed on May 15, 1986.
Another potent reason for annulling the disputed collective bargaining is the finding of respondent
director that one hundred eighty-one( 181) of the two hundred eighty-one (281) workers who
"ratified" the same now " strongly and vehemently deny and/or repudiate the alleged negotiations
and ratification of the CBA. " 10 Although petitioner claims that only sev en (7) of the repudiating
group of workers belong to the total number who allegedly ratified the agreement, nevertheless such
substantiated contention weighed against the factujal that the controverted contract will not promote
industrial stability . The Court has long since declared that:
... Basic to the contract bar rule is the proposition that the delay of the right to select represen tatives can
be justified only where stability is deemed paramount. Excepted from the contract which do not foster
industrial stability, such as contracts where the identity of the representative is in doubt. Any stability
derived from such contracts must be subordinated to the employees' freedom of choice because it does
nto establish the type of industrial peace contemplated by the law. 11
At this juncture, petitioner should be reminded that the technical rules of rpocedure do not strictly
apply in the adjudication of labor disputes. 12 Consequently, its objection that the evidence with
respect to the aforesaid repudiiation of the supposed collective bargaining agreement cannot be
considered for the first time on appeal on the Bureau of Labor Relations should be disregarded,
especially considering the weighty significance thereof.
Both petitioner and private respondent GAW Trading, Inc. allege that the employees of the latter are
now enjoying the benefits of the collective bargaining agreement that both parties had forged.
However, We cannot find sufficient evidence of record to support this contention. The only evidence
cited by petitioner is supposed payment of union fees by said employees, a premise too tenuous to
sustain the desired conclusion. Even the actual number of workers in the respondent company is not
clear from the records. Said private respondent claims that it is two hundred eighty-one (281) 13 but
petitioner suggests that it is more than that number. The said parties should be aware that this Court
is not an adjudicator of facts. Worse, to borrow a trite but apt phrase, they would heap the Ossa of
confusion upon the Pelion of uncertainty and still expect a definitive ruling on the matter thus
confounded.
Additionally, the inapplicability of the contract bar rule is further underscored by the fact that when
the disputed agreement was filed before the Labor Regional Office on May 27, 1986, a petition for
certification election had already been filed on May 19, 1986. Although the petition was not
supported by the signatures of thirty percent (30%) of the workers in the bargaining unit, the same
was enough to initiate said certification election.
WHEREFORE, the order of the public respondent for the conduct of a certification election among
the rank-and-file workers of respondent GAW Trading Inc. is AFFIRMED. The temporary restraining
order issued in this case pursuant to the Resolution of March 25, 1987 is hereby lifted.
SO ORDERED.
Melencio-Herrera, Paras, Padilla and Sarmiento, JJ., concur.
Footnotes
1 Rollo, 25-27; Annex A. Petition.
2 Ibid., 8-11.
3 Ibid., 11; Annex S. Petition.
4 Kick Loy vs. National Labor Relations Commission, 141 SCRA 179,185 (1986).
5 Rollo, 9, 34; Annex D, Petition.

4 Kick Loy vs. National Labor Relations Commission, 141 SCRA 179,185 (1986).
5 Rollo, 9, 34; Annex D, Petition.
6 Ibid., 37.
7 Colgate Palmolive Philippines, Inc. vs. Hon. Blas F. Ople, et al., G.R. No. 73691, June 30, 1988.
8 Sec. l (a), Rule IX, Book V, Implementing Rules of B.P. 130.
9 Rollo, 16.
10 Ibid., 27.
11 Firestone Tire & Rubber Company Employees Union, etc. vs. Estrella, etc., et al. 81 SCRA 49, 54
(1978).
12 Art. 221, Labor Code, as amended.
13 Rollo, 175-176.
Pasted from <http://www.lawphil.net/judjuris/juri1989/may1989/gr_l77282_1989.html>

Citizen's labor union v. CIR
12:46 AM

SUPREME COURT
Manila
EN BANC
G.R. No. L-24320 November 12, 1966
CITIZENS LABOR UNION-CCLU, petitioner,
vs.
COURT OF INDUSTRIAL RELATIONS, MALAYANG MANGGAGAWA SA ESSO, DEPARTMENT
OF LABOR and ESSO STANDARD EASTERN, INC., respondents.
G.R. No. L-24421 November 12, 1966
CITIZENS LABOR UNION-CCLU, petitioner,
vs.
COURT OF INDUSTRIAL RELATIONS, MALAYANG MANGGAGAWA SA ESSO, ESSO
STANDARD EASTERN, INC., respondents.
Leon O. Ty and Gesmundo for petitioner.
Lanting and Morabe and Padilla Law Office for respondent.
CASTRO, J.:
G.R. L-24320, entitled "Citizens Labor Union vs. Court of Industrial Relations, Malayang
Manggagawa sa Esso, Department of Labor and Esso Standard Eastern, Inc.," is a petition
for certiorari and mandamus with preliminary injunction. The petitioner therein prayed, among other
things, that a writ of preliminary injunction issue to compel the Court ofzenIndustrial Relations (to be
hereinafter referred to as the CIR) to act on the motion filed by the said petitioner Citizens Labor
Union (to be hereinafter referred to as the CLU) to suspend certification election, and to enjoin the
Department of Labor from holding the secret ballot election scheduled for March 22, 1965; or, in the
alternative, should the CIR fail to act on the motion in question and such inaction be interpreted as a
denial thereof, that the petition be given due course under Rule 43, Revised Rules of Court,
judgment be rendered reversing the order of March 6, 1965, infra, and that the petition for
certification election filed by the Malayang Manggagawa Sa Esso (to be hereinafter referred to as
the MME) be dismissed. The dispositive portion of the order of March 6, 1965 reads:
WHEREFORE, pursuant to the provisions of Section 12, Republic Act No. 875, and the Rules on
Certification Election of this Court, the Department of Labor is hereby requested to conduct the
necessary certification election among the regular rank and file employees and/or laborers of the
Esso Standard Eastern, Inc. at Pandacan Terminal, Manila, whose names appear in Exhibit X-Court,
in order to determine whether they desire to be represented for collective bargaining purposes with
the employer firm by either the Citizens Labor Union (CLU) or the Malayang Manggagawa Sa Esso
(PFPW) or neither; and upon conclusion of the said election, to submit a report of the result thereof,
for further disposition.
G.R. L-24431, entitled "Citizens Labor Union vs. Court of Industrial Relations, Malayang
Manggagawa Sa Esso, Esso Standard Eastern, Inc.," is a petition for certiorari to review the order of
March 6, 1965, quoted above, and the resolution of the CIR en banc of April 2, 1965, the dispositive
portion of which reads:
After a close perusal of the records as well as the arguments of the parties, the Court en banc fails
to find sufficient justification for altering or modifying the aforesaid Order.
BOTH MOTIONS DENIED
The chronology of the events leading to these two cases follows:

The MME on January 7, 1965 filed a petition for certification election with the CIR (Case 1459-MC),
alleging that it is a labor union organized among the employees of Esso Standard Eastern, Inc.
(ESSO) Pandacan Terminal, Manila; that it represents the majority of the non-supervisory
employees of the said terminal unit; that there exists a collective bargaining agreement between the
CLU and the ESSO, of a duration of three (3) years and three (3) month from April 8, 1963 to July 8,
1966; and that its aim in asking for a certification election is merely to determine which union will
administer the contract during the remainder of the term thereof. The CLU and the ESSO filed
motions to dismiss the petition based on several grounds, most important of which is that the
existing collective bargaining contract is a bar to the holding of a certification election.
After due hearing, the CIR, through the Honorable Judge Tabigne, issued an order dated March 6,

After due hearing, the CIR, through the Honorable Judge Tabigne, issued an order dated March 6,
1965, denying the motions to dismiss the petition for certification election, holding that the existing
collective bargaining contract is no bar to a certification election, and requesting the Department of
Labor to conduct the necessary election. The CLU and the ESSO filed with the CIR en banc
separate motions for reconsideration, to which the MME filed its opposition. Meanwhile, the
Department of Labor scheduled the secret ballot election for March 22, 1965, from 7:00 a.m. to 7:00
p.m., with notice to the parties concerned. The CLU and the ESSO on March 18, 1965 filed with the
CIR en banc separate motions to suspend the certification election as set, upon the basis of their
respective motions for reconsideration then pending, ESSO on its part alleging that the certification
election if held would render academic its said motion for reconsideration.
On March 19, 1965 the CLU filed with this Court a petition for certiorari and mandamus with
preliminary injunction (L-24320). This was given due course and the parties respondents therein as
required filed their respective answers, but no writ of preliminary injunction was issued to direct the
CIR to suspend the certification election or to enjoin the Department of Labor from proceeding with
its scheduled secret ballot election. The latter proceeded with the election and the result thereof
shows that the MME obtained votes of more than one-half of the rank and file employees and
laborers of the ESSO Pandacan Terminal unit eligible to vote.
The CLU on March 23, 1965 filed with the CIR a motion to annul the certification election on several
grounds, among which are that the election was held illegally and irregularly as it was conducted on
a holiday, and that it was had without participation of the CLU therein. The ESSO on the following
March 29 also filed with the CIR a similar motion to annul the certification election. The MME
thereafter filed its opposition thereto.
The CIR en banc, by resolution of April 2, 1965, denied the motions for reconsideration of the order
of March 6, 1965. From this resolution, the CLU filed a notice of appeal.
The CIR on April 26, 1965 issued an order denying the motions for reconsideration seeking
annulment of the certification election held on March 22, 1965. In the same order, on the basis of the
result of the secret ballot election, the CIR certified the MME as the sole and exclusive bargaining
agent of all the non-supervisory employees of the ESSO at its Pandacan Terminal unit. The CLU
and the ESSO filed separate motions to have this last order reconsidered. These motions are
pending resolution.
The CLU on May 9, 1965 filed with this Court an urgent petition praying for issuance of a writ of
preliminary injunction to restrain the CIR from proceeding with the enforcement of its order of April
26, 1965, on the ground that the issues to be heard in L-24320 which was set for hearing on June
16, 1965 would become moot and academic if the said order was enforced. The CLU on the
following May 12 moved to have hearing advanced to May 19, 1965. This Court on May 14, 1965
issued the injunction prayed for, restraining the CIR from enforcing its order of April 26, 1965, and
also from proceeding or taking any other action in connection with the certification election case.
This Court also advanced the hearing to May 26, 1965.
The CLU on June 10, 1965 filed with this Court a petition for review of the order of March 6, 1965
and of the CIR resolution en banc of April 2, 1965 (L-24431). The MME moved to have the petition
dismissed on the ground that this Court lacks jurisdiction to entertain it as the CLU failed to file with
the CIR its notice of appeal from the order of March 6, 1965 and the CIR resolution en banc of April
2, 1965 within the prescribed reglementary period. We gave due course to the petition for review and
resolved further to consider it together with L-24320 (Res. of July 14, 1965).
Pending this Court's adjudication of the two cases, or more precisely on October 13, 1966, the MME
filed with this Court a "Motion for Preliminary Injunction", alleging that the ESSO and the CLU had
extended the term of the existing collective bargaining contract to December 31, 1966; that pursuant
to its salient provisions, the CLU and the ESSO at any time between October 31 and December 31,
1966 will commence negotiations for a new collective bargaining agreement and sign the same,
unless a preliminary injunction is issued by this Court; that a new agreement will render moot and
academic the order of the CIR certifying the MME as the sole and exclusive bargaining agent of all
the employees of the ESSO at its Pandacan Terminal unit, and may again be alleged as a bar to the
holding of a new certification election. The motion was opposed by the CLU and the ESSO, both
alleging in concert that since March 22, 1965 when the secret ballot election was held, there has
occurred a substantial change in the composition of the rank and file of the employees and laborers
at the ESSO Pandacan Terminal unit, a good number of them having left their employment, retired,

at the ESSO Pandacan Terminal unit, a good number of them having left their employment, retired,
or been compulsorily laid off with the approval of the CIR, resulting in a change of employee
composition in the unit; that the ESSO will negotiate a new collective bargaining contract with the
union that commands the majority of the present labor force, either the CLU or the MME, as the case
may be; and that if this Court issues the restraining order, it will suspend the process of a new
collective bargaining agreement to the prejudice of the workers who would be denied the economic
benefits thereof.
On November 3, 1966, we issued in L-24320 an injunction commanding the CLU and ESSO to
refrain from negotiating and concluding a new collective bargaining agreement until after this Court
shall have decided the case on the merits.
We will first dispose of the jurisdictional objection interposed by the MME in its brief: that this Court
did not acquire jurisdiction over the petition for review (L-24431) on the ground that the CLU failed to
file its notice of appeal from the order of March 6, 1965 and the CIR resolution en banc of April 2,
1965 within the prescribed reglementary period. We cannot sustain this view. By giving due course
to the petition for review (See Res. of July 14, 1965), we necessarily denied the motion to dismiss
the petition for review, and simultaneously regarded the petition formandamus and certiorari with
preliminary injunction (L-2432O) as a petition for review. The CLU in that petition in fact prayed this
Court that, should the "inaction of the Respondent Court en banc be interpreted as a denial of the
said motion to Suspend Election and the Motion for Reconsideration," the petition be treated as one
for review under Rule 43 of the Revised Rules of Court, that judgment be rendered therein reversing
the order of March 6, 1965, and that the petition of the MME for certification election be dismissed.
Our resolution is in line with the ruling in Cruz vs. Court of Industrial Relations, et al., L-18277,
August 31, 1963. We there held that
Although as heretofore stated, this is an action for mandamus, prohibition and certiorari, primarily to
compel the respondent court to act on petitioner's motion for reconsideration of November 29, 1960,
nevertheless, in view of the inaction of the court, notwithstanding the repeated petitions to pass upon
the motions in question which could be interpreted as an insistence on or adherence to the judges'
respective previous rulings, and therefore, a denial of the motion for reconsideration, and
considering that we have here already before us all the records of the case, it is believed that the
interest of justice would be better subserved if the present petition should be treated as one for
review.
We will now define the diametrically opposite positions taken by the two competiting unions.
In seeking the reversal and setting aside of the order of the CIR of March 6, 1965 and the dismissal
of the petition for certification election filed by the MME, the concerted grounds relied upon by the
CLU and the ESSO are that the MME was not qualified to ask for certification election, not having
observed the legal requisites therefor; that the petition for certification election was made to
circumvent the results of the elections held in the ESSO Pandacan Terminal unit on December 4,
1964 wherein the MME's officers were defeated; that the certification election is being used as a
justification for unethical, illegal and immoral union-raiding and union-grabbing which disturb
industrial peace; that a certification election cannot be held pending the adjudication of the unfair
labor practice actions filed against the CLU and the MME in connection with the strikes staged by
the said unions (Case 3943 and Charge 442 before the CIR); and that the certification election is
barred by the "Contract-Bar Policy".
The MME, upon the other hand, urges the dismissal of these two cases before us and the affirmance
of the orders in question, contending that the CIR committed no abuse of discretion in ordering a
certification election, its judgment in certification proceedings being entitled to almost finality in the
absence of patent abuse; that the CLU can no longer be considered as the representative of the
rank and file of the employees and laborers of ESSO at its Pandacan Terminal unit, because it has
lost its majority status inasmuch as the overwhelming majority of its members have given up their
membership therein; that the MME was conclusively established to have obtained the majority status
as a result of the secret ballot election held on March 22, 1965; that the "Contract-Bar Policy" relied
upon by the CLU and the ESSO for the non-holding of a certification election can not be applied,
because here the existing collective bargaining agreement is not one of reasonable duration as it
has been in existence for more than 10 years, that is from 1953 to 1964, and moreover that the
MME in its petition for certification election expressly bound itself not to change, modify, or contest
the contract during its unexpired term; and that the right of the workers to elect their bargaining
agent to represent them is paramount and should not be curtailed or restricted in any manner unless
absolutely necessary.

absolutely necessary.
We thus confront the problem of determining which of the competing unions should be recognized
as the "appropriate bargaining unit" of the rank and file of the employees and laborers of ESSO at its
Pandacan Terminal unit, pursuant to Section 12-(a) of the Industrial Peace Act.
We must observe at this juncture, however, that the passage of time has removed all meaning and
validity from the positions taken by the two competing unions. Except for the motion for preliminary
injunction filed by the MME recently, that is, on October 13, 1966, all the pleadings extant in the
record are dated and were filed prior to July 8, 1966, the date when the life of the collective
bargaining agreement in question expired. All that the MME seeks is that it be declared the sole and
collective bargaining agent to "administer the contract during its remaining term"(see order of March
6, 1965). Upon the other hand, the opposition of the CLU and the ESSO is grounded mainly on the
existence of the collective bargaining agreement which, they claim, is of a reasonable duration, and
therefore precludes the holding of a certification election by virtue of the "Contract-Bar Policy". The
collective bargaining agreement lapsed on July 8, 1966; the positions of the two labor unions have
therefore become academic.
All these notwithstanding, we still confront the very real and fundamental problem of which union
should be recognized as the sole and exclusive bargaining agent of all the ESSO employees at the
Pandacan Terminal unit. The extension of the life of the collective bargaining agreement to
December 31, 1966, while significant, is really of little moment, because after that date, the problem
will still be there, as big as life, unless it is resolved before then.
This Court in numerous cases has reaffirmed its attitude that it is a sound and unassailable labor
practice for labor and management to conclude a new contract before the expiry date of any
collective bargaining agreement in order to avoid a hiatus in management-labor relations. The
Industrial Peace Act was designed primarily to promote industrial peace through encouragement of
collective bargaining. Any undue delay in the selection of a bargaining representative can hardly be
said to contribute to that end.
The CLU claims that it is the sole and exclusive bargaining agent on the strength of its prior
collective bargaining history (Democratic Labor Assn. vs. Cebu Stevedoring, L-10321, Feb. 28,
1958); the MME claims that it is the one that should be recognized on the basis of the will of the
employees (Democratic Labor Assn. vs. Cebu Stevedoring, supra) manifested in the secret ballot
election held on March 22, 1965 in favor of the MME as their sole and exclusive bargaining agent,
which collective will should not be brushed aside lightly. Like the CLU, the MME claims that its
majority status should be presumed to continue up to the present time and for as long as the
question has not been finally resolved (NLRB vs. International Furniture Co., 212 F. 2d 431; The
Celanese Corporation of America, 95 NLRB 664).
Against the presumption of continued majority status, however, is the rule that such majority status
does not continue forever "especially in face of an assertion and offer of proof to the contrary"
(Steward Die Casting Corp. vs. National Labor Relations Board [1940; CCA 8th] 114 F. 2d, 849 [writ
of certiorari denied in (1941)], 312 US 680; 85 L ed 1119, 61 S. Ct. 449), or "in view of altered
circumstances which have likely occurred in the interim" (Reliance Mfg. Co. vs. National Labor
Relations Board [1941; CCA 8th] 125 F 2d, 311), or "by a change in the conditions which
demonstrates that a shift in sentiment actually exists among the employees, and is caused by other
factors than the employer's refusal to bargain collectively" (National Labor Relations Board vs. P.
Lorillard Co. [1941; CCA 6th] 117 F. 2d 921). It would seem then that the burden of coming forward
with proof of majority status is upon the union asserting it.
Against the claim of the MME that it represents the will of the majority of the rank and file employees
at the Pandacan Terminal unit, is the manifestation, advanced with vehemence, of both the CLU and
the ESSO that after the secret ballot election held on March 22, 1965, the employee composition
has substantially changed because a great number of the employees and laborers in the Pandacan
Terminal unit have left their employment, retired, or been compulsorily laid off with the approval of
the CIR. On its part, ESSO further claims that the salient facts obtaining in the two cases before us
have been so altered by the lapse of time and by developments shaped and brought about by the
parties themselves, that "nothing will be gained if an altered factual situation is compelled to await a
decision applicable to an entirely different set of facts." (See ESSO opposition to the motion for
issuance of a writ of preliminary injunction, filed on October 20, 1966).
The above conflicting assertions are not based on any evidence of record, but they are nevertheless
assertions formally and solemnly made and therefore cannot be ignored.
But precisely because the record is barren of evidence upon which this Court may properly reach a
definitive determination as to which of the two unions should be upheld, at this time, as the sole and

definitive determination as to which of the two unions should be upheld, at this time, as the sole and
exclusive bargaining agent, this Court will not even begin to attempt to resolve the problem in favor
of one or the other labor union.
By express mandate of law, the CIR is empowered to investigate controversies concerning the
matter of representation of labor in its dealings with management, and, depending upon the results
of its investigation, thereafter to certify to the parties the name of the labor organization that, in
proper proceedings, has been selected to act as the appropriate bargaining unit (sec. 12-[b],
Industrial Peace Act).
UPON THE FOREGOING PREMISES, this Court is constrained to remand, as it hereby remands,
this case to the Court of Industrial Relations, with instructions that it exert and exercise, without
delay, the powers conferred upon it by law, and take such actions and issue such orders as the
environmental circumstances will accordingly warrant.
Concepcion, C.J., Reyes, J.B.L., Dizon, Regala, Makalintal, Bengzon, J.P., Zaldivar and Sanchez,
JJ., concur.
Barrera, J., is on leave.
Pasted from <http://www.lawphil.net/judjuris/juri1966/nov1966/gr_l-24320_1966.html>

National Congress Union v. CIR
12:47 AM

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 89609 January 27, 1992

NATIONAL CONGRESS OF UNIONS IN THE SUGAR INDUSTRY OF THE PHILIPPINES
(NACUSIP)-TUCP,petitioner,
vs.
HON. PURA FERRER-CALLEJA, in her capacity as Director of the Bureau of Labor Relations;
and the NATIONAL FEDERATION OF SUGAR WORKERS (NFSW)-FGT-KMU, respondents.
Zoilo V. De la Cruz, Jr., Beethoven R. Buenaventura and Pedro E. Jimenez for petitioner.
Manlapao, Drilon, Ymballa and Chavez for private respondent.
MEDIALDEA, J.:
This is a petition for certiorari seeking the nullification of the resolution issued by the respondent
Director of the Bureau of Labor Relations Pura Ferrer-Calleja dated June 26, 1989 setting aside the
order of the Med-Arbiter dated February 8, 1989 denying the motion to dismiss the petition and
directing the conduct of a certification election among the rank and file employees or workers of the
Dacongcogon Sugar and Rice Milling Co. situated at Kabankalan, Negros Occidental.
The antecedent facts giving rise to the controversy at bar are as follows:
Petitioner National Congress of Unions in the Sugar Industry of the Philippines (NACUSIP-TUCP) is
a legitimate national labor organization duly registered with the Department of Labor and
Employment. Respondent Honorable Pura Ferrer-Calleja is impleaded in her official capacity as the
Director of the Bureau of Labor Relations of the Department of Labor and Employment, while private
respondent National Federation of Sugar Workers (NFSW-FGT-KMU) is a labor organization duly
registered with the Department of Labor and Employment.
Dacongcogon Sugar and Rice Milling Co., Inc. (Dacongcogon) based in Kabankalan, Negros
Occidental employs about five hundred (500) workers during milling season and about three
hundred (300) on off-milling season.
On November 14, 1984, private respondent NFSW-FGT-KMU and employer Dacongcogon entered
into a collective bargaining agreement (CBA) for a term of three (3) years, which was to expire on
November 14, 1987.
When the CBA expired, private respondent NFSW-FGT-KMU and Dacongcogon negotiated for its
renewal. The CBA was extended for another three (3) years with reservation to negotiate for its
amendment, particularly on wage increases, hours of work, and other terms and conditions of
employment.
However, a deadlock in negotiation ensued on the matter of wage increases and optional retirement.
In order to obviate friction and tension, the parties agreed on a suspension to provide a cooling-off
period to give them time to evaluate and further study their positions. Hence, a Labor Management
Council was set up and convened, with a representative of the Department of Labor and
Employment, acting as chairman, to resolve the issues.
On December 5, 1988, petitioner NACUSIP-TUCP filed a petition for direct certification or
certification election among the rank and file workers of Dacongcogon.
On January 27, 1989, private respondent NFSW-FGT-KMU moved to dismiss the petition on the
following grounds, to wit:
I
The Petition was filed out of time;
II
There is a deadlocked (sic) of CBA negotiation between forced intervenor and respondent-central.
(Rollo, p. 25)
On February 6, 1989, Dacongcogon filed an answer praying that the petition be dismissed.
By an order dated February 8, 1989, the Med-Arbiter denied the motion to dismiss filed by private
respondent NFSW-FGT-KMU and directed the conduct of certification election among the rank and
file workers of Dacongcogon, the dispositive portion of which provides as follows:
WHEREFORE, premises considered, the Motion to Dismiss the present petition is, as it is hereby
DENIED. Let therefore a certification election among the rank and file employees/workers of the

DENIED. Let therefore a certification election among the rank and file employees/workers of the
Dacongcogon Sugar and Rice Milling Co., situated at Kabankalan, Neg. Occ., be conducted with the
following choices:
(1) National Congress of Unions in the Sugar Industry of the Philippines (NACUSIP-TUCP);
(2) National Federation of Sugar Workers (NFSW);
(3) No Union.
The designated Representation Officer is hereby directed to call the parties for a pre-election
conference to thresh out the mechanics of the election and to conduct and supervise the same
within twenty (20) days from receipt by the parties of this Order. The latest payroll shall be used to
determine the list of qualified voters.
SO ORDERED. (Rollo, p. 34)
On February 9, 1989, private respondent filed a motion for reconsideration and/or appeal alleging
that the Honorable Med-Arbiter misapprehended the facts and the law applicable amounting to gross
incompetence. Hence, private respondent prayed that the order of the Med-Arbiter be set aside and
the motion to dismiss be reconsidered.
On February 27, 1989, petitioner filed its opposition to the motion for reconsideration praying that the
motion for reconsideration and/or appeal be denied for lack of merit.
On June 26, 1989, respondent Director of the Bureau of Labor Relations rendered a resolution
reversing the order of the Med-Arbiter, to wit:
WHEREFORE, premises considered, the Order of the Med-Arbiter dated 8 February 1989 is hereby
set aside and vacated, and a new one issued dismissing the above-entitled petition for being filed
out of time.
SO ORDERED. (Rollo, p. 46)
Hence, this petition raising four (4) issues, to wit:

I. RESPONDENT HON. PURA FERRER-CALLEJA, IN HER CAPACITY AS DIRECTOR OF THE
BUREAU OF LABOR RELATIONS, COMMITTED GRAVE ABUSE OF DISCRETION IN
RENDERING HER RESOLUTION DATED 26 JUNE 1989 REVERSING THE ORDER DATED
FEBRUARY 8, 1989 OF MED-ARBITER FELIZARDO SERAPIO.
II. THAT THE AFORESAID RESOLUTION DATED 26 JUNE 1989 OF RESPONDENT PURA
FERRER-CALLEJA IS CONTRARY TO LAW AND JURISPRUDENCE.
III. THAT THE AFORESAID RESOLUTION DATED 26 JUNE 1989 OF RESPONDENT DIRECTOR
PURA FERRER-CALLEJA DENIES THE RANK AND FILE EMPLOYEES OF THE
DACONGCOGON SUGAR & RICE MILLING COMPANY, AND THE HEREIN PETITIONER
NACUSIP-TUCP, THEIR LEGAL AND CONSTITUTIONAL RIGHTS.
IV. THAT RESPONDENT DIRECTOR PURA FERRER-CALLEJA, IN RENDERING HER SAID
RESOLUTION DATED 26 JUNE 1989 WAS BIASED AGAINST PETITIONER NACUSIP-TUCP.
(Rollo,
p. 2)
The controversy boils down to the sole issue of whether or not a petition for certification election may
be filed after the 60-day freedom period.
Petitioner maintains that respondent Director Calleja committed grave abuse of discretion amounting
to excess of jurisdiction in rendering the resolution dated June 26, 1989 setting aside, vacating and
reversing the order dated February 8, 1989 of Med-Arbiter Serapio, in the following manner:
1) by setting aside and vacating the aforesaid Order dated February 8, 1989 of Med-Arbiter
Felizardo Serapio and in effect dismissing the Petition for Direct or Certification Election of Petitioner
NACUSIP-TUCP (Annex "A" hereof) without strong valid, legal and factual basis;
2) by giving a very strict and limited interpretation of the provisions of Section 6, Rule V, Book V of
the Implementing Rules and Regulations of the Labor Code, as amended, knowing, as she does,
that the Labor Code, being a social legislation, should be liberally interpreted to afford the workers
the opportunity to exercise their legitimate legal and constitutional rights to self-organization and to
free collective bargaining;
3) by issuing her questioned Resolution of June 26, 1989 knowing fully well that upon the effectivity
of Rep. Act No. 6715 on 21 March 1989 she had no longer any appellate powers over decisions of
Med-Arbiters in cases of representation issues or certification elections;
4) by ignoring intentionally the applicable ruling of the Honorable Supreme Court in the case
ofKapisanan ng Mga Manggagawa sa La Suerte-FOITAF vs. Noriel, L-45475, June 20, 1977;
5) by clearly failing to appreciate the significance (sic) of the fact that for more than four (4) years
there has been no certification election involving the rank and file workers of the Company; and,
6) by frustrating the legitimate desire and will of the workers of the Company to determine their sole
and exclusive collective bargaining representative through secret balloting. (Rollo, pp. 9-10)

and exclusive collective bargaining representative through secret balloting. (Rollo, pp. 9-10)
However, the public respondent through the Solicitor General stresses that the petition for
certification election was filed out of time. The records of the CBA at the Collective Agreements
Division (CAD) of the Bureau of Labor Relations show that the CBA between Dacongcogon and
private respondent NFSW-FGT-KMU had expired on November 14, 1987, hence, the petition for
certification election was filed too late, that is, a period of more than one (1) year after the CBA
expired.
The public respondent maintains that Section 6 of the Rules Implementing Executive Order No. 111
commands that the petition for certification election must be filed within the last sixty (60) days of the
CBA and further reiterates and warns that any petition filed outside the 60-day freedom period "shall
be dismissed outright." Moreover, Section 3, Rule V, Book V of the Rules Implementing the Labor
Code enjoins the filing of a representation question, if before a petition for certification election is
filed, a bargaining deadlock to which the bargaining agent is a party is submitted for conciliation or
arbitration.
Finally, the public respondent emphasizes that respondent Director has jurisdiction to entertain the
motion for reconsideration interposed by respondent union from the order of the Med-Arbiter
directing a certification election. Public respondent contends that Section 25 of Republic Act No.
6715 is not applicable, "(f)irstly, there is as yet no rule or regulation established by the Secretary for
the conduct of elections among the rank and file of employer Dacongcogon; (s)econdly, even the
mechanics of the election which had to be first laid out, as directed in the Order dated February 8,
1989 of the Med-Arbiter, was aborted by the appeal therefrom interposed by respondent union; and
(t)hirdly, petitioner is estopped to question the jurisdiction of respondent Director after it filed its
opposition to respondent union's Motion for Reconsideration (Annex
'F,' Petition) and without, as will be seen, in any way assailing such jurisdiction. . . ." (Rollo, p.66)
We find the petition devoid of merit.
A careful perusal of Rule V, Section 6, Book V of the Rules Implementing the Labor Code, as
amended by the rules implementing Executive Order No. 111 provides that:
Sec. 6. Procedure — . . .
In a petition involving an organized establishment or enterprise where the majority status of the
incumbent collective bargaining union is questioned by a legitimate labor organization, the Med-
Arbiter shall immediately order the conduct of a certification election if the petition is filed during the
last sixty (60) days of the collective bargaining agreement. Any petition filed before or after the sixty-
day freedom period shall be dismissed outright.
The sixty-day freedom period based on the original collective bargaining agreement shall not be
affected by any amendment, extension or renewal of the collective bargaining agreement for
purposes of certification election.
xxx xxx xxx
The clear mandate of the aforequoted section is that the petition for certification election filed by the
petitioner NACUSIP-TUCP should be dismissed outright, having been filed outside the 60-day
freedom period or a period of more than one (1) year after the CBA expired.
It is a rule in this jurisdiction that only a certified collective bargaining agreement — i.e., an
agreement duly certified by the BLR may serve as a bar to certification elections. (Philippine
Association of Free Labor Unions (PAFLU) v. Estrella, G.R. No. 45323, February 20, 1989, 170
SCRA 378, 382) It is noteworthy that the Bureau of Labor Relations duly certified the November 14,
1984 collective bargaining agreement. Hence, the contract-bar rule as embodied in Section 3, Rule
V, Book V of the rules implementing the Labor Code is applicable.
This rule simply provides that a petition for certification election or a motion for intervention can only
be entertained within sixty days prior to the expiry date of an existing collective bargaining
agreement. Otherwise put, the rule prohibits the filing of a petition for certification election during the
existence of a collective bargaining agreement except within the freedom period, as it is called, when
the said agreement is about to expire. The purpose, obviously, is to ensure stability in the
relationships of the workers and the management by preventing frequent modifications of any
collective bargaining agreement earlier entered into by them in good faith and for the stipulated
original period. (Associated Labor Unions (ALU-TUCP) v. Trajano, G.R. No. 77539, April 12, 1989,
172 SCRA 49, 57 citing Associated Trade Unions (ATU v. Trajano, G.R. No. L-75321, 20 June 1988,
162 SCRA 318, 322-323)
Anent the petitioner's contention that since the expiration of the CBA in 1987 private respondent
NFSW-FGT-KMU and Dacongcogon had not concluded a new CBA, We need only to stress what

NFSW-FGT-KMU and Dacongcogon had not concluded a new CBA, We need only to stress what
was held in the case of Lopez Sugar Corporation v. Federation of Free Workers, Philippine Labor
Union Association (G.R. No. 75700-01, 30 August 1990, 189 SCRA 179, 191) quoting Article 253 of
the Labor Code that "(i)t shall be the duty of both parties to keep the status quo and to continue in
full force and effect the terms and conditions of the existing agreement during the 60-day period
and/or until a new agreement is reached by the parties." Despite the lapse of the formal effectivity of
the CBA the law still considers the same as continuing in force and effect until a new CBA shall have
been validly executed. Hence, the contract bar rule still applies.
Besides, it should be emphasized that Dacongcogon, in its answer stated that the CBA was
extended for another three (3) years and that the deadlock was submitted to the Labor Management
Council.
All premises considered, the Court is convinced that the respondent Director of the Bureau of Labor
Relations did not commit grave abuse of discretion in reversing the order of the Med-Arbiter.
ACCORDINGLY, the petition is DENIED and the resolution of the respondent Director of the Bureau
of Labor Relations is hereby AFFIRMED.
SO ORDERED.
Narvasa, C.J., Cruz and Griño-Aquino, JJ., concur

Standard Chartered Bank Employees v. Confessor
12:47 AM
STANDARD CHARTERED BANK EMPLOYEES UNION V CONFESOR

432 SCRA 308
CALLEJO; June 16, 2004
FACTS
- Standard Chartered Bank is a foreign banking corporation doing business in the Philippines. The exclusive bargaining agent of the
rank and file employees of the Bank is the Standard Chartered Bank Employees Union
- The Union sought to renegotiate the terms of the CBA and initiated the negotiations.
- Through its President, Eddie L. Divinagracia, it sent a letter containing its proposals covering political and economic provis ions.
- The Bank, took note of the Union’s proposals. The Bank attached its counter-proposal to the non-economic provisions proposed by
the Union.
- Before the commencement of the negotiation, the Union, through Divinagracia, suggested to the Bank’s Human Resource
Manager and head of the negotiating panel, Cielito Diokno, that the bank law yers should be excluded from the negotiating team.
The Bank acceded.
- Meanw hile, Diokno suggested to Divinagracia that Jose P. Umali, Jr., the President of the National Union of Bank Employees
(NUBE), the federation to w hich the Union w as affiliated, be excluded from the Union’s negotiating panel. How ever, Umali w as
retained as a member thereof.
- The parties met and set the ground rules for the negotiation. Diokno suggested that the negotiation be kept a “family affair.”
- Even during the final reading of the, there w ere still non-economic provisions on w hich the Union and the Bank could not agree.
Both parties agreed to place the notation “DEFERRED/DEADLOCKED.”
- The negotiation for economic provisions commenced. Except for the provisions on signing bonus and uniforms, the Union and the
Bank failed to agree on the remaining economic provisions of the CBA. The Union declared a deadlock and filed a Notice of Strike
before the National Conciliation and Mediation Board
- The Bank filed a complaint for Unfair Labor Practice (ULP) and Damages before the NLRC in Manila alleging that the Union
violated its duty to bargain, as it did not bargain in good faith. It contended that the Union demanded “sky high economic demands,”
indicative of blue-sky bargaining.
- Then Secretary of Labor and Employment (SOLE) Nieves R. Confesor, assumed jurisdiction over the labor dispute and issued an
Order dismissing the Bank and the Union’s charges for unfair labor practice
- The Union filed a motion for reconsideration w ith clarification, while the Bank filed a motion for reconsideration. The SOLE issued a
Resolution denying the motions. The Union filed a second motion for reconsideration, w hich was, likew ise, denied
- The Union filed this petition
- The Union alleges that the Bank violated its duty to bargain; hence, committed ULP under Article 248(g) w hen it engaged in
surface bargaining. It alleged that the Bank just w ent through the motions of bargaining w ithout any intent of reaching an agreement,
as evident in the Bank’s counter-proposals.
ISSUE
WON the SOLE committed grave abuse of discretion amounting to lack of jurisdiction in dismissing the union’s charge of unfair labor
practice.
HELD
NO.
- Surface bargaining: “going through the motions of negotiating” w ithout any legal intent to reach an agreement.
- The resolution of surface bargaining allegations never presents an easy issue. The determination of whether a party has engaged
in unlawful surface bargaining is usually a difficult one because it involves, at bottom, a question of the intent of the party in
question, and usually such intent can only be inferred from the totality of the challenged party’s conduct both at and away from the
bargaining table. It involves the question of w hether an employer’s conduct demonstrates an unw illingness to bargain in good faith
or is merely hard bargaining.
- The minutes of meetings do not show that the Bank had any intention of violating its duty to bargain w ith the Union. Records show
that after the Union sent its proposal to the Bank, the latter replied w ith a list of its counter-proposals. Thereafter, meetings w ere set
for the settlement of their differences. The minutes of the meetings show that both the Bank and the Union exchanged economic
and non-economic proposals and counter-proposals.
- The Union has not been able to show that the Bank had done acts, both at and aw ay from the bargaining table, w hich tend to show
that it did not w ant to reach an agreement w ith the Union or to settle the differences between it and the Union. Admittedly, the
parties w ere not able to agree and reached a deadlock. How ever, it is herein emphasized that the duty to bargain “does not compel
either party to agree to a proposal or require the making of a concession.” Hence, the parties’ failure to agree did not amount to ULP
under Article 248(g) for violation of the duty to bargain.
- The inference that respondents did not refuse to bargain collectively w ith the complaining union because they accepted some of
the demands w hile they refused the others even leaving open other demands for future discussion is correct, especially so when
those demands w ere discussed at a meeting called by respondents themselves precisely in view of the letter sent by the union
- The Court also does not agree that the Union is guilty of ULP for engaging in blue-sky bargaining or making exaggerated or
unreasonable proposals.
- The Bank failed to show that the economic demands made by the Union w ere exaggerated or unreasonable. The minutes of the
meeting show that the Union based its economic proposals on data of rank and file employees and the prevailing economic benefits
received by bank employees from other foreign banks doing business in the Philippines and other branches of the Bank in the Asian
region.
Disposition Resolutions of the SOLE are AFFIRMED.
Pasted from <file:///C:\Documents%20and%20Settings\Charisse%20Mae%20Mendoza\My%20Documents\5y,%201s\Labor%

20Arb\COMPILED%20LABOR2-disini\labor%20rd5%20compiled.doc>

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 114974 June 16, 2004
STANDARD CHARTERED BANK EMPLOYEES UNION (NUBE), petitioner,
vs.
The Honorable MA. NIEVES R. CONFESOR, in her capacity as SECRETARY OF LABOR AND
EMPLOYMENT; and the STANDARD CHARTERED BANK, respondents.
DEC I SI O N
CALLEJO, SR., J.:
This is a petition for certiorari under Rule 65 of the Rules of Court filed by the Standard Chartered
Bank Employees Union, seeking the nullification of the October 29, 1993 Order 1 of then Secretary of
Labor and Employment Nieves R. Confesor and her resolutions dated December 16, 1993 and
February 10, 1994.
The Antecedents
Standard Chartered Bank (the Bank, for brevity) is a foreign banking corporation doing business in
the Philippines. The exclusive bargaining agent of the rank and file employees of the Bank is the
Standard Chartered Bank Employees Union (the Union, for brevity).
In August of 1990, the Bank and the Union signed a five-year collective bargaining agreement (CBA)
with a provision to renegotiate the terms thereof on the third year. Prior to the expiration of the three-
year period2 but within the sixty-day freedom period, the Union initiated the negotiations. On
February 18, 1993, the Union, through its President, Eddie L. Divinagracia, sent a letter 3 containing
its proposals4 covering political provisions5 and thirty-four (34) economic provisions.6 Included therein
was a list of the names of the members of the Union‘s negotiating panel.7
In a Letter dated February 24, 1993, the Bank, through its Country Manager Peter H. Harris, took
note of the Union‘s proposals. The Bank attached its counter-proposal to the non-economic
provisions proposed by the Union.8 The Bank posited that it would be in a better position to present
its counter-proposals on the economic items after the Union had presented its justifications for the
economic proposals.9 The Bank, likewise, listed the members of its negotiating panel.10 The parties
agreed to set meetings to settle their differences on the proposed CBA.
Before the commencement of the negotiation, the Union, through Divinagracia, suggested to the
Bank‘s Human Resource Manager and head of the negotiating panel, Cielito Diokno, that the bank
lawyers should be excluded from the negotiating team. The Bank acceded. 11 Meanwhile, Diokno
suggested to Divinagracia that Jose P. Umali, Jr., the President of the National Union of Bank
Employees (NUBE), the federation to which the Union was affiliated, be excluded from the Union‘s
negotiating panel.12 However, Umali was retained as a member thereof.
On March 12, 1993, the parties met and set the ground rules for the negotiation. Diokno suggested
that the negotiation be kept a "family affair." The proposed non-economic provisions of the CBA
were discussed first.13 Even during the final reading of the non-economic provisions on May 4, 1993,
there were still provisions on which the Union and the Bank could not agree. Temporarily, the
notation "DEFERRED" was placed therein. Towards the end of the meeting, the Union manifested
that the same should be changed to "DEADLOCKED" to indicate that such items remained
unresolved. Both parties agreed to place the notation "DEFERRED/DEADLOCKED."14
On May 18, 1993, the negotiation for economic provisions commenced. A presentation of the basis
of the Union‘s economic proposals was made. The next meeting, the Bank made a similar
presentation. Towards the end of the Bank‘s presentation, Umali requested the Bank to validate the
Union‘s "guestimates," especially the figures for the rank and file staff.15 In the succeeding meetings,
Umali chided the Bank for the insufficiency of its counter-proposal on the provisions on salary
increase, group hospitalization, death assistance and dental benefits. He reminded the Bank, how
the Union got what it wanted in 1987, and stated that if need be, the Union would go through the
same route to get what it wanted.16
Upon the Bank‘s insistence, the parties agreed to tackle the economic package item by item. Upon
the Union‘s suggestion, the Bank indicated which provisions it would accept, reject, retain and agree
to discuss.17 The Bank suggested that the Union prioritize its economic proposals, considering that
many of such economic provisions remained unresolved. The Union, however, demanded that the
Bank make a revised itemized proposal.
In the succeeding meetings, the Union made the following proposals:
Wage Increase:
1st Year – Reduced from 45% to 40%

1st Year – Reduced from 45% to 40%
2nd Year - Retain at 20%
Total = 60%
Group Hospitalization Insurance:
Maximum disability benefit reduced from P75,000.00 to P60,000.00 per illness annually
Death Assistance:
For the employee – Reduced from P50,000.00 to P45,000.00
For Immediate Family Member – Reduced from P30,000.00 to P25,000.00
Dental and all others – No change from the original demand. 18
In the morning of the June 15, 1993 meeting, the Union suggested that if the Bank would not make
the necessary revisions on its counter-proposal, it would be best to seek a third party
assistance.19 After the break, the Bank presented its revised counter-proposal20 as follows:
Wage Increase : 1st Year – from P1,000 to P1,050.00
2nd Year – P800.00 – no change
Group Hospitalization Insurance
From: P35,000.00 per illness
To : P35,000.00 per illness per year
Death Assistance – For employee
From: P20,000.00
To : P25,000.00
Dental Retainer – Original offer remains the same21
The Union, for its part, made the following counter-proposal:
Wage Increase: 1st Year - 40%
2nd Year - 19.5%
Group Hospitalization Insurance
From: P60,000.00 per year
To : P50,000.00 per year
Dental:
Temporary Filling/ – P150.00
Tooth Extraction
Permanent Filling – 200.00
Prophylaxis – 250.00
Root Canal – From P2,000 per tooth
To: 1,800.00 per tooth
Death Assistance:
For Employees: From P45,000.00 to P40,000.00
For Immediate Family Member: From P25,000.00 to P20,000.00.22
The Union‘s original proposals, aside from the above-quoted, remained the same.
Another set of counter-offer followed:
Management Union
Wage Increase
1st Year – P1,050.00 40%
2nd Year - 850.00 19.0%23
Diokno stated that, in order for the Bank to make a better offer, the Union should clearly identify what
it wanted to be included in the total economic package. Umali replied that it was impossible to do so
because the Bank’s counter-proposal was unacceptable. He furthered asserted that it would have
been easier to bargain if the atmosphere was the same as before, where both panels trusted each
other. Diokno requested the Union panel to refrain from involving personalities and to instead focus
on the negotiations.24 He suggested that in order to break the impasse, the Union should prioritize
the items it wanted to iron out. Divinagracia stated that the Bank should make the first move and
make a list of items it wanted to be included in the economic package. Except for the provisions on
signing bonus and uniforms, the Union and the Bank failed to agree on the remaining economic
provisions of the CBA. The Union declared a deadlock25 and filed a Notice of Strike before the
National Conciliation and Mediation Board (NCMB) on June 21, 1993, docketed as NCMB-NCR-
NS-06-380-93.26
On the other hand, the Bank filed a complaint for Unfair Labor Practice (ULP) and Damages before
the Arbitration Branch of the National Labor Relations Commission (NLRC) in Manila, docketed as
NLRC Case No. 00-06-04191-93 against the Union on June 28, 1993. The Bank alleged that the
Union violated its duty to bargain, as it did not bargain in good faith. It contended that the Union
demanded "sky high economic demands," indicative of blue-sky bargaining.27 Further, the Union
violated its no strike- no lockout clause by filing a notice of strike before the NCMB. Considering that

violated its no strike- no lockout clause by filing a notice of strike before the NCMB. Considering that
the filing of notice of strike was an illegal act, the Union officers should be dismissed. Finally, the
Bank alleged that as a consequence of the illegal act, the Bank suffered nominal and actual
damages and was forced to litigate and hire the services of the lawyer. 28
On July 21, 1993, then Secretary of Labor and Employment (SOLE) Nieves R. Confesor, pursuant to
Article 263(g) of the Labor Code, issued an Order assuming jurisdiction over the labor dispute at the
Bank. The complaint for ULP filed by the Bank before the NLRC was consolidated with the complaint
over which the SOLE assumed jurisdiction. After the parties submitted their respective position
papers, the SOLE issued an Order on October 29, 1993, the dispositive portion of which is herein
quoted:
WHEREFORE, the Standard Chartered Bank and the Standard Chartered Bank Employees Union –
NUBE are hereby ordered to execute a collective bargaining agreement incorporating the
dispositions contained herein. The CBA shall be retroactive to 01 April 1993 and shall remain
effective for two years thereafter, or until such time as a new CBA has superseded it. All provisions
in the expired CBA not expressly modified or not passed upon herein are deemed retained while all
new provisions which are being demanded by either party are deemed denied, but without prejudice
to such agreements as the parties may have arrived at in the meantime.
The Bank‘s charge for unfair labor practice which it originally filed with the NLRC as NLRC-NCR
Case No. 00-06-04191-93 but which is deemed consolidated herein, is dismissed for lack of merit.
On the other hand, the Union‘s charge for unfair labor practice is similarly dismissed.
Let a copy of this order be furnished the Labor Arbiter in whose sala NLRC-NCR Case No.
00-06-04191-93 is pending for his guidance and appropriate action. 29
The SOLE gave the following economic awards:
1. Wage Increase:
a) To be incorporated to present salary rates:
Fourth year : 7% of basic monthly salary
Fifth year : 5% of basic monthly salary based on the 4th year adjusted salary
b) Additional fixed amount:
Fourth year : P600.00 per month
Fifth year : P400.00 per month
2. Group Insurance
a) Hospitalization : P45,000.00
b) Life : P130,000.00
c) Accident : P130,000.00
3. Medicine Allowance
Fourth year : P5,500.00
Fifth year : P6,000.00
4. Dental Benefits
Provision of dental retainer as proposed by the Bank, but without diminishing existing benefits
5. Optical Allowance
Fourth year: P2,000.00
Fifth year : P2,500.00
6. Death Assistance
a) Employee : P30,000.00
b) Immediate Family Member : P5,000.00
7. Emergency Leave – Five (5) days for each contingency
8. Loans
a) Car Loan : P200,000.00
b) Housing Loan : It cannot be denied that the costs attendant to having one‘s own home have
tremendously gone up. The need, therefore, to improve on this benefit cannot be overemphasized.
Thus, the management is urged to increase the existing and allowable housing loan that the Bank
extends to its employees to an amount that will give meaning and substance to this CBA benefit.30
The SOLE dismissed the charges of ULP of both the Union and the Bank, explaining that both
parties failed to substantiate their claims. Citing National Labor Union v. Insular-Yebana Tobacco
Corporation,31 the SOLE stated that ULP charges would prosper only if shown to have directly
prejudiced the public interest.
Dissatisfied, the Union filed a motion for reconsideration with clarification, while the Bank filed a
motion for reconsideration. On December 16, 1993, the SOLE issued a Resolution denying the
motions. The Union filed a second motion for reconsideration, which was, likewise, denied on
February 10, 1994.
On March 22, 1994, the Bank and the Union signed the CBA. 32 Immediately thereafter, the wage
increase was effected and the signing bonuses based on the increased wage were distributed to the
employees covered by the CBA.

employees covered by the CBA.
The Present Petition
On April 28, 1994, the Union filed this petition for certiorari under Rule 65 of the Rules of Procedure
alleging as follows:
A. RESPONDENT HONORABLE SECRETARY COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OF JURISDICT ION IN DISMISSING THE UNION‘S CHARGE OF UNFAIR
LABOR PRACTICE IN VIEW OF THE CLEAR EVIDENCE OF RECORD AND ADMISSIONS
PROVING THE UNFAIR LABOR PRACTICES CHARGED.33
B. RESPONDENT HONORABLE SECRETARY COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OF JURISDICT ION IN FAILING TO RULE ON OTHER UNFAIR LABOR
PRACTICES CHARGED.34
C. RESPONDENT HONORABLE SECRETARY COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OF JURISDICT ION IN DISMISSING THE CHARGES OF UNFAIR LABOR
PRACTICES ON THE GROUND THAT NO PROOF OF INJURY TO THE PUBLIC INTEREST WAS
PRESENTED.35
The Union alleges that the SOLE acted with grave abuse of discretion amounting to lack or excess
of jurisdiction when it found that the Bank did not commit unfair labor practice when it interfered with
the Union‘s choice of negotiator. It argued that, Diokno‘s suggestion that the negotiation be limited
as a "family affair" was tantamount to suggesting that Federation President Jose Umali, Jr. be
excluded from the Union‘s negotiating panel. It further argued that contrary to the ruling of the public
respondent, damage or injury to the public interest need not be present in order for unfair labor
practice to prosper.
The Union, likewise, pointed out that the public respondent failed to rule on the ULP charges arising
from the Bank‘s surface bargaining. The Union contended that the Bank merely went through the
motions of collective bargaining without the intent to reach an agreement, and made bad faith
proposals when it announced that the parties should begin from a clean slate. It argued that the
Bank opened the political provisions "up for grabs," which had the effect of diminishing or obliterating
the gains that the Union had made.
The Union also accused the Bank of refusing to disclose material and necessary data, even after a
request was made by the Union to validate its "guestimates."
In its Comment, the Bank prayed that the petition be dismissed as the Union was estopped,
considering that it signed the Collective Bargaining Agreement (CBA) on April 22, 1994. It asserted
that contrary to the Union‘s allegations, it was the Union that committed ULP when negotiator Jose
Umali, Jr. hurled invectives at the Bank‘s head negotiator, Cielito Diokno, and demanded that she be
excluded from the Bank‘s negotiating team. Moreover, the Union engaged in blue-sky
bargaining and isolated the no strike-no lockout clause of the existing CBA.
The Office of the Solicitor General, in representation of the public respondent, prayed that the
petition be dismissed. It asserted that the Union failed to prove its ULP charges and that the public
respondent did not commit any grave abuse of discretion in issuing the assailed order and
resolutions.
The Issues
The issues presented for resolution are the following: (a) whether or not the Union was able to
substantiate its claim of unfair labor practice against the Bank arising from the latter‘s alleged
"interference" with its choice of negotiator; surface bargaining; making bad faith non-economic
proposals; and refusal to furnish the Union with copies of the relevant data; (b) whether or not the
public respondent acted with grave abuse of discretion amounting to lack or excess of jurisdiction
when she issued the assailed order and resolutions; and, (c) whether or not the petitioner is
estopped from filing the instant action.
The Court’s Ruling
The petition is bereft of merit.
"Interference" under Article
248 (a) of the Labor Code
The petitioner asserts that the private respondent committed ULP, i.e., interference in the selection
of the Union‘s negotiating panel, when Cielito Diokno, the Bank‘s Human Resource Manager,
suggested to the Union‘s President Eddie L. Divinagracia that Jose P. Umali, Jr., President of the
NUBE, be excluded from the Union‘s negotiating panel. In support of its claim, Divinagracia
executed an affidavit, stating that prior to the commencement of the negotiation, Diokno approached
him and suggested the exclusion of Umali from the Union‘s negotiating panel, and that during the
first meeting, Diokno stated that the negotiation be kept a "family affair."
Citing the cases of U.S. Postal Service36 and Harley Davidson Motor Co., Inc., AMF,37 the Union
claims that interference in the choice of the Union‘s bargaining panel is tantamount to ULP.
In the aforecited cases, the alleged ULP was based on the employer‘s violation of Section 8(a)(1)
and (5) of the National Labor Relations Act (NLRA),38 which pertain to the interference, restraint or

and (5) of the National Labor Relations Act (NLRA), 38 which pertain to the interference, restraint or
coercion of the employer in the employees‘ exercise of their rights to self-organization and to bargain
collectively through representatives of their own choosing; and the refusal of the employer to bargain
collectively with the employees‘ representatives. In both cases, the National Labor Relations Board
held that upon the employer‘s refusal to engage in negotiations with the Union for collective-
bargaining contract when the Union includes a person who is not an employee, or one who is a
member or an official of other labororganizations, such employer is engaged in unfair labor practice
under Section 8(a)(1) and (5) of the NLRA.
The Union further cited the case of Insular Life Assurance Co., Ltd. Employees Association – NATU
vs. Insular Life Assurance Co. Ltd.,39 wherein this Court said that the test of whether an employer
has interfered with and coerced employees in the exercise of their right to self-organization within
the meaning of subsection (a)(1) is whether the employer has engaged in conduct which it may
reasonably be said, tends to interfere with the free exercise of employees‘ rights under Section 3 of
the Act.40 Further, it is not necessary that there be direct evidence that any employee was in fact
intimidated or coerced by statements of threats of the employer if there is a reasonable inference
that anti-union conduct of the employer does have an adverse effect on self-organization and
collective bargaining.41
Under the International Labor Organization Convention (ILO) No. 87 FREEDOM OF ASSOCIATION
AND PROTECTION OF THE RIGHT TO ORGANIZE to which the Philippines is a signatory,
"workers and employers, without distinction whatsoever, shall have the right to establish and, subject
only to the rules of the organization concerned, to job organizations of their own choosing without
previous authorization."42
Workers‘ and employers‘ organizations shall have the right to draw up their constitutions and rules,
to elect their representatives in full freedom to organize their administration and activities and to
formulate their programs.43 Article 2 of ILO Convention No. 98 pertaining to the Right to Organize
and Collective Bargaining, provides:
Article 2
1. Workers‘ and employers‘ organizations shall enjoy adequate protection against any acts or
interference by each other or each other‘s agents or members in their establishment, functioning or
administration.
2. In particular, acts which are designed to promote the establishment of workers‘ organizations
under the domination of employers or employers‘ organizations or to support workers‘ organizations
by financial or other means, with the object of placing such organizations under the control of
employers or employers‘ organizations within the meaning of this Article.
The aforcited ILO Conventions are incorporated in our Labor Code, particularly in Article 243 thereof,
which provides:
ART. 243. COVERAGE AND EMPLOYEES’ RIGHT TO SELF-ORGANIZATION. – All persons
employed in commercial, industrial and agricultural enterprises and in religious, charitable, medical
or educational institutions whether operating for profit or not, shall have the right to self-organization
and to form, join, or assist labor organizations of their own choosing for purposes of collective
bargaining. Ambulant, intermittent and itinerant workers, self-employed people, rural workers and
those without any definite employers may form labor organizations for their mutual aid and
protection.
and Articles 248 and 249 respecting ULP of employers and labor organizations.
The said ILO Conventions were ratified on December 29, 1953. However, even as early as the 1935
Constitution,44 the State had already expressly bestowed protection to labor as part of the general
provisions. The 1973 Constitution,45 on the other hand, declared it as a policy of the state to afford
protection to labor, specifying that the workers‘ rights to self-organization, collective bargaining,
security of tenure, and just and humane conditions of work would be assured. For its part, the 1987
Constitution, aside from making it a policy to "protect the rights of workers and promote their
welfare,"46 devotes an entire section, emphasizing its mandate to afford protection to labor, and
highlights "the principle of shared responsibility" between workers and employers to promote
industrial peace.47
Article 248(a) of the Labor Code, considers it an unfair labor practice when an employer interferes,
restrains or coerces employees in the exercise of their right to self-organization or the right to form
association. The right to self-organization necessarily includes the right to collective bargaining.
Parenthetically, if an employer interferes in the selection of its negotiators or coerces the Union to
exclude from its panel of negotiators a representative of the Union, and if it can be inferred that the
employer adopted the said act to yield adverse effects on the free exercise to right to self-
organization or on the right to collective bargaining of the employees, ULP under Article 248(a) in
connection with Article 243 of the Labor Code is committed.
In order to show that the employer committed ULP under the Labor Code, substantial evidence is
required to support the claim. Substantial evidence has been defined as such relevant evidence as a

required to support the claim. Substantial evidence has been defined as such relevant evidence as a
reasonable mind might accept as adequate to support a conclusion. 48 In the case at bar, the Union
bases its claim of interference on the alleged suggestions of Diokno to exclude Umali from the
Union‘s negotiating panel.
The circumstances that occurred during the negotiation do not show that the suggestion made by
Diokno to Divinagracia is an anti-union conduct from which it can be inferred that the Bank
consciously adopted such act to yield adverse effects on the free exercise of the right to self-
organization and collective bargaining of the employees, especially considering that such was
undertaken previous to the commencement of the negotiation and simultaneously with
Divinagracia‘s suggestion that the bank lawyers be excluded from its negotiating panel.
The records show that after the initiation of the collective bargaining process, with the inclusion of
Umali in the Union‘s negotiating panel, the negotiations pushed through. The complaint was made
only on August 16, 1993 after a deadlock was declared by the Union on June 15, 1993.
It is clear that such ULP charge was merely an afterthought. The accusation occurred after the
arguments and differences over the economic provisions became heated and the parties had
become frustrated. It happened after the parties started to involve personalities. As the public
respondent noted, passions may rise, and as a result, suggestions given under less adversarial
situations may be colored with unintended meanings.49 Such is what appears to have happened in
this case.
The Duty to Bargain
Collectively
If at all, the suggestion made by Diokno to Divinagracia should be construed as part of the normal
relations and innocent communications, which are all part of the friendly relations between the Union
and Bank.
The Union alleges that the Bank violated its duty to bargain; hence, committed ULP under Article
248(g) when it engaged in surface bargaining. It alleged that the Bank just went through the motions
of bargaining without any intent of reaching an agreement, as evident in the Bank‘s counter-
proposals. It explained that of the 34 economic provisions it made, the Bank only made 6 economic
counterproposals. Further, as borne by the minutes of the meetings, the Bank, after indicating the
economic provisions it had rejected, accepted, retained or were open for discussion, refused to
make a list of items it agreed to include in the economic package.
Surface bargaining is defined as "going through the motions of negotiating" without any legal intent
to reach an agreement.50 The resolution of surface bargaining allegations never presents an easy
issue. The determination of whether a party has engaged in unlawful surface bargaining is usually a
difficult one because it involves, at bottom, a question of the intent of the party in question, and
usually such intent can only be inferred from the totality of the challenged party‘s conduct both at
and away from the bargaining table. 51 It involves the question of whether an employer‘s conduct
demonstrates an unwillingness to bargain in good faith or is merely hard bargaining. 52
The minutes of meetings from March 12, 1993 to June 15, 1993 do not show that the Bank had any
intention of violating its duty to bargain with the Union. Records show that after the Union sent its
proposal to the Bank on February 17, 1993, the latter replied with a list of its counter-proposals on
February 24, 1993. Thereafter, meetings were set for the settlement of their differences. The
minutes of the meetings show that both the Bank and the Union exchanged economic and non-
economic proposals and counter-proposals.
The Union has not been able to show that the Bank had done acts, both at and away from the
bargaining table, which tend to show that it did not want to reach an agreement with the Union or to
settle the differences between it and the Union. Admittedly, the parties were not able to agree and
reached a deadlock. However, it is herein emphasized that the duty to bargain "does not compel
either party to agree to a proposal or require the making of a concession." 53 Hence, the parties‘
failure to agree did not amount to ULP under Article 248(g) for violation of the duty to bargain.
We can hardly dispute this finding, for it finds support in the evidence. The inference that
respondents did not refuse to bargain collectively with the complaining union because they accepted
some of the demands while they refused the others even leaving open other demands for future
discussion is correct, especially so when those demands were discussed at a meeting called by
respondents themselves precisely in view of the letter sent by the union on April 29, 1960… 54
In view of the finding of lack of ULP based on Article 248(g), the accusation that the Bank made bad-
faith provisions has no leg to stand on. The records show that the Bank‘s counterproposals on the
non-economic provisions or political provisions did not put "up for grabs" the entire work of the Union
and its predecessors. As can be gleaned from the Bank‘s counterproposal, there were many
provisions which it proposed to be retained. The revisions on the other provisions were made after
the parties had come to an agreement. Far from buttressing the Union‘s claim that the Bank made
bad-faith proposals on the non-economic provisions, all these, on the contrary, disprove such
allegations.

allegations.
We, likewise, find that the Union failed to substantiate its claim that the Bank refused to furnish the
information it needed.
While the refusal to furnish requested information is in itself an unfair labor practice, and also
supports the inference of surface bargaining, 55 in the case at bar, Umali, in a meeting dated May 18,
1993, requested the Bank to validate its guestimates on the data of the rank and file. However,
Umali failed to put his request in writing as provided for in Article 242(c) of the Labor Code:
Article 242. Rights of Legitimate Labor Organization…
(c) To be furnished by the employer, upon written request, with the annual audited financial
statements, including the balance sheet and the profit and loss statement, within thirty (30) calendar
days from the date of receipt of the request, after the union has been duly recognized by the
employer or certified as the sole and exclusive bargaining representatives of the employees in the
bargaining unit, or within sixty (60) calendar days before the expiration of the existing collective
bargaining agreement, or during the collective negotiation;
The Union, did not, as the Labor Code requires, send a written request for the issuance of a copy of
the data about the Bank‘s rank and file employees. Moreover, as alleged by the Union, the fact that
the Bank made use of the aforesaid guestimates, amounts to a validation of the data it had used in
its presentation.
No Grave Abuse of Discretion
On the Part of the Public Respondent
The special civil action for certiorari may be availed of when the tribunal, board, or officer exercising
judicial or quasi-judicial functions has acted without or in excess of jurisdiction and there is no appeal
or any plain, speedy, and adequate remedy in the ordinary course of law for the purpose of annulling
the proceeding.56 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. Mere abuse of discretion is not enough. 57
While it is true that a showing of prejudice to public interest is not a requisite for ULP charges to
prosper, it cannot be said that the public respondent acted in capricious and whimsical exercise of
judgment, equivalent to lack of jurisdiction or excess thereof. Neither was it shown that the public
respondent exercised its power in an arbitrary and despotic manner by reason of passion or
personal hostility.
Estoppel not Applicable
In the Case at Bar
The respondent Bank argues that the petitioner is estopped from raising the issue of ULP when it
signed the new CBA.
Article 1431 of the Civil Code provides:
Through estoppel an admission or representation is rendered conclusive upon the person making it,
and cannot be denied or disproved as against the person relying thereon.
A person, who by his deed or conduct has induced another to act in a particular manner, is barred
from adopting an inconsistent position, attitude or course of conduct that thereby causes loss or
injury to another.58
In the case, however, the approval of the CBA and the release of signing bonus do not necessarily
mean that the Union waived its ULP claim against the Bank during the past negotiations. After all,
the conclusion of the CBA was included in the order of the SOLE, while the signing bonus was
included in the CBA itself. Moreover, the Union twice filed a motion for reconsideration respecting its
ULP charges against the Bank before the SOLE.
The Union Did Not Engage
In Blue-Sky Bargaining
We, likewise, do not agree that the Union is guilty of ULP for engaging in blue-sky bargaining or
making exaggerated or unreasonable proposals. 59 The Bank failed to show that the economic
demands made by the Union were exaggerated or unreasonable. The minutes of the meeting show
that the Union based its economic proposals on data of rank and file employees and the prevailing
economic benefits received by bank employees from other foreign banks doing business in the
Philippines and other branches of the Bank in the Asian region.
In sum, we find that the public respondent did not act with grave abuse of discretion amounting to
lack or excess of jurisdiction when it issued the questioned order and resolutions. While the approval
of the CBA and the release of the signing bonus did not estop the Union from pursuing its claims of
ULP against the Bank, we find the latter did not engage in ULP. We, likewise, hold that the Union is
not guilty of ULP.
IN LIGHT OF THE FOREGOING, the October 29, 1993 Order and December 16, 1993 and
February 10, 1994 Resolutions of then Secretary of Labor Nieves R. Confesor areAFFIRMED. The

February 10, 1994 Resolutions of then Secretary of Labor Nieves R. Confesor areAFFIRMED. The
Petition is hereby DISMISSED.
SO ORDERED.
Puno, Quisumbing, Austria-Martinez, and Tinga, JJ., concur.
Footnotes
1 Rollo, pp. 451-464.
2 The expiration of the CBA is on March 31, 1993.
3
Rollo, pp. 120-121.
4
Id. at 122-141.
5 Sometimes referred to as non-economic provisions.
6 Uniforms, signing bonus, wages, group insurance, medicine allowance, dental benefits, optical
allowance, death assistance, additional ½ month in midyear allowance, additional 2.5% in the teller‘s
guarantee fund; profit-sharing provision, improvements in leave benefits, i.e., maternity, vacation,
sick, emergency and union leave; introduction of paternity leave, marriage leave, birthday leave and
loyalty leave; extension of the enjoyment of salary increments from 35 to 40 years of service;
provision for meal and shift allowances; increase in overtime, weekend, holiday and shift allowances;
increase emergency premiums, increase in availments of housing corresponding lowering of interest
rates and eligibility requirements, and deletion of the current rules on availment; improvement of
gratuities to a maximum of 175% and increase of medical benefits (Rollo, p. 142).
7
Eddie L. Divinagracia, Rogelio Fernando, Nancy G. Sagum, Rebecca Gabay, Ray Michael Quimpo,
Reyel G. Vargas, Cipriano Garcia, Alberto Diaz, Ed De Mesa and Jose P. Umali, Jr.
8 The Bank‘s counterproposal centered on union recognition and scope (appropriate bargaining
agreement), union security and check-off (maintenance of membership), new employees, collection
of union dues, job security, hiring of next of kin, temporary personnel, redundancies, closure and
relocation, management prerogative, uniforms and grievance procedures. With respect to the
counterproposals on all economic provisions, the Bank said that it is open for discussion. (Rollo, p.
144).
9
Rollo, p. 142.
10 Pinky Diokno (sometimes referred to as Cielito Diokno), Jose S. Ho, Rene Padlan, Rolando
Orbeta, Janet Camarista, Sinforoso Morada and Modesto B. Lim.

11
Rollo, p. 544.
12
Id. at 288.
13 The negotiations for the non-economic provisions were made on March 12, 16, 23, and 30, 1993;
April 6, 13, 20, 23 and 28, 1993 and May 4, 1993.

14
The Union defined "DEADLOCKED" as exhaustion of the three readings; Rollo, p. 269.
15
Minutes of the Meeting of June 1, 1993; Rollo, p. 277.
16 Rollo, p. 278.
17 Minutes of the Meeting of June 8, 1993; Rollo, p. 281.
18
Rollo, p. 284.
19
Ibid.
20 Rollo, pp. 284-285.
21 Id. at 285.
22
Id. at 285.
23
Id.
24 Id.
25 Minutes of the Meeting of June 15, 1993; Rollo, p. 286.
26
Rollo, p. 683.
27 Blue-Sky Bargaining is defined as "unrealistic and unreasonable demands in negotiations by either
or both labor and management, where neither concedes anything and demands the impossible." It
actually is not collective bargaining at all. (Harold S. Roberts, Robert‘s Dictionary of Industrial
Relations (Revised Edition, 1971, p. 51);Rollo, p. 671.
28 Rollo, pp. 670-676.
29 Id. at 463-464.
30
Id. at 459-460.
31
2 SCRA 924 (1961).
32 Rollo, pp. 562-611.
33 Id. at 10.
34
Id. at 23.
35
Id. at 24.
36 280 NLRB No. 80 280 NLRB No. 8
37 214 NLRB No. 062.
38
Section 8.a . It shall be unfair labor practice for an employer-(1)To interfere with, restrain or coerce
employees in the exercise of their rights guaranteed under Section 7;

employees in the exercise of their rights guaranteed under Section 7;
…
(5) To refuse to bargain collectively with the representatives of his employees, subject to the
provisions of Section 9. (National Labor Management Act)
Section 7. Employees shall have the right to self-organization, to form, join or assist labor
organizations, to bargain collectively through representatives of their own choosing; and to engage
in other concerted activities for the purpose of collective bargaining or other mutual aid or protection,
and shall also have the right to refrain from any or all of such activities except to the extant that such
right may be affected by an agreement requiring membership in a labor organization as a condition
of employment as authorized in Section 8(a)(3.)
39 37 SCRA 244 (1971).
40
Section 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 or 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.
…
Section 4. Unfair Labor Practices.-
(a) It shall be unfair labor practice for an employer:
(1) To interfere with, restrain or coerce employees in the exercise of their rights guaranteed in
Section three; (Republic Act No. 875)
41 Referring to Section 3 and 4(a)(1) of the Industrial Peace Act, Republic Act No. 875.
42
Article 2, ILO Convention No. 87.
43 Article 3, ILO Convention No. 87.
44 Section 6, Article XIV of the 1935 Constitution provides:
Sec. 6. The State shall afford protection to labor, especially to working women and minors, and shall
regulate the relations between landowner and tenant, and between labor and capital in industry and
in agriculture. The State may provide for compulsory arbitration.
45 Section 9, Article II of the 1973 Constitution provides:
Sec. 9. 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
relations between workers and employers. The State shall assure the rights of workers to self-
organization, collective bargaining, security of tenure, and just and humane conditions of work. The
State may provide for compulsory arbitration.
46
Section 18, Article II of the 1987 Constitution provides:
Sec. 18. The State affirms labor as a primary social economic force. It shall protect the rights of
workers and promote their welfare.
47
Section 3, Article XIII on Social Justice and Human Rights reads as follows:
LABOR
Sec. 3. The State shall afford full protection to labor, local and overseas, organized and unorganized
and unorganized, and promote full employment and equality of employment opportunities for all.
It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations,
and peaceful concerted activities, including the right to strike in accordance with law. They shall be
entitled to security of tenure, humane conditions of work, and a living wage. They shall also
participate in policy and decision-making processes affecting their rights and benefits as may be
provided by law.
The State shall promote the principle of shared responsibility between workers and employers and
the preferential use of voluntary modes in settling disputes, including conciliation, and shall enforce
their mutual compliance therewith to foster industrial peace.
to its just share in the fruits of production and the right of enterprises to reasonable return on
48 Rubberworld (Phils.), Inc. vs. NLRC, 175 SCRA 450 (1989).
49
Rollo, p. 462.
50 K-Mart Corporation vs. National Labor Relations Board, 626 F.2d 704 (1980).
51 Luck Limousine, 312 NLRB 770, 789 (1993).
52 Queen Mary Restaurants Corp. and Q.M. Foods, Inc. vs. National Labor Relations Board, 560
F.2d 403 (1977).

53 Eastern Maine Medical Center vs. National Labor Relations Board, 658 F.2d 1 (1981).
54 National Union of Restaurant Workers (PTUC) vs. Court of Industrial Relations, 10 SCRA 843
(1964).
55
K-Mart Corporation vs. NLRB, supra.

55
K-Mart Corporation vs. NLRB, supra.
56 Guerrero vs. Commission on Elections, 336 SCRA 458 (2000).
57 Santos vs. Commission on Elections, 399 SCRA 611 (2003).
58
Navarro vs. Second Laguna Development Bank, 398 SCRA 227 (2003).
59
Arthur A. Sloane and Fred Witney, Labor Relations, 7th Edition 1991, p. 195.

San Miguel Corp. vs. NLRC
2:07 AM

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 99266 March 2, 1999

SAN MIGUEL CORPORATION, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, SECOND DIVISION,
AND SAN MIGUEL CORPORATIONEMPLOYEES UNION (SMCEU) — PTGWO, respondents.
PURISIMA, J.:
At bar is a Petition for Certiorari under Rule 65 of the Revised Rules of Court, assailing the
Resolution 1 of the National Labor Relations Commission in NLRC NCR CASE NO. 00094-90, which
dismissed the complaint of SanMiguel Corporation (SMC), seeking to dismiss the notice of strike
given by the private respondent union and to compel the latter to comply with the provisions of the
Collective Bargaining Agreement (CBA) 2 on grievancemachinery, arbitration, and the no-strike
clause, with prayer for the issuance of a temporary restraining order.

In July 1990, San Miguel Cooperation, alleging the need to streamline its operations due to financial
loses, shut down some of its plants and declared 55 positions as redundant listed as follows:
seventeen (17) employees in the Business Logistics Division ("BLD"), seventeen (17) in the Ayala
Operations Center (AOC), and eighteen (18) in the Magnolia-Manila Buying Station ("Magnolia-
MBS"). 3 Consequently, the private respondent union filed severalgrievance cases for the said
retrenched employees, praying for the redeployment of the said employees to the other divisions of
the company.
The grievance proceedings were conducted pursuant to Sections 5 and 8, Article VIII of the parties'
1990 Collective Bargaining Agreement providing for the following procedures, to wit:
Sec.5. Processing of Grievance. — Should a grievance arise, an earnest effort shall be made to
settle the grievance expeditiously in accordance with the following procedures:
Step 1. — The individual employee concerned and the Union Directors, or the Union Steward shall,
first take up the employee's grievance orally with his immediate superior. If no satisfactory
agreement or adjustment of the grievance is reached, the grievance shall, within twenty (20)
working days from the occurrence of the cause or event which gave rise to the grievance, be filed in
writing with the Department Manager or the next level superior who shall render his decision within
ten (10) working days from the receipt of the written grievance. A copy of the decision shall be
furnished the Plant Personnel Officer.
Step 2. — If the decision in Step 1 is rejected, the employee concerned may elevate or appeal this in
writing to the Plant Manager/Director or his duly authorized representative within twenty (20) working
days from the receipt of the Decision of the Department Manager, Otherwise, the decision in Step 1
shall be deemed accepted by the employee.
The Plant Manager/Director assisted by the Plant Personnel Officer shall determine the necessity, of
conducting grievance meetings. If necessary, the Plant Manager/Director and the Plant Personnel
Officer shall meet the employee concerned and the Union Director/Steward on such date(s) as may
be designated by the Plant Manager. In every plant/office, Grievance Meetings shall be scheduled
at least twice a month.
The Plant Manager shall give his written comments and decision within ten (10) working days after
his receipt of such grievance or the date of submission of the grievance for resolution, as the case
may be. A copy of his Decision shall be furnished the Employee Relations Directorate.
Step 3. — If no satisfactory adjustment is arrived at Step 2, the employee may appeal the Decision
to the Conciliation Board as provided under Section 6 hereof, within fifteen (15) working days from
the date of receipt of the decision of the Plant Manager/Director or his designate. Otherwise, the
decision in Step 2 shall be deemed accepted by the employee.
The Conciliation Board shall meet on the grievance in such dates as shall be designated by the
Division/Business Unit Manager or his representative. In every Division/Business

Division/Business Unit Manager or his representative. In every Division/Business
Unit, GrievanceMeetings of the Conciliation Board shall be scheduled at least once a month.
The Conciliation Board shall have fifteen (15) working days from the date of submission of
thegrievance for resolution within which to decide on the grievance.
Sec. 6. Conciliation Board. — There shall be a conciliation Board per Business Unit or Division.
Every Conciliation Board shall be composed of not more than five (5) representatives each from the
Company and the Union. Management and the Union may be assisted by their respective legal
counsels.
In every Division/Business Unit, the names of the Company and Union representatives to the
Conciliation Board shall be submitted to the Division/Business Unit Manager not later than January
of every year. The Conciliation Board members shall act as such for one (1) year until removed by
the Company or the Union, as the case may be.
xxx xxx xxx
Sec. 8. Submission to Arbitration. — If the employee or Union is not satisfied with the Decision of the
Conciliation Board and desires to submit the grievance to arbitration, the employee or the Union shall
serve notice of such intention to the Company within fifteen (15) working days after receipt of the Board's
decision. If no such written notice is received by the Company within fifteen (15) working days,
the grievance shall be considered settled on the basis of the company's position and shall no longer be
available for arbitration. 4
During the grievance proceedings, however, most of the employees were redeployed, while others
accepted early retirement. As a result only 17 employees remained when the parties proceeded to
the third level (Step 3) of the grievance procedure. In a meeting on October 26, 1990, petitioner
informed private respondent union that if by October 30, 1990, the remaining 17 employees could
not yet be redeployed, their services would be terminated on November 2, 1990. The said meeting
adjourned when Mr. Daniel S. L. Borbon II, a representative of the union, declared that there was
nothing more to discuss in view of the deadlock. 5
On November 7, 1990, the private respondent filed with the National Conciliation and Mediation
Board (NCMB) of the Department of Labor and Employment (DOLE) a notice of strike on the
following grounds: a) bargainingdeadlock; b) union busting; c) gross violation of the
Collective Bargaining Agreement (CBA), such as non-compliance with the grievance procedure;
d) failure to provide private respondent with a list of vacant positions pursuant to the parties side
agreement that was appended to the 1990 CBA; and e) defiance of voluntary arbitration award.
Petitioner on the other hand, moved to dismiss the notice of strike but the NCMB failed to act on the
motion.
On December 21, 1990, petitioner SMC filed a complaint 6 with the respondent NLRC, praying for:
(1) the dismissal the notice of strike; (2) an order compelling the respondent union to submit
to grievance and arbitration the issue listed in the notice of strike; (3) the recovery of the expenses
of litigation.
On April 16, 1991, respondent NLRC came out with a minute resolution dismissing the complaint;
holding, thus:
NLRC NCR IC NO. 000094-90, entitled San Miguel Corporation, Complainant -
versus- San Miguel Employees Union-PTWO (SMCEU), Respondent. — Considering the allegations in
the complaint to restrain Respondent Union from declaring a strike and to enforce mutual compliance with
the provisions of the collective bargaining agreement on grievance machinery, and the no-strike clause,
with prayer for issuance of temporary restraining order, and the evidence adduced therein, the Answer
filed by the respondent and the memorandum filed by the complainant in support of its application for the
issuance of an injunction, the Second Division, after due deliberation, Resolved to dismiss the complaint
for lack of merit. 7
Aggrieved by the said resolution, petitioner found its way to this court via the present petition,
contending that:
I
IT IS THE POSITIVE LEGAL DUTY OR RESPONDENT NLRC TO COMPEL ARBITRATION AND
TO ENJOIN A STRIKE IN VIOLATION OF A NO STRIKE CLAUSE.
II
INJUNCTION IS THE ONLY IMMEDIATE, EFFECTIVE SUBSTITUTE FOR THE DISASTROUS
ECONOMIC WARFARE THAT ARBITRATION IS DESIGNED TO AVOID. 8
On June 3, 1991, to preserve the status quo, the Court issued a Resolution 9 granting petitioners
prayer for the issuance of a Temporary Restraining Order.

The Petition is impressed with merit.
Rule XXII, Section I, of the Rules and Regulations Implementing Book V the Labor Code 10, reads:
Sec.1. Grounds for strike and lockout. — A strike or lockout may be declared in cases
of bargainingdeadlocks and unfair labor practices. Violations of the
collective bargaining agreements, except flagrant and/or malicious refusal to comply with its
economic provisions, shall not be considered unfair labor practice and shall not be strikeable. No
strike or lockout may be declared on grounds involving inter-union and intra-union disputes or on
issues brought to voluntary, or compulsory, arbitration.
In the case under consideration, the grounds relied upon by the private respondent union are non-
strikeable. The issues which may lend substance to the notice of strike filed by the private
respondent union are: collectivebargaining deadlock and petitioner's alleged violation of the
collective bargaining agreement. These grounds, however, appear more illusory than real.
Collective Bargaining Deadlock is defined as "the situation between the labor and the management
of the company where there is failure in the collective bargaining negotiations resulting in a
stalemate" 11 This situation, is non-existent in the present case since there is a Board assigned on
the third level (Step 3) of the grievancemachinery to resolve the conflicting views of the parties.
Instead of asking the Conciliation Board composed of five representatives each from the company
and the union, to decide the conflict, petitioner declared a deadlock, and thereafter, filed a notice of
strike. For failing to exhaust all the steps in the grievance machinery and arbitration proceedings
provided in the Collective Bargaining Agreement, the notice of strike should have been dismissed
by the NLRC and private respondent union ordered to proceed with the grievance and arbitration
proceedings. In the case of Liberal Labor Union vs. Phil. Can
Co. 12, the court declared as illegal the strike staged by the union for not complying with
the grievanceprocedure provided in the collective bargaining agreement, ruling that:
. . . the main purpose of the parties in adopting a procedure in the settlement of their disputes is to
prevent a strike. This procedure must be followed in its entirety if it is to achieve its objective. . . . strikes
held in violation of the terms contained in the collective bargainingagreement 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. . . . 13
As regards the alleged violation of the CBA, we hold that such a violation is chargeable against the
private respondent union. In abandoning the grievance proceedings and stubbornly refusing to avail
of the remedies under the CBA. private respondent violated the mandatory provisions of the
collective bargaining agreement.
Abolition of departments or positions in the company is one of the recognized management
prerogatives. 14Noteworthy is the fact that the private respondent does not question the validity of the
business move of petitioner. In the absence of proof that the act of petitioner was ill-motivated, it is
presumed that petitioner San MiguelCorporation acted in good faith. In fact, petitioner acceded to
the demands of the private respondent union by redeploying most of the employees involved; such
that from an original 17 excess employees in BLD, 15 were successfully redeployed. In AOC, out of
the 17 original excess, 15 were redeployed. In the Magnolia — Manila Buying Station, out of 18
employees, 6 were redeployed and only 12 were terminated. 15
So also, in filing complaint with the NLRC, petitioner prayed that the private respondent union be
compelled to proceed with the grievance and arbitration proceedings. Petitioner having evinced its
willingness to negotiate the fate of the remaining employees affected, there is no ground to sustain
the notice of strike of the private respondent union.
All things studiedly considered. we are of the ineluctable conclusion, and so hold, that
the NLRC gravely abused its discretion in dismissing the complaint of Petitioner SMC for the
dismissal of the notice of strike, issuance of a temporary restraining order, and an order compelling
the respondent union to settle the dispute under thegrievance machinery of their CBA..
WHEREFORE, the instant petition is hereby GRANTED. Petitioner San Miguel Corporation and
private respondent San Miguel Corporation Employees Union — PTGWO are hereby directed to
complete the third level (Step 3) of the Grievance Procedure and proceed with the Arbitration
proceedings if necessary. No pronouncement as to costs.
SO ORDERED.
Romero and Gonzaga-Reyes, JJ., concur.
Vitug, J., abroad on official business.
Panganiban, J., is on leave.
Footnotes
1 Dated April 16, 1991; Rollo, pp. 183-184.
2 Annex: "A" of Petition.
3 Complaint Annex "F", Rollo, p. 53.

4 Annex "A", Petition; Collective Bargaining Agreement, pp.18-19.
5 Annex "B-3", Petition, Rollo, p. 31.
6 Annex "F", Petition, Rollo, pp. 48-65.
7 Annex "J"; Petition; Rollo, p. 183.
8 Rollo, p. 14.
9 Rollo, p. 185.
10 As amended by D.O. No 09 which took effect on June 21, 1997.
11 Tayag & P.F. Jardiniano, Dictionary of Philippine Labor Terms. p. 36.
12 91 Phil. 72.
13 Id. p. 77-78. citing; Shop N. Save vs. Retail Food Clerks Union (1940) Cal. Super. Ct. CCT. Tab.
Case 91-18675; 2 A.L.R. Ann., 2nd Series, pp. 1278-1282.
14 Dangan vs. NLRC et al., 127 SCRA 706, p. 713.
15 Complaint; Annex "A"; Rollo, p. 54.

q=cache:pBYBkQYO7dUJ:www.lawphil.net/judjuris/juri1999/mar1999/gr_99266_1999.html+san+miguel+corporation+vs.+NLRC+
1999+grievance+procedure+bargaining+deadlock&cd=1&hl=en&ct=clnk&ie=UTF-8>

Divine Word University vs. SOLE
2:12 AM

Samahan sa Top Form vs. NLRC
2:13 AM

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 113856 September 7, 1998

SAMAHANG MANGGAGAWA SA TOP FORM MANUFACTURING UNITED WORKERS OF THE
PHILIPPINES (SMTFM-UWP), its officers and members, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, HON. JOSE G. DE VERA and TOP FORM
MANUFACTURING PHIL., INC., respondents.
ROMERO, J.:
The issue in this petition for certiorari is whether or not an employer committed an unfair labor
practice by bargaining in bad faith and discriminating against its employees. The charge arose from
the employer's refusal to grant across-the-board increases to its employees in implementing Wage
Orders Nos. 01 and 02 of the Regional Tripartite Wages and Productivity Board of the National
Capital Region (RTWPB-NCR). Such refusal was aggravated by the fact that prior to the issuance of
said wage orders, the employer allegedly promised at the collective bargaining conferences to
implement any government-mandated wage increases on an across-the-board basis.
Petitioner Samahang Manggagawa sa Top Form Manufacturing — United Workers of the Philippines
(SMTFM) was the certified collective bargaining representative of all regular rank and file employees
of private respondent Top Form Manufacturing Philippines, Inc. At the collective bargaining
negotiation held at the Milky Way Restaurant in Makati, Metro Manila on February 27, 1990, the
parties agreed to discuss unresolved economic issues. According to the minutes of the meeting,
Article VII of the collective bargaining agreement was discussed. The following appear in said
Minutes:
Art. VII, Wages
Sect. 1. — Defer —
Sect. 2. Status quo
Sec. 3. Union proposed that any future wage increase given by the government should be
implemented by the company across-the-board or non-conditional.
Management requested the union to retain this provision since their sincerity was already proven when the P25.00 wage increase was
granted across-the-board. The union acknowledges management's sincerity but they are worried that in case there is a new set of
management, they can just show their CBA. The union decided to defer this provision. 1
In their joint affidavit dated January 30, 1992, 2 union members Salve L. Barnes, Eulisa Mendoza,
Lourdes Barbero and Concesa Ibañez affirmed that at the subsequent collective bargaining negotiations,
the union insisted on the incorporation in the collective bargaining agreement (CBA) of the union proposal
on "automatic across-the-board wage increase." They added that:
11. On the strength of the representation of the negotiating panel of the company and the above
undertaking/promise made by its negotiating panel, our union agreed to drop said proposal relying
on the undertakings made by the officials of the company who negotiated with us, namely, Mr.
William Reynolds, Mr. Samuel Wong and Mrs. Remedios Felizardo. Also, in the past years, the
company has granted to us government mandated wage increases on across-the-board basis.
On October 15, 1990, the RTWPB-NCR issued Wage Order No. 01 granting an increase of P17.00
per day in the salary of workers. This was followed by Wage Order No. 02 dated December 20, 1990
providing for a P12.00 daily increase in salary.
As expected, the union requested the implementation of said wage orders. However, they demanded that
the increase be on an across-the-board basis. Private respondent refused to accede to that demand.
Instead, it implemented a scheme of increases purportedly to avoid wage distortion. Thus, private
respondent granted the P17.00 increase under Wage Order No. 01 to workers/employees receiving
salary of P125.00 per day and below. The P12.00 increase mandated by Wage Order No. 02 was granted
to those receiving the salary of P140.00 per day and below. For employees receiving salary higher than
P125.00 or P140.00 per day, private respondent granted an escalated increase ranging from P6.99 to
P14.30 and from P6.00 to P10.00, respectively. 3
On October 24, 1991, the union, through its legal counsel, wrote private respondent a letter demanding
that it should "fulfill its pledge of sincerity to the union by granting an across-the-board wage increases

(sic) to all employees under the wage orders." The union reiterated that it had agreed to "retain the old
provision of CBA" on the strength of private respondent's "promise and assurance" of an across-the-
board salary increase should the government mandate salary increases. 4 Several conferences between
the parties notwithstanding, private respondent adamantly maintained its position on the salary increases
it had granted that were purportedly designed to avoid wage distortion.
Consequently, the union filed a complaint with the NCR NLRC alleging that private respondent's act of
"reneging on its undertaking/promise clearly constitutes act of unfair labor practice through bargaining in
bad faith." It charged private respondent with acts of unfair labor practices or violation of Article 247 of the
Labor Code, as amended, specifically "bargaining in bad faith," and prayed that it be awarded actual,
moral and exemplary damages. 5 In its position paper, the union added that it was charging private
respondent with "violation of Article 100 of the Labor Code." 6
Private respondent, on the other hand, contended that in implementing Wage Orders Nos. 01 and 02, it
had avoided "the existence of a wage distortion" that would arise from such implementation. It
emphasized that only "after a reasonable length of time from the implementation" of the wage orders "that
the union surprisingly raised the question that the company should have implemented said wage orders
on an across-the-board basis." It asserted that there was no agreement to the effect that future wage
increases mandated by the government should be implemented on an across-the-board basis. Otherwise,
that agreement would have been incorporated and expressly stipulated in the CBA. It quoted the
provision of the CBA that reflects the parties' intention to "fully set forth" therein all their agreements that
had been arrived at after negotiations that gave the parties "unlimited right and opportunity to make
demands and proposals with respect to any subject or matter not removed by law from the area of
collective bargaining." The same CBA provided that during its effectivity, the parties "each voluntarily and
unqualifiedly waives the right, and each agrees that the other shall not be obligated, to bargain
collectively, with respect to any subject or matter not specifically referred to or covered by this Agreement,
even though such subject or matter may not have been within the knowledge or contemplation of either or
both of the parties at the time they negotiated or signed this Agreement." 7
On March 11, 1992, Labor Arbiter Jose G. de Vera rendered a decision dismissing the complaint for lack
of merit. 8 He considered two main issues in the case: (a) whether or not respondents are guilty of unfair
labor practice, and (b) whether or not the respondents are liable to implement Wage Orders Nos. 01 and
02 on an across-the-board basis. Finding no basis to rule in the affirmative on both issues, he explained
as follows:
The charge of bargaining in bad faith that the complainant union attributes to the respondents is
bereft of any certitude inasmuch as based on the complainant union's own admission, the latter
vacillated on its own proposal to adopt an across-the-board stand or future wage increases. In fact,
the union acknowledges the management's sincerity when the latter allegedly implemented Republic
Act 6727 on an across-the-board basis. That such union proposal was not adopted in the existing
CBA was due to the fact that it was the union itself which decided for its deferment. It is, therefore,
misleading to claim that the management undertook/promised to implement future wage increases
on an across-the-board basis when as the evidence shows it was the union who asked for the
deferment of its own proposal to that effect.
The alleged discrimination in the implementation of the subject wage orders does not inspire belief at
all where the wage orders themselves do not allow the grant of wage increases on an across-the-
board basis. That there were employees who were granted the full extent of the increase authorized
and some others who received less and still others who did not receive any increase at all, would not
ripen into what the complainants termed as discrimination. That the implementation of the subject
wage orders resulted into an uneven implementation of wage increases is justified under the law to
prevent any wage distortion. What the respondents did under the circumstances in order to deter an
eventual wage distortion without any arbitral proceedings is certainly commendable.
The alleged violation of Article 100 of the Labor Code, as amended, as well as Article XVII, Section 7
of the existing CBA as herein earlier quoted is likewise found by this Branch to have no basis in fact
and in law. No benefits or privileges previously enjoyed by the employees were withdrawn as a
result of the implementation of the subject orders. Likewise, the alleged company practice of
implementing wage increases declared by the government on an across-the-board basis has not
been duly established by the complainants' evidence. The complainants asserted that the company
implemented Republic Act No. 6727 which granted a wage increase of P25.00 effective July 1, 1989
on an across-the-board basis. Granting that the same is true, such isolated single act that
respondents adopted would definitely not ripen into a company practice. It has been said that "a
sparrow or two returning to Capistrano does not a summer make."
Finally, on the second issue of whether or not the employees of the respondents are entitled to an
across-the-board wage increase pursuant to Wage Orders Nos. 01 and 02, in the face of the above
discussion as well as our finding that the respondents correctly applied the law on wage increases,
this Branch rules in the negative.
Likewise, for want of factual basis and under the circumstances where our findings above are
adverse to the complainants, their prayer for moral and exemplary damages and attorney's fees may

adverse to the complainants, their prayer for moral and exemplary damages and attorney's fees may
not be granted.
Not satisfied, petitioner appealed to the NLRC that, in turn, promulgated the assailed Resolution of April
29, 1993 9dismissing the appeal for lack of merit. Still dissatisfied, petitioner sought reconsideration
which, however, was denied by the NLRC in the Resolution dated January 17, 1994. Hence, the instant
petition for certiorari contending that:
-A-
THE PUBLIC RESPONDENTS GROSSLY ERRED IN NOT DECLARING THE PRIVATE
RESPONDENTS GUILTY OF ACTS OF UNFAIR LABOR PRACTICES WHEN, OBVIOUSLY, THE
LATTER HAS BARGAINED IN BAD FAITH WITH THE UNION AND HAS VIOLATED THE CBA
WHICH IT EXECUTED WITH THE HEREIN PETITIONER UNION.
-B-
THE PUBLIC RESPONDENTS SERIOUSLY ERRED IN NOT DECLARING THE PRIVATE
RESPONDENTS GUILTY OF ACTS OF DISCRIMINAT ION IN THE IMPLEMENTAT ION OF NCR
WAGE ORDER NOS. 01 AND 02.
-C-
THE PUBLIC RESPONDENTS SERIOUSLY ERRED IN NOT FINDING THE PRIVATE
RESPONDENTS GUILTY OF HAVING VIOLATED SECTION 4, ARTICLE XVII OF THE EXISTING
CBA.
-D-
THE PUBLIC RESPONDENTS GRAVELY ERRED IN NOT DECLARING THE PRIVATE
RESPONDENTS GUILTY OF HAVING VIOLATED ARTICLE 100 OF THE LABOR CODE OF THE
PHILIPPINES, AS AMENDED.
-E-
ASSUMING, WITHOUT ADMITTING THAT THE PUBLIC RESPONDENTS HAVE CORRECTLY
RULED THAT THE PRIVATE RESPONDENTS ARE GUILTY OF ACTS OF UNFAIR LABOR
PRACTICES, THEY COMMITTED SERIOUS ERROR IN NOT FINDING THAT THERE IS A
SIGNIFICANT DISTORTION IN THE WAGE STRUCTURE OF THE RESPONDENT COMPANY.
-F-
THE PUBLIC RESPONDENTS ERRED IN NOT AWARDING TO THE PETITIONERS HEREIN
ACTUAL, MORAL, AND EXEMPLARY DAMAGES AND ATTORNEY'S FEES.
As the Court sees it, the pivotal issues in this petition can be reduced into two, to wit: (a) whether or
not private respondent committed an unfair labor practice in its refusal to grant across-the-board
wage increases in implementing Wage Orders Nos. 01 and 02, and (b) whether or not there was a
significant wage distortion of the wage structure in private respondent as a result of the manner by
which said wage orders were implemented.
With respect to the first issue, petitioner union anchors its arguments on the alleged commitment of
private respondent to grant an automatic across-the-board wage increase in the event that a
statutory or legislated wage increase is promulgated. It cites as basis therefor, the aforequoted
portion of the Minutes of the collective bargaining negotiation on February 27, 1990 regarding
wages, arguing additionally that said Minutes forms part of the entire agreement between the
parties.
The basic premise of this argument is definitely untenable. To start with, if there was indeed a
promise or undertaking on the part of private respondent to obligate itself to grant an automatic
across-the-board wage increase, petitioner union should have requested or demanded that such
"promise or undertaking" be incorporated in the CBA. After all, petitioner union has the means under
the law to compel private respondent to incorporate this specific economic proposal in the CBA. It
could have invoked Article 252 of the Labor Code defining "duty to bargain," thus, the duty includes
"executing a contract incorporating such agreements if requested by either party." Petitioner union's
assertion that it had insisted on the incorporation of the same proposal may have a factual basis
considering the allegations in the aforementioned joint affidavit of its members. However, Article 252
also states that the duty to bargain "does not compel any party to agree to a proposal or make any
concession." Thus, petitioner union may not validly claim that the proposal embodied in the Minutes
of the negotiation forms part of the CBA that it finally entered into with private respondent.
The CBA is the law between the contracting parties 10 — the collective bargaining representative and the
employer-company. Compliance with a CBA is mandated by the expressed policy to give protection to
labor. 11 In the same vein, CBA provisions should be "construed liberally rather than narrowly and
technically, and the courts must place a practical and realistic construction upon it, giving due
consideration to the context in which it is negotiated and purpose which it is intended to serve." 12 This is
founded on the dictum that a CBA is not an ordinary contract but one impressed with public interest. 13 It
goes without saying, however, that only provisions embodied in the CBA should be so interpreted and
complied with. Where a proposal raised by a contracting party does not find print in the CBA, 14 it is not a
part thereof and the proponent has no claim whatsoever to its implementation.

part thereof and the proponent has no claim whatsoever to its implementation.
Hence, petitioner union's contention that the Minutes of the collective bargaining negotiation meeting
forms part of the entire agreement is pointless. The Minutes reflects the proceedings and discussions
undertaken in the process of bargaining for worker benefits in the same way that the minutes of court
proceedings show what transpired therein. 15 At the negotiations, it is but natural for both management
and labor to adopt positions or make demands and offer proposals and counter-proposals. However,
nothing is considered final until the parties have reached an agreement. In fact, one of management's
usual negotiation strategies is to ". . . agree tentatively as you go along with the understanding that
nothing is binding until the entire agreement is reached." 16 If indeed private respondent promised to
continue with the practice of granting across-the-board salary increases ordered by the government,
such promise could only be demandable in law if incorporated in the CBA.
Moreover, by making such promise, private respondent may not be considered in bad faith or at the
very least, resorting to the scheme of feigning to undertake the negotiation proceedings through
empty promises. As earlier stated, petitioner union had, under the law, the right and the opportunity
to insist on the foreseeable fulfillment of the private respondent's promise by demanding its
incorporation in the CBA. Because the proposal was never embodied in the CBA, the promise has
remained just that, a promise, the implementation of which cannot be validly demanded under the
law.
Petitioner's reliance on this Court's pronouncements 17 in Kiok Loy v. NLRC 18 is, therefore, misplaced. In
that case, the employer refused to bargain with the collective bargaining representative, ignoring all
notices for negotiations and requests for counter proposals that the union had to resort to conciliation
proceedings. In that case, the Court opined that "(a) Company's refusal to make counter-proposal, if
considered in relation to the entire bargaining process, may indicate bad faith and this is specially true
where the Union's request for a counter-proposal is left unanswered." Considering the facts of that case,
the Court concluded that the company was "unwilling to negotiate and reach an agreement with the
Union." 19
In the case at bench, however, petitioner union does not deny that discussion on its proposal that all
government-mandated salary increases should be on an across-the-board basis was "deferred,"
purportedly because it relied upon the "undertaking" of the negotiating panel of private
respondent. 20 Neither does petitioner union deny the fact that "there is no provision of the 1990 CBA
containing a stipulation that the company will grant across-the-board to its employees the mandated wage
increase." They simply assert that private respondent committed "acts of unfair labor practices by virtue of
its contractual commitment made during the collective bargaining process." 21 The mere fact, however,
that the proposal in question was not included in the CBA indicates that no contractual
commitment thereon was ever made by private respondent as no agreement had been arrived at by the
parties. Thus:
Obviously the purpose of collective bargaining is the reaching of an agreement resulting in a contract binding on the parties; but the failure to
reach an agreement after negotiations continued for a reasonable period does not establish a lack of good faith. The statutesinvite and
contemplate a collective bargaining contract, but they do not compel one. The duty to bargain does not include the obligationto reach an
agreement. . . . 32
With the execution of the CBA, bad faith bargaining can no longer be imputed upon any of the parties
thereto. All provisions in the CBA are supposed to have been jointly and voluntarily incorporated therein
by the parties. This is not a case where private respondent exhibited an indifferent attitude towards
collective bargaining because the negotiations were not the unilateral activity of petitioner union. The CBA
is proof enough that private respondent exerted "reasonable effort at good faith bargaining." 23
Indeed, the adamant insistence on a bargaining position to the point where the negotiations reach an
impasse does not establish bad faith. Neither can bad faith be inferred from a party's insistence on the
inclusion of a particular substantive provision unless it concerns trivial matters or is obviously
intolerable. 24
The question as to what are mandatory and what are merely permissive subjects of collective bargaining is of significance on the right of a
party to insist on his position to the point of stalemate. A party may refuse to enter into a collective bargaining contract unless it includes a
desired provision as to a matter which is a mandatory subject of collective bargaining; but a refusal to contract unless the agreement covers
a matter which is not a mandatory subject is in substance a refusal to bargain about matters which are mandatory subjects of collective
bargaining, and it is no answer to the charge of refusal to bargain in good faith that the insistence on the disputed clause was not the sole
cause of the failure to agree or that agreement was not reached with respect to other disputed clauses. 25
On account of the importance of the economic issue proposed by petitioner union, it could have
refused to bargain and to enter into a CBA with private respondent. On the other hand, private
respondent's firm stand against the proposal did not mean that it was bargaining in bad faith. It had
the right "to insist on (its) position to the point of stalemate." On the part of petitioner union, the
importance of its proposal dawned on it only after the wage orders were issued after the CBA had
been entered into. Indeed, from the facts of this case, the charge of bad faith bargaining on the part
of private respondent was nothing but a belated reaction to the implementation of the wage orders
that private respondent made in accordance with law. In other words, petitioner union harbored the
notion that its members and the other employees could have had a better deal in terms of wage
increases had it relentlessly pursued the incorporation in the CBA of its proposal. The inevitable
conclusion is that private respondent did not commit the unfair labor practices of bargaining in bad
faith and discriminating against its employees for implementing the wage orders pursuant to law.

faith and discriminating against its employees for implementing the wage orders pursuant to law.
The Court likewise finds unmeritorious petitioner union's contention that by its failure to grant across-the-
board wage increases, private respondent violated the provisions of Section 5, Article VII of the existing
CBA 26 as well as Article 100 of the Labor Code. The CBA provision states:
Sec. 5. The COMPANY agrees to comply with all the applicable provisions of the Labor Code of the
Philippines, as amended, and all other laws, decrees, orders, instructions, jurisprudence, rules and
regulations affecting labor.
Art. 100 of the Labor Code on prohibition against elimination or diminution of benefits provides that
"(n)othing in this Book shall be construed to eliminate or in any way diminish supplements, or other
employee benefits being enjoyed at the time of promulgation of this Code."
We agree with the Labor Arbiter and the NLRC that no benefits or privileges previously enjoyed by
petitioner union and the other employees were withdrawn as a result of the manner by which private
respondent implemented the wage orders. Granted that private respondent had granted an across-
the-board increase pursuant to Republic Act No. 6727, that single instance may not be considered
an established company practice. Petitioner union's argument in this regard is actually tied up with
its claim that the implementation of Wage Orders Nos. 01 and 02 by private respondent resulted in
wage distortion.
The issue of whether or not a wage distortion exists is a question of
fact 27 that is within the jurisdiction of the quasi-judicial tribunals below. Factual findings of administrative
agencies are accorded respect and even finality in this Court if they are supported by substantial
evidence. 28 Thus, in Metropolitan Bank and Trust Company, Inc. v. NLRC, the Court said:
The issue of whether or not a wage distortion exists as a consequence of the grant of a wage increase to certain employees, we agree, is, by
and large, a question of fact the determination of which is the statutory function of the NLRC. Judicial review of labor cases, we may add,
does not go beyond the evaluation of the sufficiency of the evidence upon which the labor officials' findings rest. As such, the factual findings
of the NLRC are generally accorded not only respect but also finality provided that its decisions are supported by substantial evidence and
devoid of any taint of unfairness or arbitrariness. When, however, the members of the same labor tribunal are not in accord on those aspects
of a case, as in this case, this Court is well cautioned not to be as so conscious in passing upon the sufficiency of the evidence, let alone the
conclusions derived
therefrom. 29
Unlike in above-cited case where the Decision of the NLRC was not unanimous, the NLRC Decision
in this case which was penned by the dissenter in that case, Presiding Commissioner Edna Bonto-
Perez unanimously ruled that no wage distortions marred private respondent's implementation of the
wage orders. The NLRC said:
On the issue of wage distortion, we are satisfied that there was a meaningful implementation of Wage Orders Nos. 01 and 02. This debunks
the claim that there was wage distortion as could be shown by the itemized wages implementation quoted above. It should be noted that this
itemization has not been successfully traversed by the appellants. . . . . 30
The NLRC then quoted the labor arbiter's ruling on wage distortion.
We find no reason to depart from the conclusions of both the labor arbiter and the NLRC. It
is apropos to note, moreover, that petitioner's contention on the issue of wage distortion and the
resulting allegation of discrimination against the private respondent's employees are anchored on its
dubious position that private respondent's promise to grant an across-the-board increase in
government-mandated salary benefits reflected in the Minutes of the negotiation is an enforceable
part of the CBA.
In the resolution of labor cases, this Court has always been guided by the State policy enshrined in the
Constitution that the rights of workers and the promotion of their welfare shall be protected. 31 The Court
is likewise guided by the goal of attaining industrial peace by the proper application of the law. It cannot
favor one party, be it labor or management, in arriving at a just solution to a controversy if the party has
no valid support to its claims. It is not within this Court's power to rule beyond the ambit of the law.
WHEREFORE, the instant petition for certiorari is hereby DISMISSED and the questioned
Resolutions of the NLRC AFFIRMED. No costs.
SO ORDERED.
Narvasa, C.J., Kapunan and Purisima, JJ., concur.
Footnotes
1 Annex D to Petition: Rollo, pp. 71-74.
2 Annex K to Petition; Rollo, pp. 139-143.
3 NLRC Resolution of April 29, 1993, p. 2; Rollo, p. 61.
4 Annex E to Petition; Rollo, pp. 80-81.
5 Annex F to Petition; Rollo, pp. 75-78.
6 Rollo, p. 93.
7 Ibid., p. 95.
8 Ibid., p. 53.
9 Penned by Presiding Commissioner Edna Bonto-Perez and concurred in by Commissioners
Domingo H. Zapanta and Rogelio I. Rayala.
10 Marcopper Mining Corporation v. NLRC, 325 Phil. 618, 632 (1996).
11 Meycauayan College v. Drilon. G.R. No. 81144. May 7, 1990, 185 SCRA 50, 56 citing Art. 3 of
the Labor Code.

the Labor Code.
12 Marcopper Mining Corporation v. NLRC, supra, at p. 634.
13 Art. 1700 of the Civil Code provides: "The relations between capital and labor are not merely
contractual. They are so impressed with public interest that labor contracts must yield to the
common good. Therefore, such contracts are subject to the special laws on labor unions, collective
bargaining, strikes and lockouts, closed shop, wages, working conditions, hours of labor and similar
subjects."
14 Art. 252 of the Labor Code provides that the duty to bargain collectively "means the performance
of a mutual obligation to meet and convene promptly and expeditiously in good faith for the purpose
of negotiating an agreement with respect to wages, hours of work an all other terms and conditions
of employment including proposals for adjusting any grievances or questions arising under such
agreement and executing a contract incorporating such agreements if requested by either party but
such duty does not compel any party to agree to a proposal or to make any concession. Notably,
however, the first paragraph of Sec. 13 of Rep. Act No. 875. the Industrial peace Act, provides the
execution of a written contract incorporating the collective bargaining agreement as part of the
parties' duty to bargain collectively.
15 While the "minutes" kept by the judge are not the memorial of the judgment, and are not records
required by law to be kept, they constitute legal evidence of what was adjudged, and as such may
serve as the foundation for the correction of errors of the clerk in the performance of his duty. The
minutes are only evidence of what was done (27 WORDS AND PHRASES 425 citing State ex rel.
Sheridan Pub. Co. v. Goodrich, 140 S.W. 629, 630, 159 Mo. App. 422, citing Kreisel v. Snavely, 115
S.W. 1060, 135 Mo. App. 158).
16 William G. Caphs and Robert A. Graney. "The Technique of Labor-Management
Negotiations."University of Illinois Law Forum, Summer 1955, p. 293 cited in C.A. AZUCENA, THE
LABOR CODE WITH COMMENTS AND CASES. Vol. 11. 1993 ed., p. 228.
17 Petitioners' Memorandum. pp. 18-20.
18 G.R. No. 54334, January 22, 1986, 141 SCRA 179.
19 Ibid., at pp. 185 & 186.
20 Petitioners' Memorandum, pp. 14-15.
21 Ibid., p. 17.
22 51 C.J.S. 910.
23 Divine Word University of Tacloban v. Secretary of Labor and Employment, G.R. No. 91915,
September 11, 1992, 213 SCRA 759, 773.
24 Ibid., at p. 910.
25 Ibid., at p. 912-913.
26 Petitioner's Memorandum. p. 35.
27 Manila Mandarin Employees Union v. NLRC, G.R. No. 108556, November 19, 1996, 264 SCRA
320, 336 citing Associate Labor Unions-TUCP v. NLRC. G.R. No. 109328, August 16, 1994, 235
SCRA 395; Metropolitan Bank and Trust Co. Employees Union-ALU-TUCP v. NLRC, G.R. No.
102636, September 10, 1993, 226 SCRA 268; Cardona v. NLRC, G.R. No. 89007, March 11, 1991,
195 SCRA 92.
28 Philippine Savings Bank v. NLRC, 330 Phil, 106 (1996).
29 Supra, at p. 275.
30 Rollo, p. 66.
31 Sec. 18. Art. II, 1987 Constitution.
Pasted from <http://www.lawphil.net/judjuris/juri1998/sep1998/gr_113856_1998.html>

San Miguel Corp vs. NLRC
2:15 AM
FIRST DIVISION
[G.R. No. 119293. June 10, 2003]
SAN MIGUEL CORPORATION, petitioner, vs. NATIONAL LABOR
RELATIONS COMMISSION, Second Division, ILAW AT BUKLOD NG
MANGGAGAWA (IBM), respondents.
DECISION
AZCUNA, J.:
Before us is a petition for certiorari and prohibition seeking to set aside the
decision of the Second Division of the National Labor Relations Commission
(NLRC) in Injunction Case No. 00468-94 dated November 29, 1994,[1] and its
resolution dated February 1, 1995 [2] denying petitioner’s motion for reconsideration.
Petitioner San Miguel Corporation (SMC) and respondent Ilaw at Buklod ng
Manggagawa (IBM), exclusive bargaining agent of petitioner’s daily-paid rank and
file employees, executed a Collective Bargaining Agreement (CBA) under which
they agreed to submit all disputes to grievance and arbitration proceedings. The
CBA also included a mutually enforceable no-strike no-lockout agreement. The
pertinent provisions of the said CBA are quoted hereunder:
ARTICLE IV
GRIEVANCE MACHINERY
Section 1. - The parties hereto agree on the principle that all disputes between labor and management may
be solved through friendly negotiation;. . . that an open conflict in any form involves losses to the parties,
and that, therefore, every effort shall be exerted to avoid such an open conflict. In furtherance of the
foregoing principle, the parties hereto have agreed to establish a procedure for the adjustment of
grievances so as to (1) provide an opportunity for discussion of any request or complaint and (2) establish
procedure for the processing and settlement of grievances.
xxx xxx xxx
ARTICLE V
ARBITRATION
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 through a Committee in accordance with the procedure
established in this Article. No dispute, disagreement or controversy which may be submitted to the
grievance procedure in Article IV shall be presented for arbitration until all the steps of the grievance
procedure are exhausted.
xxx xxx xxx
ARTICLE VI
STRIKES AND WORK STOPPAGES
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 term of this Agreement.
Section 2. The COMPANY agrees that there shall be no lockout during the term of this Agreement so
long as the procedure outlined in Article IV hereof is followed by the UNION.[3]
On April 11, 1994, IBM, through its vice-president Alfredo Colomeda, filed with the
National Conciliation and Mediation Board (NCMB) a notice of strike, docketed as
NCMB-NCR-NS-04-180-94, against petitioner for allegedly committing: (1) illegal
dismissal of union members, (2) illegal transfer, (3) violation of CBA, (4)
contracting out of jobs being performed by union members, (5) labor-only

contracting out of jobs being performed by union members, (5) labor-only
contracting, (6) harassment of union officers and members, (7) non-recognition of
duly-elected union officers, and (8) other acts of unfair labor practice. [4]
The next day, IBM filed another notice of strike, this time through its president
Edilberto Galvez, raising similar grounds: (1) illegal transfer, (2) labor-only
contracting, (3) violation of CBA, (4) dismissal of union officers and members, and
(5) other acts of unfair labor practice. This was docketed as NCMB -NCR-
NS-04-182-94.[5]
The Galvez group subsequently requested the NCMB to consolidate its notice of
strike with that of the Colomeda group,[6] to which the latter opposed, alleging
Galvez’s lack of authority in filing the same.[7]
Petitioner thereafter filed a Motion for Severance of Notices of Strike with Motion to
Dismiss, on the grounds that the notices raised non-strikeable issues and that they
affected four corporations which are separate and distinct from each other. [8]
After several conciliation meetings, NCMB Director Reynaldo Ubaldo found that
the real issues involved are non-strikeable. Hence on May 2, 1994, he issued
separate letter-orders to both union groups, converting their notices of strike into
preventive mediation. The said letter-orders, in part, read:
During the conciliation meetings, it was clearly established that the real issues involved are illegal
dismissal, labor only contracting and internal union disputes, which affect not only the interest of the San
Miguel Corporation but also the interests of the MAGNOLIA-NESTLE CORPORATION, the SAN
MIGUEL FOODS, INC., and the SAN MIGUEL JUICES, INC.
Considering that San Miguel Corporation is the only impleaded employer-respondent, and considering
further that the aforesaid companies are separate and distinct corporate entities, we deemed it wise to
reduce and treat your Notice of Strike as Preventive Mediation case for the four (4) different companies
in order to evolve voluntary settlement of the disputes. . . .[9] (Emphasis supplied)
On May 16, 1994, while separate preventive mediation conferences were ongoing,
the Colomeda group filed with the NCMB a notice of holding a strike vote.
Petitioner opposed by filing a Manifestation and Motion to Declare Notice of Strike
Vote Illegal,[10] invoking the case of PAL v. Drilon,[11] which held that no strike could
be legally declared during the pendency of preventive mediation. NCMB Director
Ubaldo in response issued another letter to the Colomeda Group reiterating the
conversion of the notice of strike into a case of preventive mediation and
emphasizing the findings that the grounds raised center only on an intra-union
conflict, which is not strikeable, thus:
xxx xxx xxx
A perusal of the records of the case clearly shows that the basic point to be resolved entails the question
of as to who between the two (2) groups shall represent the workers for collective bargaining purposes,
which has been the subject of a Petition for Interpleader case pending resolution before the Office of the
Secretary of Labor and Employment. Similarly, the other issues raised which have been discussed by the
parties at the plant level, are ancillary issues to the main question, that is, the union
leadership...[12] (Emphasis supplied)
Meanwhile, on May 23, 1994, the Galvez group filed its second notice of strike
against petitioner, docketed as NCMB-NCR-NS-05-263-94. Additional grounds
were set forth therein, including discrimination, coercion of employees, illegal
lockout and illegal closure.[13] The NCMB however found these grounds to be mere
amplifications of those alleged in the first notice that the group filed. It therefore
ordered the consolidation of the second notice with the preceding one that was
earlier reduced to preventive mediation. [14] On the same date, the group likewise
notified the NCMB of its intention to hold a strike vote on May 27, 1994.
On May 27, 1994, the Colomeda group notified the NCMB of the results of their
strike vote, which favored the holding of a strike. [15] In reply, NCMB issued a letter
again advising them that by virtue of the PAL v. Drilon ruling, their notice of strike is
deemed not to have been filed, consequently invalidating any subsequent strike for
lack of compliance with the notice requirement.[16] Despite this and the pendency of
the preventive mediation proceedings, on June 4, 1994, IBM went on strike. The

the preventive mediation proceedings, on June 4, 1994, IBM went on strike. The
strike paralyzed the operations of petitioner, causing it losses allegedly worth
P29.98 million in daily lost production.[17]
Two days after the declaration of strike, or on June 6, 1994, petitioner filed with
public respondent NLRC an amended Petition for Injunction with Prayer for the
Issuance of Temporary Restraining Order, Free Ingress and Egress Order and
Deputization Order.[18] After due hearing and ocular inspection, the NLRC on June
13, 1994 resolved to issue a temporary restraining order (TRO) directing free
ingress to and egress from petitioner’s plants, without prejudice to the union’s right
to peaceful picketing and continuous hearings on the injunction case. [19]
To minimize further damage to itself, petitioner on June 16, 1994, entered into a
Memorandum of Agreement (MOA) with the respondent-union, calling for a lifting
of the picket lines and resumption of work in exchange of “good faith talks”
between the management and the labor management committees. The MOA,
signed in the presence of Department of Labor and Employment (DOLE) officials,
expressly stated that cases filed in relation to their dispute will continue and will not
be affected in any manner whatsoever by the agreement. [20] The picket lines ended
and work was then resumed.
Respondent thereafter moved to reconsider the issuance of the TRO, and sought
to dismiss the injunction case in view of the cessation of its picketing activities as a
result of the signed MOA. It argued that the case had become moot and academic
there being no more prohibited activities to restrain, be they actual or
threatened.[21] Petitioner, however, opposed and submitted copies of flyers being
circulated by IBM, as proof of the union’s alleged threat to revive the strike. [22] The
NLRC did not rule on the opposition to the TRO and allowed it to lapse.
On November 29, 1994, the NLRC issued the challenged decision, denying the
petition for injunction for lack of factual basis. It found that the circumstances at the
time did not constitute or no longer constituted an actual or threatened commission
of unlawful acts.[23] It likewise denied petitioner’s motion for reconsideration in its
resolution dated February 1, 1995.[24]
Hence, this petition.
Aggrieved by public respondent’s denial of a permanent injunction, petitioner
contends that:
A.
THE NLRC GRAVELY ABUSED ITS DISCRETION WHEN IT FAILED TO ENFORCE, BY
INJUNCTION, THE PARTIES‟ RECIPROCAL OBLIGATIONS TO SUBMIT TO ARBITRATION
AND NOT TO STRIKE.
B.
THE NLRC GRAVELY ABUSED ITS DISCRETION IN WITHHOLDING INJUNCTION WHICH IS
THE ONLY IMMEDIATE AND EFFECTIVE SUBSTITUTE FOR THE DISASTROUS ECONOMIC
WARFARE THAT ARBITRATION IS DESIGNED TO AVOID.
C.
THE NLRC GRAVELY ABUSED ITS DISCRETION IN ALLOWING THE TRO TO LAPSE
WITHOUT RESOLVING THE PRAYER FOR INJUNCTION, DENYING INJUNCTION WITHOUT
EXPRESSING THE FACTS AND THE LAW ON WHICH IT IS BASED AND ISSUING ITS DENIAL
FIVE MONTHS AFTER THE LAPSE OF THE TRO.[25]
We find for the petitioner.
Article 254 of the Labor 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 of the Labor Code. Under the first exception, Article 218 (e) of the Labor Code
expressly confers upon the NLRC the power to “enjoin or restrain actual and
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 x x x.” The second exception, on the

ineffectual any decision in favor of such party x x x.” The second exception, on the
other hand, is when the labor organization or the employer engages in any of the
“prohibited activities” enumerated in Article 264.
Pursuant to Article 218 (e), the coercive measure of injunction may also be used to
restrain an actual or threatened unlawful strike. In the case of San Miguel
Corporation v. NLRC,[26] where the same issue of NLRC’s duty to enjoin an unlawful
strike was raised, we ruled that the NLRC committed grave abuse of discretion
when it denied the petition for injunction to restrain the union from declaring a
strike based on non-strikeable grounds. Further, in IBM v. NLRC,[27] we held that it
is the “legal duty and obligation” of the NLRC to enjoin a partial strike staged in
violation of the law. Failure promptly to issue an injunction by the public respondent
was likewise held therein to be an abuse of discretion.
In the case at bar, petitioner sought a permanent injunction to enjoin the
respondent’s strike. A strike is considered as the most effective weapon in
protecting the rights of the employees to improve the terms and conditions of their
employment. However, to be valid, a strike must be pursued within legal
bounds.[28] One of the procedural requisites that Article 263 of the Labor Code and
its Implementing Rules prescribe is the filing of a valid notice of strike with the
NCMB. Imposed for the purpose of encouraging the voluntary settlement of
disputes,[29] this requirement has been held to be mandatory, the lack of which shall
render a strike illegal.[30]
In the present case, NCMB converted IBM’s notices into preventive mediation as it
found that the real issues raised are non-strikeable. Such order is in pursuance of
the NCMB’s duty to exert “all efforts at mediation and conciliation to enable the
parties to settle the dispute amicably,”[31] and in line with the state policy of favoring
voluntary modes of settling labor disputes.[32] In accordance with the Implementing
Rules of the Labor Code, the said conversion has the effect of dismissing the
notices of strike filed by respondent.[33] A case in point is PAL v. Drilon,[34] where we
declared a strike illegal for lack of a valid notice of strike, in view of the NCMB’s
conversion of the notice therein into a preventive mediation case. We ruled, thus:
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 strike
which the union mounted, while preventive mediation proceedings were ongoing, was aptly described by
the petitioner as “an ambush.” (Emphasis supplied)
Clearly, therefore, applying the aforecited ruling to the case at bar, when the
NCMB ordered the preventive mediation on May 2, 1994, respondent had
thereupon lost the notices of strike it had filed. Subsequently, however, it still
defiantly proceeded with the strike while mediation was ongoing, and
notwithstanding the letter-advisories of NCMB warning it of its lack of notice of
strike. In the case of NUWHRAIN v. NLRC,[35] where the petitioner-union therein
similarly defied a prohibition by the NCMB, we said:
Petitioners should have complied with the prohibition to strike ordered by the NCMB when the latter
dismissed the notices of strike after finding that the alleged acts of discrimination of the hotel were not
ULP, hence not “strikeable.” The refusal of the petitioners to heed said proscription of the NCMB is
reflective of bad faith.
Such disregard of the mediation proceedings was a blatant violation of the
Implementing Rules, which explicitly oblige the parties to bargain collectively in good
faith and prohibit them from impeding or disrupting the proceedings.[36]
The NCMB having no coercive powers of injunction, petitioner sought recourse
from the public respondent. The NLRC issued a TRO only for free ingress to and
egress from petitioner’s plants, but did not enjoin the unlawful strike itself. It
ignored the fatal lack of notice of strike, and five months after came out with a
decision summarily rejecting petitioner’s cited jurisprudence in this wise:
Complainant‟s scholarly and impressive arguments, formidably supported by a long line of jurisprudence

Complainant‟s scholarly and impressive arguments, formidably supported by a long line of jurisprudence
cannot however be appropriately considered in the favorable resolution of the instant case for the
complainant. The cited jurisprudence do not squarely cover and apply in this case, as they are not
similarly situated and the remedy sought for were different.[37]
Unfortunately, the NLRC decision stated no reason to substantiate the above
conclusion.
Public respondent, in its decision, moreover ruled that there was a lack of factual
basis in issuing the injunction. Contrary to the NLRC’s finding, we find that at the
time the injunction was being sought, there existed a threat to revive the unlawful
strike as evidenced by the flyers then being circulated by the IBM-NCR Council
which led the union. These flyers categorically declared: “Ipaalala n’yo sa
management na hindi iniaatras ang ating Notice of Strike (NOS) at anumang oras
ay pwede nating muling itirik ang picket line.”[38]These flyers were not denied by
respondent, and were dated June 19, 1994, just a day after the union’s
manifestation with the NLRC that there existed no threat of commission of
prohibited activities.
Moreover, it bears stressing that Article 264(a) of the Labor Code [39] explicitly states
that a declaration of strike without first having filed the required notice is a
prohibited activity, which may be prevented through an injunction in accordance
with Article 254. Clearly, public respondent should have granted the injunctive
relief to prevent the grave damage brought about by the unlawful strike.
Also noteworthy is public respondent’s disregard of petitioner’s argument pointing
out the union’s failure to observe the CBA provisions on grievance and arbitration.
In the case of San Miguel Corp. v. NLRC,[40] we ruled that the union therein violated
the mandatory provisions of the CBA when it filed a notice of strike without availing
of the remedies prescribed therein. Thus we held:
x x x For failing to exhaust all steps in the grievance machinery and arbitration proceedings provided in
the Collective Bargaining Agreement, the notice of strike should have been dismissed by the NLRC and
private respondent union ordered to proceed with the grievance and arbitration proceedings. In the case
of Liberal Labor Union vs. Phil. Can Co., the court declared as illegal the strike staged by the union for
not complying with the grievance procedure provided in the collective bargaining agreement. . . (Citations
omitted)
As in the abovecited case, petitioner herein evinced its willingness to negotiate with the
union by seeking for an order from the NLRC to compel observance of the grievance
and arbitration proceedings. Respondent however resorted to force without exhausting
all available means within its reach. Such infringement of the aforecited CBA provisions
constitutes further justification for the issuance of an injunction against the strike. As we
said long ago: “Strikes held in violation of the terms contained in a collective bargaining
agreement are illegal especially when they provide for conclusive arbitration clauses.
These agreements must be strictly adhered to and respected if their ends have to be
achieved.”[41]
As to petitioner’s allegation of violation of the no-strike provision in the CBA,
jurisprudence has enunciated that such clauses only bar strikes which are
economic in nature, but not strikes grounded on unfair labor practices. [42] The
notices filed in the case at bar alleged unfair labor practices, the initial
determination of which would entail fact-finding that is best left for the labor
arbiters. Nevertheless, our finding herein of the invalidity of the notices of strike
dispenses with the need to discuss this issue.
We cannot sanction the respondent-union’s brazen disregard of legal requirements
imposed purposely to carry out the state policy of promoting voluntary modes of
settling disputes. The state’s commitment to enforce mutual compliance therewith
to foster industrial peace is affirmed by no less than our Constitution. [43] Trade
unionism and strikes are legitimate weapons of labor granted by our statutes. But
misuse of these instruments can be the subject of judicial intervention to forestall
grave injury to a business enterprise.

Pasted from <http://sc.judiciary.gov.ph/jurisprudence/2003/jun2003/119293.htm>

Rivera vs. Espiritu
2:20 AM
SECOND DIVISION
[G.R. No. 135547. January 23, 2002]
GERARDO F. RIVERA, ALFRED A. RAMISO, AMBROCIO PALAD,
DENNIS R. ARANAS, DAVID SORIMA, JR., JORGE P. DELA ROSA,
and ISAGANI ALDEA, petitioners, vs. HON. EDGARDO ESPIRITU in
his capacity as Chairman of the PAL Inter-Agency Task Force created
under Administrative Order No. 16; HON. BIENVENIDO LAGUESMA in
his capacity as Secretary of Labor and Employment; PHILIPPINE
AIRLINES (PAL), LUCIO TAN, HENRY SO UY, ANTONIO V. OCAMPO,
MANOLO E. AQUINO, JAIME J. BAUTISTA, and ALEXANDER O.
BARRIENTOS, respondents.
DECISION
QUISUMBING, J.:
In this special civil action for certiorari and prohibition, petitioners charge public
respondents with grave abuse of discretion amounting to lack or excess of
jurisdiction for acts taken in regard to the enforcement of the agreement dated
September 27, 1998, between Philippine Airlines (PAL) and its union, the PAL
Employees Association (PALEA).
The factual antecedents of this case are as follows:
On June 5, 1998, PAL pilots affiliated with the Airline Pilots Association of the
Philippines (ALPAP) went on a three-week strike, causing serious losses to the
financially beleaguered flag carrier. As a result, PAL’s financial situation went from
bad to worse. Faced with bankruptcy, PAL adopted a rehabilitation plan and
downsized its labor force by more than one-third.
On July 22, 1998, PALEA went on strike to protest the retrenchment measures
adopted by the airline, which affected 1,899 union members. The strike ended four
days later, when PAL and PALEA agreed to a more systematic reduction in PAL’s
work force and the payment of separation benefits to all retrenched employees.
On August 28, 1998, then President Joseph E. Estrada issued Administrative
Order No. 16 creating an Inter-Agency Task Force (Task Force) to address the
problems of the ailing flag carrier. The Task Force was composed of the
Departments of Finance, Labor and Employment, Foreign Affairs, Transportation
and Communication, and Tourism, together with the Securities and Exchange
Commission (SEC). Public respondent Edgardo Espiritu, then the Secretary of
Finance, was designated chairman of the Task Force. It was “empowered to
summon all parties concerned for conciliation, mediation (for) the purpose of
arriving at a total and complete solution of the problem.” [1] Conciliation meetings
were then held between PAL management and the three unions representing the
airline’s employees,[2] with the Task Force as mediator.
On September 4, 1998, PAL management submitted to the Task Force an offer by
private respondent Lucio Tan, Chairman and Chief Executive Officer of PAL, of a
plan to transfer shares of stock to its employees. The pertinent portion of said plan
reads:
1. From the issued shares of stock within the group of Mr. Lucio Tan‟s holdings, the ownership of 60,000
fully paid shares of stock of Philippine Airlines with a par value of PHP5.00/share will be transferred in
favor of each employee of Philippine Airlines in the active payroll as of September 15, 1998. Should any

favor of each employee of Philippine Airlines in the active payroll as of September 15, 1998. Should any
share-owning employee leave PAL, he/she has the option to keep the shares or sells (sic) his/her shares to
his/her union or other employees currently employed by PAL.
2. The aggregate shares of stock transferred to PAL employees will allow them three (3) members to (sic)
the PAL Board of Directors. We, thus, become partners in the boardroom and together, we shall address
and find solutions to the wide range of problems besetting PAL.
3. In order for PAL to attain (a) degree of normalcy while we are tackling its problems, we would request
for a suspension of the Collective Bargaining Agreements (CBAs) for 10 years.[3]
On September 10, 1998, the Board of Directors of PALEA voted to accept Tan’s
offer and requested the Task Force’s assistance in implementing the same. Union
members, however, rejected Tan’s offer. Under intense pressure from PALEA
members, the union’s directors subsequently resolved to reject Tan’s offer.
On September 17, 1998, PAL informed the Task Force that it was shutting down its
operations effective September 23, 1998, preparatory to liquidating its assets and
paying off its creditors. The airline claimed that given its labor problems,
rehabilitation was no longer feasible, and hence, the airline had no alternative but
to close shop.
On September 18, 1998, PALEA sought the intervention of the Office of the
President in immediately convening the parties, the PAL management, PALEA,
ALPAP, and FASAP, including the SEC under the direction of the Inter-Agency
Task Force, to prevent the imminent closure of PAL. [4]
On September 19, 1998, PALEA informed the Department of Labor and
Employment (DOLE) that it had no objection to a referendum on the Tan’s offer.
2,799 out of 6,738 PALEA members cast their votes in the referendum under
DOLE supervision held on September 21-22, 1998. Of the votes cast, 1,055 voted
in favor of Tan’s offer while 1,371 rejected it.
On September 23, 1998, PAL ceased its operations and sent notices of termination
to its employees.
Two days later, the PALEA board wrote President Estrada anew, seeking his
intervention. PALEA offered a 10-year moratorium on strikes and similar actions
and a waiver of some of the economic benefits in the existing CBA. [5] Tan, however,
rejected this counter-offer.
On September 27, 1998, the PALEA board again wrote the President proposing
the following terms and conditions, subject to ratification by the general
membership:
1. Each PAL employee shall be granted 60,000 shares of stock with a par value of P5.00, from Mr. Lucio
Tan‟s shareholdings, with three (3) seats in the PAL Board and an additional seat from government shares
as indicated by His Excellency;
2. Likewise, PALEA shall, as far as practicable, be granted adequate representation in committees or
bodies which deal with matters affecting terms and conditions of employment;
3. To enhance and strengthen labor-management relations, the existing Labor-Management Coordinating
Council shall be reorganized and revitalized, with adequate representation from both PAL management
and PALEA;
4. To assure investors and creditors of industrial peace, PALEA agrees, subject to the ratification by the
general membership, (to) the suspension of the PAL-PALEA CBA for a period of ten (10) years, provided
the following safeguards are in place:
a. PAL shall continue recognizing PALEA as the duly certified bargaining agent of the regular
rank-and-file ground employees of the Company;
b. The „union shop/maintenance of membership‟ provision under the PAL-PALEA CBA shall
be respected.
c. No salary deduction, with full medical benefits.
5. PAL shall grant the benefits under the 26 July 1998 Memorandum of Agreement forged by and
between PAL and PALEA, to those employees who may opt to retire or be separated from the company.
6. PALEA members who have been retrenched but have not received separation benefits shall be granted
priority in the hiring/rehiring of employees.
7. In the absence of applicable Company rule or regulation, the provisions of the Labor Code
shall apply.[6]
Among the signatories to the letter were herein petitioners Rivera, Ramiso, and

Among the signatories to the letter were herein petitioners Rivera, Ramiso, and
Aranas, as officers and/or members of the PALEA Board of Directors. PAL
management accepted the PALEA proposal and the necessary referendum was
scheduled.
On October 2, 1998, 5,324 PALEA members cast their votes in a DOLE -
supervised referendum. Of the votes cast, 61% were in favor of accepting the PAL -
PALEA agreement, while 34% rejected it.
On October 7, 1998, PAL resumed domestic operations. On the same date, seven
officers and members of PALEA filed this instant petition to annul the September
27, 1998 agreement entered into between PAL and PALEA on the following
grounds:
I
PUBLIC RESPONDENTS GRAVELY ABUSED THEIR DISCRETION AND EXCEEDED
THEIR JURISDICTION IN ACTIVELY PURSUING THE CONCLUSION OF THE PAL-PALEA
AGREEMENT AS THE CONSTITUTIONAL RIGHTS TO SELF-ORGANIZATION AND
COLLECTIVE BARGAINING, BEING FOUNDED ON PUBLIC POLICY, MAY NOT BE
WAIVED, NOR THE WAIVER, RATIFIED.
II
PUBLIC RESPONDENTS GRAVELY ABUSED THEIR DISCRETION AND EXCEEDED
THEIR JURISDICTION IN PRESIDING OVER THE CONCLUSION OF THE PAL-PALEA
AGREEMENT UNDER THREAT OF ABUSIVE EXERCISE OF PAL‟S MANAGEMENT
PREROGATIVE TO CLOSE BUSINESS USED AS SUBTERFUGE FOR UNION-BUSTING.
The issues now for our resolution are:

(1) Is an original action for certiorari and prohibition the proper remedy to annul the PAL-
PALEA agreement of September 27, 1998;
(2) Is the PAL-PALEA agreement of September 27, 1998, stipulating the suspension of
the PAL-PALEA CBA unconstitutional and contrary to public policy?
Anent the first issue, petitioners aver that public respondents as functionaries of
the Task Force, gravely abused their discretion and exceeded their jurisdiction
when they actively pursued and presided over the PAL-PALEA agreement.
Respondents, in turn, argue that the public respondents merely served as
conciliators or mediators, consistent with the mandate of A.O. No. 16 and merely
supervised the conduct of the October 3, 1998 referendum during which the
PALEA members ratified the agreement. Thus, public respondents did not perform
any judicial and quasi-judicial act pertaining to jurisdiction. Furthermore,
respondents pray for the dismissal of the petition for violating the “hierarchy of
courts” doctrine enunciated in People v. Cuaresma [7] and Enrile v. Salazar.[8]
Petitioners allege grave abuse of discretion under Rule 65 of the 1997 Rules of
Civil Procedure. The essential requisites for a petition forcertiorari under Rule 65
are: (1) the writ is directed against a tribunal, a board, or an officer exercising
judicial or quasi-judicial functions; (2) such tribunal, board, or officer has acted
without or in excess of jurisdiction, or with grave abuse of discretion amounting to
lack or excess of jurisdiction; and (3) there is no appeal or any plain, speedy, and
adequate remedy in the ordinary course of law. [9] For writs of prohibition, the
requisites are: (1) the impugned act must be that of a “tribunal, corporation, board,
officer, or person, whether exercising judicial, quasi-judicial or ministerial
functions;” and (2) there is no plain, speedy, and adequate remedy in the ordinary
course of law.” [10]
The assailed agreement is clearly not the act of a tribunal, board, officer, or person
exercising judicial, quasi-judicial, or ministerial functions. It is not the act of public
respondents Finance Secretary Edgardo Espiritu and Labor Secretary Bienvenido
Laguesma as functionaries of the Task Force. Neither is there a judgment, order,
or resolution of either public respondents involved. Instead, what exists is a

or resolution of either public respondents involved. Instead, what exists is a
contract between a private firm and one of its labor unions, albeit entered into with
the assistance of the Task Force. The first and second requisites for certiorari and
prohibition are therefore not present in this case.
Furthermore, there is available to petitioners a plain, speedy, and adequate

remedy in the ordinary course of law. While the petition is denominated as one for
certiorari and prohibition, its object is actually the nullification of the PAL -PALEA
agreement. As such, petitioners’ proper remedy is an ordinary civil action for
annulment of contract, an action which properly falls under the jurisdiction of the
regional trial courts.[11] Neither certiorari nor prohibition is the remedy in the present
case.
Petitioners further assert that public respondents were partial towards PAL
management. They allegedly pressured the PALEA leaders into accepting the
agreement. Petitioners ask this Court to examine the circumstances that led to the
signing of said agreement. This would involve review of the facts and factual
issues raised in a special civil action for certiorari which is not the function of this
Court.[12]
Nevertheless, considering the prayer of the parties principally we shall look into the
substance of the petition, in the higher interest of justice [13] and in view of the public
interest involved, inasmuch as what is at stake here is industrial peace in the
nation’s premier airline and flag carrier, a national concern.
On the second issue, petitioners contend that the controverted PAL-PALEA

agreement is void because it abrogated the right of workers to self-
organization[14] and their right to collective bargaining.[15] Petitioners claim that the
agreement was not meant merely to suspend the existing PAL-PALEA CBA, which
expires on September 30, 2000, but also to foreclose any renegotiation or any
possibility to forge a new CBA for a decade or up to 2008. It violates the
“protection to labor” policy[16] laid down by the Constitution.
Article 253-A of the Labor Code reads:
ART. 253-A. Terms of a Collective Bargaining Agreement. – Any Collective Bargaining
Agreement that the parties may enter into shall, insofar as the representation aspect is concerned, be
for a term of five (5) years. No petition questioning the majority status of the incumbent bargaining
agent shall be entertained and no certification election shall be conducted by the Department of
Labor and Employment outside of the sixty-day period immediately before the date of expiry of
such five-year term of the Collective Bargaining Agreement. All other provisions of the Collective
Bargaining Agreement shall be renegotiated not later than three (3) years after its execution. Any
agreement on such other provisions of the Collective Bargaining Agreement entered into within six
(6) months from the date of expiry of the term of such other provisions as fixed in such Collective
Bargaining Agreement, shall retroact to the day immediately following such date. If any such
agreement is entered into beyond six months, the parties shall agree on the duration of the
retroactivity thereof. In case of a deadlock in the renegotiation of the collective bargaining
agreement, the parties may exercise their rights under this Code.
Under this provision, insofar as representation is concerned, a CBA has a term of five
years, while the other provisions, except for representation, may be negotiated not later
than three years after the execution.[17] Petitioners submit that a 10-year CBA
suspension is inordinately long, way beyond the maximum statutory life of a CBA,
provided for in Article 253-A. By agreeing to a 10-year suspension, PALEA, in effect,
abdicated the workers’ constitutional right to bargain for another CBA at the mandated
time.
We find the argument devoid of merit.
A CBA is “a contract executed upon request of either the employer or the exclusive
bargaining representative incorporating the agreement reached after negotiations
with respect to wages, hours of work and all other terms and conditions of
employment, including proposals for adjusting any grievances or questions arising
under such agreement.”[18] The primary purpose of a CBA is the stabilization of
labor-management relations in order to create a climate of a sound and stable
industrial peace.[19] In construing a CBA, the courts must be practical and realistic
and give due consideration to the context in which it is negotiated and the purpose
which it is intended to serve.[20]
The assailed PAL-PALEA agreement was the result of voluntary collective
bargaining negotiations undertaken in the light of the severe financial situation
faced by the employer, with the peculiar and unique intention of not merely
promoting industrial peace at PAL, but preventing the latter’s closure. We find no
conflict between said agreement and Article 253-A of the Labor Code. Article 253-
A has a two-fold purpose. One is to promote industrial stability and
predictability. Inasmuch as the agreement sought to promote industrial peace at
PAL during its rehabilitation, said agreement satisfies the first purpose of Article
253-A. The other is to assign specific timetables wherein negotiations become a
matter of right and requirement. Nothing in Article 253-A, prohibits the parties from
waiving or suspending the mandatory timetables and agreeing on the remedies to
enforce the same.
In the instant case, it was PALEA, as the exclusive bargaining agent of PAL’s
ground employees, that voluntarily entered into the CBA with PAL. It was also
PALEA that voluntarily opted for the 10-year suspension of the CBA. Either case
was the union’s exercise of its right to collective bargaining. The right to free
collective bargaining, after all, includes the right to suspend it.
The acts of public respondents in sanctioning the 10-year suspension of the PAL-
PALEA CBA did not contravene the “protection to labor” policy of the
Constitution. The agreement afforded full protection to labor; promoted the shared
responsibility between workers and employers; and the exercised voluntary modes
in settling disputes, including conciliation to foster industrial peace." [21]
Petitioners further allege that the 10-year suspension of the CBA under the PAL-
PALEA agreement virtually installed PALEA as a company union for said period,
amounting to unfair labor practice, in violation of Article 253-A of the Labor Code
mandating that an exclusive bargaining agent serves for five years only.
The questioned proviso of the agreement reads:
a. PAL shall continue recognizing PALEA as the duly certified-bargaining agent of the regular
rank-and-file ground employees of the Company;
Said proviso cannot be construed alone. In construing an instrument with several
provisions, a construction must be adopted as will give effect to all. Under Article
1374 of the Civil Code,[22] contracts cannot be construed by parts, but clauses must
be interpreted in relation to one another to give effect to the whole. The legal
effect of a contract is not determined alone by any particular provision
disconnected from all others, but from the whole read together. [23] The aforesaid
provision must be read within the context of the next clause, which provides:
b. The „union shop/maintenance of membership‟ provision under the PAL-PALEA CBA shall be
respected.
The aforesaid provisions, taken together, clearly show the intent of the parties to
maintain “union security” during the period of the suspension of the CBA. Its
objective is to assure the continued existence of PALEA during the said
period. We are unable to declare the objective of union security an unfair labor
practice. It is State policy to promote unionism to enable workers to negotiate with
management on an even playing field and with more persuasiveness than if they
were to individually and separately bargain with the employer. For this reason, the
law has allowed stipulations for “union shop” and “closed shop” as means of
encouraging workers to join and support the union of their choice in the protection
of their rights and interests vis-à-vis the employer.[24]

of their rights and interests vis-à-vis the employer.[24]
Petitioners’ contention that the agreement installs PALEA as a virtual company
union is also untenable. Under Article 248 (d) of the Labor Code, a company union
exists when the employer acts “[t]o 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.” The case records
are bare of any showing of such acts by PAL.
We also do not agree that the agreement violates the five-year representation limit
mandated by Article 253-A. Under said article, the representation limit for the
exclusive bargaining agent applies only when there is an extant CBA in full force
and effect. In the instant case, the parties agreed to suspend the CBA and put in
abeyance the limit on the representation period.
In sum, we are of the view that the PAL-PALEA agreement dated September 27,
1998, is a valid exercise of the freedom to contract. Under the principle of
inviolability of contracts guaranteed by the Constitution, [25] the contract must be
upheld.
WHEREFORE, there being no grave abuse of discretion shown, the instant petition
is DISMISSED. No pronouncement as to costs.
SO ORDERED.
Bellosillo, (Chairman), Mendoza, Buena, and De Leon, Jr., JJ., concur.
[1] Rollo, p. 68. Administrative Order No. 16, Sec. 2.

[2] ALPAP, PALEA, and the Flight Attendants and Stewards Association of the Philippines or FASAP.
[3] Supra, note 1 at 69.
[4] Id. at 98.
[5] Id. at 101.
[6] Id. at 65-66.
[7] G.R. No. 67787, 172 SCRA 415, 424-425 (1989).
[8] G.R. No. 92163-64, 186 SCRA 217, 231 (1990).
[9] Suntay v. Cojuangco-Suntay, G.R. No. 132524, 300 SCRA 760, 766 (1998); Cuison v. Court of
Appeals, G.R. No. 128540, 289 SCRA 159, 171 (1998).

[10] 1997 Rules of Civil Procedure, Rule 65, Sec. 2
[11] Batas Pambansa Blg. 129, as amended by Rep. Act No. 7691, Sec. 19.
[12] Stolt-Nielsen Marine Services, Inc. v. NLRC, G.R. No. 128395, 300 SCRA 713, 717-718
(1998); Suarez v. NLRC, G.R. No. 124723, 293 SCRA 496, 502 (1998).
[13] Go v. Court of Appeals, G.R. No. 128954, 297 SCRA 574, 584 (1998); Fortich v. Corona, G.R. No.
131457, 289 SCRA 624, 645 (1998).

[14] Const. art. III, sec. 8.
[15] Const. art. XIII, sec. 3.
[16] Const. art II, sec. 18; art. XIII, sec. 3.
[17] San Miguel Corporation Employees Union-PTGWO v. Confesor, G.R. No. 111262, 330 Phil. 628, 638
(1996).
[18] Davao Integrated Port Stevedoring Services v. Abarquez, G.R. No. 102132, 220 SCRA 197, 204
(1993).
[19] Kiok Loy v. NLRC, G.R. No. L-54334, 141 SCRA 179, 185 (1986).
[20] Davao Integrated Port Stevedoring Services v. Abarquez, supra, note 19 at 204.
[21] 1987 Const. art. XIII sec. 3. Stress supplied.
[22] Art. 1374. The various stipulations of a contract shall be interpreted together, attributing to the doubtful
ones that sense which may result from all of them taken jointly.
[23] Reparations Commission v. Northern Lines Inc., et al., G.R. No. L-24835, 145 Phil. 24, 33 (1970).
[24] Liberty Flour Mills Employees v. Liberty Flour Mills, Inc., G.R. Nos. 58768-70, 180 SCRA 668, 679-680
(1989).
[25] Const. art. III, sec. 10.
Pasted from <http://sc.judiciary.gov.ph/jurisprudence/2002/jan2002/135547.htm>

New Pacific Timber vs. NLRC
2:23 AM

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 124224 March 17, 2000

NEW PACIFIC TIMBER & SUPPLY COMPANY, CO., INC., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, MUSIB M. BUAT, LEON G. GONZAGA, JR., ET
AL., NATIONAL FEDERATION OF LABOR, MARIANO AKILIT and 350 OTHERS, respondents.
KAPUNAN, J.:
May the term of a Collective Bargaining Agreement (CBA) as to its economic provisions be extended
beyond the term expressly stipulated therein, and, in the absence of a new CBA, even beyond the
three-year period provided by law? Are employees hired after the stipulated term of a CBA entitled to
the benefits provided thereunder?
These are the issues at the heart of the instant petition for certiorari with prayer for the issuance of
preliminary injunction and/or temporary restraining order filed by petitioner New Pacific Timber &
Supply Company, Incorporated against the National Labor Relations Commission (NLRC), et. al.,
and the National Federation of Labor, et. al.
The antecedents facts, as found by the NLRC, are as follows:

The National Federation of Labor (NFL, for brevity) was certified as the sole and exclusive
bargaining representative of all the regular rank-and-file employees of New Pacific Timber & Supply
Co., Inc. (hereinafter referred to as petitioner Company). 1 As such, NFL started to negotiate for
better terms and conditions of employment for the employees in the bargaining unit which it
represented. However, the same was allegedly met with stiff resistance by petitioner Company, so
that the former was prompted to file a complaint for unfair labor practice (ULP) against the latter on
the ground of refusal to bargain collectively. 2
On March 31, 1987, then Executive Labor Arbiter Hakim S. Abdulwahid issued an order declaring (a)
herein petitioner Company guilty of ULP; and (b) the CBA proposals submitted by the NFL as the
CBA between the regular rank-and-file employees in the bargaining unit and petitioner Company. 3
Petitioner Company appealed the above order to the NLRC. On November 15, 1989, the NLRC
rendered a decision dismissing the appeal for lack of merit. A motion for reconsideration thereof
was, likewise, denied in a Resolution, dated November 12, 1990. 4
Unsatisfied, petitioner Company filed a petition for certiorari with this Court. But the Court dismissed
said petition in a Resolution, dated January 21, 1991. 5
Thereafter, the records of the case were remanded to the arbitration branch of origin of the
execution of Labor Arbiter Abdulwahid's Order, dated March 31, 1987, granting monetary benefits
consisting of wage increases, housing allowances, bonuses, etc. to the regular rank-and-file
employees. Following a series of conferences to thresh out the details of computation, Labor Arbiter
Reynaldo S. Villena issued an Order, dated October 18, 1993, directing petitioner Company to pay
the 142 employees entitled to the aforesaid benefits the respective amounts due them under the
CBA. Petitioner Company complied; and the corresponding quitclaims were executed. The case was
considered closed following NFL's manifestation that it will no longer appeal the October 18, 1993
Order of Labor Arbiter Villena. 6
However, notwithstanding such manifestation, a "Petition for Relief" was filed in behalf of 186 of the
private respondents "Mariano J. Akilit and 350 others" on May 12, 1994. In their petition, they
claimed that they were wrongfully excluded from enjoying the benefits under the CBA since the
agreement with NFL and petitioner Company limited the CBA's implementation to only the 142 rank-
and-file employees enumerated. They claimed that NFL's misrepresentations had precluded them
from appealing their exclusion. 7

from appealing their exclusion. 7
Treating the petition for relief as an appeal, the NLRC entertained the same. On August 4, 1994,
said commission issued a resolution 8 declaring that the 186 excluded employees "form part and
parcel of the then existing rank-and-file bargaining unit" and were, therefore, entitled to the benefits
under the CBA. The NLRC held, thus:
WHEREFORE, the appeal is hereby granted and the Order of the Labor arbiter dated October 18,
1993 is hereby. Set Aside and Vacated. In lieu hereof, a new Order is hereby issued directing
respondent New Pacific Timber & Supply Co., Inc. to pay all its regular rank-and-file workers their
wage differentials and other benefits arising from the decreed CBA as explained above, within ten
(10) days from receipt of this order.
SO ORDERED. 9
Petitioner Company filed a motion for reconsideration of the aforequoted resolution.
Meanwhile, four separate groups of the private respondents, including the original 186 who had filed
the "Petition for Relief" filed individual money claims, docketed as NLRC Cases Nos. M-001991-94
to M-001994-94, before the Arbitration Branch of the NLRC, Cagayan de Oro City. However, Labor
Arbiter Villena dismissed these cases in Orders, dated March 11, 1994; April 13, 1994; March 9,
1994; and, May 10, 1994. The employees appealed the respective dismissals of their complainants
to the NLRC. The latter consolidated these appeals with the aforementioned motion for
reconsideration filed by petitioner Company.
On February 29, 1996, the NLRC issued a resolution, the dispositive portions of which reads as
follows:
WHEREFORE, the instant petition for reconsideration of respondent is DENIED for lack of merit and
the Resolution of the Commission dated August 4, 1994 Sustained. The separate orders of the
Labor Arbiter dated March 11, 1994, April 13, 1994, March 9, 1994 and May 10, 1994, respectively,
in NLRC Cases Nos. M-001991-94 to M-001994-94 are Set Aside and Vacated for lack of legal
bases.
Conformably, respondent New Pacific Timber and Supply Co., Inc., is hereby directed to pay
individual complainants their CBA benefits in the aggregate amount of P13,559,510.37, the detailed
computation thereof is contained in Annex "A" which forms an integral part of this resolution, plus ten
(10%) percent thereof as Attorney's fees.
SO ORDERED. 10
Hence, the instant petition wherein petitioner Company raises the following issues:
I
THE PUBLIC RESPONDENT NLRC COMMITTED GRAVE ABUSE OF DISCRETION IN
ALLOWING THE "PETITION FOR RELIEF" TO PROSPER.
II
THE PUBLIC RESPONDENT NLRC COMMITTED GRAVE ABUSE OF DISCRETION IN RULING
THAT PRIVATE RESPONDENTS MARIANO AKILIT AND 350 OTHERS ARE ENTITLED TO
BENEFITS UNDER THE COLLECTIVE BARGAINING AGREEMENT IN SPITE OF THE FACT
THAT THEY WERE NOT EMPLOYED BY THE PETITIONER MUCH LESS WERE THEY
MEMBERS OF THE BARGAINING UNIT DURING THE TERM OF THE CBA.
III
PUBLIC RESPONDENT NLRC COMMITTED GRAVE ABUSE OF DISCRETION IN MAKING
FACTUAL FINDINGS WITHOUT BASIS.
IV
THE DISPOSITIVE PORTIONS OF THE ASSAILED RESOLUTIONS ARE DEFECTIVE AND/OR
REVEAL THE GRAVE ABUSE OF DISCRETION COMMITTE D BY PUBLIC RESPONDENT. 11
Petitioner company contends that a "Petition of Relief" is not the proper mode of seeking a review of
a decision rendered by the arbitration branch of the NLRC. 12 According to the petitioner, nowhere in
the Labor Code or in the NLRC Rules of Procedure is there such a pleading. Rather, the remedy of a
party aggrieved by an unfavorable of the labor arbiter is to appeal said judgment to the NLRC. 13
Petitioners asseverates that even assuming that the NLRC correctly treated the petition for relief as
an appeal, still, it should not have allowed the same to prosper, because the petition was filed
several months after the ten-day reglementary period for filing an appeal had expired; and therefore,
it failed to comply with the requirements of an appeal under the Labor Code and the NLRC Rules of
Procedure.

Procedure.
Petitioner Company further contends that in filing separate complaints and/or money claims at the
arbitration level in spite of their pending petition for relief and in spite of the final order, dated
October 18, 1993, in NLRC Case No. RAB-IX-0334-82, the private respondents were in fact forum-
shopping, an act which is proscribed as trifling with the courts and abusing their practices.
Anent the second issue, petitioners argues that the private respondents are not entitled to the
benefits under the CBA because employees hired after the term of a CBA are not parties to the
agreement, and therefore, may not claim benefits thereunder, even if they subsequently become
members of the bargaining unit.
As for the term of the CBA, petitioner maintains that Article 253 of the Labor Code refers to the
continuation in full force and effect of the previous CBA's terms and conditions. By necessity, it could
not possibly refers to terms and conditions which, as expressly stipulated, ceased to have force and
effect. 14
According to petitioner, the provision on wage increase in the 1981 to 1984 CBA between petitioner
Company and NFL provided for yearly wage increases. Logically, these provisions ended in the
years 1984 — the last year that the economic provisions of the CBA were, to contract and law,
effective. Petitioner claims that there is no contractual basis for the grant of CBA benefits such as
wage increases in 1985 and subsequent years, since the CBA stipulated only the increases for the
years 1981 to 1984.
Moreover, petitioner alleges that it was through no fault of theirs that no new CBA was entered
pending appeal of the decision in NLRC Case No. RAB-IX-0334-82.
Finally, petitioner Company claims that it was never given the opportunity to submit a counter-
computation of the benefits supposedly due the private respondents. Instead, the NLRC allegedly
relied on the self-serving computations of private respondents.
Petitioner's contentions as untenable.

We find no grave abuse of discretion on the part of the NLRC, when it entertained the petition for
relief filed by the private respondents and treated it as an appeal, even if it was filed beyond the
reglementary period for filing an appeal. Ordinarily, once a judgment has become final and
executory, it can no longer be disturbed, altered or modified. However, a careful scrutiny of the facts
and circumstances of the instant case warrants liberality in the application of technical rules and
procedure. It would be a greater injustice to deprive the concerned employees of the monetary
benefits rightly due them because of a circumstance over which they had no control. As stated
above, private respondents, in their petition for relief, claimed that they were wrongfully excluded
from the list of those entitled to the CBA benefits by their union, NFL, without their knowledge; and,
because they were under the impression that they were ably represented, they were not able to
appeal their case on time.
The Supreme Court has allowed appeals from decisions of the labor arbiter to the NLRC, even if
filed beyond the reglementary period, in the interest of justice. 15 Moreover, under Article 218 (c) of
the Labor Code, the NLRC may, in the exercise of its appellate powers, "correct, amend or waive
any error, defect or irregularity whether in the substance or in form." Further, Article 221 of the same
provides that "In any proceeding before the Commission or any of the Labor Arbiters, the rules of
evidence prevailing in courts of law or equity shall not be controlling and it is the spirit and intention
of this Code that the Commission and its members and the Labor Arbiter 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. . . . 16
Anent the issue of whether or not the term of an existing CB, particularly as to its economic
provisions, can be extended beyond the period stipulated therein, and even beyond the three-year
period prescribed by law, in the absence of a new agreement, Article 253 of the Labor Code
explicitly provides:
Art. 253. Duty to bargain collectively when there exists a collective bargaining agreement. — When
there is a collective bargaining agreement, the duty to bargain collectively shall also mean that
neither party shall terminate nor modify such agreement during its lifetime. However, either party can
serve a written notice to terminate or modify the agreement at least sixty (60) days prior to its
expiration date. It shall be the duty of both parties to keep the status quo and to continue in full force

and effect the terms and conditions of the existing agreement during the 60-day period and/or until a
new agreement is reached by the parties. (Emphasis supplied.)
It is clear from the above provision of law that until a new Collective Bargaining Agreement has been
executed by and between the parties, they are duty-bound to keep the status quo and to continue in
full force and effect the terms and conditions of the existing agreement. The law does not provide for
any exception nor qualification as to which of the economic provisions of the existing agreement are
to retain force and effect, therefore, it must be understood as encompassing all the terms and
conditions in the said agreement.
In the case at bar, no new agreement was entered into by and between petitioner Company and
NFL pending appeal of the decision in NLRC Case No. RAB-IX-0334-82; nor were any of the
economic provisions and/or terms and conditions pertaining to monetary benefits in the existing
agreement modified or altered. Therefore, the existing CBA in its entirety, continues to have legal
effect.
In a recent case, the Court had occasion to rule that Article 253 and
253-A 17 mandate the parties to keep the status quo and to continue in full force and effect the terms
and conditions of the existing agreement during the 60-day period prior to the expiration of the old
CBA and/or until a new agreement is reached by the parties. Consequently, the automatic renewal
clause provided for by the law, which is deemed incorporated in all CBA's, provides the reason why
the new CBA can only be given a prospective effect. 18
In the case of Lopez Sugar Corporation vs. Federation of Free Workers, et. al, 19 this Court
reiterated the rule although a CBA has expired, it continues to have legal effects as between the
parties until a new CBA has been entered into. It is the duty of both parties to the CBA to keep
the status quo, and to continue in full force and effect the terms and conditions of the existing
agreement during the 60-day period and/or until a new agreement is reached by the parties. 20
To rule otherwise, i.e., that the economic provisions of the existing CBA in the instant case ceased to
have force and effect in the year 1984 would be to create a gap during which no agreement would
govern, from the time the old contract expired to the time a new agreement shall have been entered
into. For if, as contended by the petitioner, the economic provisions of the existing CBA were to have
no legal effect, what agreement as to wage increases and other monetary benefits would govern at
all? None, it would seem, if we are to follow the logic of petitioner Company. Consequently, the
employees from the year 1985 onwards would be deprived of a substantial amount of monetary
benefits which they could have enjoyed had the terms and conditions of the CBA remained in force
and effect. Such a situation runs contrary to the very intent and purpose of Article 253 and 253-A of
the Labor Code which is to curb labor unrest and to promote industrial peace, as can be gleaned
from the discussion of the legislators leading to the passage of the said laws, thus:
HON. CHAIRMAN HERRERA: Pag nag-survey tayo sa mga unyon, ganoon ang mangyayari. And I
think our responsibility here is to create a legal framework to promote industrial peace and to
develop responsible and fair labor movement.
HON. CHAIRMAN VELOSO: In other words, the longer the period of the effectivity.
xxx xxx xxx
HON. CHAIRMAN VELOSO: (continuing) . . . . in other words, the longer the period of effectivity of
the CBA, the better for industrial peace.
xxx xxx xxx 21
Having established that the CBA between petitioner Company and NFL remained in full force and
effect even beyond the stipulated term, in the absence of a new agreement; and, therefore, that the
economic provisions such as wage increases continued to have legal effect, we are now faced with
the question of who are entitled to the benefits provided thereunder.
Petitioner Company insists that the rank-and-file employees hired after the term of the CBA inspite of
their subsequent membership in the bargaining unit, are not parties to the agreement, and certainly
may not claim the benefits thereunder.
We do not agree. In a long line of cases, this Court has held that when a collective bargaining
contract is entered into by the union representing the employees and the employer, even the non-
member employees are entitled to the benefits of the contract. To accord its benefits only to
members of the union without any valid reason would constitute undue discrimination against
nonmembers. 22 It is even conceded, that a laborer can claim benefits from the CBA entered into
between the company and the union of which he is a member at the time of the conclusion of the
agreement, after he has resigned from the said union. 23
In the same vein, the benefits under the CBA in the instant case should be extended to those

employees who only became such after the year 1984. To exclude them would constitute undue
discrimination and deprive them of monetary benefits they would otherwise be entitled to under a
new collective bargaining contract to which they would have been parties. Since in this particular
case, no new agreement had been entered into after the CBA's stipulated term, it is only fair and just
that the employees hired thereafter be included in the existing CBA. This is in consonance with our
ruling that the terms and conditions of a collective bargaining agreement continue to have force and
effect even beyond the stipulated term when no new agreement is executed by and between the
parties to avoid or prevent the situation where no collective bargaining agreement at all
would govern between the employer company and its employees.
Anent the other issues raised by petitioner Company, the Court finds that these pertain to questions
of fact that have already been passed upon by the NLRC. It is axiomatic that, the factual findings of
the National Labor Relations Commissions, which have acquired expertise because its jurisdiction is
confined to specific matters, are accorded respect and finality by the Supreme Court, when these
are supported by substantial evidence. "A perusal of the assailed resolution reveals that the same
was reached on the basis of the required quantum of evidence.
WHEREFORE, in view of the foregoing, the instant petition for certiorari is hereby DISMISSED for
lack of merit. 1âwphi 1. nê
t
SO ORDERED.
Davide, Jr., C.J., Puno and Ynares-Santiago, JJ., concur.
Pardo, J., is on official business abroad.
Footnotes
1 Rollo, p. 42.
2 Ibid.
3 Id., at 42.
4 Id., at 43.
5 Id., at 43.
6 Id., at 46.
7 Id., at 137.
8 Id., at 40.
9 Id., at 138.
10 Id., at 69-70.
11 Id., at 12.
12 Id., at 12.
13 Id., at 13.
14 Id., at 25.
15 City Fair Corporation vs. NLRC, 243 SCRA 572 (1995).
16 Id., at 576.
17 Art. 253-A. Terms of a collective bargaining agreement. — Any Collective Bargaining Agreement
that the parties may enter into shall insofar as the representation aspect is concerned, be for a term
of five (5) years. . . . All other provisions of the Collective Bargaining Agreement shall be
renegotiated not later than three (3) years after its execution. Any agreement on such other
provisions of the Collective Bargaining Agreement entered into within six (6) months from the date of
expiry of the term of such other provisions as fixed in such Collective Bargaining Agreement, shall
retroact to the day immediately following such date. If any such agreement is entered into beyond six
months, the parties shall agree on bargaining agreement, the parties may exercise their rights under
this Code.
18 Union of Filipino Employees vs. NLRC, 192 SCRA 414 (1990).
19 189 SCRA 179.
20 Pier 8 Arrastre & Stevedoring Services, Inc., vs. Hon. Ma. Nieves Roldan-Confesor, et. al., 241
SCRA 294 (1995).
21 Conference Committee on Labor, December 15, 1988.
22 International Oil Factory Workers Union vs. Hon. Martinez, et. al., 110 Phil. 595 (1960); National
Brewery & Allied Industries Labor Union vs. San Miguel Brewery Inc., et. al., 118 Phil 806 (1963).
23 Kapisanan Ng Mga Manggagawang Pinagyakap vs. Franklin Baker Co., of the Phil. June 3, 1949.

Interphil Union vs. Interphil
2:24 AM
PHILIPPINE JURISPRUDENCE - FULL TEXT

G.R. No. 142824 December 19, 2001
INTERPHIL LABORATORIES EMPLOYEES UNION-FFW, ET AL. vs. INTERPHIL LABORATORIES, INC., ET AL.

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 142824 December 19, 2001
INTERPHIL LABORATORIES EMPLOYEES UNION-FFW, ENRICO GONZALES and MA.
THERESA MONTEJO, petitioners,
vs.
INTERPHIL LABORATORIES, INC., AND HONORABLE LEONARDO A. QUISUMBING,
SECRETARY OF LABOR AND EMPLOYMENT, respondents.
KAPUNAN, J.:
Assailed in this petition for review on certiorari are the decision, promulgated on 29 December 1999,
and the resolution, promulgated on 05 April 2000, of the Court of Appeals in CA-G.R. SP No. 50978.
Culled from the questioned decision, the facts of the case are as follows: Ano na connection sa labor arb ng culture?
Baka sa hierarchy of needs… ??? :(
Interphil Laboratories Employees Union-FFW is the sole and exclusive bargaining agent of the rank-
and-file employees of Interphil Laboratories, Inc., a company engaged in the business of
manufacturing and packaging pharmaceutical products. They had a Collective Bargaining
Agreement (CBA) effective from 01 August 1990 to 31 July 1993.
Prior to the expiration of the CBA or sometime in February 1993, Allesandro G. Salazar,1 Vice-
President-Human Resources Department of respondent company, was approached by Nestor
Ocampo, the union president, and Hernando Clemente, a union director. The two union officers
inquired about the stand of the company regarding the duration of the CBA which was set to expire
in a few months. Salazar told the union officers that the matter could be best discussed during the
formal negotiations which would start soon.
In March 1993, Ocampo and Clemente again approached Salazar. They inquired once more about
the CBA status and received the same reply from Salazar. In April 1993, Ocampo requested for a
meeting to discuss the duration and effectivity of the CBA. Salazar acceded and a meeting was held
on 15 April 1993 where the union officers asked whether Salazar would be amenable to make the
new CBA effective for two (2) years, starting 01 August 1993. Salazar, however, declared that it
would still be premature to discuss the matter and that the company could not make a decision at
the moment. The very next day, or on 16 April 1993, all the rank-and-file employees of the company
refused to follow their regular two-shift work schedule of from 6:00 a.m. to 6:00 p.m., and from 6:00
p.m. to 6:00 a.m. At 2:00 p.m. and 2:00 a.m., respectively, the employees stopped working and left
their workplace without sealing the containers and securing the raw materials they were working on.
When Salazar inquired about the reason for their refusal to follow their normal work schedule, the
employees told him to "ask the union officers." To minimize the damage the overtime boycott was
causing the company, Salazar immediately asked for a meeting with the union officers. In the
meeting, Enrico Gonzales, a union director, told Salazar that the employees would only return to
their normal work schedule if the company would agree to their demands as to the effectivity and
duration of the new CBA. Salazar again told the union officers that the matter could be better
discussed during the formal renegotiations of the CBA. Since the union was apparently unsatisfied
with the answer of the company, the overtime boycott continued. In addition, the employees started
to engage in a work slowdown campaign during the time they were working, thus substantially
delaying the production of the company.2
On 14 May 1993, petitioner union submitted with respondent company its CBA proposal, and the
latter filed its counter-proposal.
On 03 September 1993, respondent company filed with the National Labor Relations Commission
(NLRC) a petition to declare illegal petitioner union's "overtime boycott" and "work slowdown" which,
according to respondent company, amounted to illegal strike. The case, docketed NLRC-NCR Case
No. 00-09-05529-93, was assigned to Labor Arbiter Manuel R. Caday.
On 22 October 1993, respondent company filed with the National Conciliation and Mediation Board
(NCMB) an urgent request for preventive mediation aimed to help the parties in their CBA
negotiations.3 The parties, however, failed to arrive at an agreement and on 15 November 1993,
respondent company filed with the Office of the Secretary of Labor and Employment a petition for
assumption of jurisdiction.
On 24 January 1994, petitioner union filed with the NCMB a Notice of Strike citing unfair labor
practice allegedly committed by respondent company. On 12 February 1994, the union staged a
strike.
On 14 February 1994, Secretary of Labor Nieves Confesor issued an assumption order4 over the
labor dispute. On 02 March 1994, Secretary Confesor issued an order directing respondent
company to "immediately accept all striking workers, including the fifty-three (53) terminated union
officers, shop stewards and union members back to work under the same terms and conditions
prevailing prior to the strike, and to pay all the unpaid accrued year end benefits of its employees in
1993."5 On the other hand, petitioner union was directed to "strictly and immediately comply with the
return-to-work orders issued by (the) Office x x x6 The same order pronounced that "(a)ll pending
cases which are direct offshoots of the instant labor dispute are hereby subsumed herewith."7
In the i, the case before Labor Arbiter Caday continued. On 16 March 1994, petitioner union filed an
"Urgent Manifestation and Motion to Consolidate the Instant Case and to Suspend Proceedings"
seeking the consolidation of the case with the labor dispute pending before the Secretary of Labor.
Despite objection by respondent company, Labor Arbiter Caday held in abeyance the proceedings
before him. However, on 06 June 1994, Acting Labor Secretary Jose S. Brillantes, after finding that
the issues raised would require a formal hearing and the presentation of evidentiary matters,
directed Labor Arbiters Caday and M. Sol del Rosario to proceed with the hearing of the cases
before them and to thereafter submit their report and recommendation to his office.

On 05 September 1995, Labor Arbiter Caday submitted his recommendation to the then Secretary of
Labor Leonardo A. Quisumbing.8 Then Secretary Quisumbing approved and adopted the report in
his Order, dated 13 August 1997, hence:
WHEREFORE, finding the said Report of Labor Arbiter Manuel R. Caday to be supported by
substantial evidence, this Office hereby RESOLVES to APPROVE and ADOPT the same as the
decision in this case, and judgment is hereby rendered:
(1) Declaring the 'overtime boycott' and 'work slowdown' as illegal strike;
(2) Declaring the respondent union officers namely:
Nestor Ocampo President

Carmelo Santos Vice-President
Marites Montejo Treasurer/Board Member
Rico Gonzales Auditor
Rod Abuan Director
Segundino Flores Director
Hernando Clemente Director
who spearheaded and led the overtime boycott and work slowdown, to have lost their employment
status; and
(3) Finding the respondents guilty of unfair labor practice for violating the then existing CBA which
prohibits the union or any employee during the existence of the CBA from staging a strike or
engaging in slowdown or interruption of work and ordering them to cease and desist from further
committing the aforesaid illegal acts.
Petitioner union moved for the reconsideration of the order but its motion was denied. The union
went to the Court of Appeals via a petition for certiorari. In the now questioned decision promulgated
on 29 December 1999, the appellate court dismissed the petition. The union's motion for
reconsideration was likewise denied.
Hence, the present recourse where petitioner alleged:

THE HONORABLE FIFTH DIVISION OF THE COURT OF APPEALS, LIKE THE HONORABLE
PUBLIC RESPONDENT IN THE PROCEEDINGS BELOW, COMMITTED GRAVE ABUSE OF
DISCRETION, AMOUNTING TO LACK AND/OR EXCESS OF JURISDICT ION WHEN IT
COMPLETELY DISREGARDED "PAROL EVIDENCE RULE" IN THE EVALUATION AND
APPRECIATION OF EVIDENCE PROFERRED BY THE PARTIES.
THE HONORABLE FIFTH DIVISION OF THE COURT OF APPEALS COMMITTED GRAVE ABUSE
OF DISCRETION, AMOUNTING TO LACK AND/OR EXCESS OF JURISDICTION, WHEN IT DID
NOT DECLARE PRIVATE RESPONDENT'S ACT OF EXTENDING SUBSTANTIAL SEPARATION
PACKAGE TO ALMOST ALL INVOLVED OFFICERS OF PETITIONER UNION, DURING THE
PENDENCY OF THE CASE, AS TANTAMOUNT TO CONDONATION, IF INDEED, THERE WAS
ANY MISDEED COMMITTED.
THE HONORABLE FIFTH DIVISION OF THE COURT OF APPEALS COMMITTED GRAVE ABUSE
OF DISCRETION, AMOUNTING TO LACK AND/OR EXCESS OF JURISDICTION WHEN IT HELD
THAT THE SECRETARY OF LABOR AND EMPLOYMENT HAS JURISDICT ION OVER A CASE (A
PETITION TO DECLARE STRIKE ILLEGAL) WHICH HAD LONG BEEN FILED AND PENDING
BEFORE THE LABOR ARBITER.9
We sustain the questioned decision.
Pasted from <http://www.lawphil.net/judjuris/juri2001/dec2001/gr_142824_2001.html>

SMC Employees Union vs. Confessor
2:24 AM

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 111262 September 19, 1996

SAN MIGUEL CORPORATION EMPLOYEES UNION-PTGWO, represented by its President
RAYMUNDO HIPOLITO, JR., petitioner,
vs.
HON. MA. NIEVES D. CONFESOR, Secretary of Labor, Dept. of Labor & Employment, SAN
MIGUEL CORPORATION, MAGNOLIA CORPORATION (Formerly, Magnolia Plant) and SAN
MIGUEL FOODS, INC. (Formerly, B-Meg Plant), respondents.
KAPUNAN, J.:
This is a petition for certiorari assailing the Order of the Secretary of Labor rendered on February 15,
1993 involving a labor dispute at San Miguel Corporation.
The facts are as follows:
On June 28, 1990, petitioner-union San Miguel Corporation Employees Union — PTGWO entered
into a Collective Bargaining Agreement (CBA) with private respondent San Miguel Corporation
(SMC) to take effect upon the expiration of the previous CBA or on June 30, 1989.
This CBA provided, among others, that:
ARTICLE XIV
DURATION OF AGREEMENT
Sec. 1. This Agreement which shall be binding upon the parties hereto and their respective
successors-in-interest, shall become effective and shall remain in force and effect until June 30,
1992.
Sec. 2. In accordance with Article 253-A of the Labor Code as amended, the term of this Agreement
insofar as the representation aspect is concerned, shall be for five (5) years from July 1, 1989 to
June 30, 1994. Hence, the freedom period for purposes of such representation shall be sixty (60)
days prior to June 30, 1994.
Sec. 3. Sixty (60) days prior to June 30, 1992 either party may initiate negotiations of all provisions of this
Agreement, except insofar as the representation aspect is concerned. If no agreement is reached in such
negotiations, this Agreement shall nevertheless remain in force up to the time a subsequent agreement is
reached by the parties. 1
In keeping with their vision and long term strategy for business expansion, SMC management
informed its employees in a letter dated August 13, 1991 2 that the company which was composed of
four operating divisions namely: (1) Beer, (2) Packaging, (3) Feeds and Livestocks, (4) Magnolia and
Agri-business would undergo a restructuring. 3
Effective October 1, 1991, Magnolia and Feeds and Livestock Division were spun-off and became
two separate and distinct corporations: Magnolia Corporation (Magnolia) and San Miguel Foods, Inc.
(SMFI). Notwithstanding the spin-offs, the CBA remained in force and effect.
After June 30, 1992, the CBA was renegotiated in accordance with the terms of the CBA and Article
253-A of the Labor Code. Negotiations started sometime in July, 1992 with the two parties
submitting their respective proposals and counterproposals.
During the negotiations, the petitioner-union insisted that the bargaining unit of SMC should still
include the employees of the spun-off corporations: Magnolia and SMFI; and that the renegotiated
terms of the CBA shall be effective only for the remaining period of two years or until June 30, 1994.
SMC, on the other hand, contended that the members/employees who had moved to Magnolia and
SMFI, automatically ceased to be part of the bargaining unit at the SMC. Furthermore, the CBA
should be effective for three years in accordance with Art. 253-A of the Labor Code.
Unable to agree on these issues with respect to the bargaining unit and duration of the CBA,
petitioner-union declared a deadlock on September 29, 1990.
On October 2, 1992, a Notice of Strike was filed against SMC.
In order to avert a strike, SMC requested the National Conciliation and Mediation Board (NCMB) to
conduct preventive mediation. No settlement was arrived at despite several meetings held between
the parties.
On November 3, 1992, a strike vote was conducted which resulted in a "yes vote" in favor of a strike.

the parties.
On November 3, 1992, a strike vote was conducted which resulted in a "yes vote" in favor of a strike.
On November 4, 1992, private respondents SMC, Magnolia and SMFI filed a petition with the
Secretary of Labor praying that the latter assume jurisdiction over the labor dispute in a vital
industry.
As prayed for, the Secretary of Labor assumed jurisdiction over the labor dispute on November 10,
1992. 4Several conciliation meetings were held but still no agreement/settlement was arrived at by
both parties.
After the parties submitted their respective position papers, the Secretary of Labor issued the
assailed Order on February 15, 1993 directing, among others, that the renegotiated terms of the
CBA shall be effective for the period of three (3) years from June 30, 1992; and that such CBA shall
cover only the employees of SMC and not of Magnolia and SMFI.
Dissatisfied, petitioner-union now comes to this Court questioning this Order of the Secretary of
Labor.
Subsequently, on March 30, 1995, 5 petitioner-union filed a Motion for Issuance of a Temporary
Restraining Order or Writ of Preliminary Injunction to enjoin the holding of the certification elections
in the different companies, maintaining that the employees of Magnolia and SMFI fall within the
bargaining unit of SMC.
On March 29, 1995, the Court issued a resolution granting the temporary restraining order prayed
for. 6
Meanwhile, an urgent motion for leave to intervene 7 in the case was filed by the Samahan ng
Malayang Manggagawa-San Miguel Corporation-Federation of Free Workers (SMM-SMC-FFW)
through its authorized representative, Elmer S. Armando, alleging that it is one of the contending
parties adversely affected by the temporary restraining order.
The Intervenor cited the case of Daniel S.L. Borbon v. Hon. Bienvenido B. Laguesma, 8 G.R. No.
101766, March 5, 1993, where the Court recognized the separation of the employees of Magnolia
from the SMC bargaining unit. It then prayed for the lifting of the temporary restraining order.
Likewise, Efren Carreon, Acting President of the SMCEU-PTGWO, filed a petition for the
withdrawal/dismissal of the petition considering that the temporary restraining order jeopardized the
employees' right to conclude a new CBA. At the same time, he challenged the legal personality of
Mr. Raymundo Hipolito, Jr. to represent the Union as its president when the latter was already
officially dismissed from the company on October 4, 1994.
Amidst all these pleadings, the following primordial issues arise:
1) Whether or not the duration of the renegotiated terms of the CBA is to be effective for three years
of for only two years; and
2) Whether or not the bargaining unit of SMC includes also the employees of the Magnolia and
SMFI.
Petitioner-union contends that the duration for the non-representation provisions of the CBA should
be coterminous with the term of the bargaining agency which in effect shall be for the remaining two
years of the current CBA, citing a previous decision of the Secretary of Labor on December 14, 1992
in the matter of the labor dispute at Philippine Refining Company.
However, the Secretary of Labor, in her questioned Order of February 15, 1993 ruled that the
renegotiated terms of the CBA at SMC should run for a period of three (3) years.
We agree with the Secretary of Labor.
Pertinent to the first issue is Art. 253-A of the Labor Code as amended which reads:
Art. 253-A. Terms of a Collective Bargaining Agreement. — Any Collective Bargaining Agreement
that the parties may enter into shall, insofar as the representation aspect is concerned, be for a term
of five (5) years. No petition questioning the majority status of the incumbent bargaining agent shall
be entertained and no certification election shall be conducted by the Department of Labor and
Employment outside of the sixty-day period immediately before the date of expiry of such five year
term of the Collective Bargaining Agreement. All other provisions of the Collective Bargaining
Agreement shall be renegotiated not later than three (3) years after its execution. Any agreement on
such other provisions of the Collective Bargaining Agreement entered into within six (6) months from
the date of expiry of the term of such other provisions as fixed in such Collective Bargaining
Agreement, shall retroact to the day immediately following such date. If any such agreement is
entered into beyond six months, the parties shall agree on the duration of retroactivity thereof. In
case of a deadlock in the renegotiation of the collective bargaining agreement, the parties may
exercise their rights under this Code. (Emphasis supplied.)
Article 253-A is a new provision. This was incorporated by Section 21 of Republic Act No. 6715 (the
Herrera-Veloso Law) which took effect on March 21, 1989. This new provision states that the CBA
has a term of five (5) years instead of three years, before the amendment of the law as far as the
representation aspect is concerned. All other provisions of the CBA shall be negotiated not later than
three (3) years after its execution. The "representation aspect" refers to the identity and majority
status of the union that negotiated the CBA as the exclusive bargaining representative of the

status of the union that negotiated the CBA as the exclusive bargaining representative of the
appropriate bargaining unit concerned. "All other provisions" simply refers to the rest of the CBA,
economic as well as non-economic provisions, except representation. 10
As the Secretary of Labor herself observed in the instant case, the law is clear and definite on the
duration of the CBA insofar as the representation aspect is concerned, but is quite ambiguous with
the terms of the other provisions of the CBA. It is a cardinal principle of statutory construction that
the Court must ascertain the legislative intent for the purpose of giving effect to any statute. The
history of the times and state of the things existing when the act was framed or adopted must be
followed and the conditions of the things at the time of the enactment of the law should be
considered to determine the legislative intent. 11 We look into the discussions leading to the passage
of the law:
THE CHAIRMAN (REP. VELASCO): . . .the CBA, insofar as the economic provisions are
concerned . . .
THE CHAIRMAN (SEN. HERRERA): Maximum of three years?
THE CHAIRMAN (SEN. VELOSO): Maximum of three years.
THE CHAIRMAN (SEN. HERRERA): Present practice?
THE CHAIRMAN (REP. VELOSO): In other words, after three years pwede nang magnegotiate in
the CBA for the remaining two years.
THE CHAIRMAN (REP. HERRERA): You can negotiate for one year, two years or three years but
assuming three years which, I think, that's the likelihood. . .
THE CHAIRMAN (REP. VELOSO): Yes.
THE CHAIRMAN (SEN. HERRERA): Three years, the new union, assuming there will be a change
of agent, at least he has one year to administer and to adjust, to develop rapport with the
management. Yan ang importante.
You know, for us na nagne-negotiate, ang hazard talaga sa negotiation, when we negotiate with
somebody na hindi natin kilala, then, we are governed by our biases na ito ay destroyer ng Labor;
ang mga employer, ito bayaran ko lang ito okay na.
'Yan ang nangyayari, but let us give that allowance for the one year to let them know.
Actually, ang thrust natin ay industrial peace, and there can be no industrial peace if you encourage union
to fight each other. 'Yan ang problema. 12
xxx xxx xxx
HON. ISIDRO: Madali iyan, kasi these two periods that are mentioned in the CBA seem to provide
some doubts later on in the implementation. Sabi kasi rito, insofar as representation issue is
concerned, seven years and lifetime. . .
HON. CHAIRMAN HERRERA: Five years.
HON. ISIDRO: Five years, all the others three years.
HON. CHAIRMAN HERRERA: No. Ang three years duon sa terms and conditions, not later than
three years.
HON. ISIDRO: Not later than three years, so within three years you have to make a new CBA.
HON. CHAIRMAN HERRERA: Yes.
HON. ISIDRO: That is again for purposes of renewing the terms, three years na naman iyan — then,
seven years. . .
HON. CHAIRMAN HERRERA: Not later than three years.
HON. ISIDRO: Assuming that they usually follow the period — three years nang three years, but
under this law with respect to representation — five years, ano? Now, after three years, nagkaroon
ng bagong terms, tapos na iyong term, renewed na iyong terms, ang karapatan noon sa
representation issue mayroon pang two years left.
HON. CHAIRMAN HERRERA: One year na lang because six years nang lahat, three plus three.
HON. ISIDRO: Hindi, two years pa rin ang natitira, eh. Three years pa lang ang natatapos. So,
another CBA was formed and this CBA mayroon na naman siyang bagong five years with respect to
representation issue.
HON. CHAIRMAN HERRERA: Hindi. Hindi na. Ganito iyan. Iyong terms and conditions for three
years.
HON. ISIDRO: Yes.
HON. CHAIRMAN HERRERA: One the third year you can start negotiating to change the terms and
conditions.
HON. ISIDRO: Yes.
HON. CHAIRMAN HERRERA: Assuming you will follow the practice . . .
HON. ISIDRO: Oo.
HON. CHAIRMAN HERRERA: But on the fifth year, ang representation status now can be
questioned, so baka puwedeng magkaroon ng certification election. If the incumbent union loses,
then the new union administers the contract for one year to give him time to know his counterpart —

the employer, before he can negotiate for a new term. Iyan ang advantage.
HON. ISIDRO: Kasi, when the CBA has only a three-year lifetime with respect to the terms and
conditions and then, so you have to renew that in three years — you renew for another three years,
mayroon na naman another five years iyong ano . . .
HON. ANIAG: Hindi, ang natitira duon sa representation two years na lang.
HON. CHAIRMAN HERRERA: Two years na lang sa representation.
HON. ANIAG: So that if they changed the union, iyong last year . . .
HON. CHAIRMAN HERRERA: Iyon lang, that you have to administer the contract. Then, voluntary
arbitration na kayo and then mayroon ka nang probisyon "retroact on the date of the expiry date".
Pagnatalo ang incumbent unyon, mag-aassume ang new union, administer the contract. As far as
the term and condition, for one year, and that will give him time and the employer to know each
other.
HON. JABAR: Boy, let us be realistic. I think if a new union wins a certification election, it would not
want to administer a CBA which has not been negotiated by the union itself.
HON. CHAIRMAN HERRERA: That is not true, Hon. This is true because what is happening now in
the country is that the term ng contract natin, duon din mage-expire ang representation. Iyon ang
nangyari. That is where you have the gulo. Ganoon ang nangyari. So, ang nangyari diyan, pag-
mayroon certification election, expire ang contract, ano ang usual issue — company union. I can you
(sic) give you more what the incumbent union is giving. So ang mangyayari diyan, pag-negotiate mo
hardline na agad.
HON. CHAIRMAN VELOSO : Mon, for four years?
HON. ISIDRO: Ang tingin ko lang dito, iyong distinction between the terms and the representation
aspect — why do we have to distinguish between three and five? What's wrong with having a
uniform expiration period?
HON. CHAIRMAN HERRERA: Five years.
HON. ISIDRO: Puro three years.
HON. CHAIRMAN HERRERA: That is what we are trying to avoid because ang reality diyan, Mart,
pagpasok mo sa kumpanya, mag-ne-negotiate ka ng six months, that's the average, aabot pa
minsan ng one year. Pagktapos ng negotiation mo, signing kayo. There will be an allowed period of
one year. Third year na, uumpisahan naman ang organizations, papasok na ang ibang unyon
because the reality in Trade Union committee, they organize, we organize. So, actually, you have
only industrial peace for one year, effective industrial peace. That is what we are trying to change.
Otherwise, we will continue to discourage the investors and the union will never grow because every
other year it has to use its money for the certification election. Ang grabe pang practice diyan, mag-
a-advance ang federation for three years union dues para panggastos lang sa certification election.
That is what we are trying to avoid.
HON. JABAR: Although there are unions which really get advances.
HON. CHAIRMAN HERRERA: Pag nag-survey tayo sa mga unyon, ganoon ang mangyayari. And I
think our responsibility here is to create a legal framework to promote industrial peace and to
develop responsible and fair labor movement.
HON. CHAIRMAN VELOSO: In other words, the longer the period of the effectivity . . .
xxx xxx xxx
HON CHAIRMAN VELOSO. (continuing) . . . in other words, the longer the period of effectivity of the
CBA, the better for industrial peace.
HON. CHAIRMAN HERRERA: representation status.
HON. CHAIRMAN VELOSO: Only on —
HON. CHAIRMAN HERRERA: — the representations.
HON. CHAIRMAN VELOSO: But on the economic issues.
HON. CHAIRMAN HERRERA: You have to review that. The parties will have to review that.
HON. CHAIRMAN VELOSO: At least on second year.
HON. CHAIRMAN HERRERA: Not later than 3 years, ang karamihan ng mga mag-negotiate when the
companyis (interrupted) 13
From the aforesaid discussions, the legislators were more inclined to have the period of effectivity for
three (3) years insofar as the economic as well as non-economic provisions are concerned, except
representation.
Obviously, the framers of the law wanted to maintain industrial peace and stability by having both
management and labor work harmoniously together without any disturbance. Thus, no outside union
can enter the establishment within five (5) years and challenge the status of the incumbent union as
the exclusive bargaining agent. Likewise, the terms and conditions of employment (economic and
non-economic) can not be questioned by the employers or employees during the period of effectivity
of the CBA. The CBA is a contract between the parties and the parties must respect the terms and
conditions of the agreement. 14 Notably, the framers of the law did not give a fixed term as to the
effectivity of the terms and conditions of employment. It can be gleaned from their discussions that it

effectivity of the terms and conditions of employment. It can be gleaned from their discussions that it
was left to the parties to fix the period.
In the instant case, it is not difficult to determine the period of effectivity for the non-representation
provisions of the CBA. Taking it from the history of their CBAs, SMC intended to have the terms of
the CBA effective for three (3) years reckoned from the expiration of the old or previous CBA which
was on June 30, 1989, as it provides:
Sec. 1. This Agreement which shall be binding upon the parties hereto and their respective
successors-in-interest, shall become effective and shall remain in force and effect until June 30,
1992.
The argument that the PRC case is applicable is indeed misplaced. We quote with favor the Order of
the Secretary of Labor in the light of SMC's peculiar situation as compared with PRC's company
situation.
It is true that in the Philippine Refining Company case (OS-AJ-0031-91) (sic), Labor Dispute at
Philippine Refining Company), we ruled that the term of the renegotiated provisions of the CBA
should coincide with the remaining term of the agency. In doing so, we placed premium on the fact
that PRC has only two (2) unions and no other union had yet executed a renewed term of 3 years.
Nonetheless, in ruling for a shortened term, we were guided by our considered perception that the
said term would improve, rather than ruin, the general welfare of both the workers and the company.
It is equally true that once the economic provisions of the CBA expire, the residual representative
status of the union is effective for only 2 more years. However, if circumstances warrant that the
contract duration which it is soliciting from the company for the benefit of the workers, shall be a little
bit longer than its lifespan, then this Office cannot stand in the way of a more ideal situation. We
must not lose sight of the fact that the primordial purpose of a collective contract is to promote
industrial harmony and stability in the terms and conditions of employment. To our mind, this
objective cannot be achieved without giving due consideration to the peculiarities and unique
characteristics of the employer. In the case at bar, there is no dispute that the mother corporation
(SMC) spun-off two of its divisions and thereby gave birth to two (2) other entities now known as
Magnolia Corporation and San Miguel Foods, Inc. In order to effect a smooth transition, the
companies concerned continued to recognize the existing unions as the bargaining agents of their
respective bargaining units. In the meantime, the other unions in these companies eventually
concluded their CBA negotiations on the remaining term and all of them agreed on a 3-year cycle.
Notably, the following CBAs were forged incorporating a term of 3-years on the renegotiated
provisions, to wit:
1. SMC — daily-paid employees union (IBM)
2. SMFI — monthly-paid employees and daily-paid employees at the Cabuyao Plant.
There is a direct link between the voluntary recognition by the company of the continuing representative
status of the unions after the aforementioned spin-offs and the stand of the company for a 3-year
renegotiated cycle when the economic provisions of the existing CBAs expired, i.e., the maintain stability
and avoid confusion when the umbilical cord of the two divisions were severed from their parent. These
two cannot be considered independently of each other for they were intended to reinforce one another.
Precisely, the company conceded to face the same union notwithstanding the spin-offs in order to
preserve industrial peace during the infancy of the two corporations. If the union would insist on a shorter
renegotiated term, then all the advantages gained by both parties in this regard, would have gone to
naught. With this in mind, this office feels that it will betray its mandate should we order the parties to
execute a 2-year renegotiated term for then chaos and confusion, rather than tranquillity, would be the
order of the day. Worse, there is a strong likelihood that such a ruling might spawn discontent and
possible mass actions against the company coming from the other unions who had already agreed to a 3-
year renegotiated terms. If this happens, the purpose of this Office's intervention into the parties'
controversy would have been defeated. 15
The issue as to the term of the non-representation provisions of the CBA need not belabored
especially when we take note of the Memorandum of the Secretary of Labor dated February 24,
1994 which was mentioned in the Resolution of Undersecretary Bienvenido Laguesma on January
16, 1995 in the certification election case involving the SMC employees. 16 In said memorandum, the
Secretary of Labor had occasion to clarify the term of the renegotiated terms of the CBA vis-a-vis the
term of the bargaining agent, to wit:
As a matter of policy the parties are encourages (sic) to enter into a renegotiated CBA with a term
which would coincide (sic) with the aforesaid five (5) year term of the bargaining representative.
In the event however, that the parties, by mutual agreement, enter into a renegotiated contract with a
term of three (3) years or one which does not coincide with the said 5-year term, and said agreement
is ratified by majority of the members in the bargaining unit, the subject contract is valid and legal
and therefore, binds the contracting parties. The same will however not adversely affect the right of
another union to challenge the majority status of the incumbent bargaining agent within sixty (60)
days before the lapse of the original five (5) year term of the CBA.

days before the lapse of the original five (5) year term of the CBA.
Thus, we do not find any grave abuse of discretion on the part of the Secretary of Labor in ruling that
the effectivity of the renegotiated terms of the CBA shall be for three (3) years.
With respect to the second issue, there is, likewise, no merit in petitioner-union's assertion that the
employees of Magnolia and SMFI should still be considered part of the bargaining unit of SMC.
Magnolia and SMFI were spun-off to operate as distinct companies on October 1, 1991.
Management saw the need for these transformations in keeping with its vision and long term
strategy as it explained in its letter addressed to the employees dated August 13, 1991:
. . . As early as 1986, we announced the decentralization program and spoke of the need for
structures that can react fast to competition, a changing environment, shorter product life cycles and
shifts in consumer preference. We further stated in the 1987 Annual Report to Stockholders that San
Miguel's businesses will be more autonomous and self sufficient so as to better acquire and master
new technologies, cope with a labor force with different expertises and expectations, and master and
satisfy the changing needs of our customers and end-consumers. As subsidiaries, Magnolia and
FLD will gain better industry focus and flexibility, greater awareness of operating results, and
speedier, more responsive decision making.
xxx xxx xxx
We only have to look at the experience of Coca-Cola Bottlers Philippines, Inc., since this company
was organized about ten years ago, to see the benefits that arise from restructuring a division of San
Miguel into a more competitive organization. As a stand-alone enterprise, CCBPI engineered a
dramatic turnaround and has sustained its sales and market share leadership ever since.
We are confident that history will repeat itself, and the transformation of Magnolia and FLD will be
successful as that of CCBPI. 17
Undeniably, the transformation of the companies was a management prerogative and business
judgment which the courts can not look into unless it is contrary to law, public policy or morals.
Neither can we impute any bad faith on the part of SMC so as to justify the application of the
doctrine of piercing the corporate veil. 18 Ever mindful of the employees' interests, management has
assured the concerned employees that they will be absorbed by the new corporations without loss of
tenure and retaining their present pay and benefits according to the existing CBAs. 19 They were
advised that upon the expiration of the CBAs, new agreements will be negotiated between the
management of the new corporations and the bargaining representatives of the employees
concerned. As a result of the spin-offs:
1. Each of the companies are run by, supervised and controlled by different management teams
including separate human resource/personnel managers.
2. Each Company enforces its own administrative and operational rules and policies and are not
dependent on each other in their operations.
3. Each entity maintains separate financial statements and are audited separately from each other. 20
Indubitably, therefore, Magnolia and SMFI became distinct entities with separate juridical
personalities. Thus, they can not belong to a single bargaining unit as held in the case of Diatagon
Labor Federation Local 110 of the ULGWP v. Ople. 21 We elucidate:
The fact that their businesses are related and that the 236 employees of the Georgia Pacific
International Corporation were originally employees of Lianga Bay Logging Co., Inc. is not a
justification for disregarding their separate personalities. Hence, the 236 employees, who are now
attached to Georgia Pacific International Corporation, should not be allowed to vote in the
certification election at the Lianga Bay Logging Co., Inc. They should vote at a separate certification
election to determine the collective bargaining representative of the employees of Georgia Pacific
International Corporation.
Petition-union's attempt to include the employees of Magnolia and SMFI in the SMC bargaining unit
so as to have a bigger mass base of employees has, therefore, no more valid ground.
Moreover, in determining an appropriate bargaining unit, the test of grouping is mutuality or
commonality of interests. The employees sought to be represented by the collective bargaining
agent must have substantial mutual interests in terms of employment and working conditions as
evinced by the type of work they performed. 22 Considering the spin-offs, the companies would
consequently have their respective and distinctive concerns in terms of the nature of work, wages,
hours of work and other conditions of employment. Interests of employees in the different companies
perforce differ. SMC is engaged in the business of the beer manufacturing. Magnolia is involved in
the manufacturing and processing of diary products 23 while SMFI is involved in the production of
feeds and the processing of chicken. 24 The nature of their products and scales of business may
require different skills which must necessarily be commensurated by different compensation
packages. The different companies may have different volumes of work and different working
conditions. For such reason, the employees of the different companies see the need to group
themselves together and organize themselves into distinctive and different groups. It would then be
best to have separate bargaining units for the different companies where the employees can bargain

best to have separate bargaining units for the different companies where the employees can bargain
separately according to their needs and according to their own working conditions.
We reiterate what we have explained in the case of University of the Philippines v. Ferrer-
Calleja 25 that:
[T]here 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 and 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). . .
Finally, we take note of the fact that the separate interests of the employees of Magnolia and SMFI
from those of SMC has been recognized in the case of Daniel Borbon v. Laguesma. 26 We quote:
Even assuming in gratia argumenti that at the time of the election they were regular employees of
San Miguel, nonetheless, these workers are no longer connected with San Miguel Corporation in
any manner because Magnolia has ceased to be a division of San Miguel Corporation and has been
formed into a separate corporation with a personality of its own (p. 305, Rollo). This development,
which was brought to our attention by private respondents, necessarily renders moot and academic
any further discourse on the propriety of the elections which petitioners impugn via the recourse (p.
319, Rollo).
In view of all the foregoing, we do not find any grave abuse of discretion on the part of the Secretary
of Labor in rendering the assailed Order.
WHEREFORE, the petition is DISMISSED for lack of merit. The Temporary Restraining Order issued
on March 29, 1995 is lifted.
SO ORDERED.
Bellosillo, Vitug and Hermosisima, Jr., JJ., concur.
Footnotes
1 Rollo, p. 56.
2 Id., at 541.
3 Id., at 211.
4 Id., at 9.
5 Id., at 1048.
6 Id., at 1125.
7 Id., at 1166.
8 219 SCRA 605 (1993).
9 OS-AJ-0031-92 NCMB-NCR-NS-08-563-92, December 14, 1992, Annex "B," fRollo, p. 33.
10 C.A. Azucena, Labor Law Handbook, 718 (1995 Edition).
11 De los Santos v. Mallari, 87 Phil. 289 (1950); Gomez Garcia v. Hipolito, 2 Phil. 732 (1903).
12 Joint Congressional Conference Committee on Senate Bill No. 530 and House Bill No. 11524,
December 14, 1988.
14 Henson v. Intermediate Appellate Court, 148 SCRA 11 (1987).
15 Rollo, pp. 28-30.
16 Attached as Annex "G" (Rollo, p. 1108) to the Motion for Temporary Restraining
Order/Preliminary Injunction (Rollo, p. 1048).
17 Rollo, p. 211.
18 See Indophil Textile Mill Workers Union v. Calica, 205 SCRA 697 (1992).

18 See Indophil Textile Mill Workers Union v. Calica, 205 SCRA 697 (1992).
19 Id., at 211, 213.
20 Id., at 23.
21 101 SCRA 534 (1980).
22 San Miguel Corporation v. Laguesma, 231 SCRA 595 (1994).
23 Rollo, p. 186.
24 Id., at 451.
25 211 SCRA 451 (1992).
26 Supra.

Navarro vs. Damasco
2:26 AM
-Navrro was preventively suspended
Republic of the Philippines -then dismissed from service for having
SUPREME COURT violated the Conduct and Behavior provisions
Manila of the Code of Employee Discipline
FIRST DIVISION -Union and Navarro agreed to submit the
case to voluntary arbitration (instead of
G.R. No. 101875 July 14, 1995 arguing that the grievance procedure be
CASIANO A. NAVARRO III, petitioner,
vs. resorted to) raised as an issue WON the
HON. ISRAEL D. DAMASCO, in his capacity as VOLUNTARY ARBITRATOR, and BUSCO grievance procedure in the CBA was followed
SUGAR MILLING CO., INC., respondents. -VA: dismissed Navarro from employment; ER
did not violate the provisions of the grievance
QUIASON, J.: procedure under the CBA
This is a petition for certiorari to reverse the Decision dated August 16, 1991 of the Voluntary
Arbitrator, respondent Israel D. Damasco, declaring as valid the separation from employment of
ON WON THE GRIEVANCE PROCEDURE IN
petitioner.
THE CBA WAS FOLLOWED:
We dismiss the petition.
HELD
I -the Grievance Machinery in the CBA may be
Petitioner was employed as typist of private respondent at its plant in Quezon, Bukidnon. availed of as regards the following:
At about 5:00 P.M. of November 27, 1990, petitioner went to visit Mercy Baylas, a co-employee, at "any ruling, practice or working conditions in
the ladies' dormitory inside the compound of private respondent. Upon seeing petitioner, Baylas hid the Company, or any dispute arising as to
behind the divider at the reception room. Rosemarie Basa and Isabel Beleno, co-boarders of Baylas, the meaning, application or claim of
told petitioner that Baylas was not at the dormitory and advised him to stop courting her because she violation of any provision of this Agreement
had no feelings towards him. Afterwards, the two left leaving petitioner alone in the room. When he or any complaint that any employee may
peeped behind the divider, he saw Baylas, who stood up without answering his greetings and ran have against the COMPANY shall
towards her room. He followed, and after taking hold of her left hand, pulled her towards him. The constitute a grievance "
force caused her to fall on the floor. He then placed himself on top of her. She resisted and futilely HERE: SC held that this is not a grievance:
struggled to free herself from his grasp. Sonia Armada, the dormitory housekeeper, responded to The instant case is not a grievance
Baylas' shouts for help. Armada saw petitioner embracing and kissing Baylas. She tried to separate that must be submitted to the
petitioner from Baylas but to no avail. So she went outside and asked Basa and Beleno to help grievance machinery. What are
Baylas. She also asked the help of Edmundo Subong. subject of the grievance procedure for
adjustment and resolution are
Basa and Beleno tried to pull petitioner away from Baylas, but it was Subong who was able to free grievances arising from the
Baylas from petitioner. interpretation or implementation of the
collective bargaining agreement
According to the medical report issued by Dr. Letecia P. Maraat, Baylas complained of pains on her (Labor Code of the Philippines, as
shoulder and left foot. amended by R.A. No. 6715, Art. 260).
-the acts of petitioner, violating the Code of
On December 5, 1990, petitioner was informed of the complaint against him and was placed under Employee Discipline, cannot be invoked to
preventive suspension. Nolito S. Densing, Jr. was instructed to investigate the incident. In his resort to the CBA (court citing Auxilio Jr v.
report dated December 26, 1990, Densing recommended that the maximum penalty be meted out NLRC (1990))
against petitioner. On January 5, 1991, petitioner was dismissed from the service for having -Navarro voluntarily submitted to the
violated paragraph 3.B (Conduct and Behavior) of the Code of Employee Discipline, which jurisdiction of the Voluntary Arbitrator, and
provides: has not questioned his jurisdiction. Even
1. Inflicting or attempting to inflict bodily injury, in any form, on fellow employee, with a penalty of submitted additional documentary evidence
dismissal. and was present during the initial
2. Immoral conduct within company premises, regardless of whether or not committed during conference
working time, punishable by reprimand to dismissal, depending on the prejudice caused by such act -ON THE ISSUE OF WON HE WAS
to the company. DENIED DUE PROCESS BECAUSE HE
3. Improper conduct and acts of gross discourtesy or disrespect to fellow employees at any time WAS NOT ACCORDED AN
within the company premises punishable by reprimand to dismissal, depending on the gravity of the OPPORTUNITY TO CROSS EXAMINE
offense. THE WITNESS AGAINSTH HIM:
4. Knowingly giving false or untruthful statements or concealing material facts in an investigation No violation of due process. A formal or
conducted by authorized representative of the company, punishable by dismissal ( Rollo, pp. 47-48). trial-type hearing is not at all times and in all
instances essential. The requirements are
On March 18, 1991, the President of the Mindanao Sugar Workers Union, for and in behalf of satisfied where the parties are fair and
petitioner, and Jaime J. Javier, Personnel Officer of private respondent, agreed to submit the case reasonable opportunity to explain their side
of petitioner to voluntary arbitration. of the controversy at hand. What is frowned
upon is the absolute lack of notice and
At the initial conference on March 27, 1991, petitioner, represented by his counsel, agreed to limit hearing. . . .
the issues to be submitted to the Voluntary Arbitrator to the following: -also, the parties have agreed that position
1. Whether or not the grievance procedure in the CBA for bringing a case before the Voluntary papers be submitted instead of undergoing
Arbitrator had been followed; examination of witnesses
2. Whether petitioner's dismissal was legal; and -ON ALLEGATION THAT THE QUARREL
3. Who was the complainant insofar as the grievance procedure under the CBA was concerned WAS P[URELY A PRIVATE AFFAIR
(Rollo, p. 147). • Incident happened w/n company
premises, i.e. The ladies dormitory
The parties also agreed to submit the case for decision based on their position papers. located inside the plant site
• Both of them were employees of the
On August 16, 1991, a decision was rendered by the Voluntary Arbitrator dismissing petitioner from ER
his employment and holding that private respondent did not violate the provisions of the grievance
procedure under the Collective Bargaining Agreement.
Not satisfied with the decision, petitioner filed the instant petition.
II
According to petitioner's version, Baylas was his girlfriend, whom he visited at the ladies' dormitory in
the afternoon of November 27, 1990. At the dormitory, petitioner saw Rosemarie Basa who told him
that Baylas was not around. To prove that Basa was lying, he peeped behind the divider and saw
Baylas hiding there. When Baylas ran towards her room, petitioner followed her. While running,
Baylas lost her balance and fell down. However, petitioner got hold of her to prevent her from hitting
the floor and to help her to her feet. He denied having kissed and embraced her. He admitted that
Subong arrived and pulled him away from Baylas. He also admitted that he voluntarily surrendered

Subong arrived and pulled him away from Baylas. He also admitted that he voluntarily surrendered
to the security guards.
III
Petitioner contends that the grievance procedure provided for in the Collective Bargaining
Agreement was not followed; hence, the Voluntary Arbitrator exceeded his authority when he took
cognizance of the labor case.
Section 2, Article X of the Collective Bargaining Agreement specifies the instances when the
grievance machinery may be availed of, thus:
Any protest or misunderstanding concerning any ruling, practice or working conditions in the
Company, or any dispute arising as to the meaning, application or claim of violation of any provision
of this Agreement or any complaint that any employee may have against the COMPANY shall
constitute a grievance ( Rollo, p. 27).
The instant case is not a grievance that must be submitted to the grievance machinery. What are
subject of the grievance procedure for adjustment and resolution are grievances arising from the
interpretation or implementation of the collective bargaining agreement (Labor Code of the
Philippines, as amended by R.A. No. 6715, Art. 260).
The acts of petitioner involved a violation of the Code of Employee Discipline, particularly the
provision penalizing the immoral conduct of employees. Consequently, there was no justification for
petitioner to invoke the grievance machinery provisions of the Collective Bargaining Agreement
(Auxilio, Jr. v. National Labor Relations Commission, 188 SCRA 263 [1990]).
The case of petitioner was submitted to voluntary arbitration by agreement of the president of the
labor union to which petitioner belongs, and his employer, through its personnel officer. Petitioner
himself voluntarily submitted to the jurisdiction of the Voluntary Arbitrator when he, through his
counsel, filed his position paper with the Voluntary Arbitrator and even submitted additional
documentary evidence. In addition thereto, during the initial conference on March 27, 1991, the
parties manifested that they were not questioning the authority of the Voluntary Arbitrator.
It is the policy of the State to promote voluntary arbitration as a mode of settling labor disputes
(Manguiat, Mechanisms of Voluntary Arbitration in Labor Disputes 2-6 [1978]).
Petitioner claims that he was denied due process of law because no hearing was held and he was
not given an opportunity to cross-examine the witnesses.
We held in Stayfast Philippines Corp. v. National Labor Relation Commission, 218 SCRA 596 (1993)
that:
The essence of due process is simply an opportunity to be heard, or as applied to administrative
proceedings, an opportunity to explain one's side or an opportunity to seek a reconsideration of the
action or ruling complained of.
A formal or trial-type hearing is not at all times and in all instances essential. The requirements are
satisfied where the parties are fair and reasonable opportunity to explain their side of the controversy
at hand. What is frowned upon is the absolute lack of notice and hearing. . . .
(at p. 601).
Concerning the allegation that petitioner was not allowed to cross-examine the witnesses, the record
shows that the parties had agreed not to cross-examine their witnesses anymore.
Petitioner alleges that the quarrel between Baylas and him was a purely private affair. We do not
agree with this contention. It will be noted that not only did the incident happen within the company
premises, i.e. the ladies' dormitory which was located inside the plant site, but both of them are
employees of private respondent. Management would then be at the mercy of its employees if it
cannot enforce discipline within company premises solely because the quarrel is purely personal
matter. The harassment of an employee by a co-employee within the company premises even after
office hours is a work-related matter considering that the peace of the company is thereby affected.
The Code of Employee Discipline is very clear that immoral conduct "within the company premises
regardless of whether or not [it is] committed during working time" is punishable.
The pretext of petitioner that he was merely helping Baylas is belied by the eyewitnesses. Petitioner
admitted that it took Subong to pull him away from Baylas. His alleged act of chivalry is nothing more
than a chance to gratify his amorous feelings.
WHEREFORE, the Decision of the respondent Voluntary Arbitrator is AFFIRMED.
SO ORDERED.
Padilla, Davide, Jr. and Kapunan, JJ., concur.
Bellosillo, J., is on leave.

Republic Savings Bank vs. CIR
2:26 AM

Davao Integrated Port Stevedoring Services vs. Abarquez
2:27 AM
lawphil
Today is
Thursda
y, July
01, 2004

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 102132. March 19, 1993.

DAVAO INTEGRATED PORT STEVEDORING SERVICES, petitioner, vs. RUBEN
V. ABARQUEZ, in his capacity as an accredited Voluntary Arbitrator and THE
ASSOCIATION OF TRADE UNIONS (ATU-TUCP), respondents.
Libron, Gaspar & Associates for petitioner.
Bansalan B. Metilla for Association of Trade Unions (ATUTUCP).
SYLLABUS
1. LABOR LAWS AND SOCIAL LEGISLATION; LABOR RELATIONS;
COLLECTIVE BARGAINING AGREEMENT; DEFINED; NATURE THEREOF;
CONSTRUCTION TO BE PLACED THEREON. — A collective bargaining
agreement (CBA), as used in Article 252 of the Labor Code, refers to a contract
executed upon request of either the employer or the exclusive bargaining
representative incorporating the agreement reached after negotiations with respect
to wages, hours of work and all other terms and conditions of employment, including
proposals for adjusting any grievances or questions arising under such agreement.
While the terms and conditions of a CBA constitute the law between the parties, it is
not, however, an ordinary contract to which is applied the principles of law
governing ordinary contracts. A CBA, as a labor contract within the contemplation of
Article 1700 of the Civil Code of the Philippines which governs the relations between
labor and capital, is not merely contractual in nature but impressed with public
interest, thus, it must yield to the common good. As such, it must be construed
liberally rather than narrowly and technically, and the courts must place a practical
and realistic construction upon it, giving due consideration to the context in which it
is negotiated and purpose which it is intended to serve.
2. ID.; ID.; ID.; ID.; ID.; ID.; CASE AT BAR. — It is thus erroneous for petitioner to
isolate Section 1, Article VIII of the 1989 CBA from the other related section on sick
leave with pay benefits, specifically Section 3 thereof, in its attempt to justify the
discontinuance or withdrawal of the privilege of commutation or conversion to cash
of the unenjoyed portion of the sick leave benefit to regular intermittent workers. The
manner they were deprived of the privilege previously recognized and extended to
them by petitioner-company during the lifetime of the CBA of October 16, 1985 until
three (3) months from its renewal on April 15, 1989, or a period of three (3) years
and nine (9) months, is not only tainted with arbitrariness but likewise discriminatory

in nature. It must be noted that the 1989 CBA has two (2) sections on sick leave
with pay benefits which apply to two (2) distinct classes of workers in petitioner's
company, namely: (1) the regular non-intermittent workers or those workers who
render a daily eight-hour service to the company and are governed by Section 1,
Article VIII of the 1989 CBA; and (2) intermittent field workers who are members of
the regular labor pool and the present regular extra labor pool as of the signing of
the agreement on April 15, 1989 or those workers who have irregular working days
and are governed by Section 3, Article VIII of the 1989 CBA. It is not disputed that
both classes of workers are entitled to sick leave with pay benefits provided they
comply with the conditions set forth under Section 1 in relation to the last paragraph
of Section 3, to wit: (1) the employee-applicant must be regular or must have
rendered at least one year of service with the company; and (2) the application must
be accompanied by a certification from a company-designated physician. the phrase
"herein sick leave privilege," as used in the last sentence of Section 1, refers to the
privilege of having a fixed 15-day sick leave with pay which, as mandated by
Section 1, only the non-intermittent workers are entitled to. This fixed 15 -day sick
leave with pay benefit should be distinguished from the variable number of days of
sick leave, not to exceed 15 days, extended to intermittent workers under Section 3
depending on the number of hours of service rendered to the company, including
overtime pursuant to the schedule provided therein. It is only fair and reasonable for
petitioner-company not to stipulate a fixed 15-day sick leave with pay for its regular
intermittent workers since, as the term "intermittent" implies, there is irregularity in
their work-days. Reasonable and practical interpretation must be placed on
contractual provisions. Interpetatio fienda est ut res magis valeat quam pereat. Such
interpretation is to be adopted, that the thing may continue to have efficacy rather
than fail.
3. ID.; ID.; ID.; SICK LEAVE BENEFITS; NATURE AND PURPOSE. — Sick leave
benefits, like other economic benefits stipulated in the CBA such as maternity leave
and vacation leave benefits, among others, are by their nature, intended to be
replacements for regular income which otherwise would not be earned because an
employee is not working during the period of said leaves. They are non -contributory
in nature, in the sense that the employees contribute nothing to the operation of the
benefits. By their nature, upon agreement of the parties, they are intended to
alleviate the economic condition of the workers.
4. ID.; ID.; JURISDICT ION OF VOLUNTARY ARBITRATOR; CASE AT BAR. —
Petitioner-company's objection to the authority of the Voluntary Arbitrator to direct
the commutation of the unenjoyed portion of the sick leave with pay benefits of
intermittent workers in his decision is misplaced. Article 261 of the Labor Code is
clear. The questioned directive of the herein public respondent is the necessary
consequence of the exercise of his arbitral power as Voluntary Arbitrator under
Article 261 of the Labor Code "to hear and decide all unresolved grievances arising
from the interpretation or implementation of the Collective Bargaining Agreement."
We, therefore, find that no grave abuse of discretion was committed by public
respondent in issuing the award (decision). Moreover, his interpretation of Sections
1 and 3, Article VIII of the 1989 CBA cannot be faulted with and is absolutely
correct.
5. ID.; CONDITIONS OF EMPLOYMENT; PROHIBITION AGAINST ELIMINAT ION
OR DIMINUTION OF BENEFITS; BENEFITS GRANTED PURSUANT TO
COMPANY PRACTICE OR POLICY CANNOT BE PEREMPTORILY
WITHDRAWN. — Whatever doubt there may have been early on was clearly
obliterated when petitioner-company recognized the said privilege and paid its
intermittent workers the cash equivalent of the unenjoyed portion of their sick leave
with pay benefits during the lifetime of the CBA of October 16, 1985 until three (3)
months from its renewal on April 15, 1989. Well-settled is it that the said privilege of
commutation or conversion to cash, being an existing benefit, the petitioner -
company may not unilaterally withdraw, or diminish such benefits. It is a fact that
petitioner-company had, on several instances in the past, granted and paid the cash
equivalent of the unenjoyed portion of the sick leave benefits of some intermittent
workers. Under the circumstances, these may be deemed to have ripened into
company practice or policy which cannot be peremptorily withdrawn.
DEC I SI O N
ROMERO, J p:

ROMERO, J p:
In this petition for certiorari, petitioner Davao Integrated Port Services Corporation
seeks to reverse the Award 1 issued on September 10, 1991 by respondent Ruben
V. Abarquez, in his capacity as Voluntary Arbitrator of the National Conciliation and
Mediation Board, Regional Arbitration Branch XI in Davao City in Case No. AC -211-
BX1-10-003-91 which directed petitioner to grant and extend the privilege of
commutation of the unenjoyed portion of the sick leave with pay benefits to its
intermittent field workers who are members of the regular labor pool and the present
regular extra pool in accordance with the Collective Bargaining Agreement (CBA)
executed between petitioner and private respondent Association of Trade Unions
(ATU-TUCP), from the time it was discontinued and henceforth.
The facts are as follows:
Petitioner Davao Integrated Port Stevedoring Services (petitioner -company) and
private respondent ATU-TUCP (Union), the exclusive collective bargaining agent of
the rank and file workers of petitioner -company, entered into a collective bargaining
agreement (CBA) on October 16, 1985 which, under Sections 1 and 3, Article VIII
thereof, provide for sick leave with pay benefits each year to its employees who
have rendered at least one (1) year of service with the company, thus:
"ARTICLE VIII
Section 1. Sick Leaves — The Company agrees to grant 15 days sick leave with
pay each year to every regular non-intermittent worker who already rendered at
least one year of service with the company. However, such sick leave can only be
enjoyed upon certification by a company designated physician, and if the same is
not enjoyed within one year period of the current year, any unenjoyed portion
thereof, shall be converted to cash and shall be paid at the end of the said one year
period. And provided however, that only those regular workers of the company
whose work are not intermittent, are entitled to the herein sick leave privilege.
xxx xxx xxx
Section 3. — All intermittent field workers of the company who are members of the
Regular Labor Pool shall be entitled to vacation and sick leaves per year of service
with pay under the following schedule based on the number of hours rendered
including overtime, to wit:
Hours of Service Per Vacation Sick Leave
Calendar Year Leave
Less than 750 NII NII
751 — 825 6 days 6 days
826 — 900 7 7
901 — 925 8 8
926 — 1,050 9 9
1,051 — 1,125 10 10
1,126 — 1,200 11 11
1,201 — 1,275 12 12
1,276 — 1,350 13 13
1,351 — 1,425 14 14
1,426 — 1,500 15 15
The conditions for the availment of the herein vacation and sick leaves shall be in
accordance with the above provided Sections 1 and 2 hereof, respectively."
Upon its renewal on April 15, 1989, the provisions for sick leave with pay benefits
were reproduced under Sections 1 and 3, Article VIII of the new CBA, but the
coverage of the said benefits was expanded to include the "present Regular Extra
Labor Pool as of the signing of this Agreement." Section 3, Article VIII, as revised,
provides, thus:
"Section 3. — All intermittent field workers of the company who are members of the
Regular Labor Pool and present Regular Extra Labor Pool as of the signing of this
agreement shall be entitled to vacation and sick leaves per year of service with pay
under the following schedule based on the number of hours rendered including
overtime, to wit:
Hours of Service Per Vacation Sick Leave
Calendar Year Leave
Less than 750 NII NII
751 — 825 6 days 6 days
826 — 900 7 7

826 — 900 7 7
901 — 925 8 8
926 — 1,050 9 9
1,051 — 1,125 10 10
1,126 — 1,200 11 11
1,201 — 1,275 12 12
1,276 — 1,350 13 13
1,351 — 1,425 14 14
1,426 — 1,500 15 15
The conditions for the availment of the herein vacation and sick leaves shall be in
accordance with the above provided Sections 1 and 2 hereof, respectively."
During the effectivity of the CBA of October 16, 1985 until three (3) months after its
renewal on April 15, 1989, or until July 1989 (a total of three (3) years and nine (9)
months), all the field workers of petitioner who are members of the regular labor
pool and the present regular extra labor pool who had rendered at least 750 hours
up to 1,500 hours were extended sick leave with pay benefits. Any unenjoyed
portion thereof at the end of the current year was converted to cash and paid at the
end of the said one-year period pursuant to Sections 1 and 3, Article VIII of the
CBA. The number of days of their sick leave per year depends on the number of
hours of service per calendar year in accordance with the schedule provided in
Section 3, Article VIII of the CBA.
The commutation of the unenjoyed portion of the sick leave with pay benefits of the
intermittent workers or its conversion to cash was, however, discontinued or
withdrawn when petitioner-company under a new assistant manager, Mr. Benjamin
Marzo (who replaced Mr. Cecilio Beltran, Jr. upon the latter's resignation in June
1989), stopped the payment of its cash equivalent on the ground that they are not
entitled to the said benefits under Sections 1 and 3 of the 1989 CBA.
The Union objected to the said discontinuance of commutation or conversion to
cash of the unenjoyed sick leave with pay benefits of petitioner's intermittent
workers contending that it is a deviation from the true intent of the parties that
negotiated the CBA; that it would violate the principle in labor laws that benefits
already extended shall not be taken away and that it would result in discrimination
between the non-intermittent and the intermittent workers of the petitioner -company.
Upon failure of the parties to amicably settle the issue on the interpretation of
Sections 1 and 3, Article VIII of the 1989 CBA, the Union brought the matter for
voluntary arbitration before the National Conciliation and Mediation Board,
Regional Arbitration Branch XI at Davao City by way of complaint for enforcement of
the CBA. The parties mutually designated public respondent Ruben Abarquez, Jr. to
act as voluntary arbitrator.
After the parties had filed their respective position papers, 2 public respondent
Ruben Abarquez, Jr. issued on September 10, 1991 an Award in favor of the
Union ruling that the regular intermittent workers are entitled to commutation of their
unenjoyed sick leave with pay benefits under Sections 1 and 3 of the 1989 CBA, the
"WHEREFORE, premises considered, the management of the respondent Davao
Integrated Port Stevedoring Services Corporation is hereby directed to grant and
extend the sick leave privilege of the commutation of the unenjoyed portion of the
sick leave of all the intermittent field workers who are members of the regular labor
pool and the present extra pool in accordance with the CBA from the time it was
discontinued and henceforth.
SO ORDERED."
Petitioner-company disagreed with the aforementioned ruling of public respondent,

hence, the instant petition.
Petitioner-company argued that it is clear from the language and intent of the last
sentence of Section 1, Article VIII of the 1989 CBA that only the regular workers
whose work are not intermittent are entitled to the benefit of conversion to cash of
the unenjoyed portion of sick leave, thus: ". . . And provided, however, that only
those regular workers of the Company whose work are not intermittent are entitled

those regular workers of the Company whose work are not intermittent are entitled
to the herein sick leave privilege."
Petitioner-company further argued that while the intermittent workers were paid the
cash equivalent of their unenjoyed sick leave with pay benefits during the previous
management of Mr. Beltran who misinterpreted Sections 1 and 3 of Article VIII of
the 1985 CBA, it was well within petitioner -company's rights to rectify the error it had
committed and stop the payment of the said sick leave with pay benefits. An error in
payment, according to petitioner-company, can never ripen into a practice.
We find the arguments unmeritorious.
A collective bargaining agreement (CBA), as used in Article 252 of the Labor Code,
refers to a contract executed upon request of either the employer or the exclusive
bargaining representative incorporating the agreement reached after negotiations
employment, including proposals for adjusting any grievances or questions arising
under such agreement.
While the terms and conditions of a CBA constitute the law between the parties, 3 it
is not, however, an ordinary contract to which is applied the principles of law
governing ordinary contracts. 4 A CBA, as a labor contract within the contemplation
of Article 1700 of the Civil Code of the Philippines which governs the relations
between labor and capital, is not merely contractual in nature but impressed with
public interest, thus, it must yield to the common good. As such, it must be
construed liberally rather than narrowly and technically, and the courts must place a
practical and realistic construction upon it, giving due consideration to the context in
which it is negotiated and purpose which it is intended to serve. 5
It is thus erroneous for petitioner to isolate Section 1, Article VIII of the 1989 CBA
from the other related section on sick leave with pay benefits, specifically Section 3
thereof, in its attempt to justify the discontinuance or withdrawal of the privilege of
commutation or conversion to cash of the unenjoyed portion of the sick leave benefit
to regular intermittent workers. The manner they were deprived of the privilege
previously recognized and extended to them by petitioner -company during the
lifetime of the CBA of October 16, 1985 until three (3) months from its renewal on
April 15, 1989, or a period of three (3) years and nine (9) months, is not only tainted
with arbitrariness but likewise discriminatory in nature. Petitioner -company is of the
mistaken notion that since the privilege of commutation or conversion to cash of the
unenjoyed portion of the sick leave with pay benefits is found in Section 1, Article
VIII, only the regular non-intermittent workers and no other can avail of the said
privilege because of the proviso found in the last sentence thereof.
It must be noted that the 1989 CBA has two (2) sections on sick leave with pay
benefits which apply to two (2) distinct classes of workers in petitioner's company,
namely: (1) the regular non-intermittent workers or those workers who render a daily
eight-hour service to the company and are governed by Section 1, Article VIII of the
1989 CBA; and (2) intermittent field workers who are members of the regular labor
pool and the present regular extra labor pool as of the signing of the agreement on
April 15, 1989 or those workers who have irregular working days and are governed
by Section 3, Article VIII of the 1989 CBA.
It is not disputed that both classes of workers are entitled to sick leave with pay
benefits provided they comply with the conditions set forth under Section 1 in
relation to the last paragraph of Section 3, to wit: (1) the employee -applicant must
be regular or must have rendered at least one year of service with the company;
and (2) the application must be accompanied by a certification from a company -
designated physician.
Sick leave benefits, like other economic benefits stipulated in the CBA such as
maternity leave and vacation leave benefits, among others, are by their nature,
intended to be replacements for regular income which otherwise would not be
earned because an employee is not working during the period of said leaves. 6

earned because an employee is not working during the period of said leaves. 6
They are non-contributory in nature, in the sense that the employees contribute
nothing to the operation of the benefits. 7 By their nature, upon agreement of the
parties, they are intended to alleviate the economic condition of the workers.
After a careful examination of Section 1 in relation to Section 3, Article VIII of the

1989 CBA in light of the facts and circumstances attendant in the instant case, we
find and so hold that the last sentence of Section 1, Article VIII of the 1989 CBA,
invoked by petitioner-company does not bar the regular intermittent workers from
the privilege of commutation or conversion to cash of the unenjoyed portion of their
sick leave with pay benefits, if qualified. For the phrase "herein sick leave privilege,"
as used in the last sentence of Section 1, refers to the privilege of having a fixed 15 -
day sick leave with pay which, as mandated by Section 1, only the non -intermittent
workers are entitled to. This fixed 15-day sick leave with pay benefit should be
distinguished from the variable number of days of sick leave, not to exceed 15 days,
extended to intermittent workers under Section 3 depending on the number of hours
of service rendered to the company, including overtime pursuant to the schedule
provided therein. It is only fair and reasonable for petitioner -company not to stipulate
a fixed 15-day sick leave with pay for its regular intermittent workers since, as the
term "intermittent" implies, there is irregularity in their work -days. Reasonable and
practical interpretation must be placed on contractual provisions. Interpetatio fienda
est ut res magis valeat quam pereat. Such interpretation is to be adopted, that the
thing may continue to have efficacy rather than fail. 8
We find the same to be a reasonable and practical distinction readily discernible in

Section 1, in relation to Section 3, Article VIII of the 1989 CBA between the two
classes of workers in the company insofar as sick leave with pay benefits are
concerned. Any other distinction would cause discrimination on the part of
intermittent workers contrary to the intention of the parties that mutually agreed in
incorporating the questioned provisions in the 1989 CBA.
Public respondent correctly observed that the parties to the CBA clearly intended
the same sick leave privilege to be accorded the intermittent workers in the same
way that they are both given the same treatment with respect to vacation leaves -
non-commutable and non-cumulative. If they are treated equally with respect to
vacation leave privilege, with more reason should they be on par with each other
with respect to sick leave privileges. 9 Besides, if the intention were otherwise,
during its renegotiation, why did not the parties expressly stipulate in the 1989 CBA
that regular intermittent workers are not entitled to commutation of the unenjoyed
portion of their sick leave with pay benefits?
Whatever doubt there may have been early on was clearly obliterated when
petitioner-company recognized the said privilege and paid its intermittent workers
the cash equivalent of the unenjoyed portion of their sick leave with pay benefits
during the lifetime of the CBA of October 16, 1985 until three (3) months from its
renewal on April 15, 1989. Well-settled is it that the said privilege of commutation or
conversion to cash, being an existing benefit, the petitioner -company may not
unilaterally withdraw, or diminish such benefits. 10 It is a fact that petitioner-
company had, on several instances in the past, granted and paid the cash
equivalent of the unenjoyed portion of the sick leave benefits of some intermittent
workers. 11 Under the circumstances, these may be deemed to have ripened into
company practice or policy which cannot be peremptorily withdrawn. 12
Moreover, petitioner-company's objection to the authority of the Voluntary Arbitrator

to direct the commutation of the unenjoyed portion of the sick leave with pay
benefits of intermittent workers in his decision is misplaced. Article 261 of the Labor
Code is clear. The questioned directive of the herein public respondent is the
necessary consequence of the exercise of his arbitral power as Voluntary Arbitrator
under Article 261 of the Labor Code "to hear and decide all unresolved grievances
arising from the interpretation or implementation of the Collective Bargaining
Agreement." We, therefore, find that no grave abuse of discretion was committed by
public respondent in issuing the award (decision). Moreover, his interpretation of

public respondent in issuing the award (decision). Moreover, his interpretation of
Sections 1 and 3, Article VIII of the 1989 CBA cannot be faulted with and is
absolutely correct.
WHEREFORE, in view of the foregoing, the petition is DISMISSED. The award
(decision) of public respondent dated September 10, 1991 is hereby AFFIRMED.
No costs.
SO ORDERED.
Feliciano, Bidin, Davide, Jr. and Melo, JJ., concur.
Gutierrez, Jr., on terminal leave.
Footnotes
1. Annex "E," Petition, pp. 39-43, Rollo. Article 262-A of the Labor Code used the
terms "decision order or award" in describing the decision of the voluntary arbitrator.
There is no significance attached to the use of term "award" by public respondent
contrary to petitioner's apprehension.
2. pp. 24-38, Rollo.
3. Meycauayan College v. Drilon, 185 SCRA 50 (1990); Kapisanan ng mga
Manggagawa sa La Suerte-FOITAF v. Noriel, G.R. No. L-45475, June 20, 1977, 77
SCRA 414; Mactan Workers Union v. Aboitiz, G.R. No. L -30241, June 30, 1972, 45
SCRA 577.
4. Transportation-Communication Employees Union v. Union P.R. Co., 385 US 157,
17 L Ed 2d 264, 87 S Ct 369; John Wiley & Sons, Inc. v. Livingston, 376 US 543, 11
L Ed 2d 898, 84 S Ct 909.
5. 48A Am Jur 2d, s. 1800, pp. 255-256.
6. Singapore Airlines Local Employees Association v. NLRC, G.R. No. L -65786,
July 16, 1984, 130 SCRA 472.
7. Nestle Philippines, Inc. v. NLRC, G.R. No. 921231, February 4, 1991, 193 SCRA
504.
8. Singapore Airlines Local Employees Association v. NLRC, supra, citing Martin v.
Sheppard, 102 S Co. 2nd p. 1036; Adamowski v. Bard, AC Pa. 193F 2d p. 578.
9. p. 43, Rollo.
10. Article 100, Labor Code of the Philippines; Nestle Philippines, Inc. v. NLRC,
G.R. No. 91231, February 4, 1991, 193 SCRA 504; Tiangco, et. al. v. Leogardo,
G.R. No. L-57636, May 16, 1983, 122 SCRA 267.
11. p. 29, Rollo; p. 36, Rollo.
12. Republic Planters Bank v. NLRC, G.R. No. L -79488, September 30, 1988, 166
SCRA 197.

Kimberly Clark Phil. Vs. Lorredo
2:28 AM

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 103090 September 21, 1993

KIMBERLY CLARK PHILIPPINES, petitioner,
vs.
VOLUNTARY ARBITRATOR DANILO LORREDO and UNITED KIMBERLY CLARK EMPLOYEES
UNION-PTGWO, respondents.
Quiason, Makalintal, Barrot, Torres, Ibarra & Sison Law Office for petitioner.
Romeo C. Lagman for private respondent.
VITUG, J.:
A Voluntary Arbitrator's decision which is final and unappealable, as a rule, 1 is assailed in this
special civil action for certiorari under Rule 65 of the Rules of Court. Since the voluntary arbitrator
regrettably has not expounded on what appears to be the threshold issue, we have decided to
accept for consideration the petition.
Petitioner Kimberly-Clark Philippines, Inc. (KCPI), seeks to set aside the Resolutions of 15 October
1991 and 21 November 1991 of public respondent Voluntary Arbitrator Danilo Lorredo, holding that
the nephew of a retired employee should be employed by KCPI as his replacement pursuant to
Section 1, Article XX, of their Collective Bargaining Agreement ("CBA").
The pertinent provisions of the CBA, 2 relevant to the controversy, is hereinafter quoted:
Art. XX — Resignation, Retirement, Disability and Death.
Sec. 1. The COMPANY agrees to employ, the immediate member of the family of an employee
provided qualified, upon the employee's resignation, retirement, disability or death. In case of
resignation, however, employment of an immediate member of the family of an employee may be
allowed provided the employee has rendered a service of ten (10) years and above and the
resignation is not a forced resignation. For the purpose of this section, the phrase "immediate
member of the family of an employee" shall refer to the employee's legitimate children and in default
thereof to the employee's collateral relative within the third civil degree. The recommendee of the
retired/resigned employee shall, if qualified, be hired on probationary status.
Danilo L. Guerrero, an employee assigned as Operator B in KCPI's Finishing Section, voluntarily

resigned on 02 January 1991, after thirteen (13) years and three (3) months of employment with the
petitioner corporation. 3
Pursuant to Section I, Article XX, of the aforementioned CBA, Guerrero, through the Union,
recommended for hiring his nephew (name undisclosed from the records), who is a collateral relative
within the third civil degree.
In a letter, dated 16 April 1991, 4 KCPI informed the Union, through its President, that it could not act
favorably on Guerrero's recommendee "(i)n as much as Mr. Danilo L. Guerrero has legitimate
children . . .", namely: Joanne Guerrero (ten years of age), Mary Anne Guerrero (seven years of
age) and Dianne Guerrero (three years of age). The private respondent argued that, since
Guerrero's legitimate children are still minors, he could validly recommend for hiring his nephew.
Failing to agree on the proper interpretation of Article XX, Section 1, of the CBA and after exhausting
remedies through the grievance machinery, the parties agreed to submit their dispute for voluntary
arbitration.
A submission agreement 5 was the filed with the National Conciliation and Mediation Board, Regional
Branch No. IV. Arbitrator Danilo Lorredo was assigned to resolve the central issue of how the above
cited CBA provision should be construed. 6
On 15 October 1991, after hearing and the submission of position papers, reply, rejoinder and
counter-rejoinder, the voluntary arbitrator rendered his disputed resolution, 7 the pertinent portions of
which read:

which read:
xxx xxx xxx
Indeed the issue that needs resolution is not whether the Union's or the Company's interpretation is
correct. What should be resolved is whether or not the implementation of the questioned provision of
the CBA is well within the spirit of the provision. The relationships of the replacements with the
retired employees should control. They are within the covered provision. Admittedly, they were hired
as replacements of the concerned retired employees pursuant to the questioned CBA provision. We
have to agree with the Union's posturing on this point. The Company's argument evades the issue. It
maintains that these relatives who replaced the resigned employees were hired as contractual
before they became regular employees. The fact is not in issue. In what status the replacement
started at the company is not in issue. The issue is they were employed by the Company as
replacements of the resigned, retired and dead employees. This has not been controverted. It is
basic that mere denials cannot prevail over positive assertion.
In fine, the Company has implemented the questioned provision of the CBA in such a manner that
retired employees have been replaced by their relatives within the degree allowed by the CBA. This
is the fact of the matter. And no reason has been put forth why the nephew of Mr. Guerrero should
be treated differently.
What has appeared as a sore thumb in the whole exercise is the lack of procedure in the
replacement. There is no showing how the retired employee manifests his intent to be replaced.
However, the fact remains that the replacements were hired at the instance of the retired employee.
And the Company accepted them. We find nothing illegal or immoral in the manner the questioned
CBA provision has been implemented. What is disturbing is why all of a sudden the Company now
objects to the hiring of Mr. Guerrero's nephew as his replacement. We hold that the nephew of
retired employee Danilo Guerrero should be employed by the Company as his replacement pursuant
to Section 1, Article XX of the Collective Bargaining Agreement. (emphasis supplied)
xxx xxx xxx
SO ORDERED.
A motion for reconsideration was denied in the arbitrator's resolution of 21 November 1991. 8
The question, as aforesaid, focuses on the proper interpretation of the aforequoted Section 1, Article
XX, of the Collective Bargaining Agreement. KCPI reiterates its stand that since Danilo Guerrero has
legitimate children of his own, he cannot recommend his nephew for hiring under the pertinent
provisions of the CBA. Private respondent, on the other hand, asserts that since Guerrero's children
are still minors, he can recommend his nephew (a collateral relative within the third civil degree) for
hiring, and the petitioner corporation is obligated to hire him under the same CBA provision.
A collective bargaining agreement, just like any other contract, is respected as the law between the
contracting parties and compliance therewith in good faith is mandated. 9 Similarly, the rules
embodied in the Civil Code 10 on the proper interpretation of contracts can very well govern. 11 The
intention of the parties is primodial; 12 if the terms of the contract are clear, the literal meaning of the
stipulations shall control, 13 but if the words appear to be contrary to the evident intention of the
parties, the latter shall prevail over the former. 14
The company has agreed in its CBA with the employees "to employ (an) immediate member of the
family provided qualified upon the employee's resignation, retirement, disability or death." This is its
basic covenant. Covered by the term "(an) immediate member of the family" are the employee's
legitimate children and, in default thereof, a collateral relative within the third civil degree; it is thus a
definition by inclusion. As we see it, the phrase "in default thereof" has not been intended or
contemplated by the parties as having a preclusive effect within the group. It simply sets a priority on
who can possibly be recommendees for employment. The employee, in fine, need not be childless at
all for him to be allowed to nominate a third degree collateral relative; otherwise, his ability to
designate such relative is all but suddenly lost by the birth of an only child and regained by the
latter's demise. This situation could not have been intended.
Even in government and corporate hierarchy, when a next ranking official is to take over the
authorities and responsibilities of a superior, such as when the latter is "absent" (the literal and
ordinary meaning of "in default of"), such absence merely means his non-availability, not necessarily
that he be extant, in order to permit the former to assume the office.
We take note, furthermore, that KCPI is not obligated to unconditionally accept the recommendee
since the latter must still meet the required employment standards theretofore set by it. And even
when the recommendee is qualified, he, nonetheless, shall be hired only, pursuant to the agreement,

when the recommendee is qualified, he, nonetheless, shall be hired only, pursuant to the agreement,
on a "probationary status," an added measure, we assume, to further prove his worth for eventual
regular employment. The company is not, therefore, left without its own safeguards under the
agreement.
WHEREFORE, the petition is hereby DISMISSED. The questioned resolutions of 15 October 1991
and 21 November 1991 are hereby AFFIRMED. no costs.
SO ORDERED.
Bidin, Romero and Melo, JJ., concur.
Feliciano, J., is on leave.
# Footnotes
1 Eternit Employees and Workers Union v. De Veyra, G.R. No. 50110, 189 SCRA 752 [1990].
2 Annex "C", Petition, Rollo, 41.
3 Ibid., 45; 160.
4 Annex "D", Petition, Rollo, p. 42.
5 Annex E-1, Ibid., 44.
6 Annex "E", Ibid., 43.
7 Annex "A", Ibid., 35-39.
8 Annex "B", Petition, Rollo, 40.
9 Article 1159, Civil Code; Alex Ferrer v. NLRC, G.R. No. 100898, 05 July 1993; Marcopper Mining
v. NLRC, G.R. No. 83207, 200 SCRA 167 [1991]; Pe v. IAC, 195 SCRA 137.
10 Article 1370 to Article 1379, Civil Code.
11 Marcopper Mining v. NLRC, 200 SCRA 167, supra.
12 Article 1170, Civil Code; Kasilag v. Rodriguez, 69 Phil. 217 [1939].
13 Ibid; Alim v. CA, 200 SCRA 450; Honrado, Jr. v. CA, 198 SCRA 326; Papa v. Alonzo, 198 SCRA
564.
14 Article 1370, Civil Case; Sy vs. Court of Appeals, 131 SCRA 116.

United Kimberly Union vs. KCPI
2:28 AM
PHILIPPINE JURISPRUDENCE – FULL TEXT

G.R. No. 162957 March 6, 2006
UNITED KIMBERLY-CLARK EMPLOYEES UNION ETC. VS. KIMBERLY – CLARK PHILIPPINES, INC.

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 162957 March 6, 2006
UNITED KIMBERLY-CLARK EMPLOYEES UNION – PHILIPPINE TRANSPORT GENERAL WORKERS’
ORGANIZATION (UKCEU-PTGWO), Petitioner,
vs.
KIMBERLY – CLARK PHILIPPINES, INC., Respondent.
DE C I S I O N
CALLEJO, SR., J.:
Before the Court is a Petition for Review on Certiorari of the Decision1 of the Court of Appeals (CA)
which partially reversed and set aside the March 19, 2001 Resolution2 of the Voluntary Arbitrator (VA).
Following are the factual antecedents:
United Kimberly-Clark Employees Union (UKCEU), a local chapter affiliate of the Philippine Transport
General Workers’ Organization (PTGWO), is the certified collective bargaining agent of all rank-and-file
employees of the San Pedro milling plant of Kimberly-Clark Philippines, Inc. (KCPI), a multinational
corporation engaged in the manufacture of bathroom and facial tissues, paper napkins, feminine care
products, disposable diapers and absorbent cotton.
Way back in 1980, KCPI and the UKCEU executed a Collective Bargaining Agreement (CBA). Article XX,
Section 1 of the CBA reads:
Section 1. The Company agrees to employ, regardless of sex, the immediate member of the family of an
employee provided qualified, upon the employee's resignation, retirement, disability or death. In case of
resignation, however, employment of an immediate member of the family of an employee may be
allowed provided the employee has rendered a service of ten (10) years and above and the resignation
is not a forced resignation. For the purpose of this section, the phrase "immediate member of the family
of an employee" shall refer to the employee's legitimate children and in default thereof to the
employee's collateral relative within the third civil degree. The recommendee of the retired/resigned
employee shall, if qualified, be hired on probationary status. (Emphasis added)3
However, KCPI did not set any other employment qualifying standards for the recommendees of retired,
resigned, deceased or disabled employees and agreed to hire such recommendees who were high
school graduates as an act of liberality and generosity. The provision remained unchanged.4 Through the
years, several UKCEU members who resigned or were disabled availed of the said benefits and
recommended their successors. Although such recommendees were merely high school graduates, KCPI
nonetheless employed them.
Sometime in 1991, Danilo L. Guerrero retired and recommended his nephew as his replacement. KCPI
rejected Guerrero’s recommendation because his nephew was not a member of his (Guerrero’s)
immediate family. The matter was brought to Voluntary Arbitrator Danilo Lorredo who ruled that
Guerrero’s nephew should be employed as his replacement in accordance with the CBA. KCPI brought
the matter to the Court. On September 21, 1993, the Court affirmed the ruling of the VA in Kimberly
Clark Philippines v. Lorredo,5 where it was held that:
As we see it, the phrase "in default thereof" has not been intended or contemplated by the parties as
having a preclusive effect within the group. It simply sets a priority on who can possibly be
recommendees for employment. The employee, in fine, need not be childless at all for him to be
recommendees for employment. The employee, in fine, need not be childless at all for him to be
allowed to nominate a third degree collateral relative; otherwise, his ability to designate such relative is
all but suddenly lost by the birth of an only child and regained by the latter's demise. This situation could
not have been intended.6
However, the Court also ruled that KCPI was not obliged to unconditionally accept the recommendee
since the latter must still meet the required employment standard theretofore set by it. Even a qualified
recommendee would be hired only on a "probationary status." As such, KCPI was not left without its
own safeguards under the agreement.7
On November 7, 1995, KCPI issued Guidelines on the Hiring of Replacements of Retired/Resigned
Employees8 for the effective implementation of Article XX, Section 1 of the existing CBA, to take effect
on January 1, 1996. The Guidelines require, among others, that: (a) such recommendees must be at
least 18 years of age but not more than 30 years old at the time of the hiring, and (b) have completed,
after graduating from high school, at least a two-year technical/vocational course or a third year level of
college education. Moreover, where both husband and wife are employees of the company, they shall
be treated as one family; hence, only one of the spouses would be allowed to avail of the benefit.9
UKCEU, through its President, Reynaldo B. Hermoso, requested for a grievance meeting, which was held
on November 22, 1995.10 During the meeting, UKCEU specifically requested the deferment of the
implementation of the Guidelines until January 1, 1997, after the next CBA negotiations in 1997 during
which the matter will be taken up. KCPI agreed to postpone the implementation of the Guidelines until
January 1, 1997 but only with respect to the educational qualification.11
During the negotiation for the 1997 CBA, UKCEU proposed the amendment of Article XX, Section 1 of
the existing CBA. After the negotiation, KCPI and UKCEU executed a CBA to cover the period from July 1,
1997 to June 30, 1999. The educational qualifications contained in the Guidelines prepared and issued
by KCPI were not incorporated in the CBA. Neither were the proposed amendment of UKCEU. Article XX,
Section 1 of the preceding CBA was retained without any modification.12 KCPI continued to hire
employees pursuant to the CBA up to 1998. It had employed 44 employees from 1995 to 1998.13
However, in the second half of 1998, KCPI started to suspend the implementation of the CBA. This was
partly due to the depressed economic conditions then prevailing in the Philippines, and in compliance
with the freeze hiring policy of its Asia-Pacific headquarters.14 It refused to hire, as regular employees,
80 recommendees of retiring employees.15 KCPI and UKCEU failed to settle the matter through the
existing grievance machinery.
On April 23, 1999, the parties filed before the National Conciliation and Mediation Board (NCMB), a
Submission Agreement referring to arbitration the issue of whether KCPI violated Article XX, Section 1 of
the CBA. The parties agreed not to appeal any resolution/decision of the VA.16
Meantime, in August 1999, KCPI and UKCEU executed a new CBA. Article XX, Section 1 of the preceding
CBA was incorporated in the new CBA, governing the relation of the parties up to June 30, 2002.17
UKCEU averred in its pleadings that the "qualification in terms of education," that is, admitting
recommendees who were at least high school graduates, had been an established practice of KCPI since
1980. They appended to their position paper as Annexes "A," "A-1" to "A-5" thereof, a list of such
recommendees who were hired by KCPI.18 This being the case, KCPI could not just unilaterally revoke
such practice without its (UKCEU) consent and approval. UKCEU explained that while KCPI, in general,
had the discretion to raise the educational qualification of its applicants for employment, this did not
apply to recommendees due to the manner by which Article XX, Section 1 was implemented in the past.
UKCEU emphasized that its benefits had already been institutionalized in the CBAs executed by the
parties through the years. Thus, in refusing to hire the 80 recommendees as regular employees, KCPI
violated its CBA with the union,19 equivalent to breach of contract and unfair labor practice. It was
further pointed out that contrary to its claim that KCPI was implementing a freeze hiring policy, KCPI
even hired more or less 400 casuals, most of whom were only high school graduates who performed
activities necessary and desirable to KCPI’s regular and usual business. They averred that the hiring of
such employees was continuous, and on a five-month contract without extension or rehiring. UKCEU
insisted that it was not estopped to question the move to "upgrade the academic standards" of
recommendees, and that KCPI should have indicated its counter-proposal during the 1997 and 1999 CBA
negotiations. Since KCPI preferred to retain Article XX, Section 1 where the dispute and ambiguity
developed, the union opined that such provision should be strictly construed against the company.
UKCEU averred that either the husband or wife had the "right of replacement," and to the benefits

UKCEU averred that either the husband or wife had the "right of replacement," and to the benefits
offered by Article XX, Section 1; to deny them the right would be a clear discrimination and violation of
the CBA, since both are paying members of union dues and individually vote for any policy
determination.
In its pleadings, KCPI maintained that pursuant to its management prerogative, it had the right to
determine hiring standards under Article XX, Section 1 of the CBA without the consent or approval of
UKCEU. It argued that like applicants for regular positions, recommendees of retiring employees must
also be college graduates, in accordance with its November 7, 1995 Guidelines. It explained that such
recommendees are applying for regular positions and not as casual, who are hired on a temporary basis.
KCPI averred that the employment educational standards in the Guidelines it issued on November 7,
1995 took effect on January 1, 1997 and that after its implementation was deferred, the union did not
take any action. Hence, UKCEU was estopped from questioning the implementation of Article XX,
Section 1 in the 1999 CBA. In fact, such upgraded educational qualifications under the November 7,
1995 Guidelines were never brought up by UKCEU, and were never discussed during the 1997 CBA
negotiations. It asserted, however, that it was justified to temporarily suspend the implementation
because the freeze hiring policy of its Asia-Pacific headquarters had affected both existing and new
regular positions in the company. It pointed out that, in order to enforce the CBA provision, it normally
fills up two regular positions because the recommendee of a union member who resigns, retires, dies or
is disabled does not usually possess the same qualifications and skills of his/her predecessor. KCPI
averred that it never anticipated this undue burden and was not in a position to sustain the practice,
considering the lower volume in sales and a reduction in the number of working days in some areas of
its operations.
With respect to spouses who are both employed in KCPI, it was maintained that the policy regarding the
availment of their benefits had always been consistent since 1980: only one of the spouses is entitled
thereto, like the CBA provisions on the employees’ medical and funeral benefits. It pointed out that at
the time Article XX, Section 1 was adopted, there was already an existing policy in KCPI prohibiting the
hiring of a relative of an employee within the fourth civil degree of consanguinity or affinity. Thus, if the
interpretation of UKCEU would be considered, an unwarranted and anomalous situation would result,
since children of spouses who are both employed in the company fall within the second degree of
consanguinity. Moreover, spouses should be treated as one family, much like the tax treatment on the
claim for additional dependents. KCPI stressed that, as stated in the guidelines, the rationale for the
policy is to maintain fairness and equality since the intended or actual beneficiary is the child of an
employee.
On May 8, 1999, the VA visited the premises of KCPI with prior notice to the parties, and discovered that
KCPI employed casuals who performed the work of certain regular employees covered by the CBA.20
On March 19, 2001, the VA issued a Resolution in favor of UKCEU. The dispositive portion of the
resolution reads:
WHEREFORE, premises considered, this Voluntary Arbitrator, finds that (a) the Company cannot suspend
implementation of Section 1, Article XX of the existing CBA unilaterally by upgrading the educational
qualifications of "applicants-replacements" than are required previously, and (b) the husband and the
wife, under the said provision, are each entitled separately to recommend an applicant-replacement.
SO ORDERED.21
The VA ruled that since the CBA is the law between the parties, KCPI could not just unilaterally change or
suspend the implementation of the existing employment requirements, even in the light of the business
situation then prevailing in the Philippines. Moreover, an unambiguous CBA provision must be
interpreted according to its literal meaning and not beyond the parties' actual intendment, and, in case
of doubts, the same should be resolved in favor of labor. The VA declared that management prerogative
does not give license to a company to set aside or ignore what had been agreed upon through
negotiation. According to the VA, since KCPI failed to explain why it continued to hire casual workers
doing the jobs of regular employees, it failed to substantiate its contention that the economic crisis did
not warrant the hiring of regular employees.22
As to the applicability of Article XX, Section 1 to spouses employed by KCPI, the VA referred to Article I of
the CBA, which provides that the Agreement covers all regular rank-and-file employees. Had the
intention of the parties been to grant husband and wife employees the privilege of recommending only
one applicant-replacement, it should have been stated in unequivocal terms.23

one applicant-replacement, it should have been stated in unequivocal terms.23
KCPI assailed the decision of the VA via petition for review24 before the CA. It alleged that:
A. Contrary to the ruling of the Honorable Voluntary Arbitrator, petitioner may validly suspend the
implementation of Section 1, Article XX, by reason of economic difficulty.
B. Contrary to the ruling of the Honorable Voluntary Arbitrator, law and jurisprudence [recognize]
management's prerogative to set the qualifications for [the] hiring of employees, including those hired
as replacements under Section 1, Article XX.
C. Contrary to the ruling of the Honorable Voluntary Arbitrator, reasonable application of statutory and
contractual interpretation supports only one conclusion - that, in case of both spouses being KCPI
employees, only one of them may avail himself or herself of the benefits of Section 1, Article XX.25
On July 23, 2003, the CA partially set aside the Resolution of the VA.26 The fallo of the decision reads:
WHEREFORE, the petition is PARTIALLY GRANTED, and the Resolution of Voluntary Arbitrator Jose A.
Cabatuando, Jr. dated March 19, 2001 is PARTIALLY REVERSED AND SET ASIDE. Petitioner may not
suspend the implementation of Section 1, Article XX of the Collective Bargaining Agreement on account
of alleged economic distress. Petitioner, however, may require that recommendees under the said
provision must have completed at least a two-year technical/vocational course or reached the third year
of any college-level course, as a valid exercise of management prerogative. And when spouses are both
employed by petitioner, each may recommend a replacement in case of his death, disability, retirement
or voluntary resignation pursuant to Section 1, Article XX of the Collective Bargaining Agreement.
SO ORDERED.27
The CA ruled that KCPI may validly exercise its management prerogative and impose the requirement
that recommendees should have at least completed a two-year technical/vocational course or reached
the third year of any college-level course. While the right of KCPI to set hiring standards for
recommendees under the disputed provision of the CBA is apparent in the ruling of the Court in
Kimberly Clark Philippines v. Lorredo,28 the CA concluded that the right of retired, resigned, disabled or
deceased employees to recommend their replacements is not absolute. It emphasized that the
recommendees must still meet the standard set by petitioner. The CA further opined that Article XX,
Section 1 is not an inheritance the right to which attaches immediately upon an employee's death,
disability, retirement or voluntary resignation. However, as to whether spouses employed by petitioner
may separately recommend a replacement, the CA affirmed the observation of the VA that the provision
was literally made to apply to "all" employees, and does not mean that only one of the spouses may
avail of said benefit.29
The CA rejected the claim of KCPI that it (the court) should take judicial notice of the adverse effects of
the Asian economic crisis to the operation of its business in the Philippines. As in the case of
retrenchment, it was ruled that the company must still prove financial distress by sufficient and
convincing evidence. Moreover, the CA held that for the theory of rebus sic stantibus to apply, it must
be shown that the economic crisis made it extremely difficult for the company to comply with Article XX,
Section 1 of the CBA, and that the change in the circumstances of the parties must be one which could
not be foreseen at the time the contract was executed.30
Only UKCEU moved for a partial reconsideration of the CA Decision with respect to its ruling on the
upgraded educational qualification of the recommendees.31 The CA denied the motion in a Resolution32
dated March 23, 2004.
UKCEU, now petitioner, seeks relief from this Court in the instant petition.
The issue in this case is whether or not the CA erred in ruling that, under Article XX, Section 1 of the
1997 CBA, respondent is required to hire only those recommendees of retired/resigned, deceased or
disabled members of petitioner who had completed at least a two-year technical/vocational course or a
third-year level of college education. This is anchored on the resolution of the issue of whether the
November 7, 1995 Guidelines issued by respondent took effect on January 1, 1997.
Petitioner avers that the CA erred in holding that, under Article XX, Section 1 of the 1997 CBA and the
ruling of this Court in Kimberly Clark Philippines v. Lorredo, respondent is required to hire
recommendees of retired/resigned, deceased or disabled employees who possess the educational
qualification standards for employees contained in the November 7, 1995 Guidelines issued by
respondent.
Petitioner asserts that the employment qualification standards in Article XX, Section 1 of the CBA
requiring the recommendees to be at least high school graduates is contrary to the practice that had

requiring the recommendees to be at least high school graduates is contrary to the practice that had
been followed by respondent since 1980 up to 1998. Petitioner further avers that such practice, which
had been established by respondent in implementing the CBA, cannot be unilaterally revoked by it.
Petitioner argues that to allow respondent to set higher educational standards for employment of such
recommendees is to render nugatory the right granted to them under the CBA and would defeat the
ruling of the Court in Kimberly Clark Philippines v. Lorredo. Petitioner avers that 70% of the employees
of respondent are mere high school graduates who did not finish any technical or vocational course.
This, notwithstanding, respondent had a profit of P527,000,000.00 in 1999. Petitioner stresses that the
exercise of management prerogative must be circumscribed by the CBA of the parties.
For its part, respondent maintains that under Article XX, Section 1 of its CBA with petitioner, a
recommendee of retired/resigned, deceased or disabled members of petitioner must also be qualified
for the position. Respondent also invokes Kimberly Clark Philippines v. Lorredo, insisting that the Court
ruled therein that such recommendees must meet the employment standards set by respondent;
conformably with such ruling, it issued said Guidelines on November 7, 1995. Thus, it is not proscribed
from setting out higher qualification standards for said recommendees, such as those set forth in said
Guidelines. Contrary to petitioner’s claim of employing recommendees who were only high school
graduates, was not an established practice, as its policy had always been to hire college graduates for
regular employment. Finally, respondent avers that the implementation of qualifications for the
recommendees is a valid exercise of its management prerogative.
Respondent also points out during their 1997 CBA negotiations, petitioner proposed the following
revisions of Article XX, Section 1:
Section 1. A replacement of a deceased employee or recommendee of a retiring or resigning employee
with at least 10 years of service, when at least High School Graduate and able bodied, shall be hired by
the Company as Trainee for the first six (6) months, and then probationary employee to a permanent
position and if passed to qualifications made known to him shall be hired as a regular employee of the
Company. Recommendee entitled to this right shall be limited to up to the third civil degree only.33
However, said proposal was not incorporated in the CBA of the parties since by then, the November 7,
1995 Guidelines had already taken effect.
We rule against petitioner.
As a general proposition, an arbitrator is confined to the interpretation and application of the collective
bargaining agreement. He does not sit to dispense his own brand of industrial justice: his award is
legitimate only in so far as it draws its essence from the CBA,34 i.e., when there is a rational nexus
between the award and the CBA under consideration.35 It is said that an arbitral award does not draw its
essence from the CBA; hence, there is an unauthorized amendment or alteration thereof, if:
1. It is so unfounded in reason and fact;
2. It is so unconnected with the working and purpose of the agreement;
3. It is without factual support in view of its language, its context, and any other indicia of the parties'
intention;36
4. It ignores or abandons the plain language of the contract;37
5. It is mistakenly based on a crucial assumption which concededly is a nonfact;38
6. It is unlawful, arbitrary or capricious;39 and
7. It is contrary to public policy.40
A CBA is more than a contract; it is a generalized code to govern a myriad of cases which the draftsmen
cannot wholly anticipate. It covers the whole employment relationship and prescribes the rights and
duties of the parties. It is a system of industrial self-government with the grievance machinery at the
very heart of the system.41 The parties solve their problems by molding a system of private law for all
the problems which may arise and to provide for their solution in a way which will generally accord with
the variant needs and desires of the parties.
If the terms of a CBA are clear and have no doubt upon the intention of the contracting parties, the
literal meaning of its stipulation shall prevail.42 However, if, in a CBA, the parties stipulate that the hirees
must be presumed of employment qualification standards but fail to state such qualification standards
in said CBA, the VA may resort to evidence extrinsic of the CBA to determine the full agreement
intended by the parties. When a CBA may be expected to speak on a matter, but does not, its sentence
imports ambiguity on that subject.43 The VA is not merely to rely on the cold and cryptic words on the
face of the CBA but is mandated to discover the intention of the parties. Recognizing the inability of the

face of the CBA but is mandated to discover the intention of the parties. Recognizing the inability of the
parties to anticipate or address all future problems, gaps may be left to be filled in by reference to the
practices of the industry, and the step which is equally a part of the CBA although not expressed in it.44
In order to ascertain the intention of the contracting parties, their contemporaneous and subsequent
acts shall be principally considered.45 The VA may also consider and rely upon negotiating and
contractual history of the parties, evidence of past practices interpreting ambiguous provisions. The VA
has to examine such practices to determine the scope of their agreement,46 as where the provision of
the CBA has been loosely formulated.47 Moreover, the CBA must be construed liberally rather than
narrowly and technically and the Court must place a practical and realistic construction upon it.
In the present case, the parties are in agreement that, on its face, Article XX, Section 1 of their 1997 CBA
does not contain any provision relative to the employment qualification standards of recommendees of
retired/resigned, deceased or disabled employees of respondent who are members of petitioner.
However, in determining the employment qualification standards for said recommendees, the VA
should have relied on the November 7, 1995 Guidelines issued by respondent, which reads:
D. Definition of the phrase "immediate member of the family of an employee"
1. The phrase "immediate member of the family of an employee" shall refer to the employee’s
legitimate children and in default thereof to the employee’s collateral relatives within the third civil
degree.
2. A resigned/retired employee may be allowed to recommend a collateral relative within the third civil
degree (e.g., brother, sister, nephew or niece) as his/her replacement only in the following cases:
a. Where the retired/resigned employee is single or if married has no legitimate children.
b. Where the retired/resigned employee’s children are still minors (below 18 years old) at the time of
his/her separation from the company. (Emphasis added)
E. General Provisions
1. The privilege to recommend a replacement can be exercised by the employee concerned only once.
Thus, in the following cases, a recommendee who has been hired on probationary status can no longer
be substituted with another recommendee.
a. where the recommendee fails to pass in his performance evaluation.
b. where the recommendee resigns without completing his probationary period.
c. where the recommendee is dismissed for cause.
d. where the recommendee dies during his probationary period.48
Respondent issued said Guidelines in light of the ruling of this Court in Kimberly Clark Philippines v.
Lorredo. Respondent saw it imperative to do away with its practice of accommodating recommendees
who were mere high school graduates, and to require higher employment standards for them.
By agreement of the parties, the implementation of the Guidelines was deferred until January 1, 1997,
unless revoked or amended by the 1997 CBA. Petitioner proposed that the practice of hiring
recommendees of retired/resigned, deceased or disabled employees who were union members, who
were at least high school graduates, be included in their CBA, but respondent did not agree. Hence,
Article XX, Section 1 of the 1997 CBA of the parties remained intact. There was thus no more legal bar
for respondent to implement the November 7, 1995 Guidelines. By executing the 1997 CBA, in its
present form, petitioner is bound by the terms and conditions therein set forth.
The VA, however, ignored the plain language of the 1997 CBA of the parties, as well as the Guidelines
issued by respondent. He capriciously based his resolution on the respondent’s practice of hiring which,
however, by agreement of petitioner and respondent, was discontinued.
The Court has recognized in numerous instances the undoubted right of the employer to regulate,
according to his own discretion and best judgment, all aspects of employment, including but not limited
to, work assignments and supervision, working methods and regulations, time, place and manner of
work, processes to be followed, and hiring, supervision, transfer, discipline, lay off, dismissal and recall
of workers. Encompassing though it could be, the exercise of this right is not absolute. Management
prerogative must be exercised in good faith for the advancement of the employer’s interest and not for
the purpose of defeating or circumventing the rights of the employees under special laws, valid
agreements such as the individual contract of employment and the collective bargaining agreement, and
general principles of justice and fair play.49 In this case, the Court finds that respondent acted in accord
with the CBA and the November 7, 1995 Guidelines, which, by agreement of the parties, may be
implemented by respondent after January 1, 1997.

implemented by respondent after January 1, 1997.
IN LIGHT OF ALL THE FOREGOING, the petition is DENIED for lack of merit. Costs against petitioner.
SO ORDERED.
ROMEO J. CALLEJO, SR.
Associate Justice
WE CONCUR:
ARTEMIO V. PANGANIBAN
Chief Justice
Chairperson
CONSUELO YNARES-SANTIAGO MA. ALICIA AUSTRIA-MARTINEZ
Associate Justice Asscociate Justice
MINITA V. CHICO-NAZARIO
Associate Justice
CE R T I F I C AT I O N
Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the conclusions in the
above Decision were reached in consultation before the case was assigned to the writer of the opinion
of the Court’s Division.
Chief Justice
Footnotes
1
Penned by Associate Justice Noel G. Tijam, with Associate Justices Portia Aliño-Hormachuelos and
Edgardo P. Cruz, concurring; rollo, pp. 20-30.
2
Penned by Voluntary Arbitrator Jose A. Cabatuando, Jr.
3
Rollo, p. 20.
4 CA rollo, pp. 35-36.
5 G.R. No. 103090, September 21, 1993, 226 SCRA 639.
6 Id. at 644.
7
Rollo, p. 43.
8 CA rollo, pp. 41-43.
9 Id. at 42-43.
10 Id. at 65.
11 Id. at 66.
12
Id. at 152.
13 Id. at 70, 77.
14
Id. at 51-53.
15
Id. at 126-127.
16 Id. at 45.
17
Id. at 30.
18
Id. at 123.
19 Id. at 116, 126-127.
20 Id. at 36.
21 Id. at 40.
22 Id. at 36-38.
23 Id. at 38-40.
24 Id. at 7-28.
25 Id. at 14.
26 Id. at 289-298.
27 Id. at 298.
28 Supra note 5.
29
CA rollo, pp. 296-297.
30 Id. at 293-294.
31 Id. at 302-310.
32 Id. at 344-346.
33 CA rollo, p. 105.

32
Id. at 344-346.
33 CA rollo, p. 105.
34
International Union, United Automobile, Aerospace and Agricultural Implement Workers of America
(UAW), et al. v. White Motor Corporation, et al., 505 F.2d 1193 (1974); Cliftex Corporation vs. Local 377,
New England Regional Joint Board, Amalgamated Clothing and Textile Workers Union, AFL-CIO, CLC, 625
F.Supp. 903 (1986); Excel Corporation v. United Food and Commercial Workers International Union,
Local 431, 102 F.3d 1464 (1996); Local No. 7 United Food and Commercial Workers International Union
v. King Soopers, Inc., 222 F.3d 1223 (2000); and Association of Cleveland Fire Fighters, Local 93 of the
International Association of Fire Fighters v. City of Cleveland, 793 N.E.2d 484 (2003).
35 Association of Cleveland Fire Fighters, Local 93 of the International Association of Fire Fighters v. City
of Cleveland, supra, citing Mahoning Cty. Bd. of Mental Retardation & Developmental Disabilities v.
Mahoning Cty. TMR Edn. Assn., 22 Ohio St.3d 80, 22 OBR 95, 488 N.E.2d 872 (1986).
36
Local No. 7 United Food and Commercial Workers International Union v. King Soopers, Inc., supra.
37
Excel Corporation v. United Food and Commercial Workers International Union, Local 431, supra.
38 Cliftex Corporation v. Local 377, New England Regional Joint Board, Amalgamated Clothing and Textile
Workers Union, AFL-CIO, CLC, supra.

39 Association of Cleveland Fire Fighters, Local 93 of the International Association of Fire Fighters v. City
of Cleveland, supra.
40 Local No. P-1236, Amalgamated Meat Cutters & Butcher Workmen of North America, AFL-CIO v. Jones
Dairy Farm, 519 F.Supp. 1362 (1981).

41 United Steel Workers of America v. Warrior and Gulf Navigation Company, 363 U.S. 574, 80 S.Ct. 1347,
4 L.Ed.2d 1409 (1960).

42 Article 1370, New Civil Code.
43
International Union, et al. v. White Motor Corporation, supra.
44
Cliftex Corporation v. Local 377, New England Regional Joint Board, supra.
45
Article 1371, New Civil Code.
46
Excel Corporation v. United Food and Commercial Workers International Union, Local 431, supra.
47
Cliftex Corporation v. Local 377, New England Regional Joint Board, supra.
48 CA rollo, pp. 63-64.
49
Unicorn Safety Glass, Inc. v. Basarte, G.R. No. 154689, November 25, 2004, 444 SCRA 287, 296-297.

Manalang vs. Artex
2:29 AM
G.R. No. L-20432 October 30, 1967

JOSE MANALANG, ET AL., petitioners,
vs.
ARTEX DEVELOPMENT CO., INC., ET AL., respondents.
Beltran and Lacson for petitioners.
Emiliano Morabe and Mariano V. Ampil for respondents.
CASTRO, J.:
This is a petition for certiorari by Jose E. Manalang, Marcelino de Leon and Bernardo Lactao to set
aside the resolution en banc of the Court of Industrial Relations (CIR) dated September 14, 1962 in
case 2490-ULP,1 which reversed the decision of Presiding Judge Jose Bautista of June 30, 1962.
The latter decision ordered the respondent Bagong Buhay Labor Union (hereinafter referred to as
the BBLU) to readmit the complainants to active membership in the said union, and directed the
respondent Artex Development Co., Inc. (hereinafter referred to as the Company) to reinstate them
to their former positions, with back wages from the date of their dismissal to the time of their actual
reinstatement, and with all the appertaining rights and privileges.
The facts that gave rise to the present petition are not disputed. The Federation of Free Workers
(FFW), in a letter dated May 3, 1960, informed the Company that a "great majority" of the latter's
employees had organized the Artex Free Workers (FFW), 2 that this new union had affiliated with the
FFW, and that a set of proposals was being formulated as the basis of a prospective collective
bargaining agreement between the said new union and the Company. In another letter dated May 4,
1960, the FFW asked the Company to give a "thorough study" to the collective bargaining proposals
therein enclosed. In its reply of May 12, 1960, the Company stated that it had "nothing against your
union", but called attention to the fact that it had already recognized the BBLU, which union had then
been in existence for four years, and with which it had concluded two collective bargaining
agreements. FFW then requested that it be furnished a copy of the second collective bargaining
agreement. When the Company did not honor the request, the FFW gave a copy of its May 4 letter
to the Conciliation Service, Regional Office3 of the Department of Labor, on the basis of which a
labor conciliator scheduled conferences between the FFW and the Company. After the conference
held on May 12, 17, and 30, and June 9, 1960 in the office of the labor conciliator, the latter ordered
the Company to furnish the FFW a copy of the collective bargaining agreement. This order was not
complied with.
In the meantime, the board of directors of the BBLU held a special meeting on June 1, 1960, for the
purpose of taking appropriate steps against the petitioners herein who were employees of the
Company and members of the union. The board found that the petitioners had "affiliated themselves
with another labor union (Artex Free Workers [FFW]), without first terminating their membership" with
the BBLU and "without the knowledge of the officers" of the latter union. On the same date, the
board adopted a resolution, the pertinent portions of which read as follows:
WHEREAS, the union after due investigation, has found Messrs. Jose Manalang, Marcelino de Leon
and Bernardo Lactao, guilty of disloyalty to the union and for the reason, have been expelled from
the union, thereby losing their good standing in the union.
WHEREFORE, by virtue of the provisions of the Collective Bargaining Agreement above mentioned,
and in order to promote sanctity in the observance of the Collective Bargaining Agreements, it has
been resolved, as it is hereby resolved, to inform the management of the Artex Development Co.,
Inc., of the loss of good standing as members of the Bagong Buhay Labor Union and said Messrs.
Manalang, de Leon and Lactao, by virtue of which they should be dismissed, as it is now resolved to
ask the Company to dismiss them;
Be it resolved further that the Company be furnished a copy of this resolution, and that the said firm
be advised that the union will be compelled to take such action as maybe necessary to protect its
interest, in case the Management should fail to comply with its contractual obligation above-
mentioned. (Emphasis supplied)
After receipt of the above resolution, the Company, having in mind the closed-shop stipulation in the
collective bargaining agreement, sent three identical letters, all dated June 3, 1960, to the
petitioners, advising them of the termination of their employment effective June 3, 1960.

On July 20, 1960 the petitioners lodged an unfair labor practice charge with the CIR against the
Company and the BBLU. They alleged that they "were engaged in concerted activities, more
particularly to form the Artex Free Workers (FFW) due to the inability and refusal of the respondent
company to furnish them with [a copy of] an alleged collective bargaining agreement between the
respondent labor union and respondent company", and that without any valid cause but "due to said
concerted activities, the company dismissed them."
In its answer, the respondent BBLU admitted that the petitioners were bona fide members thereof,
but averred that they were expelled from the union, after due investigation, for acts of disloyalty. In
its answer, the Company denied the charge. It alleged that on March 4, 1960, it entered into a
collective bargaining agreement with the BBLU after the latter had satisfactorily demonstrated
majority representation; that the petitioners were dismissed at the behest of the BBLU due to loss of
their good standing as union members; and that refusal on the part of the Company of the union's
demand for the dismissal of the petitioners would constitute a violation of the collective bargaining
agreement and might result in a union strike or in other punitive acts against the Company.
After due trial, Presiding Judge Bautista rendered judgment finding that the petitioners were not
aware of the existence of the collective bargaining agreement, much less of its closed-shop
provision, and holding, in consequence that they were not bound by it. The decision observed that
the provision in question was "merely a cloak to cover the discriminatory dismissal of the complaints,
due to their union activities in forming another union, which the company did not like." The Company
was ordered to reinstate the petitioners, with back wages from the date of their dismissal and "all the
rights and privileges formerly appertaining thereto". The BBLU was ordered to readmit them to active
membership therein.
Thereafter the CIR, en banc, set aside the judgment. It found that the failure of the Company to
furnish the petitioners a copy of the collective bargaining agreement did not constitute an unfair labor
practice because furnishing them with any and all information on union matters was the obligation of
the BBLU; that the Company in dismissing them merely complied with the provisions of the collective
bargaining agreement; and that if there was any party liable under Republic Act 875, it was the
BBLU and not the Company. The CIR, en banc, concluded with the observation that "if warranted
and desired, they [the petitioners] may file a case against respondent labor union [BBLU] under the
provisions of the Magna Carta of Labor, unless it could be said that there is already res judicata."
Hence, the present recourse.
The validity of the collective bargaining agreement of March 4, 1960 is not here assailed by the
petitioners. Nor do they deny that they were members of the BBLU prior to March 4, 1960, and until
they were expelled from the union. That the BBLU was the lawful and proper bargaining
representative of the non-supervisory employees of the Company, is not traversed.
The issue tendered for resolution, by the petitioners' formulation, is: "Is it just and lawful to enforce a
contract [referring to the collective bargaining agreement] against the employees who were unduly,
unreasonably and illegally denied knowledge of the contents thereof?" More particular reference is
made by them to the closed shop provision of the agreement that states, "All employees of the
COMPANY must be members in good standing of the UNION as a condition of employment with the
COMPANY", which provision, the petitioners claim, they were totally unaware of. They argue, in
essence, that because they were ignorant of the provisions of the agreement, they cannot be bound
by such agreement, and that, therefore, their dismissal from the Company on the strength of the
closed-shop provision is unlawful and constitutes an unfair labor practice on the part of both the
Company and the BBLU.
Were the petitioners really unaware of the provisions of the collective bargaining agreement during
the period from March 4, 1960, when the agreement was entered into, to the time they organized the
Artex Free Workers which was in the following month of April? This, in our view, is the vital issue of
fact that constitutes the vertex of this case, especially because the CIR, en banc, did not make any
unequivocal findings of fact relative thereto.
A host of circumstances can be gleaned from the record that would demonstrate persuasively that
the petitioners were not unaware of the provisions of the agreement in question prior to their
organization of the Artex Free Workers union.
From the admitted facts that the petitioners started working in the Company in December, 1959, and
that they succeeded in wielding sufficient influence to persuade other employees to join them in
forming the Artex Free Workers, we can reasonably infer that they knew of the existence of the first
collective bargaining agreement between the BBLU and the Company, as well especially of the
fundamental provisions thereof regarding check-off or payroll deduction of union dues and

fundamental provisions thereof regarding check-off or payroll deduction of union dues and
assessments, vacation and sick leaves, hospital, medical and dental care, working hours and
overtime service, union meetings, and the duration of the agreement — provisions which are
standard stipulations in collective bargaining agreements and which affect them directly, personally
and individually. They can therefore be properly charged with knowledge specifically of the expiry
date of the agreement and, consequently, of the negotiations between the BBLU and the Company
before the said expiry date toward the execution of a second agreement — which is the agreement
in question.
Since in their petition they do not deny that they knew of the existence of the second agreement, it is
only natural to presume that they knew of its provisions, and that they had actually studied them in a
comparative way in order to be able to formulate the collective bargaining proposals submitted by
them (the Artex Free Workers) to the Company on May 4, 1960.
The evidence on record is unmistakable that before the BBLU recommended the dismissal of the
petitioners because they had violated the agreement, the officials of the said union conducted an
investigation of the actuations of the petitioners. The record does not reveal any disavowal made by
any of the petitioners of knowledge of the closed-shop provision at any time prior to their dismissal.
Disavowal came as an afterthought and was articulated only after they had received their notices of
discharge. Even after their dismissal, not one of them protested either to the BBLU or the Company.
True it is that the petitioner Manalang testified that he went to Mauricio Mariñas, personnel manager
of the Company, and protested his dismissal, but Mariñas categorically declared that Manalang
never went to see him regarding the matter of his dismissal.
The petitioners' further contention that the closed-shop provision in the collective bargaining
agreement is illegal because it is an unreasonable restriction of the right of freedom of association
guaranteed by the Constitution is a futile exercise in argumentation, as this Court has in a number of
cases sustained closed-shop as a valid form of union security.3
Finally, even if we assume, in gratia argumentis, that the petitioners were unaware of the stipulations
set forth in the collective bargaining agreement, since their membership in the BBLU prior to their
expulsion therefrom is undenied, there can be no question that as long as the agreement with
closed-shop provision was in force, they were bound by it. Neither their ignorance of, nor their
dissatisfaction with, its terms and conditions would justify breach thereof or the formation by them of
a union of their own. As has been aptly said, "a collective bargaining agreement entered into by
officers of a union, as agent of the members, and an employer, gives rise to valid enforcible
contractual relations, against the individual union members in matters that affect them peculiarly,
and against the union in matters that affect the entire membership or large classes of its
members,"4 and "a union member who is employed under an agreement between the union and his
employer is bound by the provisions thereof, since it is a joint and several contract of the members
of the union entered into by the union as their agent." 5
On the basis of all the foregoing, we do not see any unfair labor practice committed by either the
Company or the BBLU.
ACCORDINGLY, the resolution of the CIR en banc of September 14, 1962, setting aside the
decision of the trial judge of June 30, 1962, is affirmed. No pronouncement as to costs.
Concepcion, C.J., Reyes J.B.L., Dizon, Makalintal, Bengzon, J.P., Zaldivar, Sanchez, Angeles and
Fernando, JJ.,concur.
Footnotes
1 "Jose Manalang, et al., complainants vs. Artex Development Co., Inc., et al., respondents."
2 The Artex Free Workers (FFW) was organized in April 1960.
3
National Brewery & Allied Industries labor Union of the Philippines vs. San Miguel Brewery, Inc., et
al., L-18170, Aug. 31, 1963; Bacolod-Murcia Milling Co. vs. National Employees' Security Union,
L-9003, Dec. 21, 1956; National Labor Union vs. Aguinaldo's Echague, L-7358, May 31, 1655; Ang
Malayang Manggagawa ng Ang Tibay Enterprises vs. Ang Tibay, L-8259, Dec. 28, 1957.
4
Dangel & Shriber, The Law of Labor Unions, 1941 ed., p. 340.
5
See Capra v. Local Lodge, 102 Colo. 63, cited in Dangel & Shriber, The Law of Labor Unions, 1941
ed., p. 342.
Pasted from <http://www.lawphil.net/judjuris/juri1967/oct1967/gr_l-20432_1967.html>

TSPIC Corp v. TSPIC Union (2008)
12:10 AM
SECOND DIVISION
[G.R. No. 163419, February 13, 2008]
TSPIC CORPORATION, Petitioner, vs. TSPIC EMPLOYEES UNION (FFW), representing MARIA
FE FLORES, FE CAPISTRANO, AMY DURIAS,[1] CLAIRE EVELYN VELEZ, JANICE OLAGUIR,
JERICO ALIPIT, GLEN BATULA, SER JOHN HERNANDEZ, RACHEL NOVILLAS, NIMFA ANILAO,
ROSE SUBARDIAGA, VALERIE CARBON, OLIVIA EDROSO, MARICRIS DONAIRE, ANALYN
AZARCON, ROSALIE RAMIREZ, JULIETA ROSETE, JANICE NEBRE, NIA ANDRADE, CATHERINE
YABA, DIOMEDISA ERNI,[2] MARIO SALMORIN, LOIDA COMULLO,[3] MARIE ANN DELOS
SANTOS,[4] JUANITA YANA, and SUZETTE DULAY, Respondents.
DEC I SI ON
VELASCO JR., J.:

The path towards industrial peace is a two-way street. Fundamental fairness and protection to labor should
always govern dealings between labor and management. Seemingly conflicting provisions should be harmonized
to arrive at an interpretation that is within the parameters of the law, compassionate to labor, yet, fair to
management.
In this Petition for Review on C ertiorari under Rule 45, petitioner TSPIC C orporation (TSPIC) seeks to annul and
set aside the October 22, 2003 Decision[5] and April 23, 2004 Resolution[6] of the C ourt of Appeals (C A) in C A-
G.R. SP No. 68616, which affirmed the September 13, 2001 Decision[7] of Accredited Voluntary Arbitrator
Josephus B. Jimenez in National C onciliation and Mediation Board C ase No. JBJ-AVA-2001-07-57.
TSPIC is engaged in the business of designing, manufacturing, and marketing integrated circuits to serve the
communication, automotive, data processing, and aerospace industries. Respondent TSPIC Employees Union
(FFW) (Union), on the other hand, is the registered bargaining agent of the rank-and-file employees of TSPIC.
The respondents, Maria Fe Flores, Fe C apistrano, Amy Durias, C laire Evelyn Velez, Janice Olaguir, Jerico Alipit,
Glen Batula, Ser John Hernandez, Rachel Novillas, Nimfa Anilao, Rose Subardiaga, Valerie C arbon, Olivia
Edroso, Maricris Donaire, Analyn Azarcon, Rosalie Ramirez, Julieta Rosete, Janice Nebre, Nia Andrade,
C atherine Yaba, Diomedisa Erni, Mario Salmorin, Loida C omullo, Marie Ann Delos Santos, Juanita Yana, and
Suzette Dulay, are all members of the Union.
In 1999, TSPIC and the Union entered into a C ollective Bargaining Agreement (C BA)[8] for the years 2000 to
2004. The C BA included a provision on yearly salary increases starting January 2000 until January 2002.
Section 1, Article X of the C BA provides, as follows:
Section 1. Salary/ Wage Increases.â€“â€“Employees covered by this Agreement shall be granted
salary/wage increases as follows:
a) Effe ctive January 1, 2000, all employees on re gular status and within the bargaining unit on or before
said date shall be granted a salary incre ase equivalent to te n percent (10%) of their basic monthly
salary as of December 31, 1999.
b) Effe ctive January 1, 2001, all employees on re gular status and within the bargaining unit on or before
said date shall be granted a salary incre ase equivalent to twe lve (12%) of their basic monthly salary as
of De ce mber 31, 2000.
c) Effe ctive January 1, 2002, all employees on re gular status and within the bargaining unit on or before
said date shall be granted a salary incre ase equivalent to e leven perce nt (11%) of their basic monthly
salary as of December 31, 2001.
The wage salary increase of the first year of this Agreement shall be over and above the wage/salary
increase, including the wage distortion adjustment, granted by the C OMPANY on November 1, 1999 as
per Wage Order No. NC R-07.
The wage/salary increases for the years 2001 and 2002 shall be deemed inclusive of the mandated
minimum wage increases under future Wage Orders, that may be issued after Wage Order No. NC R -07,
and shall be considered as correction of any wage distortion that may have been brought about by the
said future Wage Orders. Thus the wage/salary increases in 2001 and 2002 shall be deemed as
compliance to future wage orders after Wage Order No. NC R -07.

compliance to future wage orders after Wage Order No. NC R -07.
C onsequently, on January 1, 2000, all the regular rank-and-file employees of TSPIC received a 10% increase in
their salary. Accordingly, the following nine (9) respondents (first group) who were already regular employees
received the said increase in their salary: Maria Fe Flores, Fe C apistrano, Amy Durias, Claire Evelyn Velez,
Janice Olaguir, Jerico Alipit, Glen Batula, Ser John Hernandez, and Rachel Novillas.[9]
The C BA also provided that employees who acquire regular employment status within the year but after the
effectivity of a particular salary increase shall receive a proportionate part of the increase upon attainment of
their regular status. Sec. 2 of the C BA provides:
SEC TION 2. Regularization Increase.â€“â€“A covered daily paid employee who acquires regular status
within the year subsequent to the effectivity of a particular salary/wage increase mentioned in Section 1
above shall be granted a salary/wage increase in proportionate basis as follows:
R e gularization Period Equiva lent Increase
- 1 st Q uarter 100%
- 2 nd Q uarte r 75%
- 3 rd Q uarter 50%
- 4 th Q uarter 25%
Thus, a daily paid employee who becomes a regular employee covered by this Agreement only on May 1,
2000, i.e., during the second quarter and subsequent to the January 1, 2000 wage increase under this
Agreement, will be entitled to a wage increase equivalent to seventy -five percent (75%) of ten percent
(10%) of his basic pay. In the same manner, an employee who acquires regular status on December 1,
2000 will be entitled to a salary increase equivalent to twenty -five percent (25%) of ten percent (10%)
of his last basic pay.
On the other hand, any monthly-paid employee who acquires regular status within the term of the
Agreement shall be granted regularization increase equivalent to 10% of his regular basic salary.
Then on October 6, 2000, the Regional Tripartite Wage and Productivity Board, National C apital Region, issued
Wage Order No. NC R-08[10] (WO No. 8) which raised the daily minimum wage from PhP 223.50 to PhP 250
effective November 1, 2000. C onformably, the wages of 17 probationary employees, namely: Nimfa Anilao,
Rose Subardiaga, Valerie Carbon, Olivia Edroso, Maricris Donaire, Analyn Azarcon, Rosalie Ramirez, Julieta
Rosete, Janice Nebre, Nia Andrade, C atherine Yaba, Diomedisa Erni, Mario Salmorin, Loida Comullo, Marie Ann
Delos Santos, Juanita Yana, and Suzette Dulay (second group), were increased to PhP 250.00 effective
November 1, 2000.
On various dates during the last quarter of 2000, the above named 17 employees attained regular
employment[11] and received 25% of 10% of their salaries as granted under the provision on regularization
increase under Article X, Sec. 2 of the C BA.
In January 2001, TSPIC implemented the new wage rates as mandated by the C BA. As a result, the nine
employees (first group), who were senior to the above-listed recently regularized employees, received less
wages.
On January 19, 2001, a few weeks after the salary increase for the year 2001 became effective, TSPICâ€™s
Human Resources Department notified 24 employees,[12]namely: Maria Fe Flores, Janice Olaguir, Rachel
Novillas, Fe C apistrano, Jerico Alipit, Amy Durias, Glen Batula, Claire Evelyn Velez, Ser John Hernandez, Nimfa
Anilao, Rose Subardiaga, Valerie C arbon, Olivia Edroso, Maricris Donaire, Analyn Azarcon, Rosalie Ramirez,
Julieta Rosete, Janice Nebre, Nia Andrade, C atherine Yaba, Diomedisa Erni, Mario Salmorin, Loida C omullo, and
Marie Ann Delos Santos, that due to an error in the automated payroll system, they were overpaid and the
overpayment would be deducted from their salaries in a staggered basis, starting February 2001. TSPIC
explained that the correction of the erroneous computation was based on the crediting provision of Sec. 1, Art.
X of the C BA.
The Union, on the other hand, asserted that there was no error and the deduction of the alleged overpayment
from employees constituted diminution of pay. The issue was brought to the grievance machinery, but TSPIC
and the Union failed to reach an agreement.
C onsequently, TSPIC and the Union agreed to undergo voluntary arbitration on the solitary issue of whether or
not the acts of the management in making deductions from the salaries of the affected employees constituted
diminution of pay.
On September 13, 2001, Arbitrator Jimenez rendered a Decision, holding that the unilateral deduction made by
TSPIC violated Art. 100[13] of the Labor C ode. The falloreads:
WHEREFORE, in the light of the law on the matter and on the facts adduced in evidence, judgment is
hereby rendered in favor of the Union and the named individual employees and against the company,
thereby ordering the [TSPIC] to pay as follows:
1) to the sixteen (16) newly re gularized employees named above, the amount of P12,642.24 a m onth or
a total of P113,780.16 for nine (9) months or P7,111.26 for e ach of them as we ll as an additional

a total of P113,780.16 for nine (9) months or P7,111.26 for e ach of them as we ll as an additional
P12,642.24 (for all), or P790.14 (for e ach), for e very month after 30 September 2001, until full
paym ent, with le gal interests for every m onth of delay;
2) to the nine (9) who we re hired e arlier than the sixteen (16); also named above, their re spective
am ount of e ntitlements, according to the Unionâ €™s correct computation, ranging from P110.22 per
m onth (or P991.98 for nine months) to P450.58 a month (or P4,055.22 for nine months), as we ll as
corre sponding monthly e ntitlements after 30 September 2001, plus legal interests until full payment,
3) to Suze tte Dulay, the amount of P608.14 a month (or P5,473.26), as we ll as corresponding monthly
e ntitlements after 30 Se ptember 2001, plus legal interest until full payment,
4) Attorne yâ€™s fees equal to 10% of all the above monetary awards.
The claim for exemplary damages is denied for want of factual basis.
The parties are hereby directed to comply with their joint voluntary commitment to abide by this Award
and thus, submit to this Office jointly, a written proof of voluntary compliance with this DEC ISION within
ten (10) days after the finality hereof.
SO ORDERED.[14]
TSPIC filed a Motion for Reconsideration which was denied in a Resolution dated November 21, 2001.
Aggrieved, TSPIC filed before the C A a petition for review under Rule 43 docketed as C A-G.R. SP No. 68616.
The appellate court, through its October 22, 2003 Decision, dismissed the petition and affirmed in toto the
decision of the voluntary arbitrator. The C A declared TSPICâ€™s computation allowing PhP 287 as daily wages
to the newly regularized employees to be correct, noting that the computation conformed to WO No. 8 and the
provisions of the C BA. According to the C A, TSPIC failed to convince the appellate court that the deduction was
a result of a system error in the automated payroll system. The C A explained that when WO No. 8 took effect
on November 1, 2000, the concerned employees were still probationary employees who were receiving the
minimum wage of PhP 223.50. The C A said that effective November 1, 2000, said employees should have
received the minimum wage of PhP 250. The C A held that when respondents became regular employees on
November 29, 2000, they should be allowed the salary increase granted them under the C BA at the rate of
25% of 10% of their basic salary for the year 2000; thereafter, the 12% increase for the year 2001 and the
10% increase for the year 2002 should also be made applicable to them.[15]
TSPIC filed a Motion for Reconsideration which was denied by the C A in its April 23, 2004 Resolution.
TSPIC filed the instant petition which raises this sole issue for our resolution: Does the TSPIC â€™s decision to
deduct the alleged overpayment from the salaries of the affected members of the Union constitute diminution of
benefits in violation of the Labor C ode?
TSPIC maintains that the formula proposed by the Union, adopted by the arbitrator and affirmed by the C A, was
flawed, inasmuch as it completely disregarded the â€œcrediting provisionâ€ contained in the last paragraph
of Sec. 1, Art. X of the C BA.
We find TSPIC â€™s contention meritorious.
A Collective Bargaining Agreement is the law between the parties
It is familiar and fundamental doctrine in labor law that the C BA is the law between the parties and they are
obliged to comply with its provisions.[16] We said so in Honda Phils., Inc. v. Samahan ng Malayang Manggagawa
sa Honda:
A collective bargaining agreement or C BA refers to the negotiated contract between a legitimate labor
organization and the employer concerning wages, hours of work and all other terms and conditions of
employment in a bargaining unit. As in all contracts, the parties in a C BA may establish such stipulations,
clauses, terms and conditions as they may deem convenient provided these are not contrary to law,
morals, good customs, public order or public policy. Thus, where the C BA is clear and unambiguous, it
becomes the law between the parties and compliance therewith is mandated by the express policy of the
law.[17]
Moreover, if the terms of a contract, as in a C BA, are clear and leave no doubt upon the intention of the
contracting parties, the literal meaning of their stipulations shall control.[18] However, sometimes, as in this
case, though the provisions of the C BA seem clear and unambiguous, the parties sometimes arrive at conflicting
interpretations. Here, TSPIC wants to credit the increase granted by WO No. 8 to the increase granted under
the C BA. According to TSPIC, it is specifically provided in the C BA that â€œthe salary/wage increase for the
year 2001 shall be deemed inclusive of the mandated minimum wage increases under future wage orders that
may be issued after Wage Order No. 7.â€ The Union, on the other hand, insists that the â€œcreditingâ€
provision of the C BA finds no application in the present case, since at the time WO No. 8 was issued, the
probationary employees (second group) were not yet covered by the C BA, particularly by its crediting provision.
As a general rule, in the interpretation of a contract, the intention of the parties is to be pursued.[19] Littera
necat spiritus vivificat. An instrument must be interpreted according to the intention of the parties. It is the
duty of the courts to place a practical and realistic construction upon it, giving due consideration to the context

duty of the courts to place a practical and realistic construction upon it, giving due consideration to the context
in which it is negotiated and the purpose which it is intended to serve.[20] Absurd and illogical interpretations
should also be avoided. C onsidering that the parties have unequivocally agreed to substitute the benefits
granted under the C BA with those granted under wage orders, the agreement must prevail and be given full
effect.
Paragraph (b) of Sec. 1 of Art. X of the C BA provides for the general agreement that, effective January 1, 2001,
all employees on regular status and within the bargaining unit on or before said date shall be granted a salary
increase equivalent to twelve (12%) of their basic monthly salary as of December 31, 2000. The 12% salary
increase is granted to all employees who (1) are regular employees and (2) are within the bargaining unit.
Second paragraph of (c) provides that the salary increase for the year 2000 shall not include the increase in
salary granted under WO No. 7 and the correction of the wage distortion for November 1999.
The last paragraph, on the other hand, states the specific condition that the wage/salary increases for the years
2001 and 2002 shall be deemed inclusive of the mandated minimum wage increases under future wage orders,
that may be issued after WO No. 7, and shall be considered as correction of the wage distortions that may be
brought about by the said future wage orders. Thus, the wage/salary increases in 2001 and 2002 shall be
deemed as compliance to future wage orders after WO No. 7.
Paragraph (b) is a general provision which allows a salary increase to all those who are qualified. It, however,
clashes with the last paragraph which specifically states that the salary increases for the years 2001 and 2002
shall be deemed inclusive of wage increases subsequent to those granted under WO No. 7. It is a familiar rule
in interpretation of contracts that conflicting provisions should be harmonized to give effect to all.[21] Likewise,
when general and specific provisions are inconsistent, the specific provision shall be paramount to and govern
the general provision.[22] Thus, it may be reasonably concluded that TSPIC granted the salary increases under
the condition that any wage order that may be subsequently issued shall be credited against the previously
granted increase. The intention of the parties is clear: As long as an employee is qualified to receive the 12%
increase in salary, the employee shall be granted the increase; and as long as an employee is granted the 12%
increase, the amount shall be credited against any wage order issued after WO No. 7.
Respondents should not be allowed to receive benefits from the C BA while avoiding the counterpart crediting
provision. They have received their regularization increases under Art. X, Sec. 2 of the C BA and the yearly
increase for the year 2001. They should not then be allowed to avoid the crediting provision which is an
accompanying condition.
Respondents attained regular employment status before January 1, 2001. WO No. 8, increasing the minimum
wage, was issued after WO No. 7. Thus, respondents rightfully received the 12% salary increase for the year
2001 granted in the C BA; and consequently, TSPIC rightfully credited that 12% increase against the increase
granted by WO No. 8.
Proper formula for computing the salaries for the year 2001
Thus, the proper computation of the salaries of individual respondents is as follows:
(1) With regard to the first group of respondents who attained regular employment status before the effectivity
of WO No. 8, the computation is as follows:
For respondents Jerico Alipit and Glen Batula:[23]
W a ge ra te before WO No. 8 .............................. PhP 234.67

Incre a se due to WO No. 8
se tting the minimum wa ge at PhP 250 .................. 15.33

Tota l Salary upon effectivity of WO No. 8 ........... PhP 250.00
Incre a se for 2001 (12% of 2000 salary) .............. PhP 30.00
Le ss the wage incre ase under W O No. 8 ............ ____15.33
Tota l differe nce betwe en the wa ge incre ase
for 2001 and the incre ase gra nted under W O No. 8 ............. PhP 14.67
W a ge ra te by De cember 2000 ............................ PhP 250.00
Plus total difference betwe en the wa ge increase for 2001
a nd the increase granted under W O No. 8 ........... 14.67

Total (W a ge ra te ra nge beginning January 1, 2001) PhP 264.67

Total (W a ge ra te ra nge beginning January 1, 2001) PhP 264.67
For respondents Ser John Hernandez and Rachel Novillas:[24]
W a ge ra te ra nge before W O No. 8 ..................... PhP 234.68

Incre ase due to WO No. 8
se tting the minimum wage at PhP 250 .................. 15.32

Tota l Salary upon effectivity of WO No. 8 ........... PhP 250.00
Incre a se for 2001 (12% of 2000 salary) .............. PhP 30.00
Le ss the wa ge incre ase under W O No. 8 ............ 15.32
Tota l differe nce betwe en the wa ge incre ase
for 2001 and the incre ase gra nted under W O No. 8 ........................ PhP 14.68
W age rate by De cember 2000 ............................ PhP 250.00
a nd the increase granted under W O No. 8 ........... _____14.68

Total (W a ge ra te ra nge beginning January 1, 2001) ...................... PhP 264.68
For respondents Amy Durias, Claire Evelyn Velez, and Janice Olaguir:[25]
W a ge ra te ra nge before W O No. 8 .................................... PhP 240.26

se tting the minimum wa ge at PhP 250 ................... 9.74

Tota l Salary upon effectivity of WO No. 8 ...................... PhP 250.00
Incre a se for 2001 (12% of 2000 salary) ............................. PhP 30.00
Le ss the wa ge incre ase under W O No. 8 ................... _____9.74
Tota l differe nce betwe en the wa ge incre ase for 2001
a nd the increase granted under W O No. 8 ......................... PhP 20.26

W age rate by De cember 2000 ........................................... PhP 250.00
a nd the increase granted under W O No. 8 ............... _____20.26

Total (W a ge ra te ra nge beginning January 1, 2001) ....... PhP 270.26
For respondents Ma. Fe Flores and Fe Capistrano:[26]
W a ge ra te ra nge before W O No. 8 .............................. PhP 245.85

se tting the minimum wa ge at PhP 250 ............................... 4.15

Tota l Salary upon effectivity of WO No. 8 ......................... PhP 250.00
Incre a se for 2001 (12% of 2000 salary) ................................ PhP 30.00
Le ss the wage incre ase under W O No. 8 ............ 4.15
Tota l differe nce betwe en the wa ge incre ase for 2001
a nd the increase granted under W O No. 8 ................................ PhP 25.85

W a ge ra te by De cember 2000 .......................................
PhP 250.00
a nd the increase granted under W O No. 8 ........... _____25.85

Total (W a ge ra te ra nge beginning January 1, 2001) ................... PhP 275.85
(2) With regard to the second group of employees, who attained regular employment status after the
implementation of WO No. 8, namely: Nimfa Anilao, Rose Subardiaga, Valerie Carbon, Olivia Edroso, Maricris
Donaire, Analyn Azarcon, Rosalie Ramirez, Julieta Rosete, Janice Nebre, Nia Andrade, C atherine Yaba,
Diomedisa Erni, Mario Salmorin, Loida C omullo, Marie Ann Delos Santos, Juanita Yana, and Suzette Dulay, the
proper computation of the salaries for the year 2001, in accordance with the C BA, is as follows:

proper computation of the salaries for the year 2001, in accordance with the C BA, is as follows:
C ompute the increase in salary after the implementation of WO No. 8 by subtracting the minimum wage before
WO No. 8 from the minimum wage per the wage order to arrive at the wage increase, thus:
Minim um Wage per W age Order .................................. PhP 250.00

W age rate before W age Order ...................................... 223.50
W a ge Incre ase ...................................... PhP 26.50
Upon attainment of regular employment status, the employeesâ€™ salaries were increased by 25% of 10% of
their basic salaries, as provided for in Sec. 2, Art. X of the C BA, thus resulting in a further increase of PhP 6.25,
for a total of PhP 256.25, computed as follows:
W a ge ra te after WO No. 8 .................................................. PhP 250.00

R e gularization incre ase (25 % of 10% of basic salary) .......... 6.25
Tota l (Salary for the end of year 2000) ................................ PhP 256.25
To compute for the increase in wage rates for the year 2001, get the increase of 12% of the employeesâ€™
salaries as of December 31, 2000; then subtract from that amount, the amount increased in salaries as granted
under WO No. 8 in accordance with the crediting provision of the C BA, to arrive at the increase in salaries for
the year 2001 of the recently regularized employees. Add the result to their salaries as of December 31, 2000
to get the proper salary beginning January 1, 2001, thus:
Incre ase for 2001 (12% of 2000 salary) ....................................... PhP 30.75
Le ss the wa ge incre ase under W O No. 8 ..................................... 26.50
Diffe re nce betwe en the wa ge incre ase
for 2001 and the incre ase gra nted under W O No. 8 ..................... PhP 4.25
W a ge ra te after re gularization increase .......................................... PhP 256.25
Plus total difference betwe en the wa ge increase and
the incre ase granted under W O No. 8 .......................................... 4.25

Total (W a ge ra te beginning January 1, 2001) ............................... PhP 260.50
With these computations, the crediting provision of the C BA is put in effect, and the wage distortion between
the first and second group of employees is cured. The first group of employees who attained regular
employment status before the implementation of WO No. 8 is entitled to receive, starting January 1, 2001, a
daily wage rate within the range of PhP 264.67 to PhP 275.85, depending on their wage rate before the
implementation of WO No. 8. The second group that attained regular employment status after the
implementation of WO No. 8 is entitled to receive a daily wage rate of PhP 260.50 starting January 1, 2001.
Diminution of benefits
TSPIC also maintains that charging the overpayments made to the 16 respondents through staggered
deductions from their salaries does not constitute diminution of benefits.
We agree with TSPIC .
Diminution of benefits is the unilateral withdrawal by the employer of benefits already enjoyed by the
employees. There is diminution of benefits when it is shown that: (1) the grant or benefit is founded on a policy
or has ripened into a practice over a long period; (2) the practice is consistent and deliberate; (3) the practice
is not due to error in the construction or application of a doubtful or difficult question of law; and (4) the
diminution or discontinuance is done unilaterally by the employer.[27]
As correctly pointed out by TSPIC , the overpayment of its employees was a result of an error. This error was
immediately rectified by TSPIC upon its discovery. We have ruled before that an erroneously granted benefit
may be withdrawn without violating the prohibition against non-diminution of benefits. We ruled in Globe-
Mackay Cable and Radio Corp. v. NLRC:
Absent clear administrative guidelines, Petitioner C orporation cannot be faulted for erroneous application
of the law. Payment may be said to have been made by reason of a mistake in the construction or
application of a â€œdoubtful or difficult question of lawâ€. (Article 2155, in relation to Article 2154 of
the C ivil C ode). Since it is a past error that is being corrected, no vested right may be said to have arisen
nor any diminution of benefit under Article 100 of the Labor C ode may be said to have resulted by virtue
of the correction.[28]
Here, no vested right accrued to individual respondents when TSPIC corrected its error by crediting the salary
increase for the year 2001 against the salary increase granted under WO No. 8, all in accordance with the C BA.

increase for the year 2001 against the salary increase granted under WO No. 8, all in accordance with the C BA.
Hence, any amount given to the employees in excess of what they were entitled to, as computed above, may
be legally deducted by TSPIC from the employeesâ€™ salaries. It was also compassionate and fair that TSPIC
deducted the overpayment in installments over a period of 12 months starting from the date of the initial
deduction to lessen the burden on the overpaid employees. TSPIC, in turn, must refund to individual
respondents any amount deducted from their salaries which was in excess of what TSPIC is legally allowed to
deduct from the salaries based on the computations discussed in this Decision.
As a last word, it should be reiterated that though it is the stateâ€™s responsibility to afford protection to labor,
this policy should not be used as an instrument to oppress management and capital.[29] In resolving disputes
between labor and capital, fairness and justice should always prevail. We ruled in Norkis Union v. Norkis
Trading that in the resolution of labor cases, we have always been guided by the State policy enshrined in the
C onstitution: social justice and protection of the working class. Social justice does not, however, mandate that
every dispute should be automatically decided in favor of labor. In any case, justice is to be granted to the
deserving and dispensed in the light of the established facts and the applicable law and doctrine.[30]
WHEREFORE, premises considered, the September 13, 2001 Decision of the Labor Arbitrator in National
C onciliation and Mediation Board C ase No. JBJ-AVA-2001-07-57 and the October 22, 2003 C A Decision in C A-
G.R. SP No. 68616 are herebyAFFIRMED with MODIFICATION. TSPIC is hereby ORDERED to pay
respondents their salary increases in accordance with this Decision, as follows:
Name of Employee Daily Wage No. of Working Days in a No. of Months in a Total Salary for
Rate Month Year 2001
Nim fa Anilao 260.5 26 12 81,276.00
R ose Subardiaga 260.5 26 12 81,276.00
Vale rie Carbon 260.5 26 12 81,276.00
O livia Edroso 260.5 26 12 81,276.00
Ma ricris Donaire 260.5 26 12 81,276.00
Ana lyn Azarcon 260.5 26 12 81,276.00
R osalie Ramirez 260.5 26 12 81,276.00
Julie ta R osete 260.5 26 12 81,276.00
Ja nice Ne bre 260.5 26 12 81,276.00
Nia Andra de 260.5 26 12 81,276.00
Catherine Yaba 260.5 26 12 81,276.00
Diom edisa Erni 260.5 26 12 81,276.00
Ma rio Sa lmorin 260.5 26 12 81,276.00
Loida Camullo 260.5 26 12 81,276.00
Ma rie Ann De los 260.5 26 12 81,276.00
Sa ntos
Jua nita Yana 260.5 26 12 81,276.00
Suze tte Dulay 260.5 26 12 81,276.00
Je rico Alipit 264.67 26 12 82,577.04
Gle n Batula 264.67 26 12 82,577.04
Se r John Hernandez 264.68 26 12 82,580.16
R a chel Novillas 264.68 26 12 82,580.16
Am y Durias 270.26 26 12 84,321.12
C la ire Evelyn Ve lez 270.26 26 12 84,321.12
Ja nice Olaguir 270.26 26 12 84,321.12
Ma ria Fe Flores 275.85 26 12 86,065.20
Fe C a pistra no 275.85 26 12 86,065.20
The award for attorneyâ€™s fees of ten percent (10%) of the total award isMAINTAINED.
SO ORDERED.
Quisumbing, (Chairperson), Carpio, Carpio-Morales, and Tinga, JJ., concur.

[1] Also appears as Amie Durias in some parts of the records.
[2] Also appears as Deomedisa Erne in some parts of the records.
[3] Also appears as Loida C amullo in some parts of the records.
[4] Also appears as Mary Ann delos Santos in some parts of the records.
Rollo, pp. 31-39-A. Penned by Associate Justice C onrado M. Vasquez, Jr., and concurred in by Associate
[5]
Justices Bienvenido L. Reyes and Arsenio J. Magpale.
[6] Id. at 41-42.
[7] Id. at 118-132.
[8] Id. at 188-212.
[9] Id. at 122.
â€œProviding an Increase in the Daily Minimum Wage in the National C apital Region, and Its Implementing
[10]
Rules: Rules Implementing Wage Order No. NC R-08,â€ approved on October 25, 2000.
[11] Rollo, p. 32.
[12] Id. at 43.
Art. 100. Prohibition against elimination or diminution of benefits. Nothing in this Book shall be
[13]
construed to eliminate or in any way diminish supplements, or other employee benefits being enjoyed at the
time of promulgation of this C ode.
[14] Rollo, pp. 131-132.
[15] Id. at 37-38.
Centro Escolar University Faculty and Allied Workers Union-Independent v. Court of Appeals, G.R. No.
[16]
165486, May 31, 2006, 490 SC RA 61, 72.
[17] G.R. No. 145561, June 15, 2005, 460 SC RA 187, 190-191.
[18] C IVIL C ODE, Art. 1370.
[19] See RULES OF C OURT, Rule 130, Sec. 11.
[20]Marcopper Mining Corporation v. NLRC, G.R. No. 103525, March 29, 1996, 255 SC RA 322, 333;
citing Davao Integrated Port Stevedoring Services v. Abarquez, G.R. No. 102132, March 19, 1993, 220 SC RA
197.
[21] C IVIL C ODE, Art. 1374; RULES OF C OURT, Rule 130, Sec. 11.
[22] See RULES OF C OURT, Rule 130, Sec. 12.
Rollo, p. 537. It appears from the records that they attained regular employment status on July 31, 2000
[23]
with a basic wage rate of PhP 234.67.
Id. It appears from the records that they attained regular employment status on August 21, 2000 with a
[24]
basic wage rate of PhP 234.68.
Id. It appears from the records that respondents Amy Durias and C laire Evelyn Velez attained regular
[25]
employment status on April 11, 2000, while Janice Olaguir on April 18, 2000, all with a basic wage rate of PhP
240.26.
Id. It appears from the records that respondent Maria Fe Flores attained regular employment status on
[26]
February 22, 2000, while Fe C apistrano on March 22, 2000, both with a basic wage rate of PhP 245.85.

February 22, 2000, while Fe C apistrano on March 22, 2000, both with a basic wage rate of PhP 245.85.
[27] C .A. Azucena, THE LABOR C ODE WITH C OMMENTS AND CASES 222 (2004).
[28] No. L-74156, June 29, 1988, 163 SC RA 71, 78.
[29] Agabon v. NLRC, G.R. No. 158693, November 17, 2004, 442 SC RA 573, 614.
[30] G.R. No. 157098, June 30, 2005, 462 SC RA 485, 497.
E-Library Doc. ID: 12077377241325439322

12077377241325439322>

Bobcock vs. Union (2005)
12:11 AM
THIRD DIVISION
[G.R. No. 156260. March 10, 2005]
BABCOCK-HITACHI (PHILS.), INC., petitioner, vs. BABCOCK-HITACHI (PHILS.), INC., MAKATI
EMPLOYEES UNION (BHPIMEU), respondent.
DECI SION
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 Decision[1] dated May 14, 2002 and Resolution[2] dated November 26, 2002
rendered by the Court of Appeals in CA-G.R. SP No. 65260, entitled “Babcock-Hitachi (Phils.), Inc. vs.
Babcock-Hitachi (Phils.), Inc., Makati Employees Union (BHPIMEU).”
The facts as borne by the records are:
Babcock-Hitachi (Phils.), Inc., petitioner, is a manufacturing corporation, with branches at Makati City
and Bauan, Batangas.
Sometime in December 1997, petitioner, to improve the operating efficiency and coordination among its
various departments, formulated a plan to transfer the Design Department from its Makati office to
Bauan, Batangas.
With this development, petitioner, on February 24, 1999, sent separate notices to Justiniano G. Iniego,
Xavier Aguila and Bonifacio B. Vergara, who occupied Engineer 1 positions at the Design Department,
of their re-assignment and transfer to Bauan, Batangas effective April 1, 1999. This prompted them to
claim for their relocation allowance provided by Sections 1 and 2, Article XXI of the collective
bargaining agreement (CBA).[3]
However, petitioner refused to implement the CBA, claiming that the affected employees are not entitled
to relocation allowance under Policy Statement No. BHPI-G-044A dated October 1, 1996[4]considering
that they are residents of Bauan or its adjacent towns.[5]
Thus, the affected union members (Justiniano Iniego, et al.), represented by Babcock-Hitachi (Phils.),
Inc., Makati Employees Union, respondent, filed with the National Conciliation and Mediation Board
(NCMB) a complaint for payment of relocation allowance against petitioner. In a Submission Agreement
dated March 18, 1999, the parties stipulated to submit the case for voluntary arbitration.
On July 25, 2000, after the parties submitted their pleadings and position papers, the Voluntary Arbitrator
rendered a Decision ordering petitioner to pay respondent‟s concerned members their relocation
allowances. Petitioner then filed a motion for reconsideration but was denied in a Resolution dated May
30, 2001.
Thereafter, petitioner filed with the Court of Appeals a petition for review with prayer for issuance of a
temporary restraining order and/or writ of preliminary injunction.
On May 14, 2002, the Appellate Court promulgated its Decision affirming the Voluntary Arbitrator‟s
assailed Decision. The Court of Appeals ratiocinated as follows:
“After a thorough study of the case at hand, we are convinced that the affected employees are entitled to
the relocation allowance provided for in the Collective Bargaining Agreement (CBA) entered into and
signed by both the Union and petitioner Company on July 18, 1997. We share the posture adopted by the
Voluntary Arbitrator in rejecting petitioner‟s arguments that the affected employees are not entitled to
relocation allowance. Pursuant to the basic and irrefragable rule that in carrying out and interpreting the
provisions of the Labor Code and its implementing rules and regulations, the workingman‟s welfare
should be the primordial and paramount consideration. Undoubtedly, this rule must likewise find
application in the interpretation and meaning of the CBA entered into by both the parties, for the same is
the law between the parties. x x x.
xx x xxx
In the case before this Court, petitioner Company‟s contention that the policy statement they issued still
finds application in the present CBA is misplaced. With the advent of the new CBA dated July 18, 1997,
the policy statement, which previously finds application can no longer be controlling in the present
situation. Had it been the intent of the proponents of the CBA, then it could have been incorporated in the
agreement or contract, otherwise, it contravenes the very essence and purpose of the CBA. Obviously,
the purpose of collective bargaining agreement is the reaching of an agreement resulting in a contract
binding on the parties.
Moreover, the policy statement being invoked by petitioner Company is not a part of the contract or CBA,
thus, it cannot remain in full force and effect even beyond the stipulated term, especially, in the light of

thus, it cannot remain in full force and effect even beyond the stipulated term, especially, in the light of
the present CBA. Under the circumstances, the policy statement issued by the petitioner company is a
unilateral policy, which is contrary to the provisions of the CBA. The CBA operates as the law that
governs the employer-employee relationship of herein petitioner Company and the Union.
Second. Petitioner Company contends that the rationale behind the CBA provision on relocation
allowance is clearly spelled out in the company policy on relocation allowance.
Under the circumstances obtaining in this case, petitioner Company‟s argument falters. The benefits
available in the present CBA (dated July 18, 1997) does not provide for any qualification, it was written
in straight and unequivocal terms, not susceptible to any other interpretation. x x x.
xx x xxx
WHEREFORE, in view of the foregoing, the instant petition is hereby DISMISSED for lack of merit.
SO ORDERED.”
On November 26, 2002, the Court of Appeals issued a Resolution denying petitioner‟s motion for
reconsideration.
Hence, this petition for review on certiorari.
Petitioner contends that the Court of Appeals, in affirming the Voluntary Arbitrator‟s Decision, erred in
relying solely upon the parties‟ CBA providing that employees transferred from Makati to Bauan,
Batangas are entitled to relocation allowance equivalent to 1,500.00. Petitioner invokes Policy Statement
No. BHPI-G-044A (earlier quoted) expressly providing that employees, who are “residents of Bauan or
adjacent Batangas towns and assigned permanently back to the Bauan Plant,” are not entitled to relocation
allowance.
Petitioner‟s contention lacks merit.
The basic issue for our resolution is whether union members are entitled to relocation allowance in light
of the CBA between the parties.
To begin with, any doubt or ambiguity in the contract between management and the union members
should be resolved in favor of the latter. This is pursuant to Article 1702 of the Civil Code which
provides: “(I)n case of doubt, all labor legislation and all labor contracts shall be construed in favor of the
safety and decent living for the laborer.”[6]
Pertinent are Sections 1 and 2, Article XXI of the CBA which provide:
“Section 1. The COMPANY shall provide a relocation allowance of ONE THOUSAND EIGHT
HUNDRED PESOS (1,800.00) per month for employees who will be transferred from Bauan to
Makati. For employees who will be transferred from Makati to Bauan, the relocation assistance
shall be ONE THOUSAND FIVE HUNDRED PESOS (1,500.00).
Section 2. Employees can avail this provision provided their transfer is on a permanent basis or for a
duration exceeding one (1) month.”
The above provisions state that employees transferred from Makati City to Bauan, Batangas are entitled to
a monthly relocation allowance of 1,500.00, provided their transfer is permanent or for a period exceeding
one month. Such provisions need no interpretation for they are clear. Contracts which are not ambiguous
are to be interpreted according to their literal meaning and not beyond their obvious intendment. [7]
In Mactan Workers Union vs. Aboitiz,[8] we held that “the terms and conditions of a collective
bargaining contract constitute the law between the parties. Those who are entitled to its benefits
can invoke its provisions. In the event that an obligation therein imposed is not fulfilled, the aggrieved
party has the right to go to court for redress.”
Finally, we sustain the finding of the Court of Appeals that the policy statement being invoked by
petitioner is not a part of the CBA which is the law between the parties.
Thus, the Court of Appeals did not commit any error when it rendered the assailed Decision and
Resolution, the same being consistent with law and jurisprudence.
WHEREFORE, the petition is DENIED. The assailed Decision dated May 14, 2002 and Resolution
dated November 26, 2002 rendered by the Court of Appeals in CA-G.R. SP No. 65260 are
AFFIRMED. Costs against petitioner.
SO ORDERED.
Panganiban, (Chairman), Corona, and Garcia, JJ., concur.
Carpio-Morales, J., on leave.
[1] Penned by Justice Perlita J. Tria Tirona, and concurred in by Justices Buenaventura J. Guerrero
(retired) and Rodrigo V. Cosico, Annex “A” of the Petition, Rollo at 31-43.
[2] Annex “B”, id. at 44-45.
[3] “ARTICLE XXI

[3] “ARTICLE XXI
RELOCATION ASSISTANCE
Section 1. The COMPANY shall provide a relocation allowance of ONE THOUSAND EIGHT
HUNDRED PESOS (P 1,800.00) per month for employees who will be transferred from Bauan to
Makati. For employees who will be transferred from Makati to Bauan, the relocation assistance shall be
ONE THOUSAND FIVE HUNDRED PESOS (P 1,500.00).
Section 2. Employees can avail this provision provided their transfer is on a permanent basis or for a
duration exceeding one (1) month.”
[4] “The RELOCATION ASSISTANCE is, therefore, created to cover what is considered a reasonable,
safe, comfortable and presentable means of transportation, from Batangas to Manila and vice
versa. Furthermore, the assistance is intended to help defray the relatively higher meal expenses after the
relocation takes effect. x x x
COVERAGE AND ELIGIBILITY
1. Those employees whose residence or birthplace is situated in Bauan or any adjacent town, who
applied and were hired for employment in the Bauan Plant, but transferred to Makati Office.
2. Those who live in Metro Manila whose family is also based in Metro Manila, but assigned to
work at the Bauan plant.
xx x xxx
EXCEPTIONS
xx x xxx
2. Enjoyment shall cease upon permanent transfer back to the original place of employment (Makati
Office or Bauan Plant) where the residence is proximate.
xx x xxx
4.Resident of Bauan or adjacent Batangas town and assigned permanently back to the Bauan Plant.
xx x x x x.”
[5] Xavier Aguila, Bonifacio B. Vergara and Justiniano G. Iniego are permanent residents of Bayanan,
San Pascual, Batangas; Tubigan, Lemery, Batangas and Cuenca, Batangas, respectively.
[6] Plastic Town Center Corporation vs. NLRC, G.R. No. 81176, April 19, 1989, 172 SCRA 580, 587,
cited in Mindanao Steel Corporation vs. Minsteel Free Workers Organization (MINFREWO-NFL)
Cagayan de Oro, G.R. No. 130693, March 4, 2004 at 6.
[7] See Id., citing Herrera vs. Petrophil Corp., 146 SCRA 385 (1986).
[8] G.R. No. L-30241, June 30, 1972, 45 SCRA 577, 581, citing Shell Oil Workers Union vs. Shell
Company of the Philippines, 39 SCRA 276 (1971).
Pasted from <http://webcache.googleusercontent.com/search?

q=cache:hPHueVvUO8AJ:sc.judiciary.gov.ph/jurisprudence/2005/mar2005/156260.htm+bobcock+vs.+union+2005
&hl=tl&gl=ph&strip=1>

Caltex Refinery vs. Brillantes
12:13 AM
THIRD DIVISION
[G.R. No. 123782. September 16, 1997]
CALTEX REFINERY EMPLOYEES ASSOCIATION
(CREA), petitioner, vs. HON. JOSE S. BRILLANTES, in his
capacity as Acting Secretary of the Department of Labor and
Employment, and CALTEX (PHILIPPINES), Inc., respondents.
RESOLUTI ON
PANGANIBAN, J.:
Unless shown to be clearly whimsical, capricious or arbitrary, the orders or
resolutions of the secretary of labor and employment resolving conflicts on
what should be the contents of a collective bargaining agreement will be
respected by this Court. We realize that, oftentimes, such orders and
resolutions are based neither on definitive shades of black or white, nor on
what is legally right or wrong. Rather, they are grounded largely on what is
possible, fair and reasonable under the peculiar circumstances of each case.
Statement of the Case

Petitioner Caltex Refinery Employees Association (CREA) seeks through
Rule 65 of the Rules of Court “reversal or modification” of three orders of
public respondent, then Acting Secretary of Labor of Employment Jose S.
Brillantes, in Case No. OS-AJ-0044-95 [1] entitled “ In re: Labor Dispute at
Caltex (Phils.), Inc.” The disposition of the first assailed Order [2]of public
respondent dated October 29, 1995: [3]
“WHEREFORE, ON THE BASIS OF THE FOREGOING, the Caltex Refinery Employees
Association and Caltex Philippines, Inc. are hereby directed to execute a new collective bargaining
agreement embodying therein the appropriate dispositions above spelled out including those subject
of previous agreements.
Provisions in the old CBA, or existing benefits subject of Company policy or practice not
otherwise modified or improved herein are deemed maintained.
New demands not otherwise touched upon or disposed of are hereby denied.”
The motions for reconsideration and clarification of the above Order filed by
both petitioner and private respondent were denied in the second assailed
Order dated November 21, 1995, which disposed: [4]
“WHEREFORE, except the modifications hereinabove set forth, the Order dated 9 October 1995 is
hereby affirmed.
Moreover, pursuant to the Agreement reached by the parties on 13 September 1995 for this Office
to commence the proceedings concerning the legality of strike and the termination of the union
officers, after the resolution of the CBA issues, both parties are hereby directed to submit their
position papers and evidence within ten (10) days from receipt of a copy of this Order. For this
purpose, Atty. Tito F. Genilo is hereby designated as Hearing Officer and authorized as such, to
immediately conduct hearings and receive evidence and, thereafter, submit his report and
recommendations thereon.”
Petitioner’s second motion for reconsideration of the above Order was
likewise denied by the third assailed Order dated January 9, 1996, as
follows: [5]
“WHEREFORE, PREMISES CONSIDERED, our Order of 21 November 1995 is hereby
affirmed en toto, subject to the afore-mentioned clarification on the issue of Sunday work.
No further motions of this nature shall be entertained by this Office.

No further motions of this nature shall be entertained by this Office.
The parties are given another ten (10) days from receipt hereof to submit their respective position
papers and evidences (sic) relative to the issue of the legality of strike and termination of the union
officers.”
The Facts
Anticipating the expiration of their Collective Bargaining Agreement on July
31, 1995, petitioner and private respondent negotiated the terms and
conditions of employment to be contained in a new CBA. The negotiation
between the two parties was participated in by the National Conciliation and
Meditation Board (NCMB) and the Office of the Secretary of Labor and
Employment. Some items in the new CBA were amicably arrived at and
agreed upon, but some others were unresolved.
To settle the unresolved issues, eight meetings between the parties were
conducted. Because the parties failed to reach any significant progress in
these meetings, petitioner declared a deadlock. On July 24, 1995, petitioner
filed a notice of strike. Six (6) conciliation meetings conducted by the NCMB
failed to settle the parties’ differences. Then, the parties held marathon
meetings at the plant level, but this remedy proved also unavailing.
During a strike vote on August 16, 1995, the members of petitioner opted for
a walkout. Private respondent then filed with the Department of Labor and
Employment (DOLE) a petition for assumption of jurisdiction in accordance
with Article 263 (g) of the Labor Code.
In an Order dated August 22, 1995, public respondent assumed jurisdiction
“over the entire labor dispute at Caltex (Philippines) Inc.,” with the following
disposition: [6]
“WHEREFORE ABOVE PREMISES CONSIDERED, this Office hereby assumes jurisdiction over
the entire labor dispute at Caltex (Philippines) Inc. pursuant to Article 263 (g) of the Labor Code, as
amended.
Accordingly, any strike or lockout, whether actual or intended, is hereby enjoined.
The parties are further directed to cease and desist from committing any and all acts which might
exacerbate the situation.
To expedite the resolution of the instant dispute, the parties are further directed to submit their
respective position papers and evidence within ten (10) days from receipt hereof.”
In defiance of the above Order expressly restraining any strike or lockout,
petitioner began a strike and set up a picket in the premises of private
respondent on August 25, 1995. Thereafter, several company notices
directing the striking employees to return to work were issued, but the
members of petitioner defied them and continued their mass action.
In the course of the strike, DOLE Undersecretary Bienvenido Laguesma
interceded and conducted several conciliation meetings between the
contending parties. He was able to convince the members of the union to
return to work and to enter into a memorandum of agreement with private
respondent. On September 9, 1995, the picket lines were finally
lifted. Thereafter, the contending parties filed their position papers pertaining
to unresolved issues. [7]
Because of the strike, private respondent terminated the employment of some
officers of petitioner union. The legality of these dismissals brought additional
contentious issues.[8]
Again, the parties tried to resolve their differences through
conciliation. Failing to come to any substantial agreement, the parties
stopped further negotiation and, on September 13, 1995, decided to refer the
problem to the secretary of labor and employment: [9]
“It appearing that the possibility of an amicable settlement appears remote, the parties agreed to
submit their respective position paper and evidence simultaneously on 27 September 1995 at the
Office of the Secretary. The parties further agreed that there will be no extension of time for filing

Office of the Secretary. The parties further agreed that there will be no extension of time for filing
and no further pleading will be filed.
The decision of the Secretary of Labor and Employment will be rendered on or before October 9,
1995.
The proceedings concerning the legal issues involving the legality of strike and the termination of
the Union officers will be commenced by the Office of the Secretary after the resolution of the
CBA issues.”
As already stated, public respondent issued as scheduled on October 9, 1995
the assailed Order resolving the deadlock, followed by two more assailed
Orders on November 21, 1995 and January 16, 1996 disposing of the
motions for reconsideration/clarification of both parties. Dissatisfied with
these Orders issued by public respondent, petitioner sought remedy from this
Court.
After realizing the urgency of the case and after meticulously reviewing
the Petition dated February 23, 1996; Comment by the private respondent
dated April 16, 1996 which was adopted as its own by the public
respondent; Reply by the petitioner dated September 7,
1996; Rejoinder dated October 3, 1996 and Sur-Rejoinder dated November
12, 1996, the Court resolved to give due course to the petition and to consider
the case submitted for resolution without requiring memoranda from the
parties.
The Issues
Petitioner does not specifically pinpoint the issues it wants the Court to rule
upon. It appears, however, that petitioner questions public respondent’s
resolution of five issues in the CBA, specifically on wage increase, union
security clause, retirement benefits or application of the new retirement plan,
signing bonus and grievance and arbitration machineries.
Private respondent, on the other hand, submits this lone issue: [10]
“Whether or not the Honorable Secretary of Labor and Employment committed grave abuse of
discretion in resolving the instant labor dispute.”

The petition is partly meritorious.
Preliminary Matter: Certiorari in Labor Cases

At the outset, we must reiterate several settled rules in a petition
for certiorari involving labor cases.
First, the factual findings of quasi-judicial agencies (such as the Department
of Labor and Employment), when supported by substantial evidence, are
binding on this Court and entitled to great respect, considering the expertise
of these agencies in their respective fields. [11] It is well-established that
findings of these administrative agencies are generally accorded not only
respect but even finality. [12]
Second, substantial evidence in labor cases is such amount of relevant
evidence which a reasonable mind will accept as adequate to justify a
conclusion. [13]
Third, in Flores vs. National Labor Relations Commission [14] we explained the
role and function of rule 65 as an extraordinary remedy:
“It should be noted, in the first place, that the instant petition is a special civil action for certiorari
under Rule 65 of the Revised Rules of Court. An extraordinary remedy, its use is available only
and restrictively in truly exceptional cases -- those wherein the action of an inferior court, board or
officer performing judicial or quasi-judicial acts is challenged for being wholly void on grounds of
jurisdiction. The sole office of the writ of certiorari is the correction of errors of jurisdiction
including the commission of grave abuse of discretion amounting to lack or excess of
jurisdiction. It does not include correction of public respondent NLRC‟s evaluation of the evidence

jurisdiction. It does not include correction of public respondent NLRC‟s evaluation of the evidence
and factual findings based thereon, which are generally accorded not only great respect but even
finality.
No question of jurisdiction whatsoever is being raised and/or pleaded in the case at bench. Instead,
what is being sought is a judicial re-evaluation of the adequacy or inadequacy of the evidence on
record, which is certainly beyond the province of the extraordinary writ of certiorari. Such demand
is impermissible for it would involve this court in determining what evidence is entitled to belief
and the weight to be assigned it. As we have reiterated countless times, judicial review by this
Court in labor cases does not go so far as to evaluate the sufficiency of the evidence upon which the
proper labor officer or office based his or its determination but is limited only to issues of
jurisdiction or grave abuse of discretion amounting to lack of jurisdiction.”
We shall thus use the foregoing time-tested standards in deciding this
petition.
1. Wage Increase
The main assailed Order dated October 9, 1995 resolved the ticklish demand
for wage increase as follows: [15]
“With this in mind and taking into view similar factors as financial capacity, position in the
industry, package of existing benefits, inflation rate, seniority, and maintenance of the wage
differentiation between and among the various classes of employees within the entire Company,
this Office hereby finds the following improved benefits fair, reasonable and equitable:
1. Wage Increases
Effective August 1, 1995 - 14%
2. meal subsidy - P15.00”
In denying the motions for reconsideration/clarification of the above award,
public respondent rules in the challenged Order dated November 21, 1995: [16]
“First, on the matter of wages, we find no compelling reasons to alter or modify our award after
having sufficiently passed upon the same arguments raised by both parties in our previous
Order. The subsequent agreement on a package of wage increases at Shell Company, adverted to
by the Union as the usual yardstick for purposes of developing its own package of improved wage
increases, would not be sufficient basis to grant the same increases to the Union members herein
considering that other factors, among which is employment size, were carefully taken into
account. While it is true that inflation has direct impact on wage increases, it is not quite accurate
to state that inflation „as of September 1995‟ is already registered at 11.8%. The truth of the matter
is that the average inflation for the first ten (10) months was only 7.496% and Central Bank
projections indicate that it will take a 13.5% inflation for November and December to record an
average inflation of 8.5% for the year. We, therefore, maintain the reasonableness of the package
of wage increases that we awarded.”
Petitioner belittles the awarded increases. It insists that the increase should
be ruled on the basis of four factors: “(a) the economic needs of the [u]nion’s
members; (b) the [c]ompany’s financial capacity; (c) the bargaining history
between the [u]nion and the [c]ompany; and (d) the traditional parity in wages
between Caltex and Shell Refinery Employees.” [17]
Petitioner contends that the “inflation rate rose to 11.8% in September [1995],
rose further in October, and is still a double-digit figure at the time of this
writing.” Therefore, public respondent’s so-called “improved benefits” are in
reality “retrogressive.” [18]
Petitioner tries to show private respondent’s “immense financial capacity” by
citing Caltex’s “Banaba Housing Up-grading” which would cost “not less
than P200,000,000.00” [19]Petitioner does “not begrudge” private respondent’s
“pampering of its [r]efinery [m]anagers and supervisors,” but asks that the
rank and file employees be “not left too far behind.” [20]
Petitioner maintains that the salaries of Shell Refinery employees be used as
a “reference point” in upgrading the compensation of private respondent’s
employees because these two companies are in the “same industry and their
refineries are both in Batangas.” Thus, the wage increase of petitioner’s

refineries are both in Batangas.” Thus, the wage increase of petitioner’s
members should be “15%/15%/15%.” [21]
Private respondent counters with a “proposed 9% 7% 7% increase for the
same period with automatic adjustment should the increase fall short of the
inflation rate.” Hence, the Secretary’s award of “14% 14% 13%” increase
really comes “closer to the Union’s position.” [22]
Petitioner’s arguments fail to impress us. First, the matter of inflation rate was
clearly addressed in public respondent’s Order dated November 21,
1995. Contrary to petitioners undocumented claim of 11.8% inflation in
September of 1995, the “truth of the matter is that the average inflation for the
first ten (10) months was only 7.496%, and Central Bank projections indicate
that it will take a 13.5% inflation for November and December to record an
average inflation of 8.5% for the year.” [23] Second, private respondent’s
financial capacity has been insufficiently explained in its Comment dated April
16, 1996 in which it stated that the Banaba “upgrading” should not be
construed as a yardstick of its financial standing: [24]
“It is equally amazing how the Union (petitioner) desperately justifies their demands by comparing
the „upgrading cost‟ of the Company‟s (private respondent) Banaba Housing Facilities, a matter
totally unrelated to the case, to the cost of their demands. The Union not only errs in its choice of
yardstick of the Company‟s capacity to pay, it likewise displays its ignorance of the Banaba
Housing Program.
The Banaba Housing Facility is not a benefit. It is an integral part of an indispensable requirement
for smooth Plant operations and assurance of an emergency response crew in times of calamities
and accidents. Employees who are required to stay in the housing facility are members of the
Refinery‟s emergency response organization. It is also not a case of „upgrading‟. The Banaba
Housing Facility was built in 1954. A significant number of its structure are dilapidated and in dire
need of rehabilitation and preservation. Finally, Banaba is not a yardstick of the Company‟s
capacity to pay, but rather, an eloquent demonstration of the Company‟s will to survive and remain
globally competitive.”
The above reasoning convinces us that such upgrading should not be equated with
private respondent’s financial capacity to pay the proposed wage increase, but
should be evaluated as a business judgment “to survive and remain globally
competitive.” We believe that the standard proof of a company’s financial standing
is its financial statements duly audited by independent and credible external
auditors. [25] Third, the traditional parity in wages used by petitioner to justify its
proposal is flimsy and trivial. Aside from its bare allegation of “similarity” in salaries
and locations, petitioner did not proffer any substantial reason to impute grave
abuse of discretion on the part of the public respondent. On the other hand, we
find private respondent’s discussion of this matter reasonable, as the following
shows: [26]
“It is further amazing that the Union continues to use an outmoded concept of the „Shell yardstick‟
and „relative parities in wages‟ to justify an imperative need for them to keep their traditional edge
in pay over their industry counterparts. It is not just a matter of being above the rest. Sound
compensation principle of higher productivity equals higher pay, as well as, recent developments in
the industry have negated this argument. Both Shell and Petron continue to benefit from increasing
manpower productivity. Shell, for instance, produces 155,000 barrels per day on a 120 manpower
complement of operatives and rank and file; while the Company only produces 65,000 barrels per
day with its 221 manpower complement. In addition, the counterpart union at Shell incurs an
average overtime rate of 37%, as a percentage of base pay; the Union‟s overtime rate is 102%.
Thus, the issue is productivity, not sales, and so far, the Company‟s Refinery is not as productive as
Shell‟s or Petron‟s. To ask for relative parity in the face of this reality is not only unreasonable, it
is likewise illogical.
As it is, the wage increase of 14%, 14% and 13% will result in an average basic salary
of P23,510.00 at the end of the three-year cycle. The resulting pay is excessive and
disproportionately high compared with the value of the jobs within the bargaining unit. Stated
differently, this average salary will be unreasonably high for the skills and qualifications needed for
the job.

the job.
Even now, with an average monthly salary (prior to the DOLE awarded CBA increases)
of P16,010 plus overtime, holiday and other premiums way above those mandated by law, the
Union members are already the highest paid in the Philippines, in terms of gross income.”
The alleged “similarity” in the situation of Caltex and Shell cannot be
considered a valid ground for a demand of wage increase, in the absence of a
showing that the two companies are also similar in “substantial aspects,” as
discussed above. Private respondent is merely asking that an employee
should be paid on the basis of work done. If such employee is absent on a
certain day, he should not, as a rule, be paid wages for that day. And if the
employee has worked only for a portion of a day, he is not entitled to the pay
corresponding to a full day. A contrary precept would ultimately result in the
financial ruin of the employer. The age-old general rule governing relations
between labor and capital, or management and employee, is “a fair day’s
wage for a fair day’s work.” If no work is performed by the employee, there
can be no wage or pay unless, of course, the laborer was ready, willing and
able to work but was locked out, dismissed, suspended or otherwise illegally
prevented from working. [27] True, union members have the right to demand
wage increases through their collective force; but it is equally cogent that they
should also be able to justify an appreciable increase in wages. We observe
that private respondent’s detailed allegations on productivity are
unrebutted. It is noteworthy that petitioner ignored this argument of private
respondent and based its demand for wage increase not on the ground that
they were as productive as the Shell employees. Thus, we cannot attribute
grave abuse of discretion to public respondent.
2. Union Security Clause

In the impugned Order dated October 9, 1995, public respondent’s contested
resolution on the “union [security] clause” reads: [28]
“The relevant provisions found in Article III of the CBA, which is hereby read, thus:
„Section 1. Employees of the COMPANY who at the signing of this Agreement are members of
the UNION and those who subsequently become members thereof shall maintain their membership
with the UNION for the duration of this Agreement as a condition of employment.
Section 2. Members of the UNION who cease to be members of the UNION in good standing by
reason of resignation or expulsion shall not be retained in the employment of the COMPANY.
x x x x x x x’
are sought to be amended by the Union, to read as follows:
„Section 1. Employees of the Company who at the signing of this Agreement are members of the
Union and those who subsequently become members thereof shall maintain their membership in
GOOD STANDING with the Union for the duration of this Agreement as a condition of
CONTINUOUS employment.
Section 2. PURSUANT TO THE FOREGOING, ANY UNION MEMBER WHO CEASES TO BE
SUCH MEMBER ON GROUNDS PROVIDED IN ITS CONSTITUTION AND BY-LAWS
SHALL , UPON PRIOR WRITTEN NOTICE BY THE UNION TO THE COMPANY, BUT
SUBJECT TO THE OBSERVANCE OF DUE PROCESS AND THE EXPRESS RATIFICATION
OF THE MAJORITY OF THE UNION MEMBERSHIP, BE DISMISSED FROM
EMPLOYMENT BY THE COMPANY; PROVIDED, HOWEVER, THAT THE UNION SHALL
HOLD THE COMPANY FREE AND BLAMELESS FROM ANY LIABILITY IN THE EVENT
THAT THE EMPLOYEE IN ANY MANNER QUESTIONS HIS DISMISSAL.‟
The proposed amendment of the Union gives the same substantial effect as the existing
provision. Rather, the same tackles more on procedure which, to our belief, is already sufficiently
provided under its constitution and by-laws. Insofar as Union security is concerned, this is
sufficiently addressed by the present provisions in the CBA. Hence, we find we are not competent
to arbitrarily incorporate any modification thereof. We are convinced that any amendment on this
matter should be a product of mutual concern and agreement.” [29]
Petitioner contends that the foregoing disposition leaving to the parties the
decision on the union security clause issue is “contrary to the whole idea of

assumption of jurisdiction.” Petitioner argues that in spite of the provisions on
the “union security clause,” it may expel a member only on any of three
grounds: non-payment of dues, subversion, or conviction for a crime
involving moral turpitude. If the employee’s act does not constitute any of
these three grounds, the member would continue to be employed by private
respondent. Thus, the disagreement between petitioner and private
respondent on this issue is not only “procedural” but also “substantial.” [30]
On the other hand, private respondent argues that nothing prevents petitioner
from expelling its members; however, termination of employment should be
based only on these three grounds agreed upon in the existing CBA. Further,
private respondent explains that petitioner’s citation of Article 249 (a) [31] of the
Labor Code is out of context. It adds that the cited section provides only for
the right of a union to prescribe its own rules with respect to the acquisition
and retention of membership, and that upholding the arguments of petitioner
would make the private respondent a policeman of the union. [32]
We agree with petitioner. The disagreement between petitioner and private
respondent on the union security clause should have been definitively
resolved by public respondent. The labor secretary should take cognizance of
an issue which is not merely incidental to but essentially involved in the labor
dispute itself, or which is otherwise submitted to him for resolution. [33] In this
case, the parties have submitted the issue of the union security clause for
public respondent’s disposition. But the secretary of labor has given no valid
reason for avoiding the said issue; he merely points out that this issue is a
procedural matter. Such vacillation clearly sidesteps the nature of the union
security clause as one intended to strengthen the contracting union and to
protect it from the fickleness or perfidy of its own members. Without such
safeguard, group solidarity becomes uncertain; the union becomes gradually
weakened and increasingly vulnerable to company machinations. In this
security clause lies the strength of the union during the enforcement of the
collective bargaining agreement. It is this clause that provides labor with
substantial power in collective bargaining. The secretary of labor assumed
jurisdiction over this labor dispute in an industry indispensable to national
interest, precisely to settle once and for all the disputes over which he has
jurisdiction at his level. In not performing his duty, the secretary of labor
committed a grave abuse of discretion.
3. New Retirement Plan

Public respondent’s contested resolution on “retirement benefits (application
of the new retirement plan)”in the Order dated November 21, 1995 reads: [34]
“Third, the matter of retirement benefits deserves a second look considering that the concerned
employees were already previously granted the option to choose between the old and the new plan
at the time the latter was initiated and they choose to be covered under the Old Plan. To accede to
the Union‟s demand to cover them under the new plan entails a different arrangement under a new
scheme and likewise requires the approval of a Board of Trustees. It is, therefore, understood that
the new Retirement Plan does not apply to the more or less 40 employees being sought by the
Union to be covered under the New Plan.”
Petitioner contends that “40 of its members who are still covered by the Old
Retirement Plan because they were not able to exercise the option to shift to
the New Retirement Plan, for one reason or another, when such option was
given in the past” are included in the New Retirement Plan. Petitioner argues
that the exclusion of forty employees from the New Plan constitutes grave
abuse of discretion for three reasons. First, “ it is a case of the left hand
taking away, so to speak, what the right hand had given.” Second, the
change “was done for a very shallow reason.” The new scheme was no
longer new, “as the New Retirement Plan had been in place for at least two

longer new, “as the New Retirement Plan had been in place for at least two
years.” Third, in not applying the New Retirement Plan to the 40 employees,
public respondent was perpetrating his department’s discriminatory
practice. [35]
Private respondent counters that “these 40 or so employees have opted to
remain covered by the old plan despite opportunities given them in 1985 to
shift to the New Plan.” [36]
We hold that public respondent did not commit grave abuse of discretion in
respecting the free and voluntary decision of the employees in regard to the
Provident Plan and the irrevocable one-time option provided for in the New
Retirement Plan. Although the union has every right to represent its
members in the negotiation regarding the terms and conditions of their
employment, it cannot negate their wishes on matters which are purely
personal and individual to them. In this case, the forty employees freely
opted to be covered by the Old Plan; their decision should be respected. The
company gave them every opportunity to choose, and they voluntarily
exercised their choice. The union cannot pretend to know better; it cannot
impose its will on them.
4. Grievance Machinery and Arbitration

The public respondent’s contested resolution on “grievance and arbitration
machineries” in the Order dated November 21, 1995 reads: [37]
“Seventh, we are constrained to take a closer look at the existing procedure concerning grievance in
relation to the modifications being proposed by the Union. In this regard, we affirm our resolution
to shorten the periods to process/resolve grievances based on existing practice from (45) days to
(30) days at the first step and (10) days to seven (7) days at the second step which is the level of the
VP for manufacturing. We further reviewed the steps through which a grievance may be processed
and in line with the principle to expedite the early resolution of grievances, we find that the
establishment of a joint Council as an additional step in the grievance procedure, may only serve to
protract the proceeding and, therefore, no longer necessary. Instead, the unresolved grievance, if,
not settled within (7) days at the level of the VP for Manufacturing, shall automatically be referred
by both parties to voluntary arbitration in accordance with R.A. 6715. As to the number of
Arbitrators for which the Union proposes to employ only one instead of a panel of three Arbitrators,
we find it best to leave the matter to the agreement of both parties. Finally, we hereby advise the
parties that the list of accredited voluntary arbitrators is now being maintained and disseminated by
the National Conciliation and Meditation Board and no longer by the Bureau of Labor Relations.”
Petitioner contends that public respondent “derailed the grievance and
arbitration scheme proposed by the Union.” [38] Petitioner argues that the
proposed “Grievance Settlement Council” is intended to “supplement the
effort of the Vice President for Manufacturing in reviewing the grievance
elevated to him, so that instead of acting alone x x x he will be obliged to
convoke a conference of the Council to afford the grievant a thorough
hearing.” Petitioner’s recommendation for a “single arbitrator is based on the
proposition that if voluntary arbitration should be resorted to at all, this
recourse should entail the least possible expense.” [39]
Private respondent counters that the disposition on the grievance machinery
is likewise “fair and reasonable under the circumstances and in fact was
merely a reiteration of the (u)nion’s position during the conciliation meetings
conducted by Undersecretary Bienvenido Laguesma.” [40]
No particular setup for a grievance machinery is mandated by law. Rather,
Article 260 of the Labor Code, as incorporated by RA 6715, provides for only
a single grievance machinery in the company to settle problems arising from
“interpretation or implementation of their collective bargaining agreement and
those arising from the interpretation or enforcement of company personnel
policies.” Article 260, as amended, reads:
Article 260. Grievance Machinery and Voluntary Arbitration. The parties to a Collective

Article 260. Grievance Machinery and Voluntary Arbitration. The parties to a Collective
Bargaining Agreement shall include therein provisions that will ensure the mutual observance of its
terms and conditions. They shall establish a machinery for the adjustment and resolution of
grievances arising from the interpretation or implementation of their Collective Bargaining
Agreement and those arising from the interpretation or enforcement of company personnel policies.
All grievances submitted to the grievance machinery which are not settled within seven (7) calendar
days from the date of its submission shall automatically be referred to voluntary arbitration
prescribed in the Collective Bargaining Agreement.
For this purpose, parties to a Collective Bargaining Agreement shall name and designate in advance
a Voluntary Arbitrators or panel of voluntary arbitrators, include in the agreement a procedure for
the selection of such Voluntary Arbitrator or panel of Voluntary Arbitrators, preferably from the
listing of qualified Voluntary Arbitrators duly accredited by the Board. In case the parties fail to
select a Voluntary Arbitrator or panel of Voluntary Arbitrators, the Board shall designate the
Voluntary Arbitrator or panel of Voluntary Arbitrators, as may be necessary, pursuant to the
selection procedure agreed upon in the Collective Bargaining Agreement, which shall act with same
force and effect as if the Arbitrator or panel of Arbitrators has been selected by the parties as
described above.”
We believe that the procedure described by public respondent sufficiently
complies with the minimum requirement of the law. Public respondent even
provided for two steps in hearing grievances prior to their referral to
arbitration. The parties will decide on the number of arbitrators who may hear
a dispute only when the need for it arises. Even the law itself does not
specify the number of arbitrators. Their alternatives – whether to have one or
three arbitrators – have their respective advantages and disadvantages. In
this matter, cost is not the only consideration; full deliberation on the issues is
another, and it is best accomplished in a hearing conducted by three
arbitrators. In effect, the parties are afforded the latitude to decide for
themselves the composition of the grievance machinery as they find
appropriate to a particular situation. At bottom, we cannot really impute grave
abuse of discretion to public respondent on this issue.
5. Signing Bonus
The public respondent‘s contested resolution on the ―signing bonus‖ in the
Order dated November 21, 1995 reads: [41]
“Fifth, specifically on the issue of whether the signing bonus is covered under the „maintenance of
existing benefits‟ clause, we find that a clarification is indeed imperative. Despite the expressed
provision for a signing bonus in the previous CBA, we uphold the principle that the award for a
signing bonus should partake the nature of an incentive and premium for peaceful negotiations and
amicable resolution of disputes which apparently are not present in the instant case. Thus, we are
constrained to rule that the award of signing bonus is not covered by the „maintenance of existing
benefits‟ clause.”
Petitioner asseverates that the ―signing bonus is an existing benefit embodied
in the old CBA.‖ [42] It explains that public respondent erred in removing the
award of a signing bonus which is ―given not only as an incentive for peaceful
negotiations and amicable settlement of disputes but also as an extra award
to the workers following the settlement of a CBA dispute by whatever
means.‖ [43]
Private respondent disagrees, contending that a signing bonus is not awarded
when CBA negotiations ―result in a strike.‖ There are two reasons
therefor: First, ―the grant of a signing bonus is a matter of discretion and
cannot be demanded as a matter of right;‖ and second, the signing bonus is
meant as an incentive for a peaceful negotiation. Once these negotiations
result in a strike, an illegal one at that, the basis or rationale for such an
award is lost.‖ [44]
Although proposed by petitioner, [45] the signing bonus was not accepted by
private respondent. [46] Besides, a signing bonus is not a benefit which may be
demanded under the law. Rather, it is now claimed by petitioner under the

demanded under the law. Rather, it is now claimed by petitioner under the
principle of ―maintenance of existing benefits‖ of the old CBA. However, as
clearly explained by private respondent, a signing bonus may not be
demanded as a matter of right. If it is not agreed upon by the parties or
unilaterally offered as an additional incentive by private respondent, the
condition for awarding it must be duly satisfied. In the present case, the
condition sine qua non for its grant – a non strike – was not complied with. In
fact, private respondent categorically stated in its counter-proposal – to the
exclusion of those agreed upon before – that new collective bargaining
agreement would constitute the only agreement between the parties, as
follows:
“SECTION 4. Scope of Agreement. – The terms and conditions of employment of the employees
within the appropriate bargaining unit are embodied in this Agreement. On the other hand, all such
benefits which are not expressly provided for in this Agreement, but which are now being accorded,
may in the future be accorded, or might have been previously accorded to employees, by the
COMPANY shall be deemed as purely discretionary or pure acts of grace and magnanimity on the
part of the COMPANY in each particular case, and the continuance or repetition thereof now or in
the future, no matter how long or how often, shall not be construed as establishing a right for the
employee and/or obligation on the part of the COMPANY.” [47]
This provision on the scope of the agreement is further buttressed by the
clause on waiver: [48]
“The parties acknowledge that during the negotiations which resulted in the execution of this
Agreement, each of them had the unlimited opportunity to make demands and proposals with
respect to any and all subjects and matters proper for collective bargaining and not prohibited by
law; and the parties further acknowledge that the understandings and agreements arrived at by
them after the exercise of that right and unlimited opportunity are fully set forth in this
Agreement. Therefore, the COMPANY and the UNION during the life of this Agreement, each
voluntarily and unqualifiedly waives the right and each agrees that the other shall not be obligated
to bargain collectively with respect to any subject or matter referred to or covered in this
Agreement or with respect to any subject or matter not specifically referred to or covered in this
Agreement even though such subject or matter may not have been within the knowledge or
contemplation of either or both parties at the time they negotiated or signed this Agreement.”
Epilogue
We have carefully reviewed the assailed Orders. Other than his failure to rule
on the issue of union security, the secretary of labor cannot be indicted for
grave abuse of discretion amounting to want or excess of jurisdiction.
“Basically, there is grave abuse of discretion amounting to lack of jurisdiction where the respondent
board, tribunal or officer exercising judicial functions exercised its judgment in a capricious,
whimsical, arbitrary or despotic manner. However, it has also been said that grave abuse is
committed when “the lower court acted capriciously, and whimsically or the petitioner‟s contention
appears to be clearly tenable or the broader interest of justice or public policy [so] require x x
x.” Also, grave abuse of discretion is committed when the board, tribunal or officer exercising
judicial function fails to consider evidence adduced by the parties.” [49]
In Saballa vs. National Labor Relations Commission, [50] we ruled on how a
decision of an administrative body must be drawn:
“The Court has previously held that judges and arbiters should draw up their decisions and
resolutions with due care, and make certain that they truly and accurately reflect their conclusions
and their final dispositions. x x x The same thing goes for the findings of fact made by the NLRC,
as it is a settled rule that such findings are entitled to great respect and even finality when supported
by substantial evidence; otherwise, they shall be struck down for being whimsical and capricious
and arrived at with grave abuse of discretion. It is a requirement of due process and fair play that
the parties to a litigation be informed of how it was decided, with an explanation of the factual and
legal reasons that led to the conclusions of the court. A decision that does not clearly and distinctly
state the facts and the law of which it is based leaves the parties in the dark as to how it was reached
and is especially prejudicial to the losing party, who is unable to pinpoint the possible errors of the
court for review by a higher tribunal.”
In the present case, the foregoing requirements has been sufficiently

court for review by a higher tribunal.”
In the present case, the foregoing requirements has been sufficiently
met. Petitioner‘s claim of grave abuse of discretion is anchored on the simple
fact that public respondent adopted largely the proposals of private
respondent. It should be understood that bargaining is not equivalent to an
adversarial litigation where rights and obligations are delineated and
remedies applied. It is simply a process of finding a reasonable solution to a
conflict and harmonizing opposite positions into a fair and reasonable
compromise. When parties agree to submit unresolved issues to the
secretary of labor for his resolution, they should not expect their positions to
be adopted in toto. It is understood that they defer to his wisdom and
objectivity in insuring industrial peace. And unless they can clearly
demonstrate bias, arbitrariness, capriciousness or personal hostility on the
part of such public officer, the Court will not interfere or substitute the said
officer‘s judgment with its own. In this case, it is possible that this Court, or
some its members at least, may even agree with the wisdom of petitioner‘s
claims. But unless grave abuse of discretion is cogently shown, this Court will
refrain from using its extraordinary power of certiorari to strike down decisions
and orders of quasi-judicial officers specially tasked by law to settle
administrative questions and disputes. This is particularly true in the
resolution of controversies in collective bargaining agreements where the
question is rarely one of legal right or wrong – nay, of black and white – but
one of wisdom, cogency and compromise as to what is possible, fair and
reasonable under the circumstances.
WHEREFORE, premises considered, the petition is partly GRANTED. The
assailed Orders are AFFIRMED with the modification that the issue on the
union security clause be REMANDED to the Department of Labor and
Employment for definite resolution within one month from the finality of this
Decision. No costs.
SO ORDERED.
Narvasa, C.J., (Chairman), Romero, Melo and Francisco, JJ., concur.
[1] With National Conciliation and Mediation Board case number NCMB-RBIV-NS-07-088-95.
[2] Rollo, pp. 164-178.
[3] Ibid., p. 178.
[4] Ibid., p. 204.
[5] Ibid., p. 242.
[6] Ibid., pp. 47-48.
[7] Ibid., p. 285.
[8] Ibid., p. 165.
[9] Ibid., p. 166.
[10] Ibid., p. 288; original text in upper case.
[11] Association of Marine Officers and Seamen of Reyes and Lim Co. vs. Laguesma, 239 SCRA
460, 465, December 27, 1994, citing Loadstar Shipping Co., Inc. vs. Gallo, G.R. No. 102845,
February 4, 1994; PAL Employees‘ Association vs. Ferrer-Calleja, 162 SCRA 426.
[12] Villanueva, Sr. vs. Leogardo, Jr. 215 SCRA 835, 838, November 20, 1992, citing Special Events
& Central Shipping Office Workers Union vs. San Miguel Corp., 122 SCRA 557.
[13] Madlos vs. National Labor Relations Commission, 254 SCRA 248, 257, March 4, 1996, citing
Section 5, Rule 133, Rules of Court. See Rase vs. NLRC, 237 SCRA 523 (1994).
[14] 253 SCRA 494, 497, February 9, 1996, per Panganiban, J., citing Sajonas vs. NLRC, 183 SCRA
182, March 15, 1990; Special Events & Central Shipping Office Workers Union vs. San Miguel
Corporation, supra, and Yap vs. Inciong, 186 SCRA 664, June 21, 1990.
[15] Ibid., p. 172.
[16] Ibid., p. 202.
[17] Ibid., p. 12.
[18] Ibid., p. 14.
[19] Ibid., pp. 15-16.
[20] Ibid., p. 16.
[21] Ibid., pp. 18-20.

[20] Ibid., p. 16.
[21] Ibid., pp. 18-20.
[22] Ibid., p. 290.
[23] Ibid., p. 202.
[24] Ibid., pp. 291-292; Comment, pp. 11-12.
[25] Saballa vs. National Labor Relations Commission, 260 SCRA 697, 709, August 22, 1996 per
Panganiban, J. citing Lopez Sugar Corporation vs. Federation of Free Workers, 189 SCRA 179,
190, August 30, 1990.
[26] Comment, pp. 12-13; Rollo, pp. 292-293.
[27] Social Security System vs. SSS Supervisor‘s Union, 117 SCRA 746, 749, October 23, 1982,
citing J.P. Heilbronn Co. vs. National Labor Union, 92 Phil. 577 (1953).
[28] Rollo, p. 20.
[29] Ibid., pp. 175-176.
[30] Ibid., p. 25.
[31] ―Article 249. Unfair labor practices of labor organizations. – It shall be unfair labor practice for a
labor organization, its officers, agents or representatives:

(a) To restrain or coerce employees in the exercise of their rights to self-organization. However, a
labor organization shall have the right to prescribe its own rules with respect to the acquisition or
retention of membership;
xxx xxx xxx
[32] Comment, pp. 13-15; Rollo, pp. 293-295.
[33] St. Scholastica‘s College vs. Torres, 210 SCRA 565, 571, June 29, 1992.
[34] Rollo, p. 202.
[35] Ibid., pp. 26-29.
[36] Ibid., p. 295.
[37] Ibid., pp. 203-204.
[38] Ibid., p. 36.
[39] Ibid., pp. 36-38.
[40] Ibid., p. 297.
[41] Ibid., p. 203.
[42] Ibid., p. 30; underscoring omitted.
[43] Ibid., pp. 32-33.
[44] Ibid., pp. 297-298.
[45] Ibid., p. 121.
[46] Ibid., p. 136.
[47] Counter-Proposal of Caltex, p. 3; Rollo, p. 130.
[48] Ibid., p. 10; rollo, p. 137.
[49] Philippine Airlines, Inc. vs. Confessor, 231 SCRA 41-42, March 10, 1994, per Nocon, J.
[50] G.R. No. 102472-84, August 22, 1996, per Panganiban, J.
Pasted from <http://sc.judiciary.gov.ph/jurisprudence/1997/sep1997/123782.htm>

Master Iron Labor Union vs. NLRC
12:13 AM

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 92009 February 17, 1993

MASTER IRON LABOR UNION (MILU), WILFREDO ABULENCIA, ROGELIO CABANA, LOPITO
SARANILLA, JESUS MOISES, BASILIO DELA CRUZ, EDGAR ARANES, ELY BORROMEO,
DANIEL BACOLON, MATIAS PAJIMULA, RESTITUTO PAYABYAB, MELCHOR BOSE, TEOFILO
ANTOLIN, ROBERT ASPURIA, JUSTINO BOTOR, ALFREDO FABROS, AGAPITO TABIOS,
BENARDO ALFON, BENIGNO BARCENA, BERNARDO NAVARRO, MOISES LABRADOR,
ERNESTO DELA CRUZ, EDUARDO ESPIRITU, IGNACIO PAGTAMA, BAYANI PEREZ,
SIMPLICIO PUASO, EDWIN VELARDE, BEATO ABOGADO, DANILO SAN ANTONIO, BERMESI
BORROMEO, and JOSE BORROMEO, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and MASTER IRON WORKS AND
CONSTRUCTION CORPORATION, respondents.
Banzuela, Flores, Mirrales, Rañeses, Sy, Taquio and Associates for petitioners.
Carlos L. Galarrita for private respondent.
MELO, J.:
The petition for certiorari before us seeks to annul and to set aside the decision of the
National Labor Relations Commission (Second Division) dated July 12, 1986 which affirmed that
of Labor Arbiter Fernando V. Cinco declaring illegal the strike staged by petitioners and terminating
the employment of the individual petitioners.
The Master Iron Works Construction Corporation (Corporation for brevity) is a duly organized
corporate entity engaged in steel fabrication and other related business activities. Sometime in
February 1987, the Master IronLabor Union (MILU) entered into a collective barganing agreement
(CBA) with the Corporation for the three-year period between December 1, 1986 and November 30,
1989 (Rollo, p. 7). Pertinent provisions of the CBA state:
Sec. 1. That there shall be no strike and no lockout, stoppage or shutdown of work, or any other
interference with any of the operation of the COMPANY during the term of this AGREEMENT,
unless allowed and permitted by law.
Sec. 2. Service Allowance — The COMPANY agrees to continue the granting of service allowance
of workers assigned to work outside the company plant, in addition to his daily salary, as follows:
(a) For those assigned to work outside the plant within Metro Manila, the service allowance shall be
P12.00;
(b) For those assigned to work outside Metro Manila, the service allowance shall be P25.00/day;
(c) The present practice of conveying to and from jobsites of workers assigned to work outside of the
company plant shall be maintained.
Right after the signing of the CBA, the Corporation subcontracted outside workers to do the usual
jobs done by its regular workers including those done outside of the company plant. As a result, the
regular workers were scheduled by the management to work on a rotation basis allegedly to prevent
financial losses thereby allowing the workers only ten (10) working days a month (Rollo, p. 8). Thus,
MILU requested implementation of the grievance procedure which had also been agreed upon in the
CBA, but the Corporation ignored the request.
Consequently, on April 8, 1987, MILU filed a notice of strike (Rollo,
p. 54) with the Department of Labor and Employment. Upon the intervention of the DOLE, through
one Atty. Bobot Hernandez, the Corporation and MILU reached an agreement whereby the
Corporation acceded to give back the usual work to its regular employees who are members of
MILU (Rollo, p. 55).
Notwithstanding said agreement, the Corporation continued the practice of hiring outside workers.
When the MILU president, Wilfredo Abulencia, insisted in doing his regular work of cutting steel bars
which was being done by casual workers, a supervisor reprimanded him, charged him with
insubordination and suspended him for three (3) days (Rollo, pp. 9 & 51-52). Upon the request of

MILU, Francisco Jose of the DOLE called for conciliation conferences. The Corporation, however,
insisted that the hiring of casual workers was a management prerogative. It later ignored subsequent
scheduled conciliation conferences (Rollo, pp. 51-52 & 57-58).
Hence, on July 9, 1987, MILU filed a notice of strike on the following grounds: (a) violation of CBA;
(b) discrimination; (c) unreasonable suspension of union officials; and (d) unreasonable refusal to
entertain grievance (Rollo,
p. 9). On July 24, 1987, MILU staged the strike, maintaining picket lines on the road leading to the
Corporation's plant entrance and premises.
At about 11 o'clock in the morning of July 28, 1987, CAPCOM soldiers, who had been summoned by
the Corporation's counsel, came and arrested the picketers. They were brought to Camp Karingal
and, the following day, to the Caloocan City jail. Charges for illegal possession of firearms and
deadly weapons were lodged against them. Later, however, those charges were dismissed for
failure of the arresting CAPCOM soldiers to appear at the investigation (Rollo, p. 10). The dispersal
of the picketlines by the CAPCOM also resulted in the temporary lifting of the strike.
On August 4, 1987, the Corporation filed with the NLRC National Capital Region arbitration branch a
petition to declare the strike illegal (Rollo,
p. 40). On September 7, 1987, MILU, with the assistance of the Alyansa ng Manggagawa sa
Valenzuela (AMVA), re-staged the strike. Consequently, the Corporation filed a petition for injunction
before the NLRC which, on September 24, 1987, issued an order directing the workers to remove
the barricades and other obstructions which prevented ingress to and egress from the company
premises. The workers obliged on October 1, 1987 (Rollo, p. 25). On October 22, 1987, through its
president, MILU offered to return to work in a letter which states:
22 Okt. 1987
Mr. Elieze Hao
Master Iron Works & Construction Corp.
790 Bagbagin, Caloocan City
Dear Sir:
Ang unyon, sa pamamagitan ng nakalagda sa ibaba, ay nagmumungkahi, nagsusuhestiyon o nag-
oofer sa inyong pangasiwaan ng aming kahilingan na bumalik na sa trabaho dahilan din lang sa
kalagayan na tuloy tuloy ang ating pag-uusap para sa ikatitiwasay ng ating relasyon. Gusto naming
manatili ang ating magandang pagtitinginan bilang magkasangga para sa ika-uunlad ng ating
kumpanya. Sana ay unawain niyo kami dahil kailangan namin ng trabaho.
Gumagalang,
(Sgd.)
WILFREDO ABULENCIA
Pangulo
(Rollo, p. 590)
On October 30, 1987, MILU filed a position paper with counter-complaint before the NLRC. In said
counter-complaint, the workers charged the Corporation with unfair labor practice for subcontracting
work that was normally done by its regular workers thereby causing the reduction of the latter's
workdays; illegal suspension of Abulencia without any investigation; discrimination for hiring casual
workers in violation of the CBA, and illegal dispersal of the picket lines by CAPCOM agents (Rollo,
pp. 26-27).
In due course, a decision dated March 16, 1988 was rendered by Labor Arbiter Fernando Cinco
declaring illegal the strike staged by MILU. The dispositive portion of the decision reads:
WHEREFORE, in the light of the foregoing premises, judgment is hereby rendered, as follows:
1. Declaring the strike by the respondents illegal and unlawful;
2. Ordering the cancellation of the registered permit of respondent union MILU for having committed
an illegal strike;
3. Ordering the termination of employment status of the individual respondents, including the
forfeiture of whatever benefits are due them under the law, for having actively participated in an
illegal strike, namely: Wilfredo Abulencia, President; Rogelio Cabana, Vice-President; Lopito
Saranilla, Secretary; Jesus Moises, Treasurer; Basilio dela Cruz, Auditor; as Members of the
Board: Edgar Aranes, Melchor Bose, Restituto Payabyab, Matias Pajimula, Daniel Bacolon, and Ely
Borromeo, as Members of the Union: Teofilo Antolin, Robert Aspuria, Justino Botor, Alfredo Fabros,
Agapito Tabios, Bernardo Alfon, Benigno Barcena, Bernardo Navaro, Moises Labrador, Ernesto dela
Cruz, Eduardo Espiritu, Ignacio Pagtama, Bayani Perez, Simplicio Puaso, Edwin Velarde, Beato
Abogado, Danila San Antonio, Bermes Borromeo and Jose Borromeo.
The respondents as appearing in Annex "A" of the Petition, but not included as among those whose
employment status were not terminated as above-mentioned, are given priority of reinstatement,
without backwages, in the event petitioner starts its normal operations, or shall be paid their
separation pay according to law.
4. Ordering the respondents to cease and desist from further committing the illegal acts complained

4. Ordering the respondents to cease and desist from further committing the illegal acts complained
of;
5. Ordering Respondent Union to pay the amount of P10,000.00 to Petitioner's Counsel as
attorney's fees;
6. Ordering the dismissal of the claim for damages for lack of merit; and
7. Ordering the dismissal of the counter-complaint in view of the filing of a separate complaint by the
respondents.
SO ORDERED. (pp. 35-36, Rollo.)
On appeal to the NLRC, MILU and the individual officers and workers named in Labor Arbiter
Cinco's decision alleged that said labor arbiter gravely abused his discretion and exhibited bias in
favor of the Corporation in disallowing their request to cross-examine the Corporation's witnesses,
namely, Corporate Secretary Eleazar Hao, worker Daniel Ignacio and foreman Marcial Barcelon,
who all testified on the manner in which the strike was staged and on the coercion and intimidation
allegedly perpetrated by the strikers (Rollo,
p. 151).
The Second Division of the NLRC affirmed with modifications the decision of the labor arbiter. The
decision, which was promulgated on July 12, 1989 with Commissioners Domingo H. Zapanta and
Oscar N. Abella concurring and Commissioner Daniel M. Lucas, Jr. dissenting, disagreed with
the labor arbiter on the "summary execution of the life of Master Iron Labor Union (MILU)" on the
grounds that the Corporation did not specifically pray for the cancellation of MILU's registration and
that pursuant to Articles 239 and 240 of the Labor Code, only the Bureau of Labor Relations may
cancel MILU's license or certificate of registration. It also deleted the award of P10,000.00 as
attorney's fees for lack of sufficient basis but it affirmed the labor arbiter with regard to the
declaration of illegality of the strike and the termination of employment of certain employees and the
rest of the dispositive portion of the labor arbiter's decision (Rollo, pp. 48-49).
In his dissent, Commissioner Lucas stated that he is "for the setting aside of the decision appealed
from, and remanding of the case to the labor arbiter of origin, considering the respondent's
countercharge or complaint for unfair labor practice was not resolved on the merits" (Rollo, p. 49).
MILU filed a motion for the reconsideration but the same was denied by the NLRC for lack of merit in
its Resolution of August 9, 1989 (Rollo, p. 50). Hence, the instant petition. 1
Petitioners contend that notwithstanding the non-strike provision in the CBA, the strike they staged
was legal because the reasons therefor are non-economic in nature. They assert that
the NLRC abused its discretion in holding that there was "failure to exhaust the provision on
grievance procedure" in view of the fact that they themselves sought grievance meetings but the
Corporation ignored such requests. They charge the NLRC with bias in failing to give weight to the
fact that the criminal charges against the individual petitioners were dismissed for failure of the
CAPCOM soldiers to testify while the same individual strikers boldly faced the charges against them.
Lastly, they aver that the NLRC abused its discretion in holding that the workers' offer to return to
work was conditional.
In holding that the strike was illegal, the NLRC relied solely on the no-strike no-lockout provision of
the CBA aforequoted. As this Court has held in Philippine Metal Foundries, Inc. vs. CIR (90 SCRA
135 [1979]), a no-strike clause in a CBA is applicable only to economic strikes. Corollarily, if the
strike is founded on an unfair laborpractice of the employer, a strike declared by the union cannot
be considered a violation of the no-strike clause.
An economic strike is defined as one which is to force wage or other concessions from the employer
which he is not required by law to grant (Consolidated Labor Association of the Philippines vs.
Marsman & Co., Inc., 11 SCRA 589 [1964]). In this case, petitioners enumerated in their notice of
strike the following grounds: violation of the CBA or the Corporation's practice of subcontracting
workers; discrimination; coercion of employees; unreasonable suspension of union officials, and
unreasonable refusal to entertain grievance.
Private respondent contends that petitioner's clamor for the implementation of Section 2, Article VIII
of the CBA on service allowances granted to workers who are assigned outside the company
premises is an economic issue (Rollo, p. 70). On the contrary, petitioners decry the violation of the
CBA, specifically the provision granting them service allowances. Petitioners are not, therefore,
already asking for an economic benefit not already agreed upon, but are merely asking for the
implementation of the same. They aver that the Corporation's practice of hiring subcontractors to do
jobs outside of the company premises was a way "to dodge paying service allowance to the workers"
(Rollo, pp. 61 & 70).
Much more than an economic issue, the said practice of the Corporation was a blatant violation of
the CBA — and unfair labor practice on the part of the employer under Article 248(i) of

the CBA — and unfair labor practice on the part of the employer under Article 248(i) of
the Labor Code. Although the end result, should the Corporation be required to observe the CBA,
may be economic in nature because the workers would then be given their regular working hours
and therefore their just pay, not one of the said grounds is an economic demand within the meaning
of the law on labor strikes. Professor Perfecto Fernandez, in his BOOK
Law on Strikes,Picketing and Lockouts (1981 edition, pp. 144-145), states that an economic strike
involves issues relating to demands for higher wages, higher pension or overtime rates, pensions,
profit sharing, shorter working hours, fewer work days for the same pay, elimination of night work,
lower retirement age, more healthful working conditions, better health services, better sanitation and
more safety appliances. The demands of the petitioners, being covered by the CBA, are definitely
within the power of the Corporation to grant and therefore the strike was not an economic strike.
The other grounds, i.e., discrimination, unreasonable suspension of union officials and
unreasonable refusal to entertain grievance, had been ventilated before the Labor Arbiter. They are
clearly unfair labor practices as defined in Article 248 of the Labor Code. 2 The subsequent
withdrawal of petitioners' complaint for unfair laborpractice (NLRC-NCR Case No. 00-11-04132-87)
which was granted by Labor Arbiter Ceferina Diosana who also considered the case closed and
terminated (Rollo, pp. 97 & 109) may not, therefore, be considered as having converted their other
grievance into economic demands.
Moreover, petitioners staged the strike only after the Corporation had failed to abide by the
agreement forged between the parties upon the intervention of no less than the DOLE after
the union had complained of the Corporation's unabated subcontracting of workers who performed
the usual work of the regular workers. The Corporation's insistence that the hiring of casual
employees is a management prerogative betrays its attempt to coat with legality the illicit curtailment
of its employees' rights to work under the terms of the contract of employment and to a fair
implementation of the CBA.
While it is true that an employer's exercise of management prerogatives, with or without reason,
does not per seconstitute unjust discrimination, such exercise, if clearly shown to be in grave abuse
of discretion, may be looked into by the courts (National Federation of Labor Unions vs. NLRC, 202
SCRA 346 [1991]). Indeed, the hiring, firing, transfer, demotion, and promotion of employees are
traditionally identified as management prerogatives. However, they are not absolute prerogatives.
They are subject to limitations found in law, a collective bargaining agreement, or general principles
of fair play and justice (University of Sto. Tomas vs. NLRC, 190 SCRA 758 [1990] citing Abbott
Laboratories [Phil.], Inc. vs. NLRC, 154 SCRA 713 [1987]). The Corporation's assertion that it was
exercising a management prerogative in hiring outside workers being contrary to the contract of
employment which, of necessity, states the expected wages of the workers, as well as the CBA, is
therefore untenable.
Private respondent's failure to traverse petitioners' allegations that the NLRC abused its discretion in
holding that the provision on grievance procedure had not been exhausted clearly sustains such
allegation and upholds the petitioners' contention that the Corporation refused to undergo said
procedure. It should be remembered that a grievance procedure is part of the continuous process of
collective bargaining (Republic Savings Bank. vs. CIR, et al., 21 SCRA 226 [1967]). It is intended to
promote a friendly dialogue between labor and management as a means of maintaining industrial
peace. The Corporation's refusal to heed petitioners' request to undergo the grievance procedure
clearly demonstrated its lack of intent to abide by the terms of the CBA.
Anent the NLRC's finding that Abulencia's offer to return to work is conditional, even a cursory
reading of the letter aforequoted would reveal that no conditions had been set by petitioners. It is
incongruous to consider as a "condition" the statement therein that the parties would continue talks
for a peaceful working relationship ("tuloy tuloy ang ating pag-uusap sa ikatitiwasay ng ating
relasyon"). Conferences form part of the grievance procedure and their mere mention in Abulencia's
letter did not make the same "conditional".
In the same manner, the following findings of the Labor Arbiter showed the illegal breakup of the
picket lines by the CAPCOM:
d) On 28 July 1987, CAPCOM soldiers, on surveillance mission, arrived at the picket line of
respondents and searches were made on reported deadly weapons and firearms in the possession
of the strikers. Several bladed weapons and firearms in the possession of the strikers were
confiscated by the CAPCOM soldiers, as a result of which, the apprehended strikers were brought to
Camp Tomas Karingal in Quezon City for proper investigation and filing of the appropriate criminal
charges against them. The strikers who were charged of illegal possession of deadly weapon and
firearms were: Edgar Aranes, Wilfredo Abulencia, Ernesto dela Cruz, Beato Abogado, Lopito
Saranilla, Restituto Payabyab, Jose Borromeo and Rogelio Cabana. Criminal informations were filed
by Inquest Fiscal, marked as Exhibits "E", "E-1 to E-8". These strikers were jailed for sometime until
they were ordered release after putting up the required bail bond. Other strikers were also arrested

they were ordered release after putting up the required bail bond. Other strikers were also arrested
and brought to Camp Tomas Karingal, and after proper investigation as to their involvement in the
offense charged, they were released for lack of prima facie evidence. They were Edwin Velarde,
Bayani Perez, Daniel Bacolon, Jesus Moises, Robert Aspurias and Benigno Barcena.
After the strikers who were arrested were brought to Camp Tomas Karingal on 28 July 1987, the rest
of the strikers removed voluntarily their human and material barricades which were placed and
posted at the road leading to the premises of the Company. (Rollo, p. 32)
The bringing in of CAPCOM soldiers to the peaceful picket lines without any reported outbreak of
violence, was clearly in violation of the following prohibited activity under Article 264 of
the Labor Code:
(d) No public official or employee, including officers and personnel of the New Armed Forces of the
Philippines or the Integrated National Police, or armed person, shall bring in, introduce or escort in
any manner any individual who seeks to replace strikers in entering or leaving the premises of a
strike area, or work in place of the strikers. The police force shall keep out of the picket lines unless
actual violence or other criminal acts occur therein; Provided, That nothing herein shall be
interpreted to prevent any public officer from taking any measure necessary to maintain peace and
order, protect life and property, and/or enforce the law and legal order. (Emphasis supplied.)
As the Labor Arbiter himself found, no pervasive or widespread coercion or violence were
perpetrated by the petitioners as to warrant the presence of the CAPCOM soldiers in the picket lines.
In this regard, worth quoting is the following excerpt of the decision in Shell Oil
Workers' Union vs. Shell Company of the Philippines, Ltd., 39 SCRA 276 [1971], which was decided
by the Court under the old Industrial Peace Act but which excerpt still holds true:
. . . What is clearly within the law is the concerted activity of cessation of work in order that . . .
employer cease and desist from an unfair labor practice. That the law recognizes as a right. There is
though a disapproval of the utilization of force to attain such an objective. For implicit in the very
concept of the legal order is the maintenance of peaceful ways. A strike otherwise valid, if violent in
character, may be placed beyond the pale. Care is to be taken, however, especially where an
unfairlabor practice is involved, to avoid stamping it with illegality just because it is tainted with such
acts. To avoid rendering illusory the recognition of the right to strike, responsibility in such a case
should be individual and not collective. A different conclusion would be called for, of course, if the
existence of force while the strike lasts is pervasive and widespread, consistently and deliberately
resorted to as a matter of policy. It could be reasonably concluded then that even if justified as to
ends, it becomes illegal because of the means employed. (at p. 292.)
All told, the strike staged by the petitioners was a legal one even though it may have been called to
offset what the strikers believed in good faith to be unfair labor practices on the part of the employer
(Ferrer, et al. vs. Court of Industrial Relations, et al., 17 SCRA 352 [1966]). Verily, such presumption
of legality prevails even if the allegations of unfair labor practices are subsequently found out to be
untrue (People's Industrial and Commercial Employees and Workers Org. [FFW] vs. People's
Industrial and Commercial Corporation, 112 SCRA 440 [1982]). Consonant with these jurisprudential
pronouncements, is Article 263 of the Labor Code which clearly states "the policy of the State to
encourage free trade unionism and free collective bargaining". Paragraph (b) of the same article
guarantees the workers' "right to engage in concerted activities for purposes of collective bargaining
or for their mutual benefit and protection" and recognizes the "right of legitimate labor organizations
to strike and picket and of employers to lockout" so long as these actions are "consistent with the
national interest" and the grounds therefor do not involve inter-union and intra-union disputes.
The strike being legal, the NLRC gravely abused its discretion in terminating the employment of the
individual petitioners, who, by operation of law, are entitled to reinstatement with three years
backwages. Republic Act No. 6715 which amended Art. 279 of the Labor Code by giving "full
backwages inclusive of allowances" to reinstated employees, took effect fifteen days from the
publication of the law on March 21, 1989. The decision of the LaborArbiter having been promulgated
on March 16, 1988, the law is not applicable in this case.
WHEREFORE, the questioned decision and resolution of the NLRC as well as the decision of
the Labor Arbiter are hereby SET ASIDE and the individual petitioners are reinstated to their
positions, with three years backwages and without loss of seniority rights and other privileges.
Further, respondent corporation is ordered to desist from subcontracting work usually performed by
its regular workers.
SO ORDERED.
Feliciano, Bidin, Davide, Jr. and Romero, JJ., concur.
Gutierrez, Jr., J., is on leave.
#Footnotes
1 The Solicitor General at first refused to file a comment on the petition in view of his stand which is

# Footnotes
1 The Solicitor General at first refused to file a comment on the petition in view of his stand which is
contrary to that of the NLRC (Rollo, p. 81). Hence, the NLRC itself was directed to file comment on
the petition in the Resolution of June 20, 1990 (Rollo, p. 83). The NLRC's Legal Division filed two
motions for extension of time to file comment (Rollo, pp. 86 & 90). However, in the Resolution of
November 14, 1990 (Rollo, p. 110), the Court noted the private respondent's manifestation and
motion "pending filing of comment by the Solicitor General on the petition." The NLRC Legal Division
having failed to file comment within the extended period to file the same, in the Resolution of
December 10, 1990, the Court dispensed with the filing of the NLRC's comment. On December 14,
1990, the Solicitor General, taking note of the Resolution of November 14, 1990, requested a new
period within which to file comment for the NLRC. On January 21, 1991, he filed said comment
praying that the NLRC decision be set aside and instead judgment be rendered directing the
reinstatement of the individual petitioners with backwages and without loss of seniority rights and
other employment privileges and enjoining the private respondent from subcontracting work regularly
within the functions of petitioners (Rollo, p. 122).
2 Art. 248. 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 labororganization or shall withdraw from one to which he belongs;
(c) To contract out services or functions being performed by union members when such will interfere
with, restrain or coerce employees in the exercise of their right to self-organization;
(d) To initiate, dominate, assist or otherwise interfere with the formation or administration of
any labororganization, including the giving of financial or other support to it or its organizations or
supporters;
(e) To discriminate in regard to wages, hours of work, and other terms and conditions of employment
in order to encourage or discourage membership in any labor organization. Nothing in this Code or
in any other law shall stop the parties from requiring membership in a recognized collective
bargaining agent as a condition of employment, except those employees who are already members
of anotherunion at the time of the signing of the collective bargaining agreement. Employees of an
appropriate collective bargaining agent may be assessed a reasonable fee equivalent to the dues
and other fees paid by members of the recognized collective bargaining agent, if such non-
union members accept the benefits under the collective agreement: Provided, that the individual
authorization required under Article 242, paragraph (o) of this Code shall not apply to the non-
members of the recognized collective bargaining agent;
(f) To dismiss, discharge, or otherwise prejudice or discriminate against an employee for having
given or being about to give testimony under this Code;
(h) To pay negotiation or attorney's fees to the union or its officers or agents as part of the
settlement of any issue in collective bargaining or any other dispute; or
(i) To violate a collective bargaining agreement.
The provisions of the preceding paragraph notwithstanding, only the officers and agents of
corporations, associations or partnerships who have actually participated in, authorized or ratified
under unfair labor practices shall be held criminally liable.
Pasted from <http://webcache.googleusercontent.com/search?q=cache:9wit-

FS4JgAJ:www.lawphil.net/judjuris/juri1993/feb1993/gr_92009_1993.html+Master+Iron+Labor+Union+vs.+NLRC&cd=3
&hl=tl&ct=clnk&gl=ph>

PAL v. Santos (1993)
12:15 AM
G.R. No. 77875 February 4, 1993

PHILIPPINE AIRLINES, INC., petitioner,
vs.
ALBERTO SANTOS, JR., HOUDIEL MAGADIA, GILBERT ANTONIO, REGINO DURAN,
PHILIPPINE AIRLINES EMPLOYEES ASSOCIATION, and THE NATIONAL LABOR RELATIONS
COMMISSION, respondents.
Fortunato Gupit, Jr., Solon R. Garcia, Rene B. Gorospe, Bienvinodo T. Jamoralin, jr. and Paulino D.
Ungos, Jr. for petitioner.
Adolpho M. Guerzon for private respondents.
REGALADO, J.:
The instant petition for certiorari seeks to set aside the decision of The National Labor Relations
Commission (NLRC) in NLRC Case No. 4-1206-85, promulgated on December 11,
1986, 1 containing the following disposition:
WHEREFORE, in view of the foregoing consideration, the Decision appealed from is set aside and
another one entered, declaring the suspension of complainants to be illegal and consequently,
respondent PAL is directed to pay complainants their salaries corresponding to the respective period(s) of
their suspension, and to delete the disciplinary action from complainants' service records. 2
These material facts recited in the basic petition are virtually undisputed and we reproduce the same
hereunder:
1. Individual respondents are all Port Stewards of Catering Sub-Department, Passenger Services
Department of petitioner. Their duties and responsibilities, among others, are:
Prepares meal orders and checklists, setting up standard equipment in accordance with the
requirements of the type of service for each flight; skiing, binning, and inventorying of Commissary
supplies and equipment.
2. On various occasions, several deductions were made from their salary. The deductions
represented losses of inventoried items charged to them for mishandling of company properties . . .
which respondents resented. Such that on August 21, 1984, individual respondents, represented by
the union, made a formal notice regarding the deductions to petitioner thru Mr. Reynaldo Abad,
Manager for Catering. . . .
3. As there was no action taken on said representation, private respondents filed a formal grievance
on November 4, 1984 pursuant to the grievance machinery Step 1 of the Collective Bargaining
Agreement between petitioner and the union. . . . The topics which the union wanted to be discussed
in the said grievance were the illegal/questionable salary deductions and inventory of bonded goods
and merchandise being done by catering service personnel which they believed should not be their
duty.
4. The said grievance was submitted on November 21, 1984 to the office of Mr. Reynaldo Abad,
Manager for Catering, who at the time was on vacation leave. . . .
5. Subsequently, the grievants (individual respondents) thru the shop steward wrote a letter on
December 5, 1984 addressed to the office of Mr. Abad, who was still on leave at the time, that
inasmuch as no reply was made to their grievance which "was duly received by your secretary" and
considering that petitioner had only five days to resolve the grievance as provided for in the CBA,
said grievance as believed by them (private respondents) was deemed resolved in their favor. . . .
6. Upon Mr. Abad's return on December 7, 1984, he immediately informed the grievants and
scheduled a meeting on December 12, 1984. . . .
7. Thereafter, the individual respondents refused to conduct inventory works. Alberto Santos, Jr. did
not conduct ramp inventory on December 7, 10 and 12. Gilbert Antonio did not conduct ramp
inventory on December 10. In like manner, Regino Duran and Houdiel Magadia did not conduct the
same on December 10 and 12.
8. At the grievance meeting which was attended by some union representatives, Mr. Abad resolved
the grievance by denying the petition of individual respondents and adopted the position that
inventory of bonded goods is part of their duty as catering service personnel, and as for the salary
deductions for losses, he rationalized:
1. It was only proper that employees are charged for the amount due to mishandling of company
property which resulted to losses. However, loss may be cost price 1/10 selling price.
9. As there was no ramp inventory conducted on the mentioned dates, Mr. Abad, on January 3,

1985 wrote by an inter-office memorandum addressed to the grievants, individual respondents
herein, for them to explain on (sic) why no disciplinary action should be taken against them for not
conducting ramp inventory. . . .
10. The directive was complied with . . . . The reason for not conducting ramp inventory was put forth
as:
4. Since the grievance step 1 was not decided and no action was done by your office within 5
days from November 21, 1984, per provision of the PAL-PALEA CBA, Art. IV, Sec. 2, the
grievance is deemed resolved in PALEA's favor.
11. Going over the explanation, Mr. Abad found the same unsatisfactory. Thus, a penalty of suspension
ranging from 7 days to 30 days were (sic) imposed depending on the number of infractions committed. *
12. After the penalty of suspension was meted down, PALEA filed another grievance asking for
lifting of, or at least, holding in abeyance the execution of said penalty. The said grievance was
forthwith denied but the penalty of suspension with respect to respondent Ramos was modified,
such that his suspension which was originally from January 15, 1985 to April 5, 1985 was shortened
by one month and was lifted on March 5, 1985. The union, however, made a demand for the
reimbursement of the salaries of individual respondents during the period of their suspension.
13. Petitioner stood pat (o)n the validity of the suspensions. Hence, a complaint for illegal suspension was
filed before the Arbitration Branch of the Commission, . . . Labor Arbiter Ceferina J. Diosana, on March
17, 1986, ruled in favor of petitioner by dismissing the complaint. . . . 3
Private respondents appealed the decision of the labor arbiter to respondent commission which
rendered the aforequoted decision setting aside the labor arbiter's order of dismissal. Petitioner's
motion for reconsideration having been denied, it interposed the present petition.
The Court is accordingly called upon to resolve the issue of whether or not public respondent NLRC
acted with grave abuse of discretion amounting to lack of jurisdiction in rendering the
aforementioned decision.
Evidently basic and firmly settled is the rule that judicial review by this Court in labor cases does not
go so far as to evaluate the sufficiency of the evidence upon which the labor officer or office based
his or its determination, but is limited to issues of jurisdiction and grave abuse of discretion. 4 It has
not been shown that respondent NLRC has unlawfully neglected the performance of an act which
the law specifically enjoins it to perform as a duty or has otherwise unlawfully excluded petitioner
from the exercise of a right to which it is entitled.
The instant case hinges on the interpretation of Section 2, Article IV of the PAL-PALEA Collective
Bargaining Agreement, (hereinafter, CBA), to wit:
Sec. 2 — Processing of Grievances
xxx xxx xxx
STEP 1 — Any employee who believes that he has a justifiable grievance shall take the matter up with
his shop steward. If the shop steward feels there is justification for taking the matter up with the
Company, he shall record the grievance on the grievance form heretofore agreed upon by the parties.
Two (2) copies of the grievance form properly filled, accepted, and signed shall then be presented to and
discussed by the shop steward with the division head. The division head shall answer the grievance
within five (5) days from the date of presentation by inserting his decision on the grievance form, signing
and dating same, and returning one copy to the shop steward. If the division head fails to act within
the five (5)-day regl(e)mentary period, the grievance must be resolved in favor of the aggrieved
party. If the division head's decision is not appealed to Step II, the grievance shall be considered settled
on the basis of the decision made, and shall not be eligible for further appeal. 5 (Emphasis ours.)
Petitioner submits that since the grievance machinery was established for both labor and
management as a vehicle to thresh out whatever problems may arise in the course of their
relationship, every employee is duty bound to present the matter before management and give the
latter an opportunity to impose whatever corrective measure is possible. Under normal
circumstances, an employee should not preempt the resolution of his grievance; rather, he has the
duty to observe the status quo. 6
Citing Section 1, Article IV of the CBA, petitioner further argues that respondent employees have the
obligation, just as management has, to settle all labor disputes through friendly negotiations. Thus,
Section 2 of the CBA should not be narrowly interpreted. 7 Before the prescriptive period of five days
begins to run, two concurrent requirements must be met, i.e., presentment of the grievance and
its discussion between the shop steward and the division head who in this case is Mr. Abad. Section
2 is not self-executing; the mere filing of the grievance does not trigger the tolling of the prescriptive
period. 8

Petitioner has sorely missed the point.
It is a fact that the sympathy of the Court is on the side of the laboring classes, not only because the
Constitution imposes such sympathy, but because of the one-sided relation between labor and
capital. 9 The constitutional mandate for the promotion of labor is as explicit as it is demanding. The
purpose is to place the workingman on an equal plane with management — with all its power and
influence — in negotiating for the advancement of his interests and the defense of his rights. 10 Under
the policy of social justice, the law bends over backward to accommodate the interests of the
working class on the humane justification that those with less privileges in life should have more
privileges in law. 11
It is clear that the grievance was filed with Mr. Abad's secretary during his absence. 12 Under Section
2 of the CBA aforequoted, the division head shall act on the grievance within five (5) days from the
date of presentation thereof, otherwise "the grievance must be resolved in favor of the aggrieved
party." It is not disputed that the grievants knew that division head Reynaldo Abad was then "on
leave" when they filed their grievance which was received by Abad's secretary. 13 This
knowledge, however, should not prevent the application of the CBA.
On this score, respondent NLRC aptly ruled:

. . . Based on the facts heretofore narrated, division head Reynaldo Abad had to act on the grievance of
complainants within five days from 21 November 1984. Therefore, when Reynaldo Abad, failed to act
within the reglementary period, complainants, believing in good faith that the effect of the CBA had
already set in, cannot be blamed if they did not conduct ramp inventory for the days thereafter. In this
regard, respondent PAL argued that Reynaldo Abad was on leave at the time the grievance was
presented. This, however, is of no moment, for it is hard to believe that everything under Abad's
authority would have to stand still during his absence from office. To be sure, it is to be expected
that someone has to be left to attend to Abad's duties. Of course, this may be a product of inadvertenc e
on the part of PAL management, but certainly, complainants should not be made to suffer the
consequences. 14
Contrary to petitioner's submission, 15 the grievance of employees is not a matter which requires
the personal act of Mr. Abad and thus could not be delegated. Petitioner could at least have
assigned an officer-in-charge to look into the grievance and possibly make his
recommendation to Mr. Abad. It is of no moment that Mr. Abad immediately looked into the
grievance upon returning to work, for it must be remembered that the grievants are
workingmen who suffered salary deductions and who rely so much on their meager income
for their daily subsistence and survival. Besides, it is noteworthy that when these employees first
presented their complaint on August 21, 1984, petitioner failed to act on it. It was only after a formal
grievance was filed and after Mr. Abad returned to work on December 7, 1984 that petitioner
decided to turn an ear to their plaints.
As respondent NLRC has pointed out, Abad's failure to act on the matter may have been due to
petitioner's inadvertence, 16 but it is clearly too much of an injustice if the employees be made
to bear the dire effects thereof. Much as the latter were willing to discuss their grievance with
their employer, the latter closed the door to this possibility by not assigning someone else to
look into the matter during Abad's absence. Thus, private respondents should not be faulted
for believing that the effects of the CBA in their favor had already stepped into the
controversy.
If the Court were to follow petitioner's line of reasoning, it would be easy for management to delay
the resolution of labor problems, the complaints of the workers in particular, and hide under the cloak
of its officers being "on leave" to avoid being caught by the 5-day deadline under the CBA. If this
should be allowed, the workingmen will suffer great injustice for they will necessarily be at the mercy
of their employer. That could not have been the intendment of the pertinent provision of the CBA,
much less the benevolent policy underlying our labor laws.
ACCORDINGLY, on the foregoing premises, the instant petition is hereby DENIED and the assailed
decision of respondent National Labor Relations Commission is AFFIRMED. This judgment is
immediately executory.
SO ORDERED.
Narvasa, C.J., Feliciano, Nocon and Campos, Jr., JJ., concur.
#Footnotes
1 Per Presiding Commissioner Edna Bonto-Perez and Commissioners Daniel M. Lucas, Jr. and

Mirasol V. Corleto.
2 Original Record, 119.
* Private respondents were meted the penalty of suspension without pay as follows: Alberto Santos,
Jr., from January 15 to April 5, 1985 (Exh. H, Original Record, 45); Regino Duran, from January 15
to February 4, 1985 (Exh. I, ibid., 46); Gilbert Antonio, from January 15 to 21, 1985 (Exh. J, ibid.,
47); and Houdiel Magadia, from January 15 to February 4, 1985 (Exh. K, ibid., 48).
3 Petition, 2-5; Rollo, 3-6.
4 Pan Pacific Industrial Sales, Inc. vs. NLRC, et al., 194 SCRA 633 (1991).
5 Exhibit S; Original Record, 57.
6 Petition, 8; Rollo, 9.
7 Ibid., 8-9; Rollo, 9-10.
8 Ibid., 9, Rollo, 10.
9 Reliance Surety and Insurance Co., Inc. vs. NLRC, et al., 193 SCRA 365 (1991).
10 Dagupan Bus Company, Inc. vs. NLRC, et al., 191 SCRA 328 (1990).
11 Ditan vs. POEA, et al., 191 SCRA 823 (1990).
12 Exhibit E; Original Record, 42.
14 Ibid., 118-119.
15 Petition, 9-10; Rollo, 10-11.

q=cache:ALSroN07K6oJ:www.lawphil.net/judjuris/juri1993/feb1993/gr_77875_1993.html+G.R.+No.+77875&cd=1

SMC vs. NLRC (1999)

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 99266 March 2, 1999

SAN MIGUEL CORPORATION, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, SECOND DIVISION, AND SAN
MIGUEL CORPORATION EMPLOYEES UNION (SMCEU) — PTGWO, respondents.
PURISIMA, J.:
At bar is a Petition for Certiorari under Rule 65 of the Revised Rules of Court, assailing
the Resolution 1 of the National Labor Relations Commission in NLRC NCR CASE NO.
00094-90, which dismissed the complaint of San Miguel Corporation (SMC), seeking to
dismiss the notice of strike given by the private respondent union and to compel the
latter to comply with the provisions of the Collective Bargaining Agreement (CBA) 2 on
grievance machinery, arbitration, and the no-strike clause, with prayer for the issuance
of a temporary restraining order.
In July 1990, San Miguel Cooperation, alleging the need to streamline its operations due
to financial loses, shut down some of its plants and declared 55 positions as redundant
listed as follows: seventeen (17) employees in the Business Logistics Division ("BLD"),
seventeen (17) in the Ayala Operations Center (AOC), and eighteen (18) in the
Magnolia-Manila Buying Station ("Magnolia-MBS"). 3 Consequently, the private
respondent union filed several grievance cases for the said retrenched employees,
praying for the redeployment of the said employees to the other divisions of the
company.
The grievance proceedings were conducted pursuant to Sections 5 and 8, Article VIII of
the parties' 1990 Collective Bargaining Agreement providing for the following
procedures, to wit:
Sec.5. Processing of Grievance. — Should a grievance arise, an earnest effort shall be
made to settle the grievance expeditiously in accordance with the following procedures:
Step 1. — The individual employee concerned and the Union Directors, or the Union
Steward shall, first take up the employee's grievance orally with his immediate superior.
If no satisfactory agreement or adjustment of the grievance is reached, the grievance
shall, within twenty (20) working days from the occurrence of the cause or event which
gave rise to the grievance, be filed in writing with the Department Manager or the next
level superior who shall render his decision within ten (10) working days from the receipt
of the written grievance. A copy of the decision shall be furnished the Plant Personnel
Officer.
Step 2. — If the decision in Step 1 is rejected, the employee concerned may elevate or
appeal this in writing to the Plant Manager/Director or his duly authorized representative
within twenty (20) working days from the receipt of the Decision of the Department
Manager, Otherwise, the decision in Step 1 shall be deemed accepted by the employee.
The Plant Manager/Director assisted by the Plant Personnel Officer shall determine the
necessity, of conducting grievance meetings. If necessary, the Plant Manager/Director
and the Plant Personnel Officer shall meet the employee concerned and the Union
Director/Steward on such date(s) as may be designated by the Plant Manager. In every
plant/office, Grievance Meetings shall be scheduled at least twice a month.
The Plant Manager shall give his written comments and decision within ten (10) working
days after his receipt of such grievance or the date of submission of the grievance for
resolution, as the case may be. A copy of his Decision shall be furnished the Employee
Relations Directorate.
Step 3. — If no satisfactory adjustment is arrived at Step 2, the employee may appeal

Step 3. — If no satisfactory adjustment is arrived at Step 2, the employee may appeal
the Decision to the Conciliation Board as provided under Section 6 hereof, within fifteen
(15) working days from the date of receipt of the decision of the Plant Manager/Director
or his designate. Otherwise, the decision in Step 2 shall be deemed accepted by the
employee.
The Conciliation Board shall meet on the grievance in such dates as shall be designated
by the Division/Business Unit Manager or his representative. In every Division/Business
Unit, Grievance Meetings of the Conciliation Board shall be scheduled at least once a
month.
The Conciliation Board shall have fifteen (15) working days from the date of submission
of the grievance for resolution within which to decide on the grievance.
Sec. 6. Conciliation Board. — There shall be a conciliation Board per Business Unit or
Division. Every Conciliation Board shall be composed of not more than five (5)
representatives each from the Company and the Union. Management and the Union
may be assisted by their respective legal counsels.
In every Division/Business Unit, the names of the Company and Union representatives
to the Conciliation Board shall be submitted to the Division/Business Unit Manager not
later than January of every year. The Conciliation Board members shall act as such for
one (1) year until removed by the Company or the Union, as the case may be.
xxx xxx xxx
Sec. 8. Submission to Arbitration. — If the employee or Union is not satisfied with the
Decision of the Conciliation Board and desires to submit the grievance to arbitration, the
employee or the Union shall serve notice of such intention to the Company within fifteen (15)
working days after receipt of the Board's decision. If no such written notice is received by the
Company within fifteen (15) working days, the grievance shall be considered settled on the
basis of the company's position and shall no longer be available for arbitration. 4
During the grievance proceedings, however, most of the employees were redeployed,
while others accepted early retirement. As a result only 17 employees remained when
the parties proceeded to the third level (Step 3) of the grievance procedure. In a meeting
on October 26, 1990, petitioner informed private respondent union that if by October 30,
1990, the remaining 17 employees could not yet be redeployed, their services would be
terminated on November 2, 1990. The said meeting adjourned when Mr. Daniel S. L.
Borbon II, a representative of the union, declared that there was nothing more to discuss
in view of the deadlock. 5
On November 7, 1990, the private respondent filed with the National Conciliation and
Mediation Board (NCMB) of the Department of Labor and Employment (DOLE) a notice
of strike on the following grounds: a) bargaining deadlock; b) union busting; c) gross
violation of the Collective Bargaining Agreement (CBA), such as non-compliance with
the grievance procedure; d) failure to provide private respondent with a list of vacant
positions pursuant to the parties side agreement that was appended to the 1990 CBA;
and e) defiance of voluntary arbitration award. Petitioner on the other hand, moved to
dismiss the notice of strike but the NCMB failed to act on the motion.
On December 21, 1990, petitioner SMC filed a complaint 6 with the respondent NLRC,
praying for: (1) the dismissal the notice of strike; (2) an order compelling the respondent
union to submit to grievance and arbitration the issue listed in the notice of strike; (3) the
recovery of the expenses of litigation.
On April 16, 1991, respondent NLRC came out with a minute resolution dismissing the
complaint; holding, thus:
NLRC NCR IC NO. 000094-90, entitled San Miguel Corporation, Complainant -versus- San
Miguel Employees Union-PTWO (SMCEU), Respondent. — Considering the allegations in
the complaint to restrain Respondent Union from declaring a strike and to enforce mutual
compliance with the provisions of the collective bargaining agreement on grievance
machinery, and the no-strike clause, with prayer for issuance of temporary restraining order,
and the evidence adduced therein, the Answer filed by the respondent and the memorandum
filed by the complainant in support of its application for the issuance of an injunction, the
Second Division, after due deliberation, Resolved to dismiss the complaint for lack of merit. 7
Aggrieved by the said resolution, petitioner found its way to this court via the present
petition, contending that:
I
IT IS THE POSITIVE LEGAL DUTY OR RESPONDENT NLRC TO COMPEL
ARBITRATION AND TO ENJOIN A STRIKE IN VIOLATION OF A NO STRIKE
CLAUSE.
II

II
INJUNCTION IS THE ONLY IMMEDIATE, EFFECTIVE SUBSTITUTE FOR THE
DISASTROUS ECONOMIC WARFARE THAT ARBITRATION IS DESIGNED TO AVOID. 8
On June 3, 1991, to preserve the status quo, the Court issued a Resolution 9 granting
petitioners prayer for the issuance of a Temporary Restraining Order.
The Petition is impressed with merit.
Rule XXII, Section I, of the Rules and Regulations Implementing Book V the Labor
Code 10, reads:
Sec.1. Grounds for strike and lockout. — A strike or lockout may be declared in cases of
bargaining deadlocks and unfair labor practices. Violations of the collective bargaining
agreements, except flagrant and/or malicious refusal to comply with its economic
provisions, shall not be considered unfair labor practice and shall not be strikeable. No
strike or lockout may be declared on grounds involving inter -union and intra-union
disputes or on issues brought to voluntary, or compulsory, arbitration.
In the case under consideration, the grounds relied upon by the private respondent
union are non-strikeable. The issues which may lend substance to the notice of strike
filed by the private respondent union are: collective bargaining deadlock and petitioner's
alleged violation of the collective bargaining agreement. These grounds, however,
appear more illusory than real.
Collective Bargaining Deadlock is defined as "the situation between the labor and the
management of the company where there is failure in the collective bargaining
negotiations resulting in a stalemate" 11 This situation, is non-existent in the present case
since there is a Board assigned on the third level (Step 3) of the grievance machinery to
resolve the conflicting views of the parties. Instead of asking the Conciliation Board
composed of five representatives each from the company and the union, to decide the
conflict, petitioner declared a deadlock, and thereafter, filed a notice of strike. For failing
to exhaust all the steps in the grievance machinery and arbitration proceedings provided
in the Collective Bargaining Agreement, the notice of strike should have been dismissed
by the NLRC and private respondent union ordered to proceed with the grievance and
arbitration proceedings. In the case of Liberal Labor Union vs. Phil. Can
Co. 12, the court declared as illegal the strike staged by the union for not complying with
the grievance procedure provided in the collective bargaining agreement, ruling that:
. . . the main purpose of the parties in adopting a procedure in the settlement of their disputes
is to prevent a strike. This procedure must be followed in its entirety if it is to achieve its
objective. . . . strikes held in violation of the terms contained in the 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. . . . 13
As regards the alleged violation of the CBA, we hold that such a violation is chargeable
against the private respondent union. In abandoning the grievance proceedings and
stubbornly refusing to avail of the remedies under the CBA. private respondent violated
the mandatory provisions of the collective bargaining agreement.
Abolition of departments or positions in the company is one of the recognized
management prerogatives. 14Noteworthy is the fact that the private respondent does not
question the validity of the business move of petitioner. In the absence of proof that the
act of petitioner was ill-motivated, it is presumed that petitioner San Miguel Corporation
acted in good faith. In fact, petitioner acceded to the demands of the private respondent
union by redeploying most of the employees involved; such that from an original 17
excess employees in BLD, 15 were successfully redeployed. In AOC, out of the 17
original excess, 15 were redeployed. In the Magnolia — Manila Buying Station, out of 18
employees, 6 were redeployed and only 12 were terminated. 15
So also, in filing complaint with the NLRC, petitioner prayed that the private respondent
union be compelled to proceed with the grievance and arbitration proceedings. Petitioner
having evinced its willingness to negotiate the fate of the remaining employees affected,
there is no ground to sustain the notice of strike of the private respondent union.
All things studiedly considered. we are of the ineluctable conclusion, and so hold, that
the NLRC gravely abused its discretion in dismissing the complaint of Petitioner SMC for
the dismissal of the notice of strike, issuance of a temporary restraining order, and an
order compelling the respondent union to settle the dispute under the grievance
machinery of their CBA..
WHEREFORE, the instant petition is hereby GRANTED. Petitioner San Miguel
Corporation and private respondent San Miguel Corporation Employees Union —

Corporation and private respondent San Miguel Corporation Employees Union —
PTGWO are hereby directed to complete the third level (Step 3) of the Grievance
Procedure and proceed with the Arbitration proceedings if necessary. No
pronouncement as to costs.
SO ORDERED.
Romero and Gonzaga-Reyes, JJ., concur.
Vitug, J., abroad on official business.
Panganiban, J., is on leave.
Footnotes
1 Dated April 16, 1991; Rollo, pp. 183-184.
2 Annex: "A" of Petition.
4 Annex "A", Petition; Collective Bargaining Agreement, pp.18-19.
5 Annex "B-3", Petition, Rollo, p. 31.
6 Annex "F", Petition, Rollo, pp. 48-65.
7 Annex "J"; Petition; Rollo, p. 183.
8 Rollo, p. 14.
9 Rollo, p. 185.
10 As amended by D.O. No 09 which took effect on June 21, 1997.
11 Tayag & P.F. Jardiniano, Dictionary of Philippine Labor Terms. p. 36.
12 91 Phil. 72.
13 Id. p. 77-78. citing; Shop N. Save vs. Retail Food Clerks Union (1940) Cal. Super. Ct.
CCT. Tab. Case 91-18675; 2 A.L.R. Ann., 2nd Series, pp. 1278-1282.
14 Dangan vs. NLRC et al., 127 SCRA 706, p. 713.
15 Complaint; Annex "A"; Rollo, p. 54.

Facts:
Seno v. Mendoza (1967) On October 4, 1957: Carlos Go Thong
Thursday, July 01, 2004 & Co. And the United Seamen's Union
12:20 AM
of the Philippines entered into a CBA
effective for 2 years, and thereafter
G.R. No. L-20565 November 29, 1967 for another 1 year period
JANUARIO T. SENO, ET AL., petitioners, ...unless either party should notify the
vs. other in writing, not less than 60 days
THE HONORABLE JUDGE JOSE M. MENDOZA of the Court of First Instance of Cebu and prior to the expiry date, of its
CARLOS A. GO THONG & CO., respondents. intention and election to terminate
Mendoza and Seno for petitioners. the agreement as of the end of the
Norberto J. Quisumbing for respondents.
current term.
MAKALINTAL, J.:
This is an original action in certiorari and prohibition with preliminary injunction brought by the above- (so in effect, presumed to be
named petitioners against the Honorable Jose M. Mendoza, presiding Judge of the Court of First continuing)
Instance of Cebu, and Carlos A. Go Thong and Company. -On July 18, 1959, CBA was extended
It appears that petitioners other than Januario T. Seno, who is their counsel, were members of the for another period of 2 years, counted
United Seamen's Union of the Philippines. Pursuant to a letter-request of the Union stating that they from October 4, 1959.
"had ceased to be members in good standing" and citing a closed shop clause in its bargaining -October 6 & 31, Philippine Labor
agreement1 with respondent Carlos A. Go Thong & Co., the latter dismissed said petitioners.
Federation (PLF) & General Maritime
Through counsel, petitioners requested that they be reinstated to their former positions and paid
Stevedores Union (GMSU)filed
their backwages, otherwise they would picket respondent's offices and vessels. The request was separate petitions for certification
denied on the ground that the dismissal was unavoidable under the terms of the collective election w/ CIR
bargaining agreement. Conciliation conferences in Regional Office of the Department of Labor in -United Seamen's Union opposed the
Cebu City failed to resolve the dispute, and on the morning of November 7, 1962 petitioners, said petitions
together with their sympathizers, picketed the vessels of respondent Carlos A. Go Thong & Co. On -January 17, 1961: United Seamen's
the same day petitioners filed a charge of unfair labor practice against the company and the
Union and Company renewed the CBA
United Seamen's Union of the Philippines before the Special Prosecutor of the Court of
Industrial Relations, Cebu Branch, which charge was docketed as Case No. 322-ULP-Cebu. w/ additional conditions for a period
of 5 years counted from execution
On November 8, 1962 the company filed a complaint (Civil Case No. R-7743) against the United -sometime before 1962, the
Seamen's Union of the Philippines and petitioners herein in the Court of First Instance of Cebu petitioners (as represented by Atty.
City, with the following prayer for relief: Seno) were removed from the union
(a) Ordering the defendants jointly and severally, to pay the plaintiff the amount of TEN THOUSAND as "members in good standing", and
PESOS (P10,000.00) and such additional amounts representing actual damages which may be
were thus terminated from the
proven during the trial of this case including attorney's fees occasioned to the plaintiff by reason of
company due to the closed shop
the illegal acts of the defendants.
(b) Ordering the defendants, their agents, and all persons acting on their behalf to forever refrain clause in the CBA between company
from molesting plaintiff's employees of its vessels, all actual and prospective passengers of its and United Seamen's Union
vessels, all actual and prospective shippers of its vessels, and all persons engaged in loading and -petitioners requested to be
unloading cargoes of plaintiff's vessels, and after trial to make said injuction permanent. reinstated and be paid their salaries
(c) That pending the final termination of this case a writ of preliminary injunction be issued to all the but Company denied said request.
defendants ordering them and all their agents and persons acting in their behalf to refrain from
-conciliation conferences in the
molesting, disturbing, or in any manner whatsoever hindering the free movements of all the
employees of plaintiff's vessels, all actual and prospective pasengers of plaintiff vessels, all actual Regional Office of DOLE (Cebu) failed
and prospective shippers of plaintiff's vessels, and all persons engaged in the loading and unloading so petitioners and their sympathizers
of cargoes of plaintiff's vessels. picketed the vessels of the company.
(d) That plaintiff be exempted from complying with that provisions of paragraph 1 of Article II of -November 7, 1962: petitioners filed
Annex "A" to the effect that the company hire all unlicensed members of the crew needed for the ULP charge against the company and
service through the hiring office of the union (USUP). the Union in CIR Cebu
(e) That the defendants be ordered to pay the costs of this action. -Company filed against United
Plaintiff further prays for such other reliefs which may be just, legal and equitable in view of the
premises. Seamen's Union of the Philippines and
petitioners in CFI Cebu for Actual
On the same day, petitioners through counsel appeared before respondent Judge and opposed the damages, and to enjoin the petitioners
issuance of the writ of preliminary injunction on the ground of lack of jurisdiction, alleging that the from molesting them and their
case involved a labor dispute and that a charge of unfair labor practice had already been filed with vessels, among others
the Court of Industrial Relations. They also requested that they be given until the next day, -Petitioners appeared before CFI Cebu
November 9, 1962, to file a memorandum of the matter, with citations of authorities. However, on
and opposed issuance of writ of
that same day respondent judge issued an order directing the issuance of a writ of
preliminary injunction, which reads: preliminary injunction on ground of
After hearing the arguments of all the parties, the Court is of the opinion and so holds that for the lack of jurisdiction (arguing that there
interest of all parties concerned and in order to maintain a status quo during the pendency of this is already a case for ULP in CIR)
action, a writ of preliminary injunction issue upon the filing of the plaintiff of a bond of P5,000.00, -On the same day, CFI Ordered the
which maybe increased or decreased as circumstances may afterward warrant duly approved by this issuance of a writ of preliminary
Honorable Court, directing all the defendants United Seamen's Union of the Philippines, Atty. injunction.
Januario T. Seno, and all the other defendants in this case, and all persons, agents and
-MR denied
sympathizers to refrain from molesting, disturbing, or in any manner whatsoever hindering the free
movements of all the employees of plaintiff's vessels, all actual and prospective shippers of plaintiff's -so petition for certiorari contesting
vessels, and all persons engaged in the loading and unloading of cargoes of plaintiff's vessels. the taking of CFI of cognizance of the
Let this case be called again for tomorrow, November 9, 1962, at 8:00 o'clock in the morning, to give case, arguing:
the defendants another opportunity to show cause if any, why the aforementioned writ of preliminary 1. That a labor dispute exists
injunction should be dissolved. 2. Dismissal constitutes ULP, being
an act of discrimination in
On November 9, 1962 petitioners moved to reconsider, but the motion was denied on November 13,
1962.
regard to hire or tenure of
employment
Petitioners have come to us contesting the jurisdiction of the lower court in taking cognizance of the (the closed shop agreement is
case (Civil Case No. R-7743). Pursuant to one of the prayers in the petition we issued a writ of null and void for being violative
preliminary injunction on December 2, 1962, ordering respondent Judge to desist from further of Sections 4(a)(1) and 4(a)(4) of
proceeding in the case and from enforcing the injunction he had issued. RA 875, inasmuch as the matter
of union representation was still
In support of the contention that the Industrial Court and not the Court of First Instance has exclusive
pending before the CIR at the
jurisdiction over the matters involved in Civil Case No. R-7743 petitioners claim: (1) that a labor
time said closed shop

jurisdiction over the matters involved in Civil Case No. R-7743 petitioners claim: (1) that a labor
dispute exists and (2) that their dismissal consitutes an unfair labor practice, being an act of time said closed shop
discrimination in regard to hire or tenure of employment. agreement was executed)
***
There is no question that a labor dispute arose when petitioners were dismissed from their HELD:
employment. Under Section 2(j) of Republic Act 875 a question involving tenure of employment is 1. There was a labor dispute (refer
included in the term "labor dispute." to RA 875, Sectionj ,2(j))
2. WON the dismissal constitutes
The main issue, however, is whether such dismissal constitutes an unfair labor practice so as to
bring the case under the jurisdiction of the Industrial Court. Sustaining the affirmative of the issue, ULP?
petitioners contend that the closed shop agreement between the United Seamen's Union of the The pendency of the petitions
Philippines and respondent company, on the strength of which petitioners were dismissed, is null for certification election did not
and void for being violative of Sections 4(a) (1) and 4(a) (4), of Republic Act 875, inasmuch as the bar or preclude the renewal of
matter of union representation of the employees was still pending before the Court of Industrial the CBA with the United
Relations at the time said closed shop agreement was executed.
Seamen's Union of the
Philippines
The following facts are pertinent to the resolution of the issue: On October 4, 1957 respondent
company entered into a collective bargaining agreement with the United Seamen's Union of the Rationale: Otherwise there
Philippines, effective for a period of two (2) years, and thereafter for another period of one (1) year would be a gap or interregnum
unless either party should notify the other in writing, not less than sixty (60) days prior to the expiry during which no agreement
date, of its intention and election to terminate the agreement as of the end of the current term. would govern, that is, from the
time the old collective
On July 18, 1959 said collective bargaining agreement was extended for another period of two (2) bargaining contract expired to
years, counted from October 4, 1959. the time the petition for
certification election is decided
On October 6 and 31, 1959 the Philippine Labor Federation and the General Maritime Stevedores and a new agreement entered
Union of the Philippines filed separate petitions for certification election with the Court of Industrial into with the Union that may be
Relations, to which the United Seamen's Union of the Philippines presented an opposition. On duly certified as the proper
January 17, 1961 respondent company and the United Seamen's Union of the Philippines renewed bargaining unit. Without any
their collective bargaining agreement, with additional conditions for a period of five (5) years counted agreement to govern the
from its execution.2 relations between labor and
management in the interim, the
We agree with respondent company that the pendency of the petitions for certification election did situation would well be
not bar or preclude the renewal of the collective bargaining agreement with the United Seamen's productive of confusion and
Union of the Philippines. 3Otherwise there would be a gap or interregnum during which no agreement result in breaches of the law by
would govern, that is, from the time the old collective bargaining contract expired to the time the either party (Victorias Milling
petition for certification election is decided and a new agreement entered into with the Union that Co. vs. Victorias-Manapla
may be duly certified as the proper bargaining unit. Without any agreement to govern the relations Workers Organization vs. Court
between labor and management in the interim, the situation would well be productive of confusion of Industrial Relations and Free
and result in breaches of the law by either party (Victorias Milling Co. vs. Victorias-Manapla Workers Visayan Workers, Nos.
Organization vs. Court of Industrial Relations and Free Visayan Workers, Nos. L-18467 & L-18470, L-18467 & L-18470, Sept. 30,
Sept. 30, 1963). The question may be asked: What would be the effect on the renewed bargaining 1963).
agreement if a union other than the one that executed it should be certified? In a similar case it has -what is the effect if the CBA is
been held that the union thus certified would have to respect the contract, but that it may bargain renewed but a new bargaining
with the management to shorten the life of the contract if it is too long (General Maritime Stevedores agent is certified: New
Union of the Philippines, et al., vs. South Sea Shipping Lines, et al., L-14689, July 26, 1960). bargaining agent would have to
Section 4 (a) of the Industrial Peace Act provides that it shall be unfair labor practice for an respect the contract, but the
employer: new bargaining agent may
(4) to discriminate in regard to hire or tenure of employment or any term or condition of employment bargain that its term be
to encourage or discourage membership in any labor organization: Provided, That nothing in this Act shortened (General Maritime
or in any other Act or statute of the Republic of the Philippines shall preclude an employer from Stevedores Union v. South Sea
making an agreement with a labor organization to require as a condition of employment membership Shipping Lines)
therein, if such labor organization is the representative of the employees as provided in section -SINCE CBA is still valid, and
twelve, but such agreement shall not cover members of any religious sects which prohibit affiliation the CBA contains a closed
of their members in any such labor organization. (As amended by Republic Act 3350 which took shop agreement, the dismissal
effect on June 17, 1961). of the petitioners is not ULP
The dismissal of petitioners was in compliance with an existing collective bargaining agreement, the
validity of which is sanctioned by the provision just quoted, and therefore does not constitute an
unfair labor practice exclusively cognizable by the Industrial Court.
Because of their dismissal petitioners picketed the vessels of respondent company. This gave rise to
the complaint in the Court of First Instance (Civil Case No. R-7743) to enforce the contract with the
United Seamen's Union of the Philippines, to recover damages, and at the same time to restrain
petitioners from "molesting, stopping, obstructing, and interfering with the free movements of the
employees of plaintiff's vessels and all its passengers, prospective and actual, as well as shippers,
prospective and actual, within the port of the City of Cebu." Actually, the intention of respondent
company in filing the action was to shift to the union the liabilities that arose by virtue of petitioners'
dismissal as provided in the renewed collective bargaining contract, particularly the first paragraph of
Article II, which states: ". . . provided, however, that the UNION shall assume all the responsibilities
and shall answer for any and all liabilities that may arise by virtue of such dismissal."
As the issue involved in the instant case, although arising from a labor dispute, does not refer to one
affecting an industry which is indispensable to the national interest and certified by the President to
the Industrial Court, nor to minimum wage under the Minimum Wage Law, or to hours of
employment under the Eight-Hour Labor Law, nor to an unfair labor practice, but seeks the
enforcement of a provision of the collective bargaining agreement, and to recover damages
occasioned by the alleged unlawful acts of petitioner, jurisdiction pertains to the ordinary courts and
not to the Industrial Court. (PAFLU, et al. vs. Tan & REMA, Inc., 99 Phil. 854; Dee Cho Lumber
Workers' Union vs. Dee Cho Lumber Co., 101 Phil. 417; Cebu Port Labor Union vs. State Marine
Corp., et al., 101 Phil. 468; Phil. Sugar Institute vs. CIR, G. R. No. L-13098, Oct. 29, 1959, and in
Elizalde Paint & Oil Factory vs. Bautista, G. R. No. L-15994, Nov. 23, 1960).
The remaining question to be resolved is whether or not the procedure followed by the lower court in
issuing the injunction is correct. In Associated Watchmen & Security Union vs. Union States Lines,
et al., (101 Phil. 896), it was held that if a labor dispute exists the provisions of the Magna Charta of
Labor (R.A. 875) should be strictly followed. The same ruling was laid down in PAFLU vs. TAN, et
al., supra, and in PAFLU vs. Barot, et al. (99 Phil. 1008). On the other hand, if no labor dispute exists

the court may issue an ordinary injunction in accordance with the Rules of Court. While the trial court
had jurisdiction to take cognizance of the case, the injunction issued by it was nevertheless void
because the procedure laid down by Section 9 (d) of R.A. 875 was not followed in its issuance. The
law provides that the testimony of witnesses in open court (with opportunity for cross-examination) in
support of the allegations of the complaint made under oath, and the testimony in opposition thereto,
if offered, should be heard and that a finding of fact by the court must be made, to the effect that
unlawful acts have been threatened and will be committed unless restrained; that substantial and
irreparable injury to complainant's property will follow; that as to each item or relief granted greater
injury will be inflicted upon complainant by the denial of relief than will be inflicted upon defendants
by the granting of relief; that complaint has no adequate remedy at law; and that public officers
charged with the duty to protect complainant's property are unable or unwilling to furnish adequate
protection. The instant case being an outgrowth of a labor dispute, the trial court cannot grant the
injunction merely under Section 6, Rule 60 of the Rules of Court (now Section 6, Rule 58), but must
follow what is provided for in R. A. 875 (Allied Free Workers' Union, et al. vs. Hon. Judge Segundo
Apostol, et al., 102 Phil. 292).
WHEREFORE, the order of the lower court dated November 8, 1962 is set aside and the case is
remanded to the court of origin for further proceedings. The preliminary injunction issued by this
Court is modified accordingly. No pronouncement as to costs.
Dizon, Bengzon, J.P., Zaldivar, Castro, Angeles and Fernando, JJ., concur.
Sanchez, J., concurs in the result.
Concepcion, C.J. and Reyes, J.B.L., J., are on leave.
Footnotes
1
"That the Company hire all unlicensed members of the crew needed for the service of the
Company through the hiring office of the Union and that membership in good standing with the
Union shall be a strict requirement as a condition of employment of all unlicensed members
employed by the said Company . . ."
"Upon written notification by the Union that an unlicensed member of the crew is no longer in good
standing with the UNION, the COMPANY shall immediately dismiss such crew member from
employment; provided, however, that the UNION shall assume all the responsibilities and shall
answer for any and all liabilities that may arise by virtue of such dismissal." [Paragraphs 1 and 2,
Article 11, Close Shop Agreement.]
2
The petitions for certification election were still pending when the collective bargaining agreement
was renewed, and also when respondents herein filed their answer to the instant petition
for certiorari.
3 Petitioners here were not members of either the Philippine Labor Federation or the General
Maritime Stevedores Union.
Pasted from <http://www.lawphil.net/judjuris/juri1967/nov1967/gr_l-20565_1967.html>

Lopez Sugar v. Federation of Free Workers (1990)
12:21 AM
LOPEZ SUGAR CORPORATION, petitioner,

vs.
FEDERATION OF FREE WORKERS, PHILIPPINE LABOR UNION ASSOCIATION (PLUA-
NACUSIP) and NATIONAL LABOR RELATIONS COMMISSION, respondents.
Sicangco, Diaz, Ortiz and Lapak for petitioner.
Reynaldo J. Gulmatico for private respondents.
FELICIANO, J.:
In this Petition, petitioner Lopez Sugar Corporation seeks reversal of the Decision dated 2 July 1986
of public respondent National labor Relations Commission ("NLRC") which affirmed the decision of
the Labor Arbiter dated 30 September 1983. The Labor Arbiter (a) had denied petitioner's application
to retrench some of its employees and (b) had ordered the reinstatement of twenty-seven (27)
employees and to pay them full backwages from the time of termination until actual reinstatement.
Petitioner, allegedly to prevent losses due to major economic problems, and exercising its privilege
under Article XI, Section 2 of its 1975-1977 Collective Bargaining Agreement ("CBA") entered into
between petitioner and private respondent Philippine Labor Union Association ("PLUA-NACUSIP"),
caused the retrenchment and retirement of a number of its employees.
Thus, on 3 January 1980, petitioner filed with the Bacolod District Office of the then Ministry of Labor
and Employment ("MOLE") a combined report on retirement and application for clearance to
retrench, dated 28 December 1979, 1 affecting eighty six (86) of its employees. This was docketed
as NLRC Case Ne. A-217-80. Of these eighty-six (86) employees, fifty-nine (59) were retired
effective 1 January 1980 and twenty-eight (27) were to be retrenched effective 16 January 1980 "in
order to prevent losses."
Also, on 3 January 1980, private respondent Federation of Free Workers ("FFW"), as the certified
bargaining agent of the rank-and-file employees of petitioner, filed with the Bacolod District Office of
the MOLE a complaint dated 27 December 1979 for unfair labor practices and recovery of union
dues docketed as NLRC Case No. A-198-80. In said complainant, FFW claimed that the
terminations undertaken by petitioner were violative of the security of tenure of its members and
were intended to "bust" the union and hence constituted an unfair labor practice. FFW claimed that
after the termination of the services of its members, petitioner advised 110 casuals to report to its
personnel office. FFW further argued that to justify retrenchment, serious business reverses must be
"actual, real and amply supported by sufficient and convincing evidence." FFW prayed for
reinstatement of its members who had been retired or retrenched.
Petitioner denied having hired casuals to replace those it had retired or retrenched. It explained that
the announcement calling for 110 workers to report to its personnel office was only for the purpose
of organizing a pool of extra workers which could be tapped whenever there were temporary
vacancies by reason of leaves of absence of regular workers.
On 22 January 1980, another report on retirement affecting an additional twenty-five (25) employees
effective 1 February 1980 was filed by petitioner. 2
On 3 March 1980, petitioner filed its Position Paper in NLRC Case No. A-217-80 contending that
certain economic factors jeopardizing its very existence rendered the dismissals necessary.
Petitioner explained:
As a business firm, the Applicant must earn [a] fair return of (sic) its investment. Its income is
generated from the sales of the Central's shares of sugar and molasses production. It has however
no control of the selling price of both products. It is of common knowledge that for the past years the
price of sugar has been very low. In order to survive, the Applicant has effected several forms of
cost reduction. Now that there is hope in the price of sugar the applicant is again faced with two
major economic problems, i.e., the stoppage of its railway operation and the spiralling cost of
production.
The Applicant was forced to stop its railway operation because the owners of the land upon which
the Applicant's railway lines traverse are no longer willing to allow the Applicant to make further use
of portions of their lands. . . .
The other economic problem that confronted the Applicant is the rising cost of labor, materials,
supplies, equipment, etc. These two major economic problems the rising cost of production and the
stoppage of its railway facilities, put together pose a very serious threat against the economic
survival of the Applicant. In view of this, the Applicant was constrained to touch on the last phase of

its cost reduction program which is the reduction of its workforce.
xxx xxx xxx
The Applicant as a business proposition must be allowed to earn income in order to survive. This is the
essence of private enterprise. Being plagued with two major economic problems, the applicant is not
expected to remain immobile. It has to react accordingly. As many other business firms have resorted to
reduction of force in view of the present economic crisis obtaining here and abroad, the applicant was
likewise compelled to do the same as a last alternative remedy for survival. 3
In a decision dated 30 September 1983, 4 the Labor Arbiter denied petitioner's application for
clearance to retrench its employees on the ground that for retrenchment to be valid, the employer's
losses must be serious, actual and real and must be amply supported by sufficient and convincing
evidence. The application to retire was also denied on the ground that petitioner's prerogative to so
retire its employees was granted by the 1975-77 collective bargaining agreement which agreement
had long ago expired. Petitioner was, therefore, ordered to reinstate twenty-seven retired or
retrenched employees represented by private respondent Philippine Labor Union Association
("PLUA") and FFW and to pay them full backwages from the time of termination until actual
reinstatement.
Both dissatisfied with the Labor Arbiter's decision, petitioner and respondent FFW appealed the case
to public respondent NLRC. On appeal, the NLRC, finding no justifiable reason for disturbing the
decision of the Labor Arbiter, affirmed that decision on 2 July 1986. 5
Hence, this Petition for certiorari making the following arguments:
1. That portions of the decision of public respondent NLRC dated July 2, 1986 affirming the decision
of Labor Arbiter Ethelwoldo Ovejera dated September 30, 1983 are contrary to law and
jurisprudence;
2. That said decision subject of this petition are in some respects not supported by evidence and
self-contradictory;
3. That said decision subject of this petition were rendered with grave abuse of discretion and in
excess of jurisdiction;
4. That the dismissals at bar are valid and based on justifiable
grounds. 6
Petitioner contends that the NLRC acted with grave abuse of discretion in denying its combined
report on retirement and application for clearance to retrench. Petitioner argues that under the law, it
has the right to reduce its workforce if made necessary by economic factors which would endanger
its existence, and that for retrenchment to be valid, it is not necessary that losses
be actually sustained. The existence of valid grounds to anticipate or expect losses would be
sufficient justification to enable the employer to take the necessary actions to prevent any threat to
its survival.
Upon the other hand the Solicitor General argued that the Decision rendered by the Labor Arbiter
and affirmed by the NLRC is supported by substantial evidence on record; that, therefore, no grave
abuse of discretion was committed by public respondent NLRC when it rendered that Decision.
Article 283 of the Labor Code provides:
Article 283. Closure of establishment and reduction of personnel. — The employer may also
terminate the employment of any employee due to the installation of labor saving devices,
redundancy, retrenchment to prevent losses or the closing or cessation of operation of the
establishment or undertaking unless the closing is for the purpose of cricumventing the provisions of
this Title, by serving a written notice on the workers and the Ministry of Labor and Employer at least
one (1) month before the intended date thereof. In case of termination due to the installation of labor
saving devices or redundancy, the worker affected thereby shall be entitled to a se pay equivalent to
at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is
higher. In case of retrenchment to prevent losses and in cases, of closures or cessation of
operations of establishment or undertaking not due to serious business losses or financial reverses,
the separation pay shall be equivalent to one (1) month pay or at least one half (1/2) month pay for
every year of service, whichever is higher. A fraction of at least six (6) months shall be considered
one (1) whole year. (Emphasis supplied)
In ts ordinary connotation, he phrase "to revent losses" means hat retrenchment or termination of the
services of some employees is authorized to be undertaken by the employer sometime before the
losses anticipated are actually sustained or realized. It is not, in other words, the intention of the
lawmaker to compel the employer to stay his hand and keep all his employees until sometime after
losses shall have in fact materialized ; 7 if such an intent were expressly written into the law, that law
may well be vulnerable to constitutional attack as taking property from one man to give to another.
This is simple enough.
At the other end of the spectrum, it seems equally clear that not every asserted possibility of loss is
sufficient legal warrant for reduction of personnel. In the nature of things, the possibility of incurring
losses is constantly present, in greater or lesser degree, in the carrying on of business operations,

losses is constantly present, in greater or lesser degree, in the carrying on of business operations,
since some, indeed many, of the factors which impact upon the profitability or viability of such
operations may be substantially outside the control of the employer. Thus, the difficult question is
determination of when, or under what circumstances, the employer becomes legally privileged to
retrench and reduce the number of his employees.
We consider it may be useful to sketch the general standards in terms of which the acts of petitioner
employer must be appraised. Firstly, the losses expected should be substantial and not merely de
minimis in extent. If the loss purportedly sought to be forestalled by retrenchment is clearly shown to
be insubstantial and inconsequential in character, the bona fide nature of the retrenchment would
appear to be seriously in question. Secondly, the substantial loss apprehended must be reasonably
imminent, as such imminence can be perceived objectively and in good faith by the employer. There
should, in other words, be a certain degree of urgency for the retrenchment, which is after all a
drastic recourse with serious consequences for the livelihood of the employees retired or otherwise
laid-off. Because of the consequential nature of retrenchment, it must, thirdly, be reasonably
necessary and likely to effectively prevent the expected losses. The employer should have taken
other measures prior or parallel to retrenchment to forestall losses, i.e., cut other costs than labor
costs. An employer who, for instance, lays off substantial numbers of workers while continuing to
dispense fat executive bonuses and perquisites or so-called "golden parachutes", can scarcely claim
to be retrenching in good faith to avoid losses. To impart operational meaning to the constitutional
policy of providing "full protection" to labor, the employer's prerogative to bring down labor costs by
retrenching must be exercised essentially as a measure of last resort, after less drastic means —
e.g., reduction of both management and rank-and-file bonuses and salaries, going on reduced time,
improving manufacturing efficiencies, trimming of marketing and advertising costs, etc. — have been
tried and found wanting.
Lastly, but certainly not the least important, alleged if already realized, and the expected imminent
losses sought to be forestalled, must be proved by sufficient and convincing evidence. The reason
for requiring this quantum of proof is readily apparent: any less exacting standard of proof would
render too easy the abuse of this ground for termination of services of employees. In Garcia v.
National Labor Relations Commissions, 8 the Court said:
. . . But it is essentially required that the alleged losses in business operations must be
prove[n] (National Federation of Labor Unions [NAFLU] vs. Ople, 143 SCRA 124
[1986]). Otherwise, said ground for termination would be susceptible to abuse by scheming
employers who might be merely feigning business losses or reverses in their business ventures in
order to ease out employees. (Emphasis supplied) 9
Whether or not an employer would imminently suffer serious or substantial losses for economic
reasons is essentially a question of fact for the Labor Arbiter and the NLRC to determine. In the
instant case, the Labor Arbiter found no sufficient and convincing evidence to sustain petitioner's
essential contention that it was acting in order to prevent substantial and serious losses. The Labor
Arbiter said:
There is no question that an employer may reduce its work force to prevent losses, however, these losses
must be serious, actual and real. In the instant case, even assuming arguendo that applicant company
was, in fact, surrounded by the major economic problems stated earlier, the question may be
asked — will it suffer serious losses as a result of the said economic problems? We find the answer to be
negative. We have scanned the records but failed to find evidence submitted to show that applicant
company would suffer serious business losses or reverses as a consequence of the alleged major
economic problems. In fact, applicant company asseverated that these problems only threatens its
survival, hence, it had to reduce its work force. Another thing, while applicant company was retrenching
its regular employees, it also hired the services of casuals. This militated its claim to reduce its work force
to set up cost reduction. It must be stated that settled is the rule that serious business losses or reverses
must be actual, real and amply supported by sufficient and convincing evidence. 10 (Emphasis supplied)
We are in principle bound by such findings in accordance with well-established jurisprudence that
the factual findings of labor administrative officials, if supported by substantial evidence, are entitled
not only to great respect but even to finality, 11 unless, indeed, petitioner is able to show that the
Labor Arbiter and the NLRC simply and arbitrarily disregarded evidence before them or had
misapprehended evidence of such a nature as to compel a contrary conclusion if properly
appreciated.
The submissions made by petitioner in this respect are basically that from the crop year 1975-1976
to the crop year 1980-981, the amount of cane deliveries made to petitioner Central was declining
and that the degree of utilization of the mill's capacity and the sugar recovery from the cane actually
processed, were similarly declining. 12 Petitioner also argued that the competition among the
existing sugar mills for the limited supply of sugar cane was lively and that such competition
resulted in petitioner having to close approximately — thirty-eight (38) of its railroad lines by the end
of 1979. 13According to the petitioner, the cost of producing one (1) picul of sugar during the same

of 1979. 13According to the petitioner, the cost of producing one (1) picul of sugar during the same
period (i.e., from crop year 1976-1977 to crop year 1979-1980) increased from P69.97 to P93.11.
The principal difficulty with petitioner's case as above presented was that no proof of actual declining
gross and net revenues was submitted. No audited financial statements showing the financial
condition of petitioner corporation during the above mentioned crop years were submitted. Since
financial statements audited by independent external auditors constitute the normal method of proof
of the profit and loss performance of a company, it is not easy to understand why petitioner should
have failed to submit such financial statements.
Moreover, while petitioner made passing reference to cost reduction measures it had allegedly
undertaken, it was, once more, a fairly conspicuous failure to specify the cost-reduction measures
actually undertaken in good faith before resorting to retrenchment. Upon the other hand, it appears
from the record that petitioner, after reducing its work force, advised 110 casual workers to register
with the company personnel officer as extra workers. Petitioner, as earlier noted, argued that it did
not actually hire casual workers but that it merely organize(d] a pool of "extra workers" from
whichworkers could be drawn whenever vacancies occurred by reason of regular workers going on
leave of absence. Both the Labor Arbiter and the NLRC did not accord much credit to petitioner's
explanation but petitioner has not shown that the Labor Arbiter and the NLRC were merely being
arbitrary and capricious in their evaluation. We note also that petitioner did not claim that the
retrenched and retired employees were brought into the "pool of extraworkers" rather than new
casual workers.
Petitioner next contends that the NLRC committed grave abuse of discretion in affirming the ruling of
the Labor Arbiter that the retirements effected by petitioner were na valid since the basis therefor,
i.e. Article XI Section 2 of the 1975-1977 CBA, had by then already expired and was thus no longer
enforceable or operative. 14 Article XI, 2 of the CBA provides:
2. Section 2. — Any employee may apply for after having rendered the of at least eighteen (18) year of
service to the COMPANY. The COMPANY, as a right , may retire any employee who has rendered twenty
(20) years of service, or has reached the age of sixty (60) years. Employees who are physically
incapacitated to continue to work in the COMPANY upon certification of the COMPANY Physician, shall
be entitled to a separation pay equivalent to the retirement benefits herein provided for that may have
accrued. The heirs or surviving legally married spouse of the deceased employee shall be granted by the
COMPANY the amount equivalent to the accrued retirement benefit of the deceased employee at the
time of his death." 15 (Emphasis supplied)
Petitioner argues that the CBA was "extended" not merely by implication, but by reciprocal acts — in
the sense that even after the CBA had expired, petitioner continued to give, and
the workers continued to receive, the benefits and exercise the prerogatives provided therein.
Under these circumstances, petitioner urges, the employees are estopped from denying the
extended effectivity of the CBA.
The Solicitor General, as well as private respondents, argue basically that petitioner's right to retire
its employees was coterminous with the life of the CBA.
On this point, we must find for petitioner. Although the CBA expired on 31 December 1977, it
continued to have legal effects as between the parties until a new CBA had been negotiated and
entered into. This proposition finds legal support in Article 253 of the Labor Code, which provides:
Article 253 — Duty to bargain collectively when there exists a collective bargaining agreement. —
When there is a collective bargaining agreement, the duty to bargain collectively shall also mean that
new agreement is reached by the parties. (Emphasis supplied)
Accordingly, in the instant case, despite the lapse of the formal effectivity of the CBA by virtue of its
own provisions, the law considered the same as continuing in force and effect until a new CBA shall
have been validly executed. Hence, petitioner acted within legal bounds when it decided to retire
several employees in accordance with the CBA. That the employees themselves similarly acted in
accordance with the CBA is plain from the record. Even after the expiration of the CBA, petitioner's
employees continued to receive the benefits and enjoy the privileges granted therein. They
continued to avail of vacation and sick leaves as computed in accordance with Articles VII and VIII of
the CBA. They also continued to avail of medical and dental aid under Article IX, death aid and
bereavement leave under Articles X and XIV, insurance coverage under Article XVI and housing
allowance under Article XVIII. Seventeen (17) employees even availed of Section XI (dealing with
retirement) when they voluntarily retired between 1 January 1978 and 31 December 1980 and
received retirement pay computed on the basis of Section 3 of the same article. If
the workers chose to avail of the CBA despite its expiration, equity — if not the law-dictates that the
employer should likewise be able to invoke the CBA.

employer should likewise be able to invoke the CBA.
The fact that several workers signed quitclaims will not by itself bar them from joining in the
complaint. Quitclaims executed by laborers are commonly frowned upon as contrary to public policy
and ineffective to bar claims for the full measure of the worker's legal rights. In AFP Mutual Benefit
Association, Inc. v. AFP-MBAI-EU, 16 the Court held:
In labor jurisprudence, it is well establish that quitclaims and/or complete releases executed by the
employees do not estop them from pursuing their claims arising from the unfair labor practice of the
employer. The basic reason for this is that such quitclaimants and/or complete releases are against
public policy and, therefore, null and void. The acceptance of termination pay does not divest a
laborer of the right to prosecute his employer for unfair labor practice acts. (Cariño vs. ACCFA,
L-19808, September 29, 1966, 18 SCRA 183; Philippine Sugar Institute vs. CIR, L-13475,
September 29, 1960, 109 Phil. 452; Mercury Drug Co. vs. CIR, L-23357, April 30, 1974, 56 SCRA
694, 704)
In the Cariño case, supra, the Supreme Court, speaking thru Justice Sanchez, said:
Acceptance of those benefits would not amount to estoppel. The reason is plain. Employer and
employee, obviously, do not stand on the same footing The employer drove the employee to the
wall. The latter must have to get hold of money. Because, out of job, he had to face the harsh
necessities of life. He thus found himself in no position to resist money proffered. His, then, is a case
of adherence, not of choice. One thing sure, however, is that petitioners did not relent their claim.
They pressed it. They are deemed not to have waived any of their rights. Renuntiatio non
praesumitur (Emphasis supplied)
We conclude that because the attempted retrenchment on the part of the petitioner was legally
ineffective, all retrenched employees should be reinstated and backwages paid them corresponding
to a period of three (3) years without qualification or deduction, in accordance with the three-year
rule laid down in a long line of cases. 17 In the case of employees who had received payments for
which they had executed quitclaims, the amount of such payments shall be deducted from the
backwages due to them. Where reinstatement is no longer possible because the positions they had
previously filled are no longer in existence, petitioner shall pay backwages plus, in lieu of
reinstatement, separation pay in the amount of one-month's pay for every year of service including
the three (3) year-period of putative service for which backwages will be paid. Upon the other hand,
we find valid the retirement of those employees who were retired by petitioner pursuant to the
applicable provisions of the CBA.
WHEREFORE, the Petition for Certiorari is partially GRANTED due course and the Decision dated 2
July 1986 of the public respondent NLRC is hereby MODIFIED to the extent that it had affirmed that
portion of the Decision of the Labor Arbiter dated 30 September 1983 ordering the reinstatement
judgment of employees who had been retired by petitioner under the applicable provisions of the
CBA. Except as so modified, the Decision of the NLRC is hereby AFFIRMED. No pronouncement as
to costs.
SO ORDERED.
Fernan (Chairman), Gutierrez, Jr., Bidin and Cortes, JJ., concur.
Footnotes
1 Rollo, pp. 38-39; Annexes "A" and "A-l" of Petition.
2 Id., pp. 40-41; Annexes "B" and "B-1" of the Petition.
3 Id., pp. 46-48; Annex "E" of Petition.
4 Id., pp. 86-100; Annex "J" of Petition.
5 Id., pp. 114-119; Annex "L" of Petition.
6 Id., p. 20.
7 Indino v. National Labor Relations Commission, et al., G.R. No. 80352, September 29, 1989.
8 153 SCRA 639 (1987); See also Camara Shoes v. Kapisanan ng Manggagawa sa Camara
Shoes,173 SCRA 127 (1989); and Indino v. National Labor Relation Commision, supra.
9 153 SCRA at 651.
10 Rollo, p. 98.
11 Mamerto v. Inciong, 118 SCRA 265 (1982); Atlas Consolidated Mining and Development Corp. v.
National Labor Relations Commission, 167 SCRA 758 (1988); Reyes v. Minister of Labor, 170
SCRA 134 (1989); Bristol Laboratories Employees Association-DFA, et al. v. National Labor
Relations Commission, et al., G.R. No. 87974, 2 July 1990.
12 In its Petition, petitioner alleged that:
1. Based on its sugar mills' rated capacity of 7,500 to 8,000 tons of cane per day, petitioner's
production figures were as follows:
Crop Year Cane Deliveries Rate of Degree Sugar Rate
(CY) inTons Increase Mill Recoveries Increase

(CY) inTons Increase Mill Recoveries Increase
(Decrease) Utili- in (Decrease)
zation Pisculs
1975-76 1,307,121,901 71.96% 2,047,291
1976-77 1,282,189,530 (1%) 70.80% 1,934,830 (5%)
1977-78 1,004,490,358 (21%) 55.56% 1,709,504 (11%)
1978-79 1,161,604.791 15% 64.25% 1,884,611 10%
1979-80 1,163,662,687 .0177% 64.26% 1,854,115 (1%)
1980-81 1,008,643,990 (13%) 55.64% 1,594,310 (14%)
These figures show that there was a continued decrease in production, both in cane deliveries and
in sugar recoveries from CY 1975-76 to CY 1977-78. While there were increase in cane deliveries in
CY 1978-79 and CY 1979-80, this was more because of Petitioner's increased trucking allowance
which proved to be too expensive But petitioner's studies projected that such increase were
temporary and would not hold, as tonnage of deliveries did fall in CY 1980-81 to a level only slightly
higher than those in CY 1977-78. (Rollo, p. 32)
13 Rollo, p. 33.
14 This CBA lapsed on 31 December 1977. The retirements, on the other hand, were made on 1
January 1980 and 1 February 1980.
15 Rollo, p. 143; Comment of the Solicitor General, p. 5.
16 97 SCRA 715 (1980).
17 Insular Life Assurance Co., Ltd. v. National Labor Relations Commission, 135 SCRA 697 (1985);
Lepanto Consolidated Mining Company v. Encarnacion, 136 SCRA 256 (1985); Panay Railways,
Inc. v. NLRC, 137 SCRA 480 (1985); Atlas Consolidated Mining and Development Corp. v. National
Labor Relations Commission, et al., 167 SCRA 758 (1988).

q=cache:1gt27mgc5UQJ:www.lawphil.net/judjuris/juri1990/aug1990/gr_75700_01_1990.html+Lopez+Sugar+v.
+Federation+of+Free+Workers+(1990)&cd=1&hl=en&ct=clnk&ie=UTF-8>

Meralco vs. Quisumbing
12:22 AM
MANILA ELECTRIC CO. v QUISUMBING (MEWA)

302 SCRA 173
MARTINEZ; JAN.27, 1999
NATURE
Petition for certiorari of the order of the Sec. of Labor (SoL)
FACTS
- MERALCO’s rank and file union, MEWA (Meralco Workers Assoc.), informed MERALCO of its intention to re-negotiate the terms
and conditions of their existing 1992-1997 CBA covering the remaining 2 years of said CBA starting from Dec. 1, 1995 to Nov. 30,
1997. MERALCO, w illing to re-negotiate, formed a CBA negotiating panel for the purpose. After MEWA submitted its proposal,
MERALCO presented a counter-proposal. The collective bargaining negotiations eventually proceeded, how ever, despite the series
of meetings betw een the negotiating panels of MERALCO and MEWA, the parties failed to arrive at terms and conditions acceptable
to both.
- MEWA filed a notice of strike w ith the NRC National Conciliation and Mediation Board (NCMB) on the grounds of bargaining
deadlock and unfair labor practices. The NCMB conducted a series of conciliation meetings but the parties failed to reach an
amicable settlement. MERALCO, faced w ith the imminence of a strike, filed a petition w ith the DOLE praying that the SoL assume
jurisdiction over the labor dispute and to enjoin the striking employees to go back to w ork. The SoL granted the petition and enjoined
the members of MEWA from committing any act that may exacerbate the situation.
- After the parties submitted their respective memoranda, the SoL resolved the labor dispute through an order dated Aug.19, 1996,
upon w hich MERALCO filed a MFR alleging that the SoL committed grave abuse of discretion amounting to lack or excess of
jurisdiction. MERALCO later filed a supplement to the MFR, alleging that the SoL did not properly appreciate the effect of the
aw arded wages and benefits on MERALCO’s financial viability. MEWA likew ise filed a motion asking the SoL to reconsider its Order
on the w age increase, leaves, decentralized filing of paternity and maternity leaves, bonuses, retirement benefits, optional
retirement, medical, dental and hospitalization benefits, short sw ing and payroll treatment. On its political demands, MEWA asked
the SoL to rule its proposal to institute a Code of Discipline for its members and the union’s representation in the administration of
the Pension Fund.
- On Dec. 28, 1996, the SoL issued an Order resolving the parties’ separate motions stating, among others, that the effectivity of the
agreement w as to be RETROACTIVE or from Dec. 1, 1995 to Nov. 30, 1997.
- Dissatisfied, MERALCO filed this petition contending that the SoL gravely abused his discretion.
ISSUE
WON the retroactive effectivity of the new CBA set by the SoL w as proper
HELD
NO. There is no sufficient legal ground on the justification for the retroactive application of the disputed CBA. The CBA should be
effective for a term of 2 years counted from Dec.28, 1996 (the date of the SoL’s disputed order) up to Dec.27, 1999.
Reasoning Under Art.253-A, the representation aspect of the CBA is to be for a term of 5 years w hile all other provisions of the
CBA shall be re-negotiated not later than 3 years after its execution. Any agreement on such other provisions of the CBA entered
into w ithin 6 months from the date of expiry of the term of such other provisions as fixed in such CBA shall retroact to the day
immediately follow ing such date. If such agreement is entered into beyond 6 months, the parties shall agree on the duration of the
effectivity thereof.
- INTERPRETATION: it is clear that the 5-year term requirement under Art.253-A is specific to the representation aspect. What the
law additionally requires is that a CBA must be re-negotiated w ithin 3 years after its execution. If no agreement is reached within
6 m onths from the expiry date of the 3 years that follow the CBA execution, the law expressly gives the parties - not
anybody else - the discretion to fix the effectivity of the agreement.
- The law does not specifically cover the situation w here no agreement has been reached w ith respect to the effectivity of the CBA
w ithin the 6 month period allow ed. In this eventuality, any provision of law should then apply, for the law abhors a vacuum. One
such provision is the principle of hold over, i.e., that in the absence of a new CBA, the parties must maintain the status quo and
must continue in full force and effect the terms and conditions of the existing agreement until a new agreement is reached. In this
manner, the law prevents the existence of a gap in the relationship betw een the collective bargaining parties. Another legal principle
that should apply is that in the absence of an agreement betw een the parties, then, an arbitrated CBA takes on the nature of any
judicial or quasi-judicial aw ard; it operates and may be executed only respectively unless there are legal justifications for its
retroactive application.
Disposition Petition GRANTED. Orders of public respondent SoL dated Aug.19, 1996 and Dec.28, 1996 are SET ASIDE.
Pasted from <file:///D:\5y,%201s\Labor%20Arb\COMPILED%20LABOR2-disini\LABOR%202%20COMPILED%20DIGEST.docx>

Manila Central Line vs. Manila Central Line Free Workers Union
(1998)
12:23 AM
MANILA CENTRAL LINE CORP. v MANILA CENTRAL LINE FREE WORKERS UNION
290 SCRA 690
MENDOZA; June 15, 1998
NATURE Petition for certiorari
FACTS
- This case arose out of a collective bargaining deadlock betw een petitioner and Manila Central Line Free Workers Union-National
Federation of Labor. The parties' collective bargaining agreement had expired on March 15, 1989. As the parties failed to reach a
new agreement, the union sought the aid of the National Conciliation and Mediation Board, but the deadlock remained unresolved.
- On February 9, 1990, the union filed a Petition for Compulsory Arbitration. At the initial hearing, the parties declared that
conciliation efforts before the NCMB had terminated and it w as their desire to submit the case for compulsory arbitration.
- On September 28, 1990, the labor arbiter rendered a decision embodying provisions for a new 5-year collective bargaining
agreement.
- Petitioner’s appeal w as denied by the NLRC. The NLRC also denied petitioner's motion for reconsideration.
ISSUE
WON the NLRC erred in affirming the Labor Arbiter's decision holding that the effectivity of the renegotiated CBA shall be retroactive
to March 15, 1989, the expiry date of the old CBA.
HELD YES
Reasoning
Art. 253-A refers to collective bargaining agreements entered into by the parties as a result of their mutual agreement. The CBA in
this case, on the other hand, is part of an arbitral aw ard. As such, it may be made retroactive to the date of expiration of the previous
agreement.
- St. Luke's M edical Center, Inc. v. Torres: The effectivity of the Order… must retroact to the date of the expiration of the previous
CBA, contrary to the position of petitioner. Article 253-A cannot be properly applied to herein case. As correctly stated by public
respondent, “anent the alleged lack of basis for the retroactivity provisions awarded, we would stress that the provision of law
invoked by the Hospital, Article 253-A of the Labor Code, speaks of agreements by and betw een the parties, and not arbitral
aw ards . . .” Therefore, in the absence of a specific provision of law prohibiting retroactivity of the effectivity of arbitral awards issued
by the Secretary of Labor pursuant to Article 263(g) of the Labor Code, such as herein involved, public respondent is deemed
vested w ith plenary and discretionary powers to determine the effectivity thereof.
- petitioner has not show n that the question of effectivity was not included in the general agreement of the parties to submit their
dispute for arbitration. To the contrary, as the order of the labor arbiter states, this question w as among those submitted for
arbitration by the parties:
As regards the "Effectivity and Duration" clause, the company proposes that the collective bargaining agreement shall take effect
only upon its signing and shall remain in full force and effect for a period of five years. The union proposes that the agreement shall
take effect retroactive to March 15, 1989, the expiration date of the old CBA.
- It is the observation of this Arbitrator that in almost subsequent CBAs, the effectivity of the renegotiated CBA, usually andmost
often is made effective retroactive to the date w hen the immediately proceeding CBA expires so as to give a semblance of
continuity.
Disposition the petition is DISMISSED for lack of merit.
G.R. No. 109383 June 15, 1998

MANILA CENTRAL LINE CORPORATION, petitioner,
vs.
MANILA CENTRAL LINE FREE WORKERS UNION-NATIONAL FEDERATION OF LABOR and
the NATIONAL LABOR RELATIONS COMMISSION, respondents.
MENDOZA, J.:
This is a petition for certiorari to set aside the resolution dated October 10, 1991 of the National
Labor Relations Commission in NLRC NCR Case No. 000977-90, dismissing the appeal of
petitioner Manila Central LineCorporation from the order of Labor Arbiter Donato G. Quinto, Jr. in
NLRC NCR Case No. 02-00813-90, as well as the resolution dated March 11, 1993 of the NLRC,
denying reconsideration.
This case arose out of a collective bargaining deadlock between petitioner and private
respondent ManilaCentral Line Free Workers Union-National Federation of Labor. The parties'
collective bargaining agreement had expired on March 15, 1989. As the parties failed to reach a new

collective bargaining agreement had expired on March 15, 1989. As the parties failed to reach a new
agreement, private respondent sought the aid of the National Conciliation and Mediation Board on
October 30, 1989, but the deadlock remained unresolved.
On February 9, 1990, private respondent filed a "Petition for Compulsory Arbitration" in the
Arbitration Branch for the National Capital Region of the National Labor Relations Commission. At
the initial hearing before the labor arbiter, the parties declared that conciliation efforts before the
NCMB had terminated and it was their desire to submit the case for compulsory arbitration.
Accordingly, they were required to submit their position papers and proposals, which they did, and in
which they indicated portions of their respective proposals to which they agree, leaving the rest for
arbitration. 1
On September 28, 1990, the labor arbiter rendered a decision embodying provisions for a new
collective bargaining agreement. The dispositive portion of his decision reads:
WHEREFORE, the petitioner UNION and the respondent COMPANY are directed to execute and
formalize their new five-year collective bargaining agreement (CBA) retroactive to the date of expiry
of the 1986-1989 CBA by adopting the provisions in the aforementioned text which incorporated
therein in the dispositions set forth by this Arbitrator within thirty (30) days from receipt of this
Decision.
SO ORDERED. 2
Petitioner appealed, but its appeal was denied by the NLRC in its questioned resolution of October
10, 1991. On March 11, 1993, the NLRC denied petitioner's motion for reconsideration. Hence, this
petition with the following assignment of errors:
a) The NLRC erred in affirming the Labor Arbiter's decision —
1. increasing the commission rate, the incentive pay, the salaries and wage of the fixed income
employees covered by the CBA;
2. granting P500.00 signing bonus to the complaint-appellee; and
3. holding that the effectivity of the renegotiated CBA shall be retroactive to March 15, 1989, the
expiry date of the old CBA.
b) There are serious errors in the findings of facts of the Labor Arbiter which were unqualified
affirmed by the NLRC and which justify the review by this Honorable SUPREME COURT;
c) The NLRC erred in upholding the jurisdiction of the Labor Arbiter; and
d) The NLRC erred in affirming the finalization of the CBA by the Labor Arbiter in disregard of the
provisions agreed upon by the parties.
The petition is without merit. We shall deal with these contentions in the order they are presented,
with the exception of the argument concerning the jurisdiction of the Labor Arbiter (par. (c)), which
we shall treat first since it raises a threshold question.
First. Despite the fact that it agreed with the union to submit their dispute to the labor arbiter for
arbitration, petitioner questions the jurisdiction of the labor arbiter to render the decision in question.
Petitioner contends that the policy of the law now is to encourage resort to conciliation and voluntary
arbitration as Art. 250 (e) of the Labor Code provides.
Indeed, the Labor Code formerly provided that if the parties in collective bargaining fail to reach an
agreement, the Bureau of Labor Relations should call them to conciliation meetings and, if its efforts
were not successful, certify the dispute to a labor arbiter for compulsory arbitration. 3 But this was
changed by R.A. No. 6715 which took effect on March 21, 1989. Art. 250(e) of the Labor Code now
provides that if efforts at conciliation fail, the Board shall "encourage the parties to submit their case
to a voluntary arbitrator." With specific reference to cases involving deadlocks in collective
bargaining, Art. 262 provides:
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.
This is what the parties did in this case. After the Board failed to resolve the bargaining deadlock
between the parties, the union filed a petition for compulsory arbitration in the Arbitration Branch of
the NLRC. Petitioner joined the petition and the case was submitted for decision. Although the
union's petition was for "compulsory arbitration," the subsequent agreement of petitioner to submit
the matter for arbitration in effect made the arbitration a voluntary one. The essence of voluntary
arbitration, after all, is that it is by agreement of the parties, rather than compulsion of law, that a
matter is submitted for arbitration. 4 It does not matter that the person chosen as arbitrator is a labor
arbiter who, under Art. 217 of the Labor Code, is charged with the compulsory arbitration of certain
labor cases. There is nothing in the law that prohibits these labor arbiters from also acting
as voluntary arbitrators as long as the parties agree to have him hear and decide their dispute.

as voluntary arbitrators as long as the parties agree to have him hear and decide their dispute.
Moreover, petitioner must be deemed to be estopped from questioning the authority of Labor Arbiter
Donato G. Quinto, Jr. to act as voluntary arbitrator and render a decision in this case. Petitioner
agreed, together with theunion, to refer their dispute for arbitration to him. It was only after a
decision was rendered that petitioner raised the question of lack of jurisdiction. Even the, petitioner
did so only for the first time in a "supplemental memorandum of appeal" to the NLRC. 5 As the
NLRC, through Commissioner Romeo B. Putong, held, it was too late in the day for petitioner to do
this. 6
Indeed, it is inconsistent for petitioner to contend, on the one hand, that this case should have been
resolved through voluntary arbitration and, on the other, to follow the procedure for compulsory
arbitration by appealing the decision of the labor arbiter to the NLRC and subsequently questioning
the latter's decision through this special civil action of certiorari. Pursuant to our decision in Luzon
Development Bank v. Luzon Development Bank Employees Association, 7 this case, considered as a
special civil action for certiorari to set aside the decision of a voluntary arbitrator, should have been
referred, as a matter of policy, to the Court of Appeals. However, it was not evident in the beginning
from a cursory consideration of the pleadings that what actually took place in the labor agency was a
proceeding for voluntary arbitration. Accordingly, so as not to delay the disposition of this case, we
have thought on balance that this case should be retained and decided on the merits.
Second. In par. (a)(1) and par. (b) of its assignment of errors, petitioner questions factual findings of
the labor arbiter and the NLRC. Such findings are generally held to be binding, and even final, so
long as they are substantially supported by evidence in the record of the case. 8 This is specially so
where, as here, the agency and a subordinate one which heard the case in the first instance are in
full agreement as to the facts. 9
The decisions of both the NLRC and the labor arbiter contain an exhaustive discussion of the issues,
belying petitioner's claim that they did not fully consider the evidence and appreciate what it claims
are the "dire economics straits" it is in. This is evident from the following portion of the labor arbiter's
order dated September 28, 1990, which the NLRC adopted:
From the foregoing allegations of the parties and as expound (sic), discussed and/or argued by them
in their respective position paper, the disagreement, or deadlock, as we say it, focus (sic) and
centers on the so called "economic issues" particularly on the provisions on Salaries and Wages.
Petitioner-Union proposed that the commission for drivers, conductors and conductresses shall be
10% and 8%, respectively, of their gross collections. In addition, as incentive pay, it proposed that
drivers, conductors and conductresses shall be entitled to incentive pay as follows: (a) For a quota of
P2,600.00, the incentive should be P40.00; (b) for a quota of P2,875.00, the incentive should be
P50.00, and (c) for a quota of P3,155.00 the incentive pay should be P60.00.
Further, petitioner-Union, insofar as the "fixed income employees" are concerned, they proposed
that they should be granted a salary/wage increase as follows: (a) effective March 15, 1989 —
P12.00; (b) Effective March 15, 1990 — P10.00; and (c) effective March 15, 1991 — P8.00.
Respondent, on the other hand, proposes that the commission for drivers and conductor/tresses
shall be 8.5% and 6.5% of their gross collections, respectively. And in addition, these drivers and
conductor/tresses shall be entitled to an incentive pay based on the following quota, to wit: (a) for
quota of P3,276.00, the incentive pay is P35.00; (b) for quota of P3,635.00, it is P45.00; and for
quota of P3,994.00, it is P55.00. Respondent management has no proposal insofar as grant of
increase/s to fixed income employees' subject of the bargaining unit.
As noted at present under the old CBA, the commission being paid to drivers and conductor/tresses
is 8% and 6%, respectively. During and in the negotiation, respondent proposes to raise this rate
by .5% thus making it 8.5 and 6.5 respectively. Respondent in proposing an increase of .5% justifies
the same by saying that such is only what it can afford as it had been incurring financial losses as
shown by Financial Statement it submitted in evidence. This was rejected by the union which
proposes that the rate of the commission be raised to 10% and 8% respectively, from 8% and 6%, or
an increase by 2%, respectively. The union debunked the claim of the respondent-company that it
had been financially suffering and had claim (sic) that it had earned profit in all the years that it had
been under operation.
A look at the parties' proposal and counter-proposal shows that the union was demanding that the
rate be increased to 10% and 8% from the old rate of 8% and 6% or an increase of 2%, while that of
the company effectively increased the rate by .5% to make the rate at 8.5% and 6.5%. From this, it
appears that the disagreement lies on how much would the increase in the rate be. As appearing
theunion was asking for an increase equivalent to at least 25% for the drivers and at least 33% for
the conductor/tresses, while that which proposed (sic) by the company shows an increase of at least
6% and 8% respectively. The difference between the parties proposal and counter-proposal is at

6% and 8% respectively. The difference between the parties proposal and counter-proposal is at
least 19% and 25%, respectively. With this disagreement in this difference, it is thought of to be
practical and reasonable to meet at the middle of the difference in the rate by dividing the same into
two. Hence, the increase in the rate should be from the present 8% and 6% to 8.75% and 6.75%.
However, in order to make the increase realistic it is opined that it should be rounded off to the
nearest full number that is to 9% and 7%, respectively.
As regards the incentive pay, the following appears:

OLD CBA RESPONDENT'S PROPOSAL UNION'S PROPOSAL
Quota Incentive Quota Incentive Quota Incentive
P2,800.00 P35.00 P3,276.00 P35.00 P2,600.00 P40.00
3,100.00 P45.00 3,635.00 P45.00 2,600.00 50.00
3,400.00 P55.00 3,994.00 P55.00 3,155.00 60.00
As can be gleaned from the above respondent raised the quota but maintained the rate for the
incentive pay, while the union lowers (sic) the quota and raises (sic) the rate for the incentive. To
the mind of this arbitrator, he deems it proper and fair for both parties, to adopt the quota as
proposed by the respondent and the rate for the incentive pay as proposed by the union. It is
believe (sic) that such is fair and reasonable because as appearing in the parties' proposal and
counter-proposal, it would seem that they are trying to out-wit each other. Hence, such would be as
follows:
Quota Rate of Incentive Pay
P3,276.00 P40.00
3,635.00 50.00
3,994.00 60.00
Another issue where the parties are in statements (sic) is the matter of increase in the salary and wages
of the fixed income employees covered by the CBA. The union proposes an increase of P12.00, P10.00
and P8.00 to be spread in the three-year period, while the company did not submit a proposal for an
increase claiming that it cannot afford to give any increase as it had suffered financial difficulty. However,
as already discussed earlier where it is found that respondent, as shown by its financial statement, is not
really in the verge of financial collapse, it is believed that it is reasonable and fair to the parties,
particularly to the union that increase would be mandated. However, we could not adopt in toto the
proposal of the union. Instead, we are to adopt the increase as provided under the old CBA , that is,
P6.00 for the first year, P5.00 for the second year and P4.00 for the third year. 10
Petitioner contends, however, that the labor arbiter has a duty to indicate in his order every relevant
proof necessary to show that the opposing party's evidence is superior to that of petitioner. This is
not so. The quantum of proof required in proceeding before administrative agencies is "substantial
evidence," not overwhelming or preponderant evidence. 11 The quoted portion of the labor arbiter's
order shows that the proposals of the parties as well as petitioner's order shows that the proposals of
the parties as well as petitioner's financial statements were carefully considered by him in arriving at
his judgment. As the Solicitor General states:
Nor did respondent NLRC overlook the protestations of the COMPANY that it is suffering from
"gargantuan economic trouble." This assertion, however, was sufficiently refuted by the UNION by
presenting proof that the COMPANY had acquired a bus terminal area in Tunasa. Moreover, the
COMPANY had just imported machines to recondition their old buses. Also, as can be seen in the
1992 Financial Statement of the COMPANY, it acquired new buses worth P2,400,000.00. These
facts verify the findings of the Labor Arbiter that the COMPANY is not on the verge of financial
collapse . . . Also, the COMPANY had offered an increase of .5% but in the same breath, it claims
that it can hardly maintain the commission rate of 8% and 6%. There is a contradiction of facts right
there and then, which considerably weakens its assertions.
The increase in commission rate will not really affect the income of the COMPANY. By their very
nature, commissions will only be given to the employees if the COMPANY receives income. They
are given in the form of incentives or encouragement so that employees would be inspired to put a
little more industry on their particular tasks. This is unlike salaries and wages which are fixed
amounts and which should be given to the employees regardless of whether the COMPANY is
making any collection or not. Therefore, the employees are merely asking a percentage of the
earnings of the COMPANY, which they, through their efforts, helped produce.
As regards the incentive pay increase, the COMPANY's financial position was also taken into
consideration. It appears that the COMPANY and the UNION were trying to outwit each other in their
respective proposals. Thus, the position adopted by the Labor Arbiter — increasing the quota and
the amount of incentive — is a middle ground which is fair to both parties.

the amount of incentive — is a middle ground which is fair to both parties.
The increase in salaries and wages was premised on the findings of the Labor Arbiter that the COMPANY
was not on the verge of financial collapse and that an increase would be mandated, particularly taking
into consideration the inflation or increase in the cost of living the subsequently years after the CBA was
finalized. In adopting the wage increase rates provided in the old CBA, the financial condition of the
COMPANY as well as the needs of the employees were taken into consideration. When conclusions of
the Labor Arbiter are sufficiently corroborated by the evidence on record, the same should be respected
by the appellant tribunals since he is in a better position to assess or evaluate the credibility of the
contending parties [CDCP Tollways Operation Employees and Workers Union v. NLRC, 211 SCRA
58) . . . . 12
Nor is the grant of a P500.00 "signing bonus" to employees unreasonable or arbitrary. The amount is
a modest sum, to be given by petitioner only once, in order to make employees finally agree to the
new CBA. In ordering payment of this amount, the labor arbiter acted in accordance with Art. 262-A
of the Labor Code which provides in part:
Procedures. — The Voluntary Arbitrator or panel of Voluntary Arbitrators shall have the power to
hold hearings, receive evidences and take whatever action is necessary to resolve the issue or
issues subject to the dispute, including efforts to effect a voluntary settlement between parties.
(emphasis added)
Third. Petitioner also contends that in ordering the new CBA to be effective on March 15, 1989, the
expiry date of the old CBA, the labor arbiter acted contrary to Art. 253-A of the Labor Code. This
provision states, among others, that:
Any agreement on such other provisions of the Collective Bargaining Agreement entered into within
six (6) months from the date of expiry of the term of such other provisions as fixed in such Collective
Bargaining Agreement, shall retroact to the day immediately following such date. If any such
agreement is entered into beyond six months, the parties shall agree on the duration of retroactivity
thereof. In case of a deadlock in the negotiation of the collective bargaining agreement, the parties
may exercise their rights under this Code.
Art. 253-A refers to collective bargaining agreements entered into by the parties as a result of their
mutual agreement. The CBA in this case, on the other hand, is part of an arbitral award. As such, it
may be made retroactive to the date of expiration of the previous agreement. As held In St. Luke's
Medical Center, Inc. v.Torres:
Finally, the effectivity of the Order of January 28, 1991, must retroact to the date of the expiration of
the previous CBA, contrary to the position of petitioner. Under the circumstances of the case, Article
253-A cannot be properly applied to herein case. As correctly stated by public respondent in his
assailed Order of April 12, 1991 dismissing petitioner's Motion for Reconsideration —
Anent the alleged lack of basis for the retroactivity provisions awarded, we would stress that the
provision of law invoked by the Hospital, Article 253-A of the Labor Code, speaks of agreements by
and between the parties, and not arbitral awards . . . (p. 818 Rollo).
Therefore, in the absence of a specific provision of law prohibiting retroactivity of the effectivity of arbitral
awards issued by the Secretary of Labor pursuant to Article 263(g) of the Labor Code, such as herein
involved, public respondent is deemed vested with plenary and discretionary powers to determine the
effectivity thereof. 13
Indeed, petitioner has not shown that the question of effectivity was not included in the general
agreement of the parties to submit their dispute for arbitration. To the contrary, as the order of the
labor arbiter states, this question was among those submitted for arbitration by the parties:
As regards the "Effectivity and Duration" clause, the company proposes that the collective bargaining
agreement shall take effect only upon its signing and shall remain in full force and effect for a period
of five years. The union proposes that the agreement shall take effect retroactive to March 15, 1989,
the expiration date of the old CBA.
And after an evaluation of the parties' respective contention and argument thereof, it is believed that of
theunion is fair and reasonable. It is the observation of this Arbitrator that in almost subsequent CBAs,
the effectivity of the renegotiated CBA, usually and most often is made effective retroactive to the date
when the immediately proceeding CBA expires so as to give a semblance of continuity. Hence, for this
particular case, it is believed that there is nothing wrong adopting the stand of the union, that is that this
CBA be made retroactive effective March 15, 1989. 14
Fourth. It is finally contended that the labor arbiter disregarded many provisions of the old CBA
which the parties had "retained, improved and agreed upon," with the result that "the CBA finalized
by the Honorable Labor Arbiter does not reflect the true intention of the parties." 15 Petitioner does
not specify, however, what provisions of the old CBA were disregarded by the labor arbiter.
Consequently, this allegation should simply be dismissed.
WHEREFORE, the petition is DISMISSED for lack of merit.
SO ORDERED.

WHEREFORE, the petition is DISMISSED for lack of merit.
SO ORDERED.
Regalado, Puno and Martinez, JJ., concur.
Melo, J., is on leave.
Footnotes
1 Rollo, pp. 29-31.
2 Id., p. 28.
3 Pres. Decree No. 1691, §3 (1980) and Pres. Decree No. 442, Art. 297 as originally numbered
(1974).
4 See Luzon Development Bank v. Luzon Development Bank Employees Ass'n. 249 SCRA 162
(1995); 2 C.A. AZUCENA, THE LABOR CODE 353 (1996).
5 Rollo, p. 39.
6 Id., pp. 39-40; M. Ramirez Industries vs. Secretary of Labor, G.R. No. 89894, Jan. 3, 1997; Stalt-
Nielsen Marine Services (Phils.) Inc. v. NLRC, 264 SCRA 307 (1996).
7 249 SCRA 162 (1995).
8 International Container Terminal Services, Inc. v. NLRC, 256 SCRA 124 (1996).
9 Belaunzaran v. NLRC, 265 SCRA 800 (1996).
10 Rollo, pp. 34-36.
11 Ynson v. Court of Appeals, 257 SCRA 411 (1996); RULES OF COURT, Rule 133, §5.
12 Rollo, pp. 95-98.
13 223 SCRA 779, 729-793 (1993); reiterated in Philippine Airlines, Inc. v. Confessor, 231 SCRA 41
(1994).
14 Rollo, pp. 38-39.
15 Id., p. 22.

q=cache:8uDXlJUrnCYJ:www.lawphil.net/judjuris/juri1998/jun1998/gr_109383_1998.html+Manila+Central+Line+vs.
+Manila+Central+Line+Free+Workers+Union+(1998)&cd=1&hl=en&ct=clnk&ie=UTF-8>

Sundower Development Corp vs. Drilon
12:30 AM
SUNDOWNER DEVELOPMENT CORP V DRILON

180 SCRA 14
GANCAYCO; December 6, 1989
NATURE
Petition for certiorari to review the orders of the Secretary of the Department of Labor and Employment
FACTS
- Hotel Mabuhay, Inc. leased the premises belonging to Santiago Syjuco, Inc. in Ermita, Manila.
- Due to non-payment of rentals, a case for ejectment w as filed by Syjuco against Mabuhay in the Metropolitan Trial Court of Manila.
Mabuhay offered to amicably settle the cam by surrendering the premises to Syjuco and to sell its assets and personal property to
any interested party.
- Syjuco offered the said premises for lease to Sundow ner.
- April 16, 1987 – The lease agreement w as finalized and w as agreed to commence on May 1, 1987 and to expire on April 30, 1992.
- May 4, 1987 - National Union of Workers in Hotel, Restaurant and Allied Services (NUWHRAIN for short) picketed the leased
premises, barricaded the entrance to the leased premises and denied petitioner's officers, employees and guests free access to and
egress from said premises. This prompted Sundow ner to w rite a letter of complaint to Syjuco.
- May 7, 1987 - A complaint for damages w ith preliminary injunction and/or temporary restraining order w as filed by Sundow ner. The
Executive Judge of the court issued a restraining order against respondent NUWHRAIN and its officers and members. NUWHRAIN
nevertheless maintained their strike but filed an answ er to the complaint.
- May 14, 1987 - An order w as issued by public respondent Secretary of Labor assuming jurisdiction over the labor dispute pursuant
to Article 263(g) of the Labor Code. It required the 91 striking employees to return to w ork and for Mabuhay to accept all returning
employees pending final determination of the issue of the absorption of the former employees of Mabuhay.
- Mabuhay submitted its position paper alleging:
- That it had sold all its assets and personal properties to Sundow ner and that there w as no sale or transfer of its shares
w hatsoever.
- Mabuhay completely ceased operation effective April 28,1987 and surrendered the premises to Sundow ner so that there
exists a legal and physical impossibility on its part to comply w ith the return to w ork order specifically on absorption.
- June 26, 1987 - In order to commence its operation, Sundow ner signed a tripartite agreement so the w orkers may lift their strike. In
this agreement among Sundow ner, NUWHRAIN and Mabuhay, the latter paid to respondent NUWHRAIN the sum of P638,000.00 in
addition to the first payment in the sum of P386,447.11, for w hich reason respondent NUWHRAIN agreed to lift the picket.
- July 13, 1987 - NUWHRAIN filed its position paper alleging connivance betw een Mabuhay and Sundow ner in selling the assets
and closing the hotel to escape its obligations to the employees of Mabuhay. NUWHRAIN prays that petitioner accept the w orkforce
of Mabuhay and pay backw ages from April 16, 1986 to April 28, 1987, the day Mabuhay stopped operation.
- January 20, 1988 – Drilon, as DOLE secretary, issued an order requiring Sundow ner to absorb the members of the union and to
pay backw ages from the time it started operations up to the date of the order.
- January 27, 1988 – Sundow ner filed a motion for reconsideration of the order, alleging that the theory of implied acceptance and
assumption of statutory w rong does not apply in the instant case and that there is no law requiring bona fide purchasers of the
assets of an on-going concern to absorb in its employ the employees of the latter.
- Drilon denied the MFR.
ISSUE
WON the purchaser of the assets of an employer corporation can be considered a successor employer of the latter's employees
HELD
NO
Ratio The rule is that unless expressly assumed, labor contracts such as employment contracts and collective bargaining
agreements are not enforceable against a transferee of an enterprise, labor contracts being in personam, thus binding only betw een
the parties.
Reasoning
- As a general rule, there is no law requiring a bona fide purchaser of assets of an on-going concern to absorb in its employ the
employees of the latter.
- How ever, although the purchaser of the assets or enterprise is not legally bound to absorb in its employ the employers of theseller
of such assets or enterprise, the parties are liable to the employees if the transaction betw een the parties is colored or clothed w ith
bad faith.
- In the case at bar, contrary to the claim of the public respondent that the transaction betw een petitioner and Mabuhay w as
attended w ith bad faith, the court finds no cogent basis for such contention. Thus, the absorption of the employees of Mabuhay may
not be imposed on petitioner.
- It is undisputed that w hen Mabuhay surrendered the leased premises to Syjuco and asked Syjuco to offer same to other lessees,it
w as Syjuco who found petitioner and persuaded petitioner to lease said premises. Mabuhay had nothing to do w ith the negotiation
and consummation of the lease contract betw een petitioner and Syjuco.
- In the tri-partite agreement that w as entered into by petitioner w ith respondents NUWHRAIN and Mabuhay, it is clearly stipulated
that immediately after the execution of the agreement, Mabuhay shall give a list of its members to Sundow ner that it desires to
recommend for employment so that the latter can consider them for employment, w ith no commitment w hatsoever on the part of
Sundow ner to hire them in the business that it w ill operate in the premises formerly occupied by the Hotel Mabuhay.
- There can be no implied acceptance of the employees of Mabuhay by petitioner and acceptance of statutory wrong as it is
expressly provided in the agreement that petitioner has no commitment or duty to absorb them.
- The court does not subscribe to the theory of Drilon that petitioner should have informed NUWHRAIN of its lease of the premises
and its purchase of the assets and personal properties of Mabuhay so that said employees could have taken steps to protect their
interest. The court finds no such duty on the part of petitioner and its failure to notify said employees cannot be an indicium of bad
faith.
- While it is true that petitioner is using the leased property for the same type of business as that of respondent Mabuhay, there can
be no continuity of the business operations of the predecessor employer by the successor employer as respondent Mabuhay had

be no continuity of the business operations of the predecessor employer by the successor employer as respondent Mabuhay had
not retained control of the business.
Disposition Petition granted. Orders reversed and set aside.
G.R. No. 82341 December 6, 1989

SUNDOWNER DEVELOPMENT CORPORATION, petitioner,
vs.
HON. FRANKLIN M. DRILON, in his capacity as Secretary of the Department of Labor and
Employment, NATIONAL UNION OF WORKERS IN HOTEL, RESTAURANT AND ALLIED
INDUSTRIES, (NUWHRAIN), HOTEL MABUHAY CHAPTER, THE CHAPTER OFFICERS AND
MEMBERS, HOTEL MABUHAY, INC. and MR. MARIANO PENANO, President of Hotel
Mabuhay, Inc., respondents.
Carmelita S. Bautista-Lozada for petitioner.
Paterno D. Menzon Law Office for private respondent NUWHRAIN.
GANCAYCO, J.:
The principal issue in this case is whether or not the purchaser of the assets of an employer
corporation can be considered a successor employer of the latter's employees.
Private respondent Hotel Mabuhay, Inc. (Mabuhay for short,) leased the premises belonging to
Santiago Syjuco, Inc. (Syjuco for short) located at 1430 A. Mabini St., Ermita, Manila. However, due
to non-payment of rentals, a case for ejectment was filed by Syjuco against Mabuhay in the
Metropolitan Trial Court of Manila. Mabuhay offered to amicably settle the case by surrendering the
premises to Syjuco and to sell its assets and personal property to any interested party.
Syjuco offered the said premises for lease to petitioner. The negotiation culminated with the
execution of the lease agreement on April 16, 1987 to commence on May 1, 1987 and to expire on
April 30,1992. 1 Mabuhay offered to sell its assets and personal properties in the premises to
petitioner to which petitioner agreed. A deed of assignment of said assets and personal properties
was executed by Mabuhay on April 29,1987 in favor of petitioner. 2
On same date Syjuco formally turned over the possession of the leased premises to petitioner who
actually took possession and occupied the same on May 1, 1987.
On May 4, 1987, respondent National Union of Workers in Hotel, Restaurant and Allied Services
(NUWHRAIN for short) picketed the leased premises, barricaded the entrance to the leased
premises and denied petitioner's officers, employees and guests free access to and egress from said
premises. Thus, petitioner wrote a letter-complaint to Syjuco.
A complaint for damages with preliminary injunction and/or temporary restraining order was filed by
petitioner on May 7, 1987 with the Regional Trial Court of Manila docketed as Civil Case No.
87-40436. On the same day, the Executive Judge of said court issued a restraining order against
respondent NUWHRAIN and its officers and members as prayed for in the petition. Nevertheless,
NUWHRAIN maintained their strike on the subject premises but filed an answer to the complaint.
On May 14, 1987, an order was issued by public respondent Secretary of Labor assuming
jurisdiction over the labor dispute pursuant to Article 263(g) of the Labor Code as amended and in
the interim, requiring all striking employees to return to work and for respondent Mabuhay to accept
all returning employees pending final determination of the issue of the absorption of the former
employees of Mabuhay. The parties were also directed to submit their respective position papers
within ten (10) days from receipt of the order.
On May 25, 1987, Mabuhay submitted its position paper alleging among others that it had sold all its
assets and personal properties to petitioner and that there was no sale or transfer of its shares
whatsoever and that Mabuhay completely ceased operation effective April 28,1987 and surrendered
the premises to petitioner so that there exists a legal and physical impossibility on its part to comply
with the return to work order specifically on absorption.
On June 26, 1987, petitioner in order to commence its operation, signed a tri-partite agreement so
the workers may lift their strike, by and among petitioner, respondents NUWHRAIN and Mabuhay
whereby the latter paid to respondent NUWHRAIN the sum of P 638,000.00 in addition to the first
payment in the sum of P 386,447.11, for which reason respondent NUWHRAIN agreed to lift the
picket . 3
Respondent NUWHRAIN on July 13, 1987 filed its position paper alleging connivance between
Mabuhay and petitioner in selling the assets and closing the hotel to escape its obligations to the
employees of Mabuhay and so it prays that petitioner accept the workforce of Mabuhay and pay

employees of Mabuhay and so it prays that petitioner accept the workforce of Mabuhay and pay
backwages from April 15,1986 to April 28,1987, the day Mabuhay stopped operation.
On the other hand, petitioner filed a "Partial Motion for Reconsideration and Position Paper," alleging
that it was denied due process; that there were serious errors in the findings of fact which would
cause grave and irreparable damage to its interest; as well as on questions of law. On January 20,
1988, the public respondent issued an order requiring petitioner to absorb the members of the union
and to pay backwages from the time it started operations up to the date of the order. 4
Petitioner filed on January 27,1988 a motion for reconsideration of the aforesaid order alleging that
the theory of implied acceptance and assumption of statutory wrong does not apply in the instant
case; that the prevailing doctrine that there is no law requiring bona fide purchasers of the assets of
an on-going concern to absorb in its employ the employees of the latter should be applied in this
case; that the order for absorption of the employees of Mabuhay as well as the payment of their
backwages is contrary to law. Respondent NUWHRAIN also filed a motion for clarification of the
aforesaid order.
On March 8, 1988, the public respondent denied said motion for reconsideration and motion for
clarification for lack of merit.
Hence, this petition for review by certiorari with prayer for preliminary injunction and/or temporary
restraining order filed by petitioner in this Court. Petitioner presents seven issues for resolution
which all revolve about the singular issue of whether or not under the circumstances of this case the
petitioner may be compelled to absorb the employees of respondent Mabuhay.
On March 23, 1988, this Court, without giving due course to the petition, required respondents to
comment thereon within ten (10) days from notice and issued a temporary restraining order enjoining
public respondent or his duly authorized representatives from executing and implementing the
orders dated January 20, 1988 and March 8, 1988.
The petition is impressed with merit.
The rule is that unless expressly assumed, labor contracts such as employment contracts and
collective bargaining agreements are not enforceable against a transferee of an enterprise, labor
contracts being in personam, thus binding only between the parties .5 A labor contract merely
creates an action in personally and does not create any real right which should be respected by third
parties. This conclusion draws its force from the right of an employer to select his employees and to
decide when to engage them as protected under our Constitution, and the same can only be
restricted by law through the exercise of the police power. 6
As a general rule, there is no law requiring a bona fide purchaser of assets of an on-going concern
to absorb in its employ the employees of the latter. 7
However, although the purchaser of the assets or enterprise is not legally bound to absorb in its
employ the employers of the seller of such assets or enterprise, the parties are liable to the
employees if the transaction between the parties is colored or clothed with bad faith. 8
In the case at bar, contrary to the claim of the public respondent that the transaction between
petitioner and Mabuhay was attended with bad faith, the court finds no cogent basis for such
contention. Thus, the absorption of the employees of Mabuhay may not be imposed on petitioner.
It is undisputed that when Mabuhay surrendered the leased premises to Syjuco and asked Syjuco to
offer same to other lessees it was Syjuco who found petitioner and persuaded petitioner to lease
said premises. Mabuhay had nothing to do with the negotiation and consummation of the lease
contract between petitioner and Syjuco.
It was only when Mabuhay offered to sell its assets and personal properties in the premises to
petitioner that they came to deal with each other. It appears that petitioner agreed to purchase said
assets of respondent Mabuhay to enable Mabuhay to pay its obligations to its striking employees
and to Syjuco. Indeed, in the deed of assignment that was executed by Mabuhay in favor of
petitioner on April 14, 1 987 for and in consideration of P2,500,000.00, it is specifically provided
therein that the same is "purely for and in consideration of the sale/transfer and assignment of the
personal properties and assets of Hotel Mabuhay, Inc. listed . . . " and "in no way involves any
assumption or undertaking on the part of Second Party (petitioner) of any debts or liabilities
whatsoever of Hotel Mabuhay, Inc." 9 The liabilities alluded to in this agreement should be
interpreted to mean not only any monetary liability of Mabuhay but any other liability or obligation
arising from the operation of its business including its liability to its employees.

Moreover, in the tripartite agreement that was entered into by petitioner with respondents
NUWHRAIN and Mabuhay, it is clearly stipulated as follows:
8. That, immediately after the execution of this Agreement, the FIRST PARTY shall give a list of its
members to the THIRD PARTY that it desires to recommend for employment so that the latter can
consider them for employment, with no commitment whatsoever on the part of the THIRD PARTY to hire
them in the business that it will operate in the premises formerly occupied by the Hotel Mabuhay; 10
From the foregoing, it is clear that petitioner has no liability whatsoever to the employees of
Mabuhay And its responsibility if at all, is only to consider them for re-employment in the operation of
the business in the same premises. There can be no implied acceptance of the employees of
Mabuhay by petitioner and acceptance of statutory wrong as it is expressly provided in the
agreement that petitioner has no commitment or duty to absorb them.
Moreover, the court does not subscribe to the theory of public respondent that petitioner should have
informed NUWHRAIN of its lease of the premises and its purchase of the assets and personal
properties of Mabuhay therein so that said employees could have taken steps to protect their
interest. The court finds no such duty on the part of petitioner and its failure to notify said employees
cannot be an indicium of bad faith.
Much less is there any evidence that petitioner and respondent Mabuhay are joint tortfeasors as
found by public respondent. While it is true that petitioner is using the leased property for the same
type of business as that of respondent Mabuhay, there can be no continuity of the business
operations of the predecessor employer by the successor employer as respondent Mabuhay had not
retained control of the business. Petitioner is a corporation entirely different from Mabuhay. It has no
controlling interest whatever in respondent Mabuhay. Petitioner and Mabuhay have no privity and
are strangers to each other.
What is obvious is that the petitioner, by purchasing the assets of respondent Mabuhay in the hotel
premises, enabled Mabuhay to pay its obligations to its employees. There being no employer-
employee relationship between the petitioner and the Mabuhay employees, the petition must fail.
Petitioner can not be compelled to absorb the employees of Mabuhay and to pay them backwages.
WHEREFORE, the petition is GRANTED and the questioned orders of public respondent Secretary
of Labor and Employment dated January 20, 1988 and March 8, 1988 are reversed and set aside.
The restraining order that this Court issued on March 20,1988 is hereby made permanent. No
pronouncement as to costs.
SO ORDERED.
Narvasa, Cruz, Griño-Aquino and Medialdea, JJ., concur.
Footnotes
1 Annex B to petition.
2 Annex C to petition.
3 Annex K to petition.
4 Annex N to petition.
5 Fernando vs. Angat Labor Union, 5 SCRA 248, 251 (1962).
6 Visayan Transportation Co., Inc. vs. Java, 93 Phil. 962, 967-968 (1953).
7 MDII Supervisors & Confidential Employees Association vs. Presidential Assistant on Legal affairs,
79 SCRA 40 (1977).
8 Majestic and Republic Theaters Employees' Association vs. CIR, 4 SCRA 457, 460 (1962); Cruz
vs. PAFLU, 42 SCRA 68, 77-78 (1971).
9 Annex C to petition, page 27, Rollo.
10 Annex K to petition; page 54, Rollo.

Manlimos vs. NLRC (1995)
12:30 AM
MANLIMOS V NLRC (SUPER MAHOGANY PLYWOOD CORPORATION/ ALBERT GO)

242 SCRA 145
DAVIDE; March 21, 1995
FACTS
- The petitioners w ere among the regular employees of the Super Mahogany Plyw ood Corporation
- A new ow ner/management group acquired complete ow nership of the corporation. The petitioners w ere advised of
such change of ow nership; however, the petitioners continued to w ork for the new owner and w ere considered
terminated, w ith their conformity, only w hen they received their separation pay, 13th month pay, and all other benefits
due them.
- Each of them then executed a Release and Waiver w hich they acknow ledged before the Hearing Officer of the
Butuan City District Office of the DOLE
- The new ow ner caused the publication of a notice for the hiring of w orkers, indicating therein w ho of the separated
employees could be accepted on probationary basis. The petitioners then filed their applications for employment.
Except for Rosario Cuarto, they w ere hired on probationary basis for six months as patchers or tapers, but w ere
compensated on piece-rate or task basis.
- For their alleged absence w ithout leave, Perla Cumpay and Virginia Etic w ere considered, to have abandoned their
w ork. The rest w ere dismissed because they allegedly committed acts prejudicial to the interest of the new
management.
- Petitioners then filed against the respondent a complaint.
- The petitioners maintained that they remained regular employees regardless of the change of management and
their execution of the Release and Waiver.
- Respondent contended that the petitioners w ere deemed legally terminated from their previous employment; that
the new ow ner was well within its legal right or prerogative in considering as terminated the petitioners'
probationary/temporary appointment; and that the petitioners w ere not illegally dismissed; hence, they are not entitled
to the reliefs prayed for.
- Labor Arbiter ruled for the petitioners. The Labor Arbiter, how ever, ruled that there w as no "cessation of operations
w hich would lead to the dismissal of the employees."
- Respondent appealed to the NLRC w hich reversed the judgment of the Labor Arbiter, subject, how ever, to
recomputation based on the actual services of the petitioners under the new ow ner up to the actual date of their
separation from the service. It found that the change of ow nership in this case w as made in good faith since there
w as no evidence on record that "the former ow ners conspired with the new owners to insulate the former
management of any liability to its w orkers."
- Their motion to reconsider the resolution having been denied by the NLRC, the petitioners filed a special civil action
for certiorari.
ISSUE
WON the NLRC acted w ith grave abuse of discretion w hen it reversed the decision of the Labor Arbiter.
HELD
NO.
- There w as only a change of ow nership of Super Mahogany Plyw ood Corporation w hich resulted in a change of
ow nership. In short, the corporation itself, as a distinct and separate juridical entity, continues to exist. The issue of
w hether there was a closing or cessation of business operations which could have operated as just cause for the
termination of employment w as not material.
- The change in ow nership of the management w as done bona fide and the petitioners did not for any moment before
the filing of their complaints raise any doubt on the motive for the change. On the contrary, upon being informed
thereof and of their eventual termination from employment, they freely and voluntarily accepted their separation pay
and other benefits and individually executed the Release or Waiver w hich they acknow ledged before no less than a
hearing officer of the DOLE.
- A change of ow nership in a business concern is not proscribed by law .
- Central Azaucarera del Danao vs. CA: It is a principle w ell-recognized, that it is w ithin the employer's legitimate
sphere of management control of the business to adopt economic policies or make some changes or adjustments in
their organization or operations that w ould insure profit to itself or protect the investment of its stockholders. As in the
exercise of such management prerogative, the employer may merge or consolidate its business w ith another, or sell
or dispose all or substantially all of its assets and properties w hich may bring about the dismissal or termination of its
employees in the process. Such dismissal or termination should not how ever be interpreted in such a manner as to
permit the employer to escape payment of termination pay. For such a situation is not envisioned in the law . It strikes
at the very concept of social justice.
- In a number of cases on this point, the rule has been laid dow n that the sale or disposition must be motivated by
good faith as an element of exemption from liability.
- Indeed, an innocent transferee of a business establishment has no liability to the employees of the transferor to
continue employing them. Nor is the transferee liable for past unfair labor practices of the previous owner, except,
when the liability therefor is assumed by the new employer under the contract of sale, or when liability arises because
of the new owner's participation in thwarting or defeating the rights of the employees.
- Where such transfer of ownership is in good faith, the transferee is under no legal duty to absorb the transferor's
employees as there is no law compelling such absorption. The most that the transferee may do, for reasons of public
policy and social justice, is to give preference to the qualified separated employees in the filling of vacancies in the
facilities of the purchaser.
- Since the petitioners w ere effectively separated from w ork due to a bona fide change of ow nership and they w ere
accordingly paid their separation pay, w hich they freely and voluntarily accepted, the private respondent corporation
w as under no obligation to employ them; it may, how ever, give them preference in the hiring. The private respondent

w as under no obligation to employ them; it may, how ever, give them preference in the hiring. The private respondent
in fact hired, but on probationary basis, all the petitioners, except Rosario Cuarto. The non-hiring of Cuarto w as
legally permissible.
Disposition Petition w aspartly GRANTED. The challenged resolutions of NLRC w ere MODIFIED; respondent w as
ordered to pay petitioners Perla Cumpay and Virginia Etic their backw ages up to the expiration of their probationary
employment contracts.
Pasted from <file:///D:\5y,%201s\Labor%20Arb\COMPILED%20LABOR2-disini\LABOR%202%20COMPILED%

20DIGEST.docx>
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 113337 March 2, 1995

RONALD MANLIMOS, FROILAN PAGALAN, MERLITA DUHAY LUNGSOD,
ELIZABETH ANDAGAN, DORIS SERDAN, LEONORA BIBIANO, PERLA CUMPAY,
VIRGINIA ETIC, REMEGIA NOEL, ROSARIO CUARTO, RONALD BOOC, JAIME
TIMBAL, GERMAN GISTA, FEDERICO AMPER, FRANCISCO EVALE, and RENANTE
YACAPIN, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and SUPER MAHOGANY PLYWOOD
CORPORATION/ALBERT GO, respondents.
DAVIDE, JR., J.:

This is a special civil action for certiorari under Rule 65 of the Rules of Court to set aside,
for having been rendered with grave abuse of discretion, the resolutions of 2 August
1993 1 and 14 October 1993 2 of public respondent National Labor Relations Commission
(NLRC) in NLRC CA No. M-001378-93. The 2 August 1993 resolution reversed the
decision of Labor Arbiter Marissa Macaraig-Guillen of 30 April 1993 3 which ordered
private respondent Super Mahogany Plywood Corporation/Albert Go to reinstate the
petitioners to their positions without loss of seniority rights and privileges and to pay them
their back wages, 13th month pay, service incentive leave pay, and attorney's fees, while
the 14 October 1993 resolution denied the motion to reconsider the 2 August 1993
resolution.
After the private respondent and the public respondent, through the Office of the Solicitor
General, had filed their separate comments and the petitioners, their consolidated reply
to the comments, this Court resolved to give due cause to the petition.
The petitioners were among the regular employees of the Super Mahogany Plywood
Corporation, a domestic corporation organized in 1988 and based in Butuan City. They
had been hired as patchers, taper-graders, and receivers-dryers. On 1 September 1991,
a new owner/management group headed by Alfredo Roxas acquired complete ownership
of the corporation. The petitioners were advised of such change of ownership;
however, the petitioners continued to work for the new owner and were considered
terminated, with their conformity, only as of December 1991 when they received
their separation pay, 13th month pay, and all other benefits due them computed as
of the said month. Each of them then executed on 17 December 1991 a Release and
Waiver which they acknowledged before Atty. Nolasco Discipulo, Hearing Officer of the
Butuan City District Office of the Department of Labor and Employment (DOLE).
On 27 December 1991, the new owner caused the publication of a notice for the hiring of
workers, indicating therein who of the separated employees could be accepted on
probationary basis. The petitioners then filed their applications for employment. Except
for Rosario Cuarto, they were hired on probationary basis for six months as patchers or
tapers, but were compensated on piece-rate or task basis.
For their alleged absence without leave, Perla Cumpay and Virginia Etic were
considered, as of 4 May 1992, to have abandoned their work. The rest were
dismissed on 13 June 1992 because they allegedly committed acts prejudicial to

dismissed on 13 June 1992 because they allegedly committed acts prejudicial to
the interest of the new management which consisted of their "including unrepaired
veneers in their reported productions on output as well as untaped corestock or
whole sheets in their supposed taped veneers/corestock." However, upon their
appeal, the effectivity of such termination was deferred to 20 June 1992. 4
Petitioners Ronald Booc, Jaime Timbal, German Gista, Federico Amper, Francisco
Evale, and Renante Yacapin then filed against the private respondent with the Sub -
Regional Arbitration Branch No. X of the NLRC in Butuan City a complaint (NLRC-SRAB
10-07-00104-92) for "non-payment of wages, underpayment of wages, incentive
leave pay, non-payment of holiday pay, overtime pay, 13th month pay, separation
pay, reinstatement with back wages, illegal termination and damages."
Petitioners Ronald Manlimos, Froilan Pagalan, Merlita Duhay Lungsod, Elizabeth

Andagan, Doris Serdan, Leonora Bibiano, Perla Cumpay, Virginia Etic, Remegia Noel,
and Rosario Cuarto also filed against the private respondent with the same office a
complaint (NLRC Case No. SRAB-10-08-00124-92) for "illegal termination; reinstatement
with back wages; non-payment of wages; underpayment of wages; non-payment of
incentive leave pay, overtime pay, 13th month pay; and damages."
Both complaints were later amended and consolidated. 5
The private respondent answered the amended complaints 6 and thereafter the parties
submitted their position papers. 7
The petitioners maintained that they remained regular employees regardless of the
change of management in September 1991 and their execution of the Release and
Waiver. They argue that being a corporation, the private respondent's juridical personality
was unaffected even if ownership of its shares of stock changed hands. Their signing of
the Release and Waiver was of no moment not only because the consideration was
woefully inadequate, but also because employees who receive their separation pay are
not barred from contesting the legality of their dismissal and quit claims executed by
laborers are frowned upon for being contrary to public policy.
On the other hand, the private respondent contended that the petitioners were deemed
legally terminated from their previous employment as evidenced by the execution of the
Release and Waiver and the filing of their applications for employment with the new
owner; that the new owner was well within its legal right or prerogative in considering as
terminated the petitioners' probationary/temporary appointment; and that the petitioners
were not illegally dismissed; hence, they are not entitled to the reliefs prayed for.
In her decision of 30 April 1993, 8 Labor Arbiter Marissa Macaraig-Guillen ruled for the
petitioners and decreed as follows:
WHEREFORE, in view of the foregoing, judgment is hereby rendered declaring the
dismissals of complainant Ronald Manlimos, Froilan Pagalan, Merlita Duhay lungsod,
Elizabeth Andagan, Doris Serdan, Leonora Bibiano, Perla Cumpay, Virginia Etic,
Remegia Noel, Ronald Booc, German Gista, Jaime Timber [sic], Federico Amper,
Renante Yacapin, and Francisco Evale as invalid and illegal and ordering respondent
Super Mahogany Plywood Corporation represented by its Vice President, Mr. Alberto Go
to:
1. To reinstate the complainants to their positions without loss of seniority rights and
privileges;
2. To pay then backwages, 13th month pay, service incentive leave pay and attorney's
fees in the total sum of FIVE HUNDRED FORTY TWO THOUSAND ONE HUNDRED
FIFTY PESOS and 40/100 ONLY (P542,150.40) in accordance with the computation
herein provided for.
All other claims are dismissed for lack of merit.
It is the thesis of the Labor Arbiter that the transfer of ownership partook of a cessation of
business operation not due to business reverses under Article 283 of the Labor Code and
pursuant to the doctrine laid down in MobilEmployees Association vs. National Labor
Relations Commission, 9 the following requisites must be complied with before the
dismissal of employees may be effected: (1) service of written notice to the employees
and to the Ministry of Labor and Employment (MOLE) at least one month before the
intended date thereof; (2) the cessation of or withdrawal from business operations must
be bona fide in character; and (3) payment to the employees of termination pay
amounting to at least one-half month pay for each year of service or one month pay

whichever is higher.
The Labor Arbiter ruled that the first and third requisites were present in this case; she
explicitly held that each of the petitioners signed freely and voluntarily the Release and
Waiver and that the termination and payment of separation pay by the previous owner of
the corporation were done in good faith. The Labor Arbiter, however, ruled that there was
no "cessation of operations which would lead to the dismissal of the employees." Thus:
In this case, there was actually no cessation of business operations except for the
traditional break between Christmas and New Year.
In fact the notice given by Acting Resident Manager Jesus A. Cu on December 27, 1991
which is Annex 11 for respondent, clearly indicates that there was no gap to speak,
between the time the previous management turned over their responsibilities to the new
team of managers and the corresponding takeover.
Secondly, we are merely presuming that there was a purchase because a new list of
stockholders now sit on the board of the corporation and occupy various positions as
corporate officers, but this Office had never been formally apprised of what actually
occurred so that the bulk of existing shareholdings were transferred to the group of Mr.
Alfredo Roxas.
The Labor Arbiter then concluded that "upon resumption of their work in January of 1992,
the complainant re-entered respondent's employ, not as probationary employees, but as
regular employees, because they were engaged in work which was necessary and
desirable to the company's operations." As regular employees, they could not be
dismissed without cause and without due process. She found that in this case the
irregularities allegedly committed by the petitioners were not proven.
From the above adverse judgment of the Labor Arbiter, the private respondent appealed
to the NLRC (Fifth Division, Cagayan de Oro City).
In its resolution of 2 August 1993, the NLRC reversed the judgment of the Labor Arbiter,
except as to the 13th month pay which was sustained subject, however, to recomputation
based on the actual services of the petitioners under the new owner up to the actual date
of their separation from the service on 20 June 1992. It found that the change of
ownership in this case was made in good faith since there was no evidence on record
that "the former owners conspired with the new owners to insulate the former
management of any liability to its workers." It ruled that the Labor Arbiter:
has not only misappreciated the facts but . . . has as well distorted the facts by
erroneously applying the ruling in the case of MOBIL. The facts in said Mobil are far
different from the facts in the instant case. The Mobil case refers to retrenchment or
termination of employment under Article 283 (ART. 284) of the Labor Code, as mended.
It does not involve termination of employment as a result of the change of corporate
ownership or corporate consolidation or merger.
xxx xxx xxx
The case cited by appellants in their position paper is more in point. General rule is that
"(C)hange of ownership or management of a business establishment or enterprise
however, is not one of the just causes . . . to terminate employment without a definite
period." That "(N)either can it be considered as synonymous with nor or analogous to
closing or cessation of operation of an establishment or enterprise . . . ." (Central
Azucarera del Danao vs. Court of Appeals, 137 SCRA 295, 303).
However, it is equally a well settled rule that the sale or disposition of a business
enterprise which has been motivated by good faith is "an element of exemption from
liability." Thus, "an innocent transferee of a business has no liability to the employees of
the transfer or to continue employing them. Nor is the transferee liable for past unfair
labor practices of the previous owner, except, when the liability is assumed by the new
employer under the contract of sale, or when liability arises because the new owners
participated in thwarting or defeating the rights of the employees." ( Central Azucarera del
Danao, ibid.).
xxx xxx xxx
The hiring of employees on probationary basis is an exclusive management prerogative. The
labor tribunal cannot substitute its own judgment on the manner how the employer will run its
own business. (National Labor Union vs. Insular Yebana Tobacco Corporation, 2 SCRA 924).
The right to hire and fire is basically a sole management prerogative which the courts may not
interfere.
xxx xxx xxx
On the other hand, the subsequent hiring of complainants on probationary basis by the
new management/corporate owners being the prerogative of management must be

new management/corporate owners being the prerogative of management must be
sustained. Since the corporate business is under a new management, the latter will
therefore need time to determine the qualifications of the newly hired workers, herein
complainants. As probationary employees, they are therefore on trial to afford new
management to determine whether or not they would qualify for permanent employment.
Their motion to reconsider the resolution having been denied by the NLRC in its
resolution of 14 October 1993, the petitioners filed this special civil action for certiorari.
They claim that the NLRC acted with grave abuse of discretion when it reversed the
decision of the Labor Arbiter.
We disagree with the Labor Arbiter's reliance on the case of Mobil Employees
Association vs. National Labor Relations Commission. 10 The NLRC was correct in
holding that Mobil was not applicable because Mobil involved the termination of
employment under Article 283 (before Article 284) of the Labor Code and not termination
of employment as a result of the change of corporate ownership, as in the case of private
respondent Super Mahogany Plywood Corporation. In Mobil, the original employer; Mobil
Oil Philippines, Inc., completely withdrew from business and was even dissolved. In the
case at bar, there was only a change of ownership of Super Mahogany Plywood
Corporation which resulted in a change of ownership. In short, the corporation itself, as a
distinct and separate juridical entity, continues to exist. The issue of whether there was a
closing or cessation of business operations which could have operated as a just cause
for the termination of employment was not material. The change in ownership of the
management was done bona fide and the petitioners did not for any moment before the
filing of their complaints raise any doubt on the motive for the change. On the contrary,
upon being informed thereof and of their eventual termination from employment, they
freely and voluntarily accepted their separation pay and other benefits and individually
executed the Release or Waiver which they acknowledged before no less than a hearing
officer of the DOLE.
A change of ownership in a business concern is not proscribed by law. 11 In Central
Azucarera del Danao vs.Court of Appeals, 12 this Court-stated:
There can be no controversy for it is a principle well-recognized, that it is within the
employer's legitimate sphere of management control of the business to adopt economic
policies or make some changes or adjustments in their organization or operations that
would insure profit to itself or protect the investment of its stockholders. As in the exercise
of such management prerogative, the employer may merge or consolidate its business
with another, or sell or dispose all or substantially all of its assets and properties which
may bring about the dismissal or termination of its employees in the process. Such
dismissal or termination should not however be interpreted in such a manner as to permit
the employer the very concept of social justice.
In a number of cases on this point, the rule has been laid down that the sale or disposition
must be motivated by good faith as an element of exemption from liability. Indeed, an
innocent transferee of a business establishment has no liability to the employees of the
transfer or to continue employing them. Nor is the transferee liable for past unfair labor
practices of the previous owner, except, when the liability therefor is assumed by the new
employer under the contract of sale, or when liability arises because of the new owner's
participation in thwarting or defeating the rights of the employees. 13
Where such transfer of ownership is in good faith, the transferee is under no legal duty to
absorb the transferor employees as there is no law compelling such absorption. The most
that the transferee may do, for reasons of public policy and social justice, is to give
preference to the qualified separated employees in the filling of vacancies in the facilities
of the purchaser. 14
Since the petitioners were effectively separated from work due to a bona fide change of
ownership and they were accordingly paid their separation pay, which they freely and
voluntarily accepted, the private respondent corporation was under no obligation to
employ them; it may, however, give them preference in the hiring. The private respondent
in fact hired, but on probationary basis, all the petitioners, except Rosario Cuarto. The
non-hiring of Cuarto was legally permissible.
The hiring of employees on a probationary basis is an exclusive management
prerogative. The employer has the right or privilege to choose who will be hired and who
will be denied employment. It is within the exercise of this right that the employers may
set or fix a probationary period within which it may test and observe the employee's
conduct before hiring him permanently. 15
It is settled that while probationary employees do not enjoy permanent status, they are

It is settled that while probationary employees do not enjoy permanent status, they are
accorded the constitutional protection of security of tenure. They may only be terminated
for just cause or when they fail to qualify as regular employees in accordance with
reasonable standards made known to them by the employer at the time of their
engagement. 16 This constitutional protection, however, ends upon the expiration of the
period provided for in their probationary contract of employment. Thereafter, the parties
are free to renew the contract or not. 17
The petitioners themselves admit that upon their request the effective date of their
separation was deferred from 13 June 1992 to 20 June 1992. The latter date apparently
coincided with the expiration of the six-month probationary period. This development has
rendered moot the question of whether there was a just cause of the dismissal of the
petitioners other than Perla Cumpay and Virginia Etic.
A different conclusion would have to be reached with respect to Perla Cumpay and
Virginia Etic. They were dismissed on 4 May 1992 for having allegedly abandoned their
work. It is settled that to constitute abandonment, there must be a clear and deliberate
intent to discontinue one‘s employment, without deliberate intent to discontinue one's
employment, without any intention of returning. 18 In this case, the private respondent not
only failed to prove such intent, it as well violated the due process rule in dismissal of
employees. The requirements of lawful dismissal of an employee by his employer are
two-fold, viz., notice and hearing. 19 These requirements constitute the essential elements
of due process. 20 These requirements not having been met with respect to Cumpay and
Etic, their dismissal was, consequently, illegal.
It results, therefore, that only petitioners Perla Cumpay and Virginia Etic were entitled to
reinstatement and back wages. Nonetheless, considering that their probationary
employment would have similarly expired six months after commencement, reinstatement
is no longer feasible.
WHEREFORE, the instant petition is partly GRANTED. The challenged resolutions of
public respondent National Labor Relations Commission (Fifth Division) of 2 August 1993
and 14 October 1993 in NLRC Case No. M-001378-93 are hereby MODIFIED; and as
modified, private respondent Super Mahogany Plywood Corporation is further ordered to
pay petitioners Perla Cumpay and Virginia Etic their backwages corresponding to the
period from 4 May 1992 up to the expiration of their probationary employment contracts.
No pronouncements as to costs in this instance.
SO ORDERED.
Padilla, Bellosillo, Quiason and Kapunan, JJ., concur.
Footnotes
1 Annex "K" of Petition; Rollo, 167.
2 Annex "8," Id.; Id., 186.
3 Annex "J," Id.; Id., 138.
5 Annexes "A" and "C" of Petition; Rollo, 39; 43.
6 Annex "D," Id.; Id., 46.
7 Annexes "F" and "H," Id.; Id., 96, 109.
8 Annex "J" of Petition; Rollo, 138.
9 183 SCRA 737 [1990].
10 Supra note 9.
11 Sunio vs. NLRC, 127 SCRA 390 [1984].
12 137 SCRA 295 [1985].
13 Id. at 304-305 (citations omitted). See also San Felipe Neri School of Mandaluyong,
Inc. vs.NLRC, 201 SCRA 478 [1991].
14 MDII Supervisors and Confidential Employees Association vs. Presidential Assistant
on Legal Affairs, 79 SCRA 40 [1977]; San Felipe Neri School of Mandaluyong,
Inc. vs. NLRC, supra note 13.
15 Grand Motor Parts Corp. vs. Minister of Labor, 130 SCRA 436 [1984].
16 Article 281, Labor Code.
17 Biboso vs. Victorias Milling Co., 76 SCRA 250 [1977]; Colegio de San
Agustin vs. NLRC, 201 SCRA 398 [1991].
18 Nueva Ecija I Electric Cooperative, Inc. vs. Minister of Labor, 184 SCRA 25 [1990];
Dagupan Bus Co. vs. NLRC, 191 SCRA 328 [1990]; Batangas Laguna Tayabas Bus
Co. vs. NLRC, 212 SCRA 792 [1992]
19 Cathedral School of Technology vs. NLRC, 214 SCRA 551 [1992]; Tiu vs. NLRC, 215
SCRA 540 [1992].

SCRA 540 [1992].
20 Abiera vs. NLRC, 215 SCRA 476 [1992].

q=cache:Kz_kiTAtQbUJ:www.lawphil.net/judjuris/juri1995/mar1995/gr_113337_1995.html+Manlimos+vs.+NLRC+(1995)&cd=1
&hl=en&ct=clnk&ie=UTF-8>

Benguet Consolidated vs. BCI Employees & Workers Union
12:33 AM
lawphil
Today is
Thursda
y, July
01, 2004

SUPREME COURT
Manila
EN BANC
G.R. No. L-25471 March 27, 1968
BENGUET CONSOLIDATED, INC., STANLEY WILLIMONT, EUGENE
KNEEBONE, C.W. HEROLD, A.P. DAVIDSON, G.N. WRIGHT and O.M.
WESTERFIELD, petitioners,
vs.
BCI EMPLOYEES & WORKERS UNION-PAFLU and DONACIANO S. ANDRADA
and the COURT OF INDUSTRIAL RELATIONS, respondents.
Ross, Selph, Salcedo, Del Rosario, Bito & Misa for petitioners.
Leonardo C. Fernandez and Cipriano Cid & Associates for respondents.
BENGZON, J.P., J.:
On May 3, 1963, respondent labor union and Donaciano Andrada filed an
unfair labor practice charge in the Court of Industrial Relations against petitioner
company alleging that the latter unduly discriminated against respondent Andrade,
one of its employees, with regard to his status and conditions of employment in
violation of Sec. 4(a) (4) of Republic Act 875.
After investigating the charge, the acting prosecutor of the Court filed on
September 4, 1963, the formal complaint against petitioners company and some of
its officials. The principal averment in the complaint was 1 —
That in the year 1954, complainant Danaciano Andrada was promoted to the
position of Invoice Processing Clerk, but respondents refused to implement his
wage scale as embodied in the several collective bargaining agreements between
the Benguet Balatoc Workers Union, the complainant labor organization and the
company, starting 1954, on account of:
(a) His militant union activities;
(b) his persistent refusal to disaffiliate from complainant union;
(c) his petitions for the betterment of his co -employees for which he was
discriminated by the company; 1äwphï 1. ñë
t
Petitioners filed their answer on September 28, 1963 denying the alleged
discrimination against respondent Andrada and the alleged unjust refusal on their
part to implement the wage scale under the Collective Bargaining Agreements.
Issues having been joined, trial was conducted. On March 23, 1965,
Associate Judge Amando Bugayong before whom the hearings were made,
rendered decision finding petitioners guilty of unfair labor practice based on the

following of facts: 2
Respondent Benguet Consolidated, Inc., is a domestic corporation engaged
in the mining industry with respondents Stanley Willimont, Eugene Kneebone, C.W.
Herold, G.N. Wright, O.M. Westerfield, A.P. Davidson and William Johnson as its
officers. Complainant BCI Employees and Workers Union (PAFLU) is a legitimate
labor union while complainant Donaciano Andrada is a member thereof.
Prior to December 19, 1954, complainant Andrada was a payroll clerk in the
respondent Company with a salary of P3.24 per day. On August 28, 1954, he and
several others petitioned the respondent company that they be given the rates of
pay as prescribed in the collective bargaining contract. It appears that at that time
there was an existing collective bargaining contract between the respondent
company then operating under the trade name Benguet Consolidated Mining
Company and Balatoc Mining Company and the Benguet -Balatoc Workers Union of
which complainant Andrada was then a member. Said contract (Exh. "A") provides
for the wage scales of the workers and pursuant thereto, the wage scale of a payroll
clerk, first class category, was P3.56 per day (Exh. "A-1"). Thus, complainant
Andrada, together with several others, requested for adjustment of their wages
(Exh. "B") and the respondent company, in compliance thereto made the necessary
salary adjustment with the exception of complainant Andrada who, although he was
reclassified from clerk second class to clerk first class, did not receive any
corresponding increase in his pay (Exh. "1").
Then, on or about January 1, 1955, he was transferred from the Accounting
Department, clerk first class, to the Purchasing Department also as clerk first class
with the same salary of P97.20 per month or P3.24 per day (Exh. "E"). His
assignment in the Purchasing Department was recommended by S.J. Willimont, his
former department head, and C.W. Herold, head of the Purchasing Department,
and approved by A.P. Davidson, General Superintendent. He was assigned to
replace Ramon M. Alvia, a bodeguero performing invoice clearing duties who
resigned December 19, 1954 and who was receiving a salary of P4.60 per day
(Exh. "E-1").
To support his claim that he was discriminated against because of his militant
union activities, complainant Andrada testified that sometime after he, together with
several others, petitioned the respondent company for a reclassification and
readjustment of their wages, as first class clerk (Exh. "B") he brought the matter to
the attention of his union, then the Benguet -Balatoc Workers Union and accordingly
the latter, through Braulio Oximana, union steward, wrote a letter dated October 6,
1954 (Exh. "F") to the respondent company requesting information as to the action
taken by said respondent on the aforesaid petition for reclassification. He also
testified that an or about October 8, 1954, he had occasion to talk with Stanley
Willimont, then his department head, and the latter told him that had he not brought
his petition to the union, his future would have been better; and that as a matter of
fact he was the only employee who did not receive any adjustment in his salary
although he was placed in the first class clerk category . Complaint Andrada further
testified that sometime in 1955 after he was transferred to the Purchasing
Department, as replacement of Ramon M. Alvia, a "bodeguero" performing invoice
clearing duties and who was receiving a salary of P4.60 per day, he received the
same salary as payroll clerk which was P97.20 per month or P3.24 per day. So, he
approached C. W. Herold, head of the Purchasing Department, and complained to
the latter about his situation hoping that he will be extended the proper wage
appertaining to the position of "bodeguero" as provided in the collective bargaining
contract, but nothing came out of his request.
He also declared that on or about August 26, 1967, on the occasion of a
grievance meeting concerning the adjustment of his wages, Eugene Kneebone, one
of the respondent herein, said to him, "am spending much of my time for your
complaint. My time is precious. I tell you that as long as I am still connected with
Benguet Consolidated, Inc., this office cannot give you any change of classification
whatsoever"; That Mr. Kneebone further said, "By representing your grievance to
the union, you are cutting your neck entirely, and I tell you to think it over or retract
your complaint"; that complaint again met Mr. Kneebone who said to him, "The
question with you is, you are too vocal of your union activities. Had you shut your
mouth, your case should not have happened like that." He also testified that
sometime in 1958, he was elected district governor for Balatoc and on July 28,

sometime in 1958, he was elected district governor for Balatoc and on July 28,
1958 the union's counsel sent a letter to the respondent company informing the
latter of the appointment of complainant Andrada as union steward for Balatoc
(Exh. "D"); that as district governor and steward of the union, he was most often
alone in representing the workers in his district; that sometime in 1959, the
respondent company offered to transfer him as "bodeguero" to the Kias Dynamite
Storage area, but the same was intended to take him far from the company where
he performs his duties as union district steward. Complaint further testified that
sometime in July, 1962, there was an increase of P.24 to all kinds of categories and
that he was not benefitted by the increase; that he asked O.M. Westerfield, his
department head, to give him also an increase, but the latter said to him, "If you will
not stop asking or complaining about your rate, Mr. Crosby will step over your
head."
xx x xx x xxx1äwphï 1. ñët
Accordingly, petitioners were ordered "to implement the salary scale with
respect to the daily wage of complainant Donaciano S. Andrada from 1954 until his
wage reaches the level as embodied in the collective bargaining agreements
between the Benguet-Balatoc Workers Union, the complainant labor organization,
and the respondent company."
Petitioners subsequently moved for reconsideration, which the lower
court, en banc, denied altho one of the five judges dissented. They then elevated
the case to this Court for review by way of certiorari. Pending the appeal and at
petitioners' instance, this Court issued preliminary injunction to prevent immediate
execution of the judgment.
Petitioners' principal submission, in the first three errors assigned, is that they
were held liable for discriminating against respondent Andrada in 1954 on account
of militant union activities which, however, were conducted in 1958. This is
erroneous on two counts. First, what was charged was not discrimination committed
in 1954 alone but rather continuing acts of discrimination committed "starting 1954"
as alleged in par. 3 of the complaint for unfair labor practice. The charge of
discrimination, consisting in petitioners' refusal to implement the proper salary scale
as to respondent Andrada is adequately supported by the following findings of the
court a quo. In August, 1954, Andrada's category was changed to clerk first class
but he received no salary adjustment unlike the other employees. In 1955, after he
was transferred to the Purchasing Department and was assigned to perform the
work done by one Ramon Alvia who held the category of bodeguero (with a higher
pay rate) respondent Andrada still received no corresponding pay increase. In July,
1962, there was a general pay hike but Andrada was not benefitted.
Second, the militant union activity, involved is not Andrada's having been
elected as Union District Governor and Steward and his actuations as such, but
rather Andrada's having sought the help of his union in pursuing what he believed
was his right to salary adjustment. It should be noted that the damaging statement
on this score 3imputed to co-petitioners Stanley Willimont and Eugene Kneebone by
respondent Andrada in his testimony to which the court a quo gave credence, were
never denied or controverted by them. And it is unquestionable that the seeking of
the union's help by one of its members in connection with the latter's correct wages
constitutes proper union activity.
The claim that respondent Andrada was guilty of laches is without merit. The
discriminations, from 1954 to 1962, were continuing. Moreover, as counsel for
respondents correctly points out, the unfair labor practice charge was filed only in
1963 because respondent's complaint was first coursed thru a series of conciliation
meetings between the union and petitioner company.
In this connection, petitioner's final submission that respondent's complaint
had already been satisfactorily settled in the grievance proceedings as the latter
himself admitted is not borne out in the portion of Andrada's testimony reproduced
in Annex D of the petition. What could be inferred therefrom is that respondent
Andrada, who was on a monthly wage basis, refused to be classified on a daily
wage basis. But as the lower court found, 4respondent was justified in so refusing,
since; an employee on a daily wage basis gets less than one on the monthly basis
assuming the pay rate to be the same. This finding of the court is based on the
admission of Willimont, one co-petitioner company's own officials.
In fine, this Court finds that the findings of fact below furnish satisfactory

admission of Willimont, one co-petitioner company's own officials.
In fine, this Court finds that the findings of fact below furnish satisfactory
answers to the questions presented here by petitioners. And there is not even a
slight suggestion from them that these findings are not based on substantial
evidence. Hence, said findings are controlling.
Pasted from <http://www.lawphil.net/judjuris/juri1968/mar1968/gr_l-25471_1968.html>

Elisco-Elirol Labor Union v. Noriel (1977)
12:37 AM
Today is
Thursday,
July 01,
2004
ELISCO-ELIROL LABOR UNION V NORIEL
80 SCRA 682
TEEHANKEE; December 29, 1977
FACTS
-Sometime on Feb1974, Elisco Elirol Labor Union (NAFLU) negotiated and executed a CBA w ith Elizalde Steel
Consolidated, Inc. Upon verification at the Registration Division, Bureau of Labor Relations, the Elisco-Elirol Labor
Union (NAFLU), the contracting party in said CBA, w as found to be not then registered and therefore not entitled to
the benefits and privileges embodied in said CBA; thus, the members said union in a general membership meeting
decided in a resolution to register their union to protect and preserve the integrity and inviolability of the collective
bargaining agreement betw een the Elisco-Elirol Labor Union (NAFLU) and the Elizalde Steel Consolidated, Inc.
-Petitioner union applied for registration w ith the BLR, hence on May 28, 1975, Certificate of Registration No. 8511-
IP w as issued by said Office. Steps were taken by petitioner to enforce the CBA as the principal party to the same
representing the w orkers covered by such agreement immediately after the issuance of the certificate of
registration.
-June 10, 1975: at a special meeting called for the purpose, the general membership of the petitioner union
adopted a resolution to disaffiliate from their mother union, the National Federation of Labor Unions. The petitioner
union informed respondents of said disaffiliation by means of a letter, and subsequently requested respondents to
recognize petitioner as the sole and exclusive bargaining representative of the employees thereof but its employer
w ithout any justifiable reason refused and continues to refuse to recognize petitioner as the sole and exclusive
bargaining representative of its employees, and, now actually dismissed the petitioner union's officers and board
members. In this connection, a complaint for unfair labor practice w as filed by petitioners against respondents for
the latter's refusal to bargain collectively w ith petitioner.
-By virtue of said refusal, petitioners filed a petition before the BLR against respondents Elizalde Steel
Consolidated, Inc. and the National Federation of Labor Unions praying that the mother union be ordered to stop
from presenting itself as the collective bargaining agent and pursuant thereto, a w rit of preliminary mandatory and
prohibitory injunction be issued.
-BLR issued an Order dismissing the petition for lack of merit. On appeal, the BLR Director affirmed said dismissal.
Hence this petition.
ISSUE
Which of the tw o unions should be recognized as the sole and exclusive bargaining representative of the
employees and ultimately recognized to administer and supervise the enforcement of the collective bargaining
agreement?
HELD
The union consisting of the members-employees of an employer is the principal party to the collective bargaining
agreement (rather than the mother union w hich is merely its agent) and is therefore entitled to be recognized as the
sole and exclusive bargaining representative entitled to administer and enforce the collective bargaining agreement
w ith the employer.
-Respondent BLR director correctly perceived in his Resolution that "to grant to the former mother union (NAFLU)
the authority to administer and enforce their collective bargaining agreement w ithout presumably any members in
the bargaining unit is quite absurd" but fell unto the grave error of holding that "When the employees disaffiliated
from the mother union and formed themselves into a new union, their status as employees w as also terminated."
-The employees and members of the local union did not form a new union but merely registered the local union as
w as their right. Petitioner Elisco-Elirol Labor Union-NAFLU, consisting of employees and members of the local
union w as the principal party to the agreement. NAFLU as the "mother union" in participation in the execution of the
bargaining agreement w ith respondent company acted merely as agent of the local union, w hich remained the
basic unit of the association existing principally and freely to serve the common interest of all its members,
including the freedom to disaffiliate w hen the circumstances so warranted as in the present case. (Liberty Cotton
Mills Workers Union v. Liberty Cotton Mills)
-The "substitutionary" doctrine likew ise fully supports petitioner's stand. Petitioner union to w hom the employees
ow e their allegiance has from the beginning expressly avowed that it "does not intend to change and/or amend the
provisions of the present collective bargaining agreement but only to be given the chance to enforce the same
since there is a shift of allegiance in the majority of the employees at respondent company."
-Benguet Consolidated Inc. vs. BCI Employees & Workers Union-PAFLU: This principle, formulated by the NLRB
as its initial compromise solution to the problem facing it w hen there occurs a shift in employees' union allegiance
after the execution of a bargaining contract w ith their employer, merely states that even during the effectivity of a
collective bargaining agreement executed between employer and employees thru their agent, the
em ployees can change said agent but the contract continues to bind then up to its expiration date. They
m ay bargain however for the shortening of said expiration date.
-In formulating the "substitutionary" doctrine, the only consideration involved as the employees' interest in the
existing bargaining agreement. The agent's interest never entered the picture. The justification for said doctrine
w as that the majority of the employees, as an entity under the statute, is the true party in interest to the
contract, holding rights through the agency of the union representative. Thus, any exclusive interest
claim ed by the agent is defeasible at the will of the principal.
-What is paramount, as it is expressly and explicitly emphasize in an exacting language under the New

claim ed by the agent is defeasible at the will of the principal.
-What is paramount, as it is expressly and explicitly emphasize in an exacting language under the New
Constitution, is the security of tenure of the w orkers, not the security of the union. To impress, therefore, such
"maintenance of membership" w hich is intended for the security of the union rather than the security of tenure of
the w orkers as a bar to employees' changing their affiliation is not only to infringe on the constitutional right of
freedom of association, but also to trample upon the constitutional right of w orkers to security of tenure and to
render meaningless w hatever "adequate social services" the State may establish or maintain in the field of
employment "to guarantee the enjoyment by the people of a decent standard of living."
Disposition Petition is granted and the appealed resolution is set aside. Petitioner local union is declared to be the
sole and exclusive bargaining representative of the employees of respondent corporation entitled to administer and
enforce any subsisting collective bargaining agreement w ith said employer corporation. Decision immediately
executory
Pasted from <file:///D:\5y,%201s\Labor%20Arb\COMPILED%20LABOR2-disini\LABOR%202%20COMPILED%

20DIGEST.docx>

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-41955 December 29, 1977
ELISCO-ELIROL LABOR UNION (NAFLU) and its OFFICERS AND MEMBERS OF
THE BOARD OF DIRECTORS, petitioners
vs.
CARMELO NORIEL, in his capacity as Director of the Bureau of Labor Relations,
ELIZALDE STEEL CONSOLIDATED, INC. and NATIONAL FEDERATION OF
LABOR UNIONS (NAFLU), respondents.
Villaluz, Villaluz & Villaluz, Padilla Law Offices and Rizalindo V. Diaz for petitioners.
Acting Solicitor General Hugo E. Gutierrez, Jr., Assistant Solicitor Reynato S. Puno and
Solicitor Ramon A. Barcelona respondent Director.
Rolando M. Olalia for respondent Union (NAFLU).
TEEHANKEE, J.:
The Court sets aside respondent director's appealed resolution and rules in accordance
with the prevailing law and settled jurisprudence that the petitioner union consisting of
the members-employees of respondent corporation is the principal party to the
collective bargaining agreement (rather than the respondent mother union which is
merely its agent) and is therefore entitled to be recognized as the sole and exclusive
bargaining representative entitled to administer and enforce the collective bargaining
agreement with the employer corporation.
The undisputed antecedent facts which gave rise to the present petition are stated in
the petition as follows:
2. That sometime on February 1974, petitioner-Elisco Elirol Labor Union (NAFLU),
negotiated and executed a collective bargaining agreement with respondent -Elizalde Steel
Consolidated, Inc. 1
3. That upon verification by individual petitioners at the Registration division, Bureau of
Labor Relations, Department of Labor, the Elisco-Elirol Labor Union (NAFLU), the
contracting party in said collective bargaining agreement, was not then registered and
therefore not entitled to the benefits and privileges embodied in said collective
bargaining agreement; thus on March 3, 1975, the member of petitioner-appellant union
in a general membership meeting decided in a resolution to register their union to
protect and preserve the integrity and inviolability of the collective bargaining agreement
between the Elisco-Elirol Labor Union (NAFLU) and the Elizalde Steel Consolidated,
Inc.
4. That said resolution of the members of petitioner-appellant union was passed upon
by the officers and members of the Board of Directors on May 20, 1975, at a special
meeting called for the purpose, resolution No. 6, s. 1975 was approved requesting the
Acting Directors, Registration Division, Bureau of Labor Relations, to register the union
Elisco-Elirol Labor Union (NAFLU).
5. That by virtue of resolution No. 6, Petitioner-appellant union applied for registration
with the Bureau of Labor Relations, hence on May 28, 1975, Certificate of Registration
No. 8511-IP was issued by said Office.
6. That with the issuance of the certificate of registration petitioner-appellant acquired a
personality separate and distinct from any other labor union.
7. That steps were taken by petitioner-appellant to enforce the collective bargaining

7. That steps were taken by petitioner-appellant to enforce the collective bargaining
agreement as the principal party to the same representing the workers covered by such
agreement immediately after the issuance of the certificate of registration.
8. That on June 10, 1975, at a special meeting called for the purpose, the general
membership of petitioner union decided that their mother union, the National Federation
of Labor Unions, can no longer safeguard the rights of its members insofar as working
conditions and other terms of employment are concerned and that the interest and
welfare of petitioner can be served best if it will stay independent and disaffiliated from
said mother union, hence, the general membership adopted a resolution to disaffiliate
from the National Federation of Labor Unions.
9. That on June 11, 1975, petitioner, acting through its President Hilario Riza informed
respondents of said disaffiliation by means of a letter, and subsequently requested
respondents to recognize petitioner as the sole and exclusive bargaining representative
of the employees thereof.

Pier 8 Arrastre v. Roldan-Confessor (1995)
12:39 AM
lawphil
Today is
Thursday,
July 01,
2004

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 110854 February 13, 1995

PIER 8 ARRASTRE & STEVEDORING SERVICES, INC., petitioner,
vs.
HON. MA. NIEVES ROLDAN-CONFESOR, in her capacity as Secretary of
Labor and Employment, and GENERAL MARITIME & STEVEDORES UNION
(GMSU), respondents.
PUNO, J.:
Petitioner corporation and private respondent labor union entered into a three -
year Collective Bargaining Agreement (CBA) with expiry date on November 27,
1991. During the freedom period the National Federation of Labor Unions
(NAFLU) questioned the majority status of Private respondent through a petition
for certification election. The election conducted on February 27, 1992 was won
by private respondent. On March 19, 1992, private respondent was certified as
the sole and exclusive bargaining agent of petitioner's rank-and-file employees.
On June 22, 1992, private respondent's CBA proposals were received by
petitioner. Counter-proposals were made by petitioner. Negotiations collapsed,
and on August 24, 1992, private-respondent filed a Notice of Strike with the
National Conciliation and Mediation Board (NCMB). The NCMB tried but failed to
settle the parties' controversy.
On September 30, 1992, public respondent Secretary of Labor assumed
jurisdiction over the dispute. She resolved the bargaining deadlock between the
parties through an Order, dated March 4, 1993, which reads, in part:
xxx xxx xxx
A. The non-economic issues
1. Scope/coverage of the CBA. Article I of the 1988 CBA provides:
The Company recognizes the Union as the sole and exclusive collective
bargaining representative of all the stevedores, dockworkers, gang bosses,
foremen, rank and file employees working at Pier 8, North Harbor and its offices
and said positions are [sic] listed in ANNEX "A" hereof.
As such representative the UNION is designated as the collective bargaining
agent with respect to and concerning the terms and conditions of employment and
the interpretations and implementation of the provisions and conditions of this

Agreement.
Annex "A" of the CBA is the listing of positions covered thereby. These are:
1. Foremen;
2. Gang bosses;
3. Winchmen;
4. Signalmen;
5. Stevedores;
6. Dockworkers;
7. Tallymen;
8. Checkers;
9. Forklift and crane operators;
10. Sweepers;
11. Mechanics;
12. Utilitymen;
13. Carpenters; and
14. Other rank and file employees;
The company argues in the first instance that under Article 212(m) in relation to
Article 245 of the Labor Code, supervisors are ineligible for. membership in a
labor organization of rank and file. Being supervisors, foremen should be
excluded from the bargaining unit.
The Company likewise seeks the exclusion on the ground of lack of community of
interest and divergence in functions, mode of compensation and working
conditions of the following:
1. Accounting clerk;
2. Audit clerk;
3. Collector;
4. Payroll clerk;
5. Nurse;
6. Chief biller;
7. Biller;
8. Teller/biller;
9. Personnel clerk;
10. Timekeeper;
11. Asst. timekeeper;
12. Legal secretary;
13. Telephone operator;
14. Janitor/Utility; and
15. Clerk
These positions, the Company argues, cannot be lumped together with the
stevedores or dockworkers who mostly comprise the bargaining unit. Further,
notwithstanding the check-off provisions of the CBA, the incumbents in these
positions have never paid union dues. Finally, some of them occupy confidential
positions and therefore ought to be excluded from the bargaining unit.
The Union generally argues that the Company's proposed exclusions
retrogressive. . . .
We see no compelling justification to order the modification of Article I of the 1988
CBA as worded. For by lumping together stevedores and other rank and file
employees, the obvious intent of the parties was to treat all employees not
disqualified from union membership as members of one bargaining unit. This is
regardless of working conditions, mode of compensation, place of work, or other
considerations. In the absence of mutual agreement of the parties or evidence
that the present compositions of the bargaining unit is detrimental to the individual
and organizational rights either of the employees or of the Company, this
expressed intent cannot be set aside.
It may well be that as a consequence of Republic Act No. 6715, foremen are
ineligible to join the union of the rank and file. But this provision can be invoked
only upon proof that the foremen sought to be excluded from the bargaining unit
are cloaked with effective recommendatory powers such as to qualify them under
the legal definitions of supervisors.
xxx xxx xxx
7. Effectivity of the CBA. The Union demands that the CBA should be fully

retroactive to 28 November 1991. The Company is opposed on the ground that
under Article 253-A of the labor code, the six-month period within which the
parties must come to an agreement so that the same will be automatically
retroactive is long past.
The Union's demand for full retroactivity, we note, will result in undue financial
burden to the Company. On the other hand, the Company's reliance on Article
253-A is misplaced as this applies only to the renegotiated terms of an existing
CBA. Here, the deadlock arose from negotiations for a new CBA.
These considered, the CBA shall be effective from the time we assumed
jurisdiction over the dispute, that is, on 22 September 1992, and shall remain e
effective for five (5) years thereafter. It shall be understood that except for the
representation aspect all other provisions thereof shall be renegotiated not later
than three (3) years after its effectivity, consistently with Article 253 -A of the Labor
Code.
B. The economic issues
The comparative positions of the parties are:
COMPANY UNION
xxx xxx xxx
5
. Vacation and sick leave 17 days vacation and sick leave i) For all covered employees
17 days sick leave per year and 17 days sick than gang
for employment with at least gang bosses:
five years of service.
15 working days vacation and
15 working days sick leave
for those with at least 1 year
of service
for those with more than one
year of service up to 5 years
of service
for those with more than 5
years of service up to 10
years of service
for those with more than 10
years of service
Provided that in the case Provided that in the case of a
of a rotation worker, he rotation worker, he must have
must have work for at worked for 140 days in a
least 160 days in a year calendar year as a condition
for availment for availment.

for availment for availment.
Provided, further that in the
event a rotation worker fails
to complete 140 days work in
a calendar year, he shall still
be entitled to vacation and
sick leave with pay, as follows:
139 - 120 days worked: 90%
119 - 110 days worked: 50%
ii) For Gang bosses:
Same as the above schedule
except that:
1) the condition that a gang
bosses must have worked for at
least 120 days in a calendar
year shall be reduced to 110
days; and
2) where the above number of
days worked is not met, the
gang boss shall still be entitled
to vacation and sick leave with
pay, as follows:
109 - 90 days worked: 90%
89 - 75 days worked: 50%
xxx xxx xxx
7. Death aid P1,500.00 to heirs P10,000.00 to heirs of covered
of covered employees employees
P5,000.00 assistance for death
of immediate member of
covered employee's family
xxx xxx xxx
12. Emergency loan

a) amount of P700.00 but damage 30 days salary payable through
entitlement to dwelling by fire shall payroll deduction in twelve
be included monthly installments
b) cash bond None The company shall put up a cash
for loss, damage bond of not less than P40,000.00
or accident for winchmen, crane and forklift
operators.

operators.
xxx xxx xxx

Balancing the right of the Company to remain viable and to just returns to its
investments with right of the Union members to just rewards for their labors, we
find the following award to be fair and reasonable:
xxx xxx xxx
6. Vacation and Sick Leave

a) Non-rotation workers 17 days vacation/17 days sick leave
for those with at least 1 year of service
b) Rotation workers other 17 days vacation/17 days sick leave,
than gang boss provided that the covered worker
must have worked for at least 155 days
in a calendar year
c) Gang bosses 17 days vacation/17 days sick leave,
provided that the gang boss must have
worked for at least 115 days in a
calendar year
xxx xxx xxx

8. Death aid P3,000.00 to the heirs of each covered employee
xxx xxx xxx
12. Emergency loan 30 days pay, payable through payroll deductions of 1/12 of
monthly salary
WHEREFORE, the Pier 8 Arrastre and Stevedoring Services and the General
Maritime Services Union are hereby ordered to execute new collective bargaining
agreement the incorporating the dispositions herein contained. These shall be in
addition to all other existing terms, conditions and benefits of employment, except
those specifically deleted herein, which have previously governed the relations of the
parties. All other disputed items not specifically touched upon herein are deemed
denied, without prejudice to such other agreements as the parties may have reached
in the meantime. The collective bargaining agreement so executed shall be effective
from 22 September 1992 and up to five years thereafter, subject to renegotiation on
the third year of its effectivity pursuant to Article 253-A of the Labor Code. 1
Petitioner sought partial reconsideration of the Order. On June 8, 1993, public
respondent affirmed her findings, except for the date of effectivity of the Collective
Bargaining Agreement which was changed to September 30, 1992. This is the
date when she assumed jurisdiction over the deadlock.
Petitioner now assails the Order as follows:
I
THE HONORABLE SECRETARY OF LABOR COMMITTED GRAVE ABUSE OF
DISCRETION IN NOT EXCLUDING CERTAIN POSITIONS FROM THE
BARGAINING AGREEMENT UNIT
II
DISCRETION IN MAKING THE CBA EFFECTIVE ON SEPTEMBER 30, 1992
WHEN SHE ASSUMED JURISDICTION OVER THE LABOR DISPUTE AND NOT
MARCH 4, 1993 WHEN SHE RENDERED JUDGMENT OVER THE DISPUTE
III
DISCRETION IN REDUCING THE NUMBER OF DAYS AN EMPLOYEE
SHOULD ACTUALLY WORK TO BE ENTITLED TO VACATION AND SICK
LEAVE BENEFITS
IV

IV
THE HONORABLE SECRETARY OF LABOR COMMITTE D GRAVE ABUSE OF
DISCRETION IN INCREASING WITHOUT FACTUAL BASIS THE DEATH AID AND
EMERGENCY LOAN 2
The petition is partially meritorious.
Firstly, petitioner questions public respondent for not excluding four (4) foremen, a
legal secretary, a timekeeper and an assistant timekeeper from the bargaining
unit composed of rank-and-file employees represented by private respondent.
Petitioner argues that: (1) the failure of private respondent to object when the
foremen and legal secretary were prohibited from voting in the certification
election constitutes an admission that such employees
hold supervisory/confidential positions; and (2) the primary duty and responsibility
of the timekeeper and assistant timekeeper is "to enforce company rules and
regulations by reporting to petitioner . . . those workers who committed infractions,
such as those caught abandoning their posts." and hence, they should not be
considered as rank-and-file employees.
The applicable law governing the proper composition of bargaining unit is Article
245 of the labor Code, as amended, which provides as follows:
Art. 245. Ineligibility of managerial employees to join any labor
organization; 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.
Article 212(m) of the same Code, as well as Book V, Rule 1, Section 1(o) of the
Omnibus Rules Implementing the Labor Code, as amended by the Rules and
Regulations Implementing R.A.. 6715, differentiate managerial, supervisory, and
rank-and-file employees, thus:
"Managerial Employee" is one who is vested with powers or prerogatives to lay
down and execute management policies and/or to hire, transfer, suspend, layoff
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 the Book.
This Court has ruled on numerous occasions that the test of supervisory or
managerial status is whether an employee possesses authority to act in the
interest of his employer which authority is not merely routinary or clerical in nature
but requires use of independent judgment. 3 What governs the determination of
the nature of employment is not the employee's title, but his job description. If the
nature of the employee's job does not fall under the definition of "managerial" or
"supervisory" in the Labor Code, he is eligible to be a member of the rank -and-file
bargaining unit. 4
Foremen are chief and often especially-trained workmen who work with and
commonly are in charge of a group of employees in an industrial plant or in
construction work. 5 They are the persons designated by the employer -
management to direct the work of employees and to superintend and oversee
them. 6 They are representatives of the employer-management with authority over
particular groups of workers, processes, operations, or sections of a plant or an
entire organization. In the modern industrial plant, they are at once a link in the
chain of command and the bridge between the management and labor. 7 In the
performance their work, foremen definitely use their independent judgment and
are empowered to make recommendations for managerial action with respect to
those employees under their control. Foremen fall squarely under the category
of supervisory employees, and cannot be part of rank-and-file unions.
Upon the other hand, legal secretaries are neither managers nor supervisors.
Their work is basically routinary and clerical. However, they should be
differentiated from rank-and-file employees because they, are tasked with, among
others, the typing of legal documents, memoranda and correspondence, the
keeping of records and files, the giving of and receiving notices and such other
duties as required by the legal personnel of the corporation. 8Legal secretaries

duties as required by the legal personnel of the corporation. 8Legal secretaries
therefore fall under the category of confidential employees. Thus, to them applies
our holding in the case of Philips Industrial Development, Inv., v. NLRC, 210
SCRA 339 (1992), that:
. . . By the very functions, they assist confidential capacity to, or have access to
confidential. matters of, persons to, exercise managerial functions in the field of
labor relations. As such, the rationale behind the ineligibility of managerial
employees to form, assist or join a labor union equally applies to them.
In Bulletin Publishing Co., Inc., vs. Hon. Augusto Sanchez, this Court elaborated
on this rationale, thus:
. . . The rationale, for this inhibition has been stated to be, because if these
managerial employees would belong to or be affiliated with Union the latter might
not, be assured of their loyalty to the Union in view of evident conflict of interests.
The Union can also become company-dominated with the presence of managerial
employees in Union membership.
In Golden Farms, Inc., vs. Ferrer-Calleja, 9
this court explicitly made this rationale
applicable to confidential employees:
This rationale holds true also for confidential employees . . ., who having access
to confidential information, may become the source of undue advantage. Said
employee(s) may act as a spy or spies of either party to a collective bargaining
agreement. . . .
We thus hold that public respondent acted with grave abuse of discretion in not
excluding the four foremen and legal secretary from the bargaining unit composed
of rank-and-file employees.
As for the timekeeper and assistant timekeeper it is clear from petitioner's own
pleadings that they are, neither managerial nor supervisory employees. They are
merely tasked to report those who commit infractions against company rules and
regulations. This reportorial function is routinary and clerical. They do not
determine the fate of those who violate company policy rules and regulations
function. It follows that they cannot be excluded from the subject bargaining unit.
The next issue is the date when the new CBA of the parties should be given
effect. Public respondent fixed the effectivity date on September 30, 1992. when
she assumed jurisdiction over the dispute. Petitioner maintains it should be March
4. 1993, when public respondent rendered judgment over the dispute.
The applicable laws are Articles 253 and 253- A of the Labor Code, thus:
Art. 253. Duty to bargain collectively when there exists a collective bargaining
agreement. — When there is a collective bargaining agreement, the duty to
bargain collectively shall also mean that neither party shall terminate nor modify
such agreement during its lifetime. However, either party can serve a written
notice to terminate or modify the agreement at least sixty (60) days prior to its
expiration date. It shall be the duty of both parties to keep the status quo and to
continue in full force and effect the terms and conditions of the existing agreement
during the 60-day period and/or until a new agreement is reached by the parties.
and;
Art. 253-A. Terms of a collective bargaining agreement. — Any Collective
Bargaining Agreement that the parties may enter into shall, insofar as the
representation aspect is concerned, be for a term of five (5) years. No petition
questioning the majority status of the incumbent bargaining agent shall be
entertained and no certification election shall be conducted by the Department of
Labor and Employment outside the sixty-day period immediately before the date
of expiry of such five year term of the Collective Bargaining Agreement. All other
provisions of the Collective Bargaining Agreement shall be renegotiated not later
than three (3) years after its execution. Any agreement on such other provisions
of the Collective Bargaining Agreement entered into within six (6) months from the
date of expiry of the term of such other provisions as fixed in such Collective
Bargaining Agreement, shall retroact to the day immediately following such date.
If any such agreement is entered into beyond six months, the parties shall agree
on the duration of collective bargaining agreement, the parties may exercise their
rights under this Code.
In Union of Filipino Employees v. NLRC, 192 SCRA 414 (1990), this court
interpreted the above law as follows:
In light of the foregoing, this Court upholds the pronouncement of the NLRC

In light of the foregoing, this Court upholds the pronouncement of the NLRC
holding the CBA to be signed by the parties effective upon the promulgation of the
assailed resolution. It is clear and explicit from Article 253 -A that any agreement
on such other provisions of the CBA shall be given retroactive effect only when it
is entered into within six (6) months from its expiry date. If the agreement was
entered into outside the six (6) month period, then the parties shall agree on the
duration of the retroactivity thereof.
The assailed resolution which incorporated the CBA to be signed by the parties
was promulgated June 5, 1989, the expiry date of the past CBA. Based on the
provision of Section 253-A, its retroactivity should be agreed upon. by the parties.
But since no agreement to that effect was made, public respondent did not abuse
its discretion in giving the said CBA a prospective effect. The action of the public
respondent is within the ambit of its authority vested by existing law.
In the case of Lopez Sugar Corporation v. Federation of Free Workers, 189 SCRA
179 (1991), this Court reiterated the rule that although a CBA has expired, it
continues to have legal effects as between the parties until a new CBA has been
entered into. It is the duty of both parties to the to keep the status quo, and to
during the 60-day freedom period and/or until a new agreement is reached by the
parties. 10 Applied to the case at bench, the legal effects of the immediate past
CBA between petitioner and private respondent terminated, and the effectivity of
the new CBA began, only on March 4, 1993 when public respondent resolved
their dispute.
Finally, we find no need to discuss at length the merits of the third and fourth
assignments of error. The questioned Order relevantly states:
In the resolution of the economic issues, the Company urges us to consider
among others, present costs of living, its financial capacity, the present wages
being paid by the other cargo handlers at the North Harbor, and the fact that the
present average wage of its workers is P127.75 a day, which is higher than the
statutory minimum wage of P118.00 a day. The Company's evidence, consisting
of its financial statements for the past three years, shows that its net income was
P743,423.45 for 1989, P2,108,569.03 for 1990, and P1,479,671.84 for 1991, or
an average of P1,443,885.10 over the three-year period. It argues that for just the
first year of effectivity of the CBA, the Company's proposals on wages, effect
thereof on overtime, 13th month pay, and vacation and sick leave commutation,
will cost about P520,723,44, or 35.19% of its net income for 1991. The Company
likewise urges us to consider the multiplier effect of its proposals on the second
and third years of the CBA. As additional argument, the Company manifests that
a portion of its pier will undergo a six-month to one-year renovation starting
January 1993.
On the other hand, the Union's main line of argument — that is, aside from being
within the financial capacity of the Company to grant, its demands are fair and
reasonable — is not supported by evidence controverting the Company's own
presentation of its financial capacity. The Union in fact uses statements of the
Company for 1989-1991, although it interprets these data as sufficient justification
for its own proposals. It also draws our attention to the bargaining history of the
parties, particularly the 1988 negotiations during which the company was able to
grant wage increases despite operational losses.
Balancing the right of the Company to remain viable and to just returns to its
investments with right of the Union members to just
rewards for their labors, we find the following award to be fair and reasonable . . . . 11
It is evident that the above portion of the impugned Order is based on well-studied
evidence. The conclusions reached by public respondent in the discharge of her
statutory duty as compulsory arbitrator, demand the high respect of this Court.
The study and settlement of these disputes fall within public respondent's distinct
administrative expertise. She is especially trained for this delicate task, and she
has within her cognizance such data and information as will assist her in striking
the equitable balance between the needs of management, labor and the public.
Unless there is clear showing of grave abuse of discretion, this Court cannot and
will not interfere with the labor expertise of public respondent Secretary of Labor.
IN VIEW WHEREOF, public respondents Order, dated March 4, 1993, and
Resolution, dated June 8, 1993, are hereby MODIFIED to exclude foremen and

Resolution, dated June 8, 1993, are hereby MODIFIED to exclude foremen and
legal secretaries from the rank-and-file bargaining unit represented by private
respondent union, and to fix the date of effectivity of the five -year collective
bargaining agreement between petitioner corporation and private respondent
union on March 4, 1993. No costs.
SO ORDERED.
Narvasa, C.J., Bidin, Regalado and Mendoza, JJ., concur.
Footnotes
1 Order of the Secretary of Labor and Employment, dated March 4,
1993. See Annex "A" to Petition, p. 27- 47 of Rollo.
2 Rollo, pp. 6-7.
3 See Philippine Appliance Corporation v. Laguesma, 226 SCRA 730 (1993);
Pagkakaisa ng mga Manggagawa sa Triumph International-United Lumber and
General Workers of the Philippines v. Ferrer-Calleja, 181 SCRA 119 (1990). See
also Atlas Lithographic Services, Inc. v. Laguesma, 205 SCRA 12 (1992);
Philtranco Service Enterprises v. Bureau of Labor Relations, 174 SCRA 338
(1989).
4 See Southern Philippines Federation of Labor (SPFL) v. Calleja, 172 SCRA 676
(1989).
5 See Ballentine's Law Dictionary, 3rd Edition (1969); Webster's Third New
International Dictionary (1971).
6 Black's Law Dictionary, 6th Edition (1990).
7 Webster's Third New International Dictionary (1971).
8 See Black's Law Dictionary, 6th Edition (1990).
9 210 SCRA 471 (1989).
10 National Congress of Unions in the Sugar Industry of the Philippines v. Ferrer -
Calleja, 205 SCRA 478 (1992).
11 Rollo, pp. 44-45.

New Pacific Timber v. NLRC (2000)
12:44 AM
NEW PACIFIC TIMBER AND SUPPLY CO. INV. V NLRC (BUAT ET AL.)
328 SCRA 173
KAPUNAN; March 17, 2000
NATURE Petition for certiorari.
FACTS
- The National Federation of Labor (NFL, for brevity) w as certified as the sole and exclusive bargaining representative of allthe
regular rank-and-file employees of petitioner New Pacific Timber & Supply Co., Inc (Pacific). NFL negotiated for better terms and
conditions, but Pacific resisted, prompting NFL to sue for unfair labor practice.
- March 31, 1987: the Labor Arbiter issued an order declaring (a) herein petitioner Company guilty of ULP.
- Pacific appealed to the NLRC, but the NLRC dismissed the petition. The Supreme Court also dismissed the petition filed by
Pacific.
- The records of the case w ere remanded to the arbitration branch of origin for the execution of the Labor Arbiter‘s Order, dated
March 31, 1987, granting monetary benefits consisting of w age increases, housing allowances, bonuses, etc. to the regular rank-
and-file employees. Follow ing a series of conferences to thresh out the details of computation, (new ) Labor Arbiter Villena issued an
Order, dated October 18, 1993, directing petitioner Company to pay the 142 employees entitled to the aforesaid benefits the
respective amounts due them under the CBA. Petitioner Company complied; and, the corresponding quitclaims w ere executed. The
case w as considered closed following NFL's manifestation that it w ill no longer appeal the October 18, 1993 Order of Labor Arbiter
Villena.
- A petition for relief w as filed in behalf of the 186 of the private respondents "Mariano J. Akilit and 350 others." They claimed they
w ere wrongfully excluded from enjoying the benefits of the CBA, and that NFL‘s misrepresentations had precluded them from
appealing their exclusion. NLRC held that they w ere entitled to the CBA.
ISSUES
1. WON the petition for relief must prosper.
2. WON Mariano Akilit and the 350 others are entitled to the benefits of the CBA even if they w ere not employed by Pacific during the
CBA term.
HELD
3. NO
Ratio Once a judgment has become final and executory, it can no longer be disturbed, altered or modified. How ever, a careful
scrutiny of the facts and circumstances of the instant case w arrants liberality in the application of technical rules and procedure.
Reasoning Private respondents, in their petition for relief, claimed that they w ere wrongfully excluded from the list of those entitled
to the CBA benefits by their union, NFL, w ithout their know ledge; and, because they w ere under the impression that they w ere ably
represented, they w ere not able to appeal their case on time.
- The Supreme Court has allow ed appeals from decisions of the labor arbiter to the NLRC, even if filed beyond the reglementary
period, in the interest of justice.
4. NO
Ratio When a collective bargaining contract is entered into by the union representing the employees and the employer, even the
non-member employees are entitled to the benefits of the contract.
Reasoning
- It must first be established w hether a CBA w as in effect during the time of the appeal. A CBA, as to its economic provisions,can be
extended beyond the period stipulated therein, and even beyond the three-year period prescribed by law , in the absence of a new
agreement, Article 253 of the Labor Code explicitly provides:
ART. 253. Duty to bargain collectively w hen there exists a collective bargaining agreement. - When there is a collective bargaining
agreement, the duty to bargain collectively shall also mean that neither party shall terminate nor modify such agreement during its
lifetime. How ever, either party can serve a w ritten notice to terminate or modify the agreement at least sixty (60) days prior to its
expiration date. It shall be the duty of both parties to keep the status quo and to continue in full force and effect the terms and
conditions of the existing agreement during the 60-day period and/or until a new agreement is reached by the parties.
- Until a new Collective Bargaining Agreement has been executed by and betw een the parties, they are duty-bound to keep the
status quo and to continue in full force and effect the terms and conditions of the existing agreement. In the case at bar, no new
agreement w as entered into by and betw een petitioner Pacific and NFL pending appeal of the decision in NLRC Case.
- To rule otherw ise, i.e., that the economic provisions of the existing CBA in the instant case ceased to have force and effectin the
year 1984, w ould be to create a gap during w hich no agreement w ould govern, from the time the old contract expired to the time a
new agreement shall have been entered into.
- It is even conceded, that a laborer can claim benefits from a CBA entered into betw een the company and the union of w hich he is
a member at the time of the conclusion of the agreement, after he has resigned from said union.
- To exclude the ―nonmembers‖ w ould constitute undue discrimination and deprive them of monetary benefits they w ould otherwise
be entitled to under a new collective bargaining contract to w hich they would have been parties. Since in this particular case, no new
agreement had been entered into after the CBA's stipulated term, it is only fair and just that the employees hired thereafter be
included in the existing CBA.
DISPOSITION
Petition for certiorari is dismissed for lack of merit.

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 124224 March 17, 2000

NEW PACIFIC TIMBER & SUPPLY COMPANY, CO., INC., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, MUSIB M. BUAT, LEON G.
GONZAGA, JR., ET AL., NATIONAL FEDERATION OF LABOR, MARIANO
AKILIT and 350 OTHERS, respondents.
KAPUNAN, J.:
May the term of a Collective Bargaining Agreement (CBA) as to its economic
provisions be extended beyond the term expressly stipulated therein, and, in the
absence of a new CBA, even beyond the three-year period provided by law? Are
employees hired after the stipulated term of a CBA entitled to the benefits provided
thereunder?
These are the issues at the heart of the instant petition for certiorari with prayer for
the issuance of preliminary injunction and/or temporary restraining order filed by
petitioner New Pacific Timber & Supply Company, Incorporated against the
National Labor Relations Commission (NLRC), et. al., and the National Federation
of Labor, et. al.
The antecedents facts, as found by the NLRC, are as follows:

The National Federation of Labor (NFL, for brevity) was certified as the sole and
exclusive bargaining representative of all the regular rank-and-file employees of
New Pacific Timber & Supply Co., Inc. (hereinafter referred to as petitioner
Company). 1 As such, NFL started to negotiate for better terms and conditions of
employment for the employees in the bargaining unit which it represented.
However, the same was allegedly met with stiff resistance by petitioner Company,
so that the former was prompted to file a complaint for unfair labor practice (ULP)
against the latter on the ground of refusal to bargain collectively. 2
On March 31, 1987, then Executive Labor Arbiter Hakim S. Abdulwahid issued an
order declaring (a) herein petitioner Company guilty of ULP; and (b) the CBA
proposals submitted by the NFL as the CBA between the regular rank-and-file
employees in the bargaining unit and petitioner Company. 3
Petitioner Company appealed the above order to the NLRC. On November 15,
1989, the NLRC rendered a decision dismissing the appeal for lack of merit. A
motion for reconsideration thereof was, likewise, denied in a Resolution, dated
November 12, 1990. 4
Unsatisfied, petitioner Company filed a petition for certiorari with this Court. But the
Court dismissed said petition in a Resolution, dated January 21, 1991. 5
Thereafter, the records of the case were remanded to the arbitration branch of
origin of the execution of Labor Arbiter Abdulwahid's Order, dated March 31, 1987,
granting monetary benefits consisting of wage increases, housing allowances,
bonuses, etc. to the regular rank-and-file employees. Following a series of
conferences to thresh out the details of computation, Labor Arbiter Reynaldo S.
Villena issued an Order, dated October 18, 1993, directing petitioner Company to
pay the 142 employees entitled to the aforesaid benefits the respective amounts
due them under the CBA. Petitioner Company complied; and the corresponding
quitclaims were executed. The case was considered closed following NFL's
manifestation that it will no longer appeal the October 18, 1993 Order of Labor
Arbiter Villena. 6

However, notwithstanding such manifestation, a "Petition for Relief" was filed in
behalf of 186 of the private respondents "Mariano J. Akilit and 350 others" on May
12, 1994. In their petition, they claimed that they were wrongfully excluded from
enjoying the benefits under the CBA since the agreement with NFL and petitioner
Company limited the CBA's implementation to only the 142 rank-and-file
employees enumerated. They claimed that NFL's misrepresentations had
precluded them from appealing their exclusion. 7
Treating the petition for relief as an appeal, the NLRC entertained the same. On
August 4, 1994, said commission issued a resolution 8 declaring that the 186
excluded employees "form part and parcel of the then existing rank-and-file
bargaining unit" and were, therefore, entitled to the benefits under the CBA. The
NLRC held, thus:
WHEREFORE, the appeal is hereby granted and the Order of the Labor arbiter
dated October 18, 1993 is hereby. Set Aside and Vacated. In lieu hereof, a new
Order is hereby issued directing respondent New Pacific Timber & Supply Co., Inc.
to pay all its regular rank-and-file workers their wage differentials and other
benefits arising from the decreed CBA as explained above, within ten (10) days
from receipt of this order.
SO ORDERED. 9
Petitioner Company filed a motion for reconsideration of the aforequoted

resolution.
Meanwhile, four separate groups of the private respondents, including the original
186 who had filed the "Petition for Relief" filed individual money claims, docketed
as NLRC Cases Nos. M-001991-94 to M-001994-94, before the Arbitration Branch
of the NLRC, Cagayan de Oro City. However, Labor Arbiter Villena dismissed
these cases in Orders, dated March 11, 1994; April 13, 1994; March 9, 1994; and,
May 10, 1994. The employees appealed the respective dismissals of their
complainants to the NLRC. The latter consolidated these appeals with the
aforementioned motion for reconsideration filed by petitioner Company.
On February 29, 1996, the NLRC issued a resolution, the dispositive portions of
which reads as follows:
WHEREFORE, the instant petition for reconsideration of respondent is DENIED for
lack of merit and the Resolution of the Commission dated August 4,
1994 Sustained. The separate orders of the Labor Arbiter dated March 11, 1994,
April 13, 1994, March 9, 1994 and May 10, 1994, respectively, in NLRC Cases
Nos. M-001991-94 to M-001994-94 are Set Aside and Vacated for lack of legal
bases.
Conformably, respondent New Pacific Timber and Supply Co., Inc., is hereby
directed to pay individual complainants their CBA benefits in the aggregate amount
of P13,559,510.37, the detailed computation thereof is contained in Annex "A"
which forms an integral part of this resolution, plus ten (10%) percent thereof as
Attorney's fees.
SO ORDERED. 10
Hence, the instant petition wherein petitioner Company raises the following issues:
I
THE PUBLIC RESPONDENT NLRC COMMITTED GRAVE ABUSE OF
DISCRETION IN ALLOWING THE "PETITION FOR RELIEF" TO PROSPER.
II
THE PUBLIC RESPONDENT NLRC COMMITTED GRAVE ABUSE OF
DISCRETION IN RULING THAT PRIVATE RESPONDENTS MARIANO AKILIT
AND 350 OTHERS ARE ENTITLED TO BENEFITS UNDER THE COLLECTIVE
BARGAINING AGREEMENT IN SPITE OF THE FACT THAT THEY WERE NOT
EMPLOYED BY THE PETITIONER MUCH LESS WERE THEY MEMBERS OF
THE BARGAINING UNIT DURING THE TERM OF THE CBA.
III

III
PUBLIC RESPONDENT NLRC COMMITTED GRAVE ABUSE OF DISCRETION
IN MAKING FACTUAL FINDINGS WITHOUT BASIS.
IV
THE DISPOSITIVE PORTIONS OF THE ASSAILED RESOLUTIONS ARE
DEFECTIVE AND/OR REVEAL THE GRAVE ABUSE OF DISCRETION COMMITTE D
BY PUBLIC RESPONDENT. 11
Petitioner company contends that a "Petition of Relief" is not the proper mode of
seeking a review of a decision rendered by the arbitration branch of the
NLRC. 12 According to the petitioner, nowhere in the Labor Code or in the NLRC
Rules of Procedure is there such a pleading. Rather, the remedy of a party
aggrieved by an unfavorable of the labor arbiter is to appeal said judgment to the
NLRC. 13
Petitioners asseverates that even assuming that the NLRC correctly treated the
petition for relief as an appeal, still, it should not have allowed the same to prosper,
because the petition was filed several months after the ten-day reglementary
period for filing an appeal had expired; and therefore, it failed to comply with the
requirements of an appeal under the Labor Code and the NLRC Rules of
Procedure.
Petitioner Company further contends that in filing separate complaints and/or

money claims at the arbitration level in spite of their pending petition for relief and
in spite of the final order, dated October 18, 1993, in NLRC Case No. RAB-
IX-0334-82, the private respondents were in fact forum-shopping, an act which is
proscribed as trifling with the courts and abusing their practices.
Anent the second issue, petitioners argues that the private respondents are not
entitled to the benefits under the CBA because employees hired after the term of a
CBA are not parties to the agreement, and therefore, may not claim benefits
thereunder, even if they subsequently become members of the bargaining unit.
As for the term of the CBA, petitioner maintains that Article 253 of the Labor Code
refers to the continuation in full force and effect of the previous CBA's terms and
conditions. By necessity, it could not possibly refers to terms and conditions which,
as expressly stipulated, ceased to have force and effect. 14
According to petitioner, the provision on wage increase in the 1981 to 1984 CBA
between petitioner Company and NFL provided for yearly wage increases.
Logically, these provisions ended in the years 1984 — the last year that the
economic provisions of the CBA were, to contract and law, effective. Petitioner
claims that there is no contractual basis for the grant of CBA benefits such as wage
increases in 1985 and subsequent years, since the CBA stipulated only the
increases for the years 1981 to 1984.
Moreover, petitioner alleges that it was through no fault of theirs that no new CBA
was entered pending appeal of the decision in NLRC Case No. RAB-IX-0334-82.
Finally, petitioner Company claims that it was never given the opportunity to submit
a counter-computation of the benefits supposedly due the private respondents.
Instead, the NLRC allegedly relied on the self-serving computations of private
respondents.
Petitioner's contentions as untenable.

We find no grave abuse of discretion on the part of the NLRC, when it entertained
the petition for relief filed by the private respondents and treated it as an appeal,
even if it was filed beyond the reglementary period for filing an appeal. Ordinarily,
once a judgment has become final and executory, it can no longer be disturbed,
altered or modified. However, a careful scrutiny of the facts and circumstances of
the instant case warrants liberality in the application of technical rules and
procedure. It would be a greater injustice to deprive the concerned employees of
the monetary benefits rightly due them because of a circumstance over which they
had no control. As stated above, private respondents, in their petition for relief,

claimed that they were wrongfully excluded from the list of those entitled to the
CBA benefits by their union, NFL, without their knowledge; and, because they were
under the impression that they were ably represented, they were not able to appeal
their case on time.
The Supreme Court has allowed appeals from decisions of the labor arbiter to the
NLRC, even if filed beyond the reglementary period, in the interest of
justice. 15 Moreover, under Article 218 (c) of the Labor Code, the NLRC may, in the
exercise of its appellate powers, "correct, amend or waive any error, defect or
irregularity whether in the substance or in form." Further, Article 221 of the same
provides that "In any proceeding before the Commission or any of the Labor
Arbiters, the rules of evidence prevailing in courts of law or equity shall not be
controlling and it is the spirit and intention of this Code that the Commission and its
members and the Labor Arbiter 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. . . . 16
Anent the issue of whether or not the term of an existing CB, particularly as to its
economic provisions, can be extended beyond the period stipulated therein, and
even beyond the three-year period prescribed by law, in the absence of a new
agreement, Article 253 of the Labor Code explicitly provides:
Art. 253. Duty to bargain collectively when there exists a collective bargaining
agreement. — When there is a collective bargaining agreement, the duty to
bargain collectively shall also mean that neither party shall terminate nor modify
such agreement during its lifetime. However, either party can serve a written notice
to terminate or modify the agreement at least sixty (60) days prior to its expiration
date. It shall be the duty of both parties to keep the status quo and to continue in
full force and effect the terms and conditions of the existing agreement during the
60-day period and/or until a new agreement is reached by the parties. (Emphasis
supplied.)
It is clear from the above provision of law that until a new Collective
Bargaining Agreement has been executed by and between the parties, they
are duty-bound to keep the status quo and to continue in full force and effect
the terms and conditions of the existing agreement. The law does not
provide for any exception nor qualification as to which of the economic
provisions of the existing agreement are to retain force and effect, therefore,
it must be understood as encompassing all the terms and conditions in the
said agreement.
In the case at bar, no new agreement was entered into by and between petitioner
Company and NFL pending appeal of the decision in NLRC Case No. RAB-
IX-0334-82; nor were any of the economic provisions and/or terms and conditions
pertaining to monetary benefits in the existing agreement modified or altered.
Therefore, the existing CBA in its entirety, continues to have legal effect.
In a recent case, the Court had occasion to rule that Article 253 and
253-A 17 mandate the parties to keep the status quo and to continue in full force
and effect the terms and conditions of the existing agreement during the 60-day
period prior to the expiration of the old CBA and/or until a new agreement is
reached by the parties. Consequently, the automatic renewal clause provided for
by the law, which is deemed incorporated in all CBA's, provides the reason why the
new CBA can only be given a prospective effect. 18
In the case of Lopez Sugar Corporation vs. Federation of Free

Workers, et. al, 19 this Court reiterated the rule although a CBA has expired, it
continues to have legal effects as between the parties until a new CBA has been
entered into. It is the duty of both parties to the CBA to keep the status quo, and to
during the 60-day period and/or until a new agreement is reached by the parties. 20
To rule otherwise, i.e., that the economic provisions of the existing CBA in the
instant case ceased to have force and effect in the year 1984 would be to create a
gap during which no agreement would govern, from the time the old contract

gap during which no agreement would govern, from the time the old contract
expired to the time a new agreement shall have been entered into. For if, as
contended by the petitioner, the economic provisions of the existing CBA were to
have no legal effect, what agreement as to wage increases and other monetary
benefits would govern at all? None, it would seem, if we are to follow the logic of
petitioner Company. Consequently, the employees from the year 1985 onwards
would be deprived of a substantial amount of monetary benefits which they could
have enjoyed had the terms and conditions of the CBA remained in force and
effect. Such a situation runs contrary to the very intent and purpose of Article 253
and 253-A of the Labor Code which is to curb labor unrest and to promote
industrial peace, as can be gleaned from the discussion of the legislators leading to
the passage of the said laws, thus:
HON. CHAIRMAN HERRERA: Pag nag-survey tayo sa mga unyon, ganoon ang
mangyayari. And I think our responsibility here is to create a legal framework to
promote industrial peace and to develop responsible and fair labor movement.
HON. CHAIRMAN VELOSO: In other words, the longer the period of the effectivity.
xxx xxx xxx
HON. CHAIRMAN VELOSO: (continuing) . . . . in other words, the longer the period
of effectivity of the CBA, the better for industrial peace.
xxx xxx xxx 21
Having established that the CBA between petitioner Company and NFL remained
in full force and effect even beyond the stipulated term, in the absence of a new
agreement; and, therefore, that the economic provisions such as wage increases
continued to have legal effect, we are now faced with the question of who are
entitled to the benefits provided thereunder.
Petitioner Company insists that the rank-and-file employees hired after the term of
the CBA inspite of their subsequent membership in the bargaining unit, are not
parties to the agreement, and certainly may not claim the benefits thereunder.
We do not agree. In a long line of cases, this Court has held that when a collective
bargaining contract is entered into by the union representing the employees and
the employer, even the non-member employees are entitled to the benefits of the
contract. To accord its benefits only to members of the union without any valid
reason would constitute undue discrimination against nonmembers. 22 It is even
conceded, that a laborer can claim benefits from the CBA entered into between the
company and the union of which he is a member at the time of the conclusion of
the agreement, after he has resigned from the said union. 23
In the same vein, the benefits under the CBA in the instant case should be
extended to those employees who only became such after the year 1984. To
exclude them would constitute undue discrimination and deprive them of monetary
benefits they would otherwise be entitled to under a new collective bargaining
contract to which they would have been parties. Since in this particular case, no
new agreement had been entered into after the CBA's stipulated term, it is only fair
and just that the employees hired thereafter be included in the existing CBA. This
is in consonance with our ruling that the terms and conditions of a collective
bargaining agreement continue to have force and effect even beyond the stipulated
term when no new agreement is executed by and between the parties to avoid or
prevent the situation where no collective bargaining agreement at all would govern
between the employer company and its employees.
Anent the other issues raised by petitioner Company, the Court finds that these
pertain to questions of fact that have already been passed upon by the NLRC. It is
axiomatic that, the factual findings of the National Labor Relations Commissions,
which have acquired expertise because its jurisdiction is confined to specific
matters, are accorded respect and finality by the Supreme Court, when these are
supported by substantial evidence. "A perusal of the assailed resolution reveals
that the same was reached on the basis of the required quantum of evidence.
WHEREFORE, in view of the foregoing, the instant petition for certiorari is hereby
DISMISSED for lack of merit. 1âwphi 1. nê
t
SO ORDERED.

SO ORDERED.
Davide, Jr., C.J., Puno and Ynares-Santiago, JJ., concur.
Pardo, J., is on official business abroad.
Footnotes
1 Rollo, p. 42.
2 Ibid.
3 Id., at 42.
4 Id., at 43.
5 Id., at 43.
6 Id., at 46.
7 Id., at 137.
8 Id., at 40.
9 Id., at 138.
10 Id., at 69-70.
11 Id., at 12.
12 Id., at 12.
13 Id., at 13.
14 Id., at 25.
15 City Fair Corporation vs. NLRC, 243 SCRA 572 (1995).
16 Id., at 576.
17 Art. 253-A. Terms of a collective bargaining agreement. — Any Collective
Bargaining Agreement that the parties may enter into shall insofar as the
representation aspect is concerned, be for a term of five (5) years. . . . All other
provisions of the Collective Bargaining Agreement shall be renegotiated not later
than three (3) years after its execution. Any agreement on such other provisions of
the Collective Bargaining Agreement entered into within six (6) months from the
date of expiry of the term of such other provisions as fixed in such Collective
Bargaining Agreement, shall retroact to the day immediately following such date. If
any such agreement is entered into beyond six months, the parties shall agree on
bargaining agreement, the parties may exercise their rights under this Code.
18 Union of Filipino Employees vs. NLRC, 192 SCRA 414 (1990).
19 189 SCRA 179.
20 Pier 8 Arrastre & Stevedoring Services, Inc., vs. Hon. Ma. Nieves Roldan -
Confesor, et. al., 241 SCRA 294 (1995).
22 International Oil Factory Workers Union vs. Hon. Martinez, et. al., 110 Phil. 595
(1960); National Brewery & Allied Industries Labor Union vs. San Miguel Brewery
Inc., et. al., 118 Phil 806 (1963).
23 Kapisanan Ng Mga Manggagawang Pinagyakap vs. Franklin Baker Co., of the
Phil. June 3, 1949.

Faculty Association of Mapua vs. Court of Appeals (2007)
12:45 AM

G.R. No. 164060 June 15, 2007
FACULTY ASSOCIATION OF MAPUA INSTITUTE OF TECHNOLOGY vs. HON. COURT OF APPEALS, ET AL.

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 164060 June 15, 2007
FACULTY ASSOCIATION OF MAPUA INSTITUTE OF TECHNOLOGY (FAMIT), petitioner,
vs.
HON. COURT OF APPEALS, and MAPUA INSTITUTE OF TECHNOLOGY, respondents.
DEC I SI O N
QUISUMBING, J.:
This is an appeal to reverse and set aside the Decision 1 dated August 21, 2003 and the
Resolution2 dated June 3, 2004 of the Court of Appeals in CA-G.R. SP No. 71479. The appellate
court had reversed the Decision of the Office of the Voluntary Arbitrators. It held that the
incorporation of the new faculty ranking to the 2001 Collective Bargaining Agreement (CBA)
between petitioner and private respondent has been the intention of the parties to the CBA.
The facts in this case are undisputed.
In July 2000, private respondent Mapua Institute of Technology (MIT) hired Arthur Andersen to
develop a faculty ranking and compensation system. On January 29, 2001, in the 5 th CBA
negotiation meeting, MIT presented the new faculty ranking instrument to petitioner Faculty
Association of Mapua Institute of Technology (FAMIT).3 The latter agreed to the adoption and
implementation of the instrument, with the reservation that there should be no diminution in rank and
pay of the faculty members.
On April 17, 2001, FAMIT and MIT entered into a new CBA effective June 1, 2001. 4 It incorporated
the new ranking for the college faculty in Section 8 of Article V which states that, "A new faculty
ranking shall be implemented in June 2001. However, there shall be no diminution in the existing
rank and the policy ‗same rank, same pay‘ shall apply."5
The faculty ranking sheet was annexed to the CBA as Annex "B," while the college faculty rates
sheet for permanent faculty and which included the point ranges and corresponding pay rates per
faculty level was added as Annex "C."
When the CBA took effect, the Vice President for Academic Affairs issued a memorandum to all
deans and subject chairs to evaluate and re-rank the faculty under their supervision using the new
ranking instrument. Eight factors were to be considered and given their corresponding weights/points
according to levels attained per factor. Among these were: (1) educational attainment; (2)
professional honors received; (3) relevant training; (4) relevant professional experience; (5) scholarly
work and creative efforts; (6) award winning works; (7) officership in relevant technical and
professional organizations; and (8) administrative positions held at MIT. 6
After a month, MIT called FAMIT‘s attention to what it perceived to be flaws or omissions in the CBA
signed by the parties. In a letter 7 dated July 5, 2001 to FAMIT, MIT requested for an amendment of
the following CBA annexes – Annex "B" (Faculty Ranking Sheet); Annex "C" (College Faculty Rates
for Permanent Faculty Only); and Annex "D" (H.S. Faculty Rates for Permanent Faculty Only). MIT
claimed that with respect to Annexes "C" and "D," these contained data under the heading "TOTAL
POINTS" that were not germane to the two other columns in both annexes. With regard to the
Faculty Ranking Point Range sheet of the new faculty ranking instrument, MIT avers that this was
inadvertently not attached to the CBA.
FAMIT rejected the proposal. It said that these changes would constitute a violation of the ratified
2001 CBA and result in the diminution of rank and benefits of FAMIT college faculty. It argued that
the proposed amendment in the ranking system for the college faculty revised the point ranges
earlier agreed upon by the parties and expands the 19 faculty ranks to 23.
Meanwhile, MIT instituted some changes in the curriculum during the school year 2000-2001 which
resulted in changes in the number of hours for certain subjects. Thus, MIT adopted a new formula

resulted in changes in the number of hours for certain subjects. Thus, MIT adopted a new formula
for determining the pay rates of the high school faculty: Rate/Load x Total Teaching Load =
Salary where total teaching load equals number of classes multiplied by hours of service per week
divided by 3 hours (as practiced, one unit subject is equal to 3 hours service).
Upon learning of the changes, FAMIT opposed the formula. It averred that unknown to FAMIT, MIT
has not been implementing the relevant provisions of the 2001 CBA. In particular, FAMIT cites
Section 2 of Article VI, which states as follows:
ARTICLE VI
General Wage Clause
xx x x
Section 2. The INSTITUTE shall pay the following rate per load for high school faculty according to
corresponding faculty rank, to wit:
· 25% increase in per rate/load for all high school faculty members effective November 2000;
· 10% increase in per rate/load for all permanent high school faculty members effective June
2001.8 (Emphasis supplied.)
On July 20, 2001, FAMIT met with MIT to settle this second issue but to no avail. MIT maintained
that it was within its right to change the pay formula used.
Hence, together with the issue pertaining to the ranking of the college faculty, FAMIT brought the
matter to the National Conciliation and Mediation Board for mediation. Proceedings culminated in the
submission of the case to the Panel of Voluntary Arbitrators for resolution.
The Panel of Voluntary Arbitrators ruled in favor of the petitioner. It ordered the private respondent
to:
1. Implement the agreed upon point range system with 19 faculty ranks, along with the
corresponding pay levels for the college faculty, consistent with the provisions of Article V,
Section 8 of the 2001 CB[A] and Annex C of the said CBA, and
2. Comply with the provisions of Article VI, Section 2 of the existing CBA, using past
practices or formula in computing the pay of high school faculty based on rate per load and
to pay the faculty their corresponding rates on this basis,
Both actions of which (sic) should be made concurrent with the effectivity of the current CBA.
SO ORDERED.9
On appeal, the Court of Appeals reversed the ruling of the Panel of Voluntary Arbitrators and
decreed as follows:
WHEREFORE, the petition is hereby GRANTED. The assailed decision of the voluntary arbitrators
is REVERSED. Accordingly, petitioner‘s proposal to include the faculty point range sheet in Annex
"B" of the 2001 CBA, as well as to replace Annex "C" with the document on the 23-level faculty
ranking instrument and replace the column containing the heading "Total Points" which is attached in
Annexes "C" and "D" of the 2001 CBA with the correct data is also GRANTED.
SO ORDERED.10
Hence, the instant petition.
The petitioner enumerated issues for resolution, to wit:
I
WHETHER THE PRIVATE RESPONDENT MAY PROPERLY, LEGALLY AND VALIDLY ALTER,
CHANGE AND/OR MODIFY UNILATERAL[L]Y PROVISIONS OF THE COLLECTIVE
[BARGAINING] AGREEMENT (CBA) IT HAD NEGOTIATED, ENTERED INTO AND SIGNED WITH
THE PETITIONER AND SUBSEQUENTLY RATIFIED AND ENFORCED BY THE PARTIES; AND
II
WHETHER PRIVATE RESPONDENT MAY PROPERLY, LEGALLY AND VALIDLY CHANGE[,]
ALTER AND/OR REPLACE UNILATERAL[L]Y A PROVISION OR FORMULA EMBODIED IN A
PERFECTED, EXISTING AND ALREADY ENFORCED CBA TO THE PREJUDICE, OR MORE
SPECIFICALLY TO THE DIMINUTION OF SALARY/BENEFITS AND DOWNGRADING OF RANKS,
OF ITS COLLEGE AND HIGH SCHOOL FACULTY.11
Simply put, the issues for our determination are: (1) Is MIT‘s new proposal, regarding faculty ranking
and evaluation, lawful and consistent with the ratified CBA? and (2) Is MIT‘s development of a new
pay formula for the high school department, without the knowledge of FAMIT, lawful and consistent
with the ratified CBA?
On the first issue, FAMIT avers that MIT‘s new proposal on faculty ranking and evaluation for the
college faculty is an unlawful modification, alteration or amendment of the existing CBA without
approval of the contracting parties.
On the other hand, MIT argues that the new faculty ranking instrument was made in good faith and
in the exercise of its inherent prerogative to freely regulate according to its own discretion and
judgment all aspects of employment.
Considering the submissions of the parties, in the light of the existing CBA, we find that the new
point range system proposed by MIT is an unauthorized modification of Annex "C" of the 2001 CBA.

point range system proposed by MIT is an unauthorized modification of Annex "C" of the 2001 CBA.
It is made up of a faculty classification that is substantially different from the one originally
incorporated in the current CBA between the parties. Thus, the proposed system contravenes the
existing provisions of the CBA, hence, violative of the law between the parties.
As observed by Office of the Voluntary Arbitrators, the evaluation system differs from past evaluation
practices (e.g., those that give more weight to tenure and faculty load) such that the system can lead
to a demotion in rank for a faculty member. A perfect example of this scenario was cited by FAMIT in
its Memorandum:
xx x x
Take the case of a faculty member with 17 years of teaching experience who has a Phd. Degree.
For school year 2000-2001 his corresponding rank is Professor 3 with 4001-4500 points using the
previous CBA. If the college faculty member is ranked based on the ratified 2001 CBA, his/her
corresponding rank would increase to Professor 5 with 5001-5500 points.
But if the proposal of private respondent is used, the professor, would be ranked as Associate
Professor 5 with 5001-5749 points, instead of Professor 5 as recognized by the 2001 CBA. True,
there may be an increase in points but there is also a resulting diminution in rank from Professor 3
based on the previous CBA to Associate Professor 5. This would translate to a reduction of the
salary increase he is entitled to under the 2001 CBA.12
According to FAMIT, this patently is a violation of Section 8, Article V of the 2001 CBA.
Noteworthy, Article 253 of the Labor Code states:
ART. 253. Duty to bargain collectively when there exists a collective bargaining agreement.–
When there is a collective bargaining agreement, the duty to bargain collectively shall also mean that
new agreement is reached by the parties.
REVISED PAGE
Until a new CBA is executed by and between the parties, they are duty-bound to keep the status
quo and to continue in full force and effect the terms and conditions of the existing agreement. The
law does not provide for any exception nor qualification on which economic provisions of the existing
agreement are to retain its force and effect. Therefore, it must be understood as encompassing all
the terms and conditions in the said agreement.13
The CBA during its lifetime binds all the parties. The provisions of the CBA must be respected since
its terms and conditions "constitute the law between the parties." Those who are entitled to its
benefits can invoke its provisions. In the event that an obligation therein imposed is not fulfilled, the
aggrieved party has the right to go to court and ask redress. 14 The CBA is the norm of conduct
between petitioner and private respondent and compliance therewith is mandated by the express
policy of the law.15
On the second issue, FAMIT avers that MIT unilaterally modified the CBA formula in determining the
salary of a high school faculty. MIT counters that it is entitled to consider the actual number of
teaching hours to arrive at a fair and just salary of its high school faculty.
Again, we are in agreement with FAMIT‘s submission. We rule that MIT cannot adopt its unilateral
interpretation of terms in the CBA. It is clear from the provisions of the 2001 CBA that the salary of a
high school faculty member is based on a rate per load and not on a rate per hour basis. Section 2,
Article VI of the 2001 CBA provides:
xx x x
Section 2. The INSTITUTE shall pay the following rate per load for high school faculty according to
corresponding faculty rank, to wit:
· 25% increase in per rate/load for all high school faculty members effective November 2000.
· 10% increase in per rate/load for all permanent high school faculty members effective June
2001.16 (Emphasis supplied.)
In our view, there is no room for unilateral change of the formula by MIT. Needless to stress, the
Labor Code is specific in enunciating that in case of doubt in the interpretation of any law or
provision affecting labor, such should be interpreted in favor of labor. 17 The appellate court
committed a grave error in the interpretation of the CBA provision and the governing law.
WHEREFORE, the instant petition is GRANTED. The Decision dated August 21, 2003 and the
Resolution dated June 3, 2004 of the Court of Appeals denying the motion for reconsideration
are REVERSED and SET ASIDE. The decision of the Office of the Voluntary Arbitrators
is REINSTATED. MIT‘s unilateral change in the ranking of college faculty from 19 levels to 23 levels,
and the computation of high school faculty salary from rate per load to rate per hour basis
is DECLARED NULL AND VOID for being violative of the parties‘ CBA and the applicable law.

is DECLARED NULL AND VOID for being violative of the parties‘ CBA and the applicable law.
Costs against private respondent MIT.
SO ORDERED.
Carpio, Tinga, Velasco, JJ., concur.
Carpio-Morales, J., on official leave.
Footnotes
1 Rollo, pp. 43-51. Penned by Associate Justice Eloy R. Bello, Jr., with Associate Justices Amelita G.
Tolentino and Jose G. Mendoza concurring.

2
Id. at 62.
3 Id. at 86-93.
4 Id. at 132-141.
5
Id. at 134.
6
Id. at 197.
7 Id. at 153.
8 Id. at 134.
9
Id. at 212.
10
Id. at 51.
11 Id. at 331.
12 Id. at 336.
13
New Pacific Timber & Supply Company, Inc. v. NLRC, G.R. No. 124224, March 17, 2000, 328
SCRA 404, 412-413.
14 Holy Cross of Davao College, Inc. v. Holy Cross of Davao Faculty Union-KAMAPI, G.R. No.
156098, June 27, 2005, 461 SCRA 319, 327, citing Mactan Workers Union v. Aboitiz, No. L-30241,
June 30, 1972, 45 SCRA 577, 581.
15 Dole Philippines, Inc. v. Pawis ng Makabayang Obrero, G.R. No. 146650, January 13, 2003, 395
SCRA 112, 116.

16 Rollo, p. 134.
17
Labor Code, Art. 4.
ART. 4. Construction in favor of labor.-All doubts in the implementation and interpretation of the
provisions of this Code, including its implementing rules and regulations, shall be resolved in favor of
labor.

Philcom Employees Union v. Philippine Global Telecommunications
2006
12:46 AM

G.R. No. 144315 July 17, 2006
PHILCOM EMPLOYEES UNION vs. PHILIPPINE GLOBAL COMMUNICATIONS, ET AL.

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 144315 July 17, 2006
PHILCOM EMPLOYEES UNION, petitioner,
vs.
PHILIPPINE GLOBAL COMMUNICATIONS and PHILCOM CORPORATION, respondents.
DEC I SI O N
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.

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.

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

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
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

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.
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 itsManifestation/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

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 paper 21 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

given or being about to give testimony under 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
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:

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.

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:
xx x x
B. Communications:
1) Wire or wireless telecommunications such as telephone, telegraph, telex, and cable companies or
firms; (Emphasis supplied)
xx x x
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

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

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.
xx x x
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.
Quisumbing, Chairman, Carpio-Morales, Tinga, Velasco, Jr., J.J., concur.
Footnotes
1 Under Rule 45 of the 1997 Rules of Civil Procedure.
2
Penned by Associate Justice Fermin A. Martin, Jr., with Associate Justices Salvador J. Valdez, Jr.
and Remedios S. Fernando, concurring. Rollo, pp. 869-888.
3 Rollo, pp. 871-874.
4 Id. at 582-583.
5
Id. at 584.
6
Id. at 585-595.
7 Id. at 597-603.
8 Id. at 605-612.
9
Id. at 622-623.
10 Id. at 623.
11 364 Phil. 44 (1999).
12
Rollo, p. 637.
13
Id. at 887-888.

12
Rollo, p. 637.
13
Id. at 887-888.
14 347 Phil. 602 (1997).
15 Rollo, pp. 52-53.
16
Manila Diamond Hotel Employees' Union v. Court of Appeals, G.R. No. 140518, 16 December
2004, 447 SCRA 97.
17 Trans-Asia Shipping Lines, Inc.-Unlicensed Crews Employees Union-Associated Labor Unions
(Tasli-Alu) v. Court of Appeals, G.R. No. 145428, 7 July 2004, 433 SCRA 610.
18
Rollo, pp. 691-692.
19
LMG Chemicals Corporation v. Secretary of the Department of Labor and Employment, G.R. No.
127422, 17 April 2001, 356 SCRA 577; International Pharmaceuticals, Inc. v. Secretary of
Labor, G.R. Nos. 92981-83, 9 January 1992, 205 SCRA 59.
20
Rollo, p. 579.
21
Id. at 422-440.
22 Id. at 548-568.
23 Great Pacific Life Employees Union v. Great Pacific Life Assurance Corporation, G.R. No. 126717,
11 February 1999, 303 SCRA 113; Cesario A. Azucena, Jr., II The Labor Code with Comments and
Cases 210 (5th ed. 2004) [The Labor Code with Comments and Cases].
24 Rollo, pp. 880-886.
25 Unicorn Safety Glass, Inc. v. Basarte, G.R. No. 154689, 25 November 2004, 444 SCRA
287; Benguet Electric Cooperative v. Fianza, G.R. No. 158606, 9 March 2004, 425 SCRA 41.
26 II The Labor Code with Comments and Cases 214.
27 ART. 261, Labor Code. x x x 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.
28
Rollo, pp. 110-112.
29
Allied Banking Corp. v. NLRC, G.R. No. 116128, 12 July 1996, 258 SCRA 724.
30 Telefunken Semiconductors Employees Union-FFW v. Sec. of Labor and Employment, 347 Phil.
447 (1997); St. Scholastica's College v. Torres, G.R. No. 100158, 29 June 1992, 210 SCRA 565.
31
Rollo, p. 444.
32
Id. at 35.
33 Id. at 1006.
34 Id. at 996.
35
Id. at 38-39.
36
Asian Transmission Corporation v. NLRC, G.R. No. 88725, 22 November 1989, 179 SCRA 582.
37 Grand Boulevard Hotel v. Genuine Labor Organization of Workers in Hotel, Restaurant and Allied
Industries (GLOWHRAIN), 454 Phil. 463 (2003).

38
St. Scholastica's College v. Torres, supra note 30.
39
Allied Banking Corp. v. NLRC, supra note 29.
40 Federation of Free Workers v. Inciong, G.R. No. 49983, 20 April 1992, 208 SCRA 157.
41 Rollo, pp. 445-448.
42
Liwayway Publications, Inc. v. Permanent Concrete Workers Union, 195 Phil. 51 (1981).
43 Great Pacific Life Employees Union v. Great Pacific Life Assurance Corporation, supra note 23.
44 St. Scholastica's College v. Torres, supra note 30.
45 Rollo, p. 443.
46
San Miguel Corp. v. NLRC, 451 Phil. 514 (2003).
47 Rollo, p. 70.
48 Id. at 579.
49
Id. at 307.
50
Id. at 583.
51 Id. at 507-508.
52 Tiu v. NLRC, 343 Phil. 478 (1997).
53
II The Labor Code with Comments and Cases 443.


Nissan Motors vs. Secretary (2006)
12:50 AM
PHILIPPINE JURISPRUDENCE – FULL TEXT

G.R. No. 158190 June 21, 2006
NISSAN MOTORS PHIL., INC. VS. SEC. OF LABOR ETC., ET AL.

SUPREME COURT
Manila
SECOND DIVISION
G.R. Nos. 158190-91 June 21, 2006
NISSAN MOTORS PHILIPPINES, INC., Petitioner,
vs.
SECRETARY OF LABOR AND EMPLOYMENT and BAGONG NAGKAKAISANG LAKAS SA NISSAN MOTOR
PHILIPPINES, INC. (BANAL-NMPI-OLALIA-KMU), Respondents.
x--------------------------------------x
G.R. Nos. 158276 and 158283 June 21, 2006
BAGONG NAGKAKAISANG LAKAS SA NISSAN MOTORS PHILIPPINES, INC. (BANAL-NMPI-OLALIA-KMU),
Petitioner,
vs.
COURT OF APPEALS (SPECIAL DIVISION OF FIVE), SECRETARY OF LABOR and EMPLOYMENT and
NISSAN MOTORS PHILIPPINES, INC., Respondents.
DE C I S I O N
GARCIA, J.:
Assailed and sought to be set aside in these petitions for review under Rule 45 of the Rules of Court are
the Decision of the Court of Appeals (CA) dated February 7, 20031 and its Resolution of May 15, 2003,2 in
CA-G.R. SP No. 69107 and CA G.R. SP No. 69799, denying the petitions for certiorari separately
interposed by Nissan Motor Philippines, Inc. ("Nissan Motor" or "Company") and Bagong Nagkakaisang
Lakas sa Nissan Motor Philippines, Inc. (BANAL-NMPI-OLALIA-KMU).
Docketed as G.R. Nos. 158190-91, Nissan Motor’s petition excepts from the assailed ruling of the
appellate court insofar as it affirmed (a) the award by the respondent Secretary of Labor and
Employment of certain economic benefits to the company’s rank-and-file workers and (b) the recall of
the dismissal of 140 Union members. On the other hand, the petition of BANAL-NMPI-OLALIA-KMU
("Union" hereafter), docketed as G.R. Nos. 158276 and 158283, assails the respondent Secretary’s
holding that the Union and its members engaged in a concerted work slowdown despite the issuance of
the assumption of jurisdiction order dated August 22, 2001,3 infra, and subsequent orders of similar
import. The same petition raises too the issue respecting the correctness of the CA’s resolution citing
the Union’s counsel for contempt.
In gist, the case turns on the labor dispute triggered by a collective bargaining deadlock between Nissan
Motor and the Union resulting in the filing of four (4) notices of strike with the National Conciliation and
Mediation Board (NCMB). Filed on December 4, 2000, the first Notice of Strike (NCMB-RBIV-LAG-
NS-12-045-00), on the ground of alleged unfair labor practice, stemmed from the suspension of about
140 company employees, following the November 15, 2000 disruptive protest action arising from the
employees’ demand for payment of the 2nd half of their 13th month pay. The Union filed the second
strike notice (NCMB-RBIV-LAG-NS-07-027-01) on July 24, 2001 on the ground of deadlock in collective
bargaining involving a mix of economic and non-economic issues.
On August 22, 2001, the Department of Labor and Employment (DOLE), upon Nissan Motor’s petition,
issued an order assuming jurisdiction over the dispute at Nissan Motor. In it, the DOLE Secretary
expressly enjoined any strike or lockout and directed the parties to cease and desist from committing
any act that might exacerbate the situation, and for the Union to refrain from any slowdown and other
any act that might exacerbate the situation, and for the Union to refrain from any slowdown and other
similar activities that may disrupt company operations or bring its production to belowits normal and
usual levels.
What happened next is summarized in the Decision of the respondent DOLE Secretary dated December
5, 2001,4 viz:
On 27 August 2001, the Union filed a 3rd Notice of Strike … on the ground of illegal lockout, illegal
suspension, union busting ….
xxx xxx xxx
On 12 September 2001, [the DOLE] issued an Order directing that the 3rd Notice of Strike be
consolidated with the first two notices …; reiterating the injunction against strike or lockout, and
directing the parties to cease and desist from committing acts which may aggravate the situation and to
refrain from any slowdown.
On 18 September 2001, the Union filed a [reiterative] Urgent Petition to Suspend the Effects of
Termination of union officers and members, now numbering 43 ….
On 24 September 2001, the Company filed its Position Paper.
On 18 September 2001, the Union filed a 4th Notice of Strike … on grounds of alleged illegal dismissal of
eighteen (18) union officials, illegal lockout on account of the forced leave, coercion/intimidation, union
busting and non-payment of salaries for the period August 15-30, 2001.
On 28 September 2001, Acting [DOLE] Secretary Arturo D. Brion issued an Order consolidating the 4th
notice of strike with the first three (3) notices … and reiterating the injunction contained in the
assumption of jurisdiction order of 22 August 2001 and the Order of 12 September 2001.
xxx xxx xxx
On 05 October 2001, the Company filed a Motion to Deputize PNP Laguna to Secure, Maintain and
Preserve Free Ingress and Egress of NMPI, alleging … that despite the injunctions … against any
slowdown and strike, the Union went on actual strike on 01 October 2001, picketed and blocked the
company offices, and plant premises; unlawfully blocked and obstructed all entrances and exits points.
On 08 October 2001, the Union filed a ‘Mosyon Laban sa Deputasyon *ng PNP+,’….
xxx xxx xxx
On 13 October 2001, the Secretary of Labor issued an Order deputizing the *PNP+ ….
On 22 October 2001, the Union filed a Supplemental Position Paper with Reply alleging that the
bargaining unit at NMPI … is composed of 360 highly skilled employees; that the workers are always on
forced leave; work is only for 4 or 5 days. The average daily salary of employees is P400.00 which is
allegedly below the poverty line …. The average monthly salary of employees is P10,000.00 for rank and
file P20,000.00 for supervisory (sic).
The Union states further that the Company realized P3.2 Billion in gross sale for the year 2000; that it is
very flexible with the pricing of its products which price ranges from P750,000.00 to P1.3 Million; that
the estimated direct labor cost is only P68.180 Million.
On the political issues, the Union alleges that 140 union officers and members were placed under
suspension from 3-6 days without observing procedural due process. xxx. The Union alleges too that the
Company abused its prerogative in imposing discipline ….
The Union accuses the Company of violating the assumption of jurisdiction order by falsely accusing the
Union of committing slowdown and placing them on forced leave, as on (sic) June 18, 30, July 7, 14, &
21. While all these were taking place and up until 23 July, the Union claims, the CKD parts have not
arrived thus, the low production.
The Union claims that after the filing of the 2nd notice of strike, the Company charged the Union with
engaging in work slowdown. Despite explanation that the low production was due to many reasons
none of which is attributable to a slowdown; …. The Union requested for grievance but the Company
ignored it.
The Union claims that the charge against the employees of violation of the assumption of jurisdiction
order is just a *union busting+ ploy …. It claims likewise that the Company also violated the assumption
order, therefore the principle of pari delicto applies to both parties.
The Union explained also its position on the CBA deadlock ….
On 26 October 2001, the Company filed its Reply to the Union’s Position Paper *later followed by+ a
Rejoinder to the Union’s Reply *therein alleging+ ... that the first notice of strike is totally without merit
as the Union’s charge of *UPL+ is not supported by the events xxx.

as the Union’s charge of *UPL+ is not supported by the events xxx.
The charge of illegal suspension of more or less 140 union members ranging from 3 to 6 days is without
merit as the action was in the exercise of management’s prerogative to instill discipline among its
employees. The Company asserts that the suspension was a sanction for the employees’ misconduct
committed on 15 November 2000, by refusing to go back to their assigned workstations, and instead
demanding payment of the 2nd half of their 13th month pay. The suspension from work was imposed as
a disciplinary measure under the Company Rules … and after observance of due process, the Company
alleges. The Company notes that the subject employees failed to submit satisfactory explanation within
the 48-hour period granted to them. The incident was recorded in the Company’s Exhibits …. A copy of
the Notice of Charge, marked as Exhibit "J," a copy of the Notice of Suspension, marked as Exhibit "K,"
and the Affidavit of Mr. Artemio del Rosario, marked as Exhibit "M" were submitted to further support
the claim of validity of the suspension.
Anent the said 13th month-pay related issue, … the Company states that the statutory deadline for
payment of the 13th month-pay is December 24th of the applicable year, thus the demand for early
payment is not in order. The 13th month pay was released as promised on 29 November 2000.
On the 2nd Notice of Strike, the Company states that it is incapable of meeting the [capricious]
economic demands of the Union … *which are+ being made despite the continued losses suffered by
NMPI over the last four (4) years of its operations amounting to about P1.490 Billion. Notwithstanding
the reduction of the Union’s total package, it would still cost P212,081,987.00 or 309.5% increase over
the previous CBA; whereas the Company’s last offer before withdrawing the same was a package
amounting to P35, 386,458.00 which represents a 52.5% increase over the previous CBA. This package
consists in:
a. Annual Salary increase - P900.00 + P160.00 merit increase
b. Signing bonus - P3,000.00
c. Maternity assistance - Normal – P 6, 500.00
Caesarian – P13,000.00
Miscarriage – P 3, 900.00
xxx xxx xxx
p. Overtime pay premium Increase for ordinary day,
special holiday, rest day and regular day
xxx xxx xxx
The Company maintains that the losses *in+ … its last four (4) years of operations, from 1997 to 2000,
resulted in net losses amounting to P1.490 Billion, owing to such factors as the 1997 Asian economic
meltdown, …, and the Company’s limited motor vehicle market share …. Copies of its audited financial
statements were submitted as Annexes "B", "C", "D", and "E" of the Affidavit of Mr. Valentino de Leon,
Exhibit "L" of the Company’s Position Paper.
The Company contends that overall, NMPI’s total market share in the year 2000 was lower than the
previous year … and among the lowest in the industry …. These factors militate against drastic award of
economic benefits … as such could adversely affect the Company’s survival.
The Company states too, that the slowdown carried out by the Union after the filing of the 2nd strike
notice, was in violation of the cooling off period prescribed by law, therefore illegal.
Moreover, the slowdown violates … the CBA. The Company submitted a sworn affidavit of Mr. Manolito
E. Burgos, Exhibit "O" of the Position Paper, to prove the fact that a slowdown was in fact carried out
which adversely affected NMPI’s normal production ….
On the matter of the dismissal of 19 Union officers and 25 members … after the issuance of the
Assumption of Jurisdiction Order …, the Company asserts that the subject employees defied the … Order
by continuing to carry on the slowdown …. The Union’s refusal to formally acknowledge receipt of the
Order of 22 August 2001, cannot thwart the efficacy of the said Order …. Citing several *SC+ decisions on
the matter, the Company maintains that this blatant defiance of the DOLE orders left it with no choice
but to declare the concerned employees to have forfeited or lost their jobs.
The Company averred that the dismissal was preceded by observance of due process. To prove this, it
submitted Exhibit "M" (Affidavit of Mr. Artemio A. del Rosario) and its Annexes …, consisting in the
notices to explain and the notices of dismissal.
xxx xxx xxx
In its Reply to the Union’s Position Paper, the Company contends that the unofficial figures given to

xxx xxx xxx
In its Reply to the Union’s Position Paper, the Company contends that the unofficial figures given to
Administrator Olalia should not be used as NMPI’s last position since these were never directly
presented by the Company to the Union as they are confidential information.
The Company alleges that the Union’s computation of the incremental direct cost over the three (3) year
period is totally incorrect and misleading as annual increases are cumulative. Moreover, there is not
basis for comparing total labor cost against total sales revenues. While labor cost may be just a small
percentage of total sales revenue, NMPI is incurring tremendous losses because of big overhead cost ….
xxx xxx xxx
The Company … confirmed that it unofficially offered P3,000.00 only, however, the basis for signing
bonus no longer exist because the parties did not reach any agreement on the CBA. The signing bonus is
premised on goodwill which no longer existed …. (Underlining and words in bracket added; emphasis in
the original.)
On December 5, 2001, public respondent DOLE Secretary Patricia A. Sto. Tomas issued her assailed
Decision, the fallo of which reads:
WHEREFORE, in the light of the foregoing discussions, this Office orders the following:
1. The suspension of the 140 employees which is the subject of the first notice of strike is hereby
affirmed;
2. The dismissal of the Union officers is hereby sustained. However, the dismissal of the Union members
is recalled, hence, they are reinstated to their former positions without back wages. They are imposed a
suspension of one month which is deemed already served;
3. Bagong Nagkakaisang Lakas sa Nissan Motor Philippines, Inc. (BANAL-NMPI-OLALIA-KMU) and Nissan
Motor Philippines, Inc. are hereby ordered to conclude a Collective Bargaining Agreement embodying
the dispositions made above and all other agreements which were reached by the parties during
negotiation and conciliation. Such agreement shall have prospective effect.
SO ORDERED.
In due time, the Company and the Union each sought partial reconsideration, but their corresponding
motions were denied by the public respondent Secretary in a modificatory resolution dated January 22,
2002.5 The modification consisted in the deletion from the list of dismissed Union officers the names of
three (3) employees previously identified as officers but are not listed as such in the official records of
the Bureau of Labor Relations.
Therefrom, both the Company and the Union went to the CA via separate petitions for certiorari under
Rule 65 of the Rules of Court. The Company’s recourse, docketed as CA-G.R. SP No. 69107, and that of
the Union, as CA-G.R. SP No. 69799, were later ordered consolidated.
On February 7, 2003, the CA, thru its Special Division of Five, rendered its assailed Decision6 which
denied the private parties’ separate petitions and affirmed the public respondent Secretary’s Decision
dated December 5, 2001 and Resolution of January 22, 2002. The Company’s and the Union’s respective
motions for reconsideration were denied by the CA in a Resolution dated May 15, 2003.
Before the CA, however, issued its February 7, 2003 decision on the merits, its Fourth Division to which
the case, as consolidated, originally pertained, issued a Resolution dated November 8, 20027 citing Atty.
Napoleon Banzuela, Jr., counsel for the Union, for indirect contempt under Rule 71 of the Rules of Court
and required to pay a fine of P15,000.00. In brief, the citation is set against the following antecedents:
1. On February 28, 2002, in CA-G.R. SP No. 69107, the CA, per a Resolution8 penned by Associate Justice
Eloy R. Bello, then of the CA 5th Division, temporarily enjoined the implementation of the DOLE
underlying decision of December 5, 2001. Barely a month after, the Union filed its own petition for
certiorari,9 docketed as CA-G.R. SP No. 69799 of the court’s 11th Division- with prayer for its
consolidation with CA-G.R. SP No. 69107 which was then pending with the CA’s 5th Division;
2. Subsequently, both petitions were consolidated and raffled to Justice Bello, formerly of the 5th
Division, but who was at this time with the 4th Division of the CA. Justice Bello accepted the
consolidation, being, per Resolution of October 11, 200210 , in accordance with CA internal rules.
3. On May 20, 2002, the Union moved for the inhibition of Justice Bello and/or the transfer of the case
to the 11th Division11 , to which motion Nissan Motor interposed an opposition with prayer to expunge
from the records the Union’s motion.
4. On August 14, 2002 the CA issued a Resolution denying the motion for inhibition of Justice Bello.12 On
September 23, 2002, the Union, thru Atty. Banzuela, Jr. filed a Motion to Refer Back to the Fourth (4th)
Division to which the Case was Originally Consolidated and there alleging the following:

Division to which the Case was Originally Consolidated and there alleging the following:
Lately, upon follow-up on the case by the workers, they learned that a reorganization as regards the
compositions of the Divisions of the entire [CA] transpired wherein JUSTICE ELOY BELLO was transferred
to the SECOND DIVISION, but surprisingly, he brought with him the above entitled case in the Second
Division which was originally docketed with the Fourth Division, despite the fact that the workers filed a
motion to inhibit, which was denied and expunged from the records. However, bringing with him the
above-entitled case in the SECOND (2nd) DIVISION lend credence to the allegation/accusation of the
workers that JUSTICE ELOY BELLO, has undue interest over the instant case.
6. The CA found the foregoing imputation to be baseless and malicious and likewise found Atty.
Banzuela’s proffered explanation insufficient to justify the utterances he made in his September 23,
2002 motion.
We now come to the instant petitions, which the Court, per its Resolution of September 17, 2003,13 as
reiterated in another Resolution dated March 22, 2004,14 ordered consolidated.
In its recourse, Nissan Motor contends that the CA erred:
1. In not considering and applying hereto pertinent law and jurisprudence which provide that regardless
of rank in the union, workers who defy and contravene the *DOLE’s+ assumption of jurisdiction and/or
return-to-work orders are deemed to have committed an illegal act and, as consequence thereof, have
lost their employment status.
2. In affirming public respondent Secretary of Labor and Employment’s award of economic benefits to
private respondent Union and the rank-and-file workers considering its own confirmatory finding of
petitioner’s financial distress.
On the other hand, the Union, apart from the matter of contempt of court, raises in its own petition the
issue of whether or not:
1. Mass dismissal and collective liability are sanctioned by law and existing jurisprudence;
2. Union officers and members accused of work slowdown in defiance of assumption of jurisdiction are
entitled to due process to determine their individual participation;
3. The Pari Delicto (sic) doctrine is applicable in the instant case;
4. Respondent company can dismiss union officers and members after it brought the issue of illegal
strike before the [DOLE] Secretary ; and
5. The 160 Union officers and members [total] illegally dismissed are entitled to reinstatement and full
backwages.
Nissan Motor faults the CA for effectively ordering, like the public respondent Secretary, the
reinstatement of the 140 rank-and-file Union members who waged a work slowdown notwithstanding
the assumption of jurisdiction order dated August 22, 2001 and what amounts to a reiterated return-to-
work orders (RTWO) dated September 12 and 28, 2001. The public respondent Secretary, Nissan Motors
notes, had found the dismissal of the Union officers to be justified. Accordingly, and consistent with
extant jurisprudence, the dismissal of the 140 rank-and-file Union members should have also been
upheld, given the Secretary’s categorical factual determination about the Union having engaged in work
slowdown which, under the circumstances it was undertaken, she viewed as constituting an illegal
strike.15
Nissan Motor next sets its sight on the DOLE’s disposition on the economic aspect of the case. In relation
thereto, it expresses dismay over the bountiful basket of economic benefits, inclusive of what amounts
to a signing bonus, that the CA, following the lead of the DOLE Secretary, extended to the Union
members and rank-and-file workers in general, given the backdrop against which the award was made,
viz: a) the benefits were based on confidential "unofficial proposals" the company made before the
NCMB at the start of the Collective Bargaining Agreement (CBA) negotiations; b) these proposals were
made before the Union’s work slowdown; and c) the Company is in dire financial strait, a situation
attributable to the 1997 Asian currency crisis but which the Union’s work slowdown aggravated.
For its part, the Union claims that the appellate court erred in sustaining the finding respecting the
concerted work slowdown. As argued, no overt act has been shown to prove the fact of concerted work
slowdown, let alone the participation of each of its members thereon. Far from establishing such
deplorable practice, the Union maintains that the facts would tend to show that it was Nissan Motor
which is guilty of unfair labor practices acts against the Union and its members, pointing to their
dismissal which was allegedly effected without due process of law.
And while not determinative of the final outcome of the substantive merits of this case, the CA’s

And while not determinative of the final outcome of the substantive merits of this case, the CA’s
resolution of November 8, 200216 embodying the contempt citation is also assailed. According to the
Union’s counsel Atty. Banzuela, what the CA considers as contemptuous utterances against Justice Eloy
Bello, Jr. were actually remarks he made without malice, unaware as he was of the CA rules respecting
distribution, assignment and disposition of cases.
Subject to well-defined exceptions, the doctrinal rule is that factual determinations of administrative
and quasi-judicial agencies, such as the National Labor Relations Commission or the DOLE, are generally
accorded not only respect but even conclusiveness if supported by substantial evidence, in recognition
of their expertise on specific matters under their consideration and jurisdiction.17 This doctrine applies
with greater force when the appellate court passes upon and upholds such findings of facts.18
The conclusion of the public respondent Secretary of Labor and Employment, as confirmed by the CA, is
that the Union and its members indeed "engaged in work slowdown which under the circumstances in
which they were undertaken constitute illegal strike." The defiance came in the form of the continuation
of the slowdown enjoined in the underlying assumption order, by the strike actually staged by the
Union, its officers and members on October 1, 2001, the closure of the company’s offices and plant
premises and the barricading of main gates. In fact, the DOLE Secretary had to ask the intervention of
the Laguna Philippine National Police (PNP) to assist the Company in opening what appeared to be
padlocked and welded gates leading to company premises. But side by side with this determination is
the CA’s categorical finding that the Company’s hands were not entirely clean, having contributed to the
ensuing deteriorating impasse between labor and management.
Verily, the DOLE’s repeated admonitions against any act that might exacerbate the labor dispute cut
both ways. Accordingly, the Court is not disposed, as Nissan Motor and the Union respectively urge, to
disturb, one way or the other, the factual determination on what eventually led the parties to engage in
a labor-management locking of horns. To be sure, the Company’s act - after the DOLE Secretary had
issued her assumption order - of suspending a very substantial number of Union officers/members with
threat of eventual dismissal and perceived illegal lockout and union busting went against the injunction
against the commission of any act that would add fire to what was already a volatile situation. This is not
to say that the Company is guilty of unfair labor practice, or union busting, to be precise. It cannot be
heard, however, to say that the CA – taking stock of the third and fourth notices of strike filed and the
grounds therefor –erred in saying that the Company "was not entirely without fault for the defiant and
adversarial level into which the tense situation between the parties eventually degenerated."19 In the
same token, the Union cannot plausibly say, as it does at every turn, that its officers and members
desisted from engaging in what turned out to be a crippling work slowdown. The evidence on record
and the ensuing discerning and detailed observations of the public respondent Secretary belie the
Union’s posture:
A perusal of the Production Plan and Results, for the months of June *to+ … September 2001 …
provide*s+ a vivid picture of the extent of the reduction in production of the Company’s JIG Lines 1 and
2, Metal Line and Trim/Chassis Line No. 1 during the period covered by the labor dispute, and tend[s] to
validate the Company’s contention that a slowdown was carried out by the Union starting 24 July 2001.
As the Union itself alleges, there was normal, even high production [95% – 100% of production plan in
all lines+ in the month of June 2001. …. In the month of July 2001, production at JIG Line 2 was 100% of
plan from July 2 to 23 (covering only 5 working days), and at Metal Line, production was from 88% to
142% of plan, for the first 3 weeks of July. But production fell by at least 50% in the 4th week (Annexes
A-1, B-1, C-1 and D-1 of Company’s Exhibit "O"), the time when the CBA deadlock occurred and the 2nd
strike notice was filed.
xxx xxx xxx
Union claims that production setback was due to … workers *training+ on the new product line launched
in June. This claim is … belied by evidence. xxx.
Union claims that the low production was due also to lack of parts. Company’s Annexes to Exhibit "O" …
show that during the period in question, there were no parts delay in JIG Line 1 experienced on August
3. In Trim/Chassis Line 1, there was in fact work-in-progress delay from JIG 1 and JIG 2 owing clearly to
the slowdown in the latter lines xxx.
Neither is the Union’s claim that the forced leaves and suspension of workers were responsible for the
disruption of production true. On the contrary, it was the lack of work-in progress due to slowdown and
absenteeism which are responsible for the declaration of forced leave. Annex "B-2" of Company’s Exh.

absenteeism which are responsible for the declaration of forced leave. Annex "B-2" of Company’s Exh.
"O" in fact shows that operations at JIG Line 2 were cancelled and transferred to Line 1 starting on
August 22 due to high incidents of absenteeism. xxx.
Thus, the Union’s excuses do not hold sway on this Office. To be sure, the Union engaged in work
slowdown which under the circumstances in which they were undertaken constitutes illegal strike. The
Company is therefore right in dismissing the subject Union officers in accordance with Article 264 (a) of
the Labor Code, for participating in illegal strike in defiance of the assumption of jurisdiction order by
the Labor Secretary.20 (Underscoring and letters in bracket added)
Given the above perspective, the benign consideration which the public respondent Secretary accorded
the rank-and-file Union members who joined in the work slowdown in defiance of the assumption order
and the complementing RTWO commends itself for concurrence. As may be recalled, the public
respondent Secretary imposed on the erring Union members a one (1) month suspension to replace the
penalty of loss of employment status heretofore meted on them by the Company. Article 263(g) in
relation to Article 264 of the Labor Code governs the effects of a strike or similar prohibited acts in
assumption cases, thus:
Art. 263. Strikes, picketing and lockouts. xxx (g) When, in his opinion, there exists a labor dispute causing
or likely to cause a strike or lockout in an industry indispensable to the national interest, the Secretary of
Labor and Employment may assume jurisdiction over the dispute and decide it …. Such assumption …
shall have the effect of automatically enjoining the intended or impending strike or lockout as specified
…. If one has already taken place at the time of assumption …, all striking or locked out employees shall
immediately return to work and the employer shall immediately resume operations and re-admit all
workers under the same terms and conditions prevailing before the strike or lockout. xxx. (Underscoring
supplied.)
Article 264. Prohibited Activities.
(a) xxx
No strike or lockout shall be declared after the assumption of jurisdiction by … the Secretary or … during
the pendency of cases involving the same grounds for the strike or lockout.
xxx. 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: ….
While the employer is authorized to declare a union officer who participated in an illegal strike as having
lost his employment,21 his/its option is not as wide with respect to union members or workers for the
law itself draws a line and makes a distinction between union officers and members/ordinary workers.
An ordinary striking worker or union member cannot, as a rule, be terminated for mere participation in
an illegal strike; there must be proof that he committed illegal acts during the strike.22 And lest it be
forgotten, the law invests the Secretary of Labor and Employment the prerogative of tempering the
consequence of the defiance to the assumption order. The Secretary may thus merely suspend rather
than dismiss the employee involved.23 This is as it should be. For as then Associate, now Chief, Justice
Artemio V. Panganiban prefaced his ponencia in Solvic Industrial Corporation vs. NLRC24 - "Except for the
most serious causes affecting the business of the employer, our labor laws frown upon dismissal. Where
a penalty less punitive would suffice, an employee should not be sanctioned with a consequence so
severe."
With the view we take of this case, the public respondent Secretary of Labor and Employment - and
necessarily the CA - acted within the bounds of the law – and certainly rendered a judicious solution to
the dispute – when she spared the striking workers or union members from the penalty of dismissal.
This disposition takes stock of the following circumstances justifying a less drastic penalty for ordinary
striking workers: a) the employees who engaged in slowdown actually reported for work and continued
to occupy their respective posts, or, in fine, did not abandon their jobs; b) they were only following
orders of their leaders; and c) no evidence has been presented to prove their participation in the
commission of illegal activities during the strike. Not to be overlooked is a factor which the CA, perhaps
having in mind PAL vs. Brillantes,25 regarded as justifying the leniency assumed by the public respondent
Secretary towards the members of the Union. We refer to the fact that Nissan Motor appeared to have
also exacerbated, as earlier indicated, the emerging volatile atmosphere despite the Secretary’s order
veritably enjoining the parties to respect the status quo prevailing when she assumed jurisdiction over
the dispute. Foremost of these exacerbating acts is the en masse termination of most of the Union

the dispute. Foremost of these exacerbating acts is the en masse termination of most of the Union
members, albeit it may be conceded that the employer has the prerogative of imposing disciplinary
sanctions against assumption-order-defying employees.
The Court has considered the cases cited by the Company to support its brief on the issue of dismissal,
notably Union of Filipro Employees vs. Nestle Philippines, Inc.,26 St. Scholastica’s College vs. Torres,[27]
and Telefunken Semiconductors Employees Union-FFW vs. Court of Appeals.28 There, we held that any
worker who participates in a strike or otherwise engages in any prohibited act in defiance of the
assumption order may be meted the penalty of loss of employment status. But as correctly pointed out
by the public respondent Secretary, however, the law itself authorizes the graduation of penalties,
Article 264 of the Labor Code making, as it were, a distinction between union officers and its members
or any other workers, the main differing line contextually being that the latter do not necessarily lose
their job by mere participation in an illegal strike absent proof that they committed illegal acts. Thus in
Association of Independent Union in the Philippines vs. NLRC,29 we held that the responsibility of union
officers, as main players in an illegal strike, is greater than that of the members and, therefore, limiting
the penalty of dismissal only for the former for participation in an illegal strike is in order. Of the same
tenor, albeit formulated a bit differently is our holding in Gold City Integrated Port Service, Inc. vs.
NLRC.30
Certainly not lost on the Court is the fact that the cited cases are not on all fours applicable, Filipro, St.
Scholastica and Telefunken involving as they do the staging of actual strikes, resulting in work stoppage
and complete abandonment of employment. There lies the difference. In this case, the element of
abandonment of work does not obtain, the employees engaging in work slowdown having reported for
work at their usual post. Abandonment means deliberate, unjustified refusal of the employee to resume
employment.31
The Court, just like the public respondent Secretary, however, cannot lend cogency to the Union’s
unyielding contention that Nissan Motor imposed disciplinary sanctions against its officers and members
without due process of law. As it were, the records32 tend to show that the Company, before proceeding
against those concerned, asked the erring Union officers/members and workers to explain what
amounts to their defiant attitude and duly warned them of their imminent fate as a consequence of
their intransigence, before declaring and then confirming their loss of employment status. The
Company’s evidence presented during the proceedings before the respondent Secretary, specifically
Exhibits "L," "M" and "O" of Annex "N" of the Company’s petition for review in G.R. Nos. 158190-91,
which the latter gave full faith and credence in her Decision dated December 5, 2001 and thereafter the
CA proved this point.
At any rate, the Union’s protestation on non-observance of due process is altogether an issue of fact
that has no place in the instant appellate proceedings. For, the Court’s jurisdiction in a petition for
review is limited to reviewing or revising errors of law allegedly committed by the appellate court, its
findings of fact being generally binding on this Court.33
In view of the legality of the disciplinary measures taken against the union officers and members of the
union, the Court need not delve on the issue of entitlement to full backwages. Backwages is, as a rule,
forthcoming only in cases where the dismissal or suspension, as the case may be, is declared unlawful.
Apropos the contempt citation, we sustain the CA’s order penalizing Atty. Napoleon Banzuela, Jr. for
indirect contempt for his uncalled-for and disrespectful remarks directed against Justice Eloy Bello, Jr.
Atty. Banzuela cannot plausibly set up his ignorance of the appellate court’s internal rules as a
justification for making his contemptuous, malicious and disparaging statements against the person and
integrity of a sitting CA justice. The Court is at loss to understand how his lack of knowledge of such
rules, if that be really the case, can serve as excuse for his unwarranted and unfounded ascription of
interest against a member of a court. A well-intentioned mind could have conveyed its sentiments about
such perceived interest in a civil and respectful language befitting a gentleman and an officer of the
court. It behooved Atty. Banzuela, as such officer, to uphold the dignity and authority of the men and
women in the judiciary. The innuendo embodied in the Union’s September 23, 2002 motion, doubtless
the product of Atty. Banzuela’s mind, is simply reprehensible. The Court cannot, as urged, let it pass
unpunished.
Finally, the disposition made by the public respondent Secretary relating to the economic aspects of the
CBA, such as, but not limited, transportation allowance, 14th month pay, seniority pay, separation pay
and the effectivity of the new CBA, appears to be proper. However, conformably with the evidence on

and the effectivity of the new CBA, appears to be proper. However, conformably with the evidence on
record that shows the Company’s precarious financial position, there is a need to modify the other
awards she thus made:
1) The annual salary increases of P900.00 for the 1st year, P1,000.00 and P1,100.00 for the 2nd and 3rd
years, respectively, which, given the proven continued losses of the Company, are hereby modified to
minimize and mitigate its operational losses to: P900.00 annual increase for the initial 3-year term of the
CBA, effective upon execution of a new CBA. In this regard, the Court cannot sanction the award made
by the public respondent Secretary based ostensibly on the revelation of NCMB Administrator Olalia
that was sourced from the confidential position given him by the Company. The reason for this is simple.
Article 233 of the Labor Code 34 prohibits the use in evidence of confidential information given during
conciliation proceedings. NCMB Administrator Olalia clearly breached this provision of law. Moreover,
as correctly pointed out by the Company, this confidential information given to Administrator Olalia was
made prior to the Union’s slowdown and defiance of the Assumption Order of August 22, 2001 causing
it additional losses.
2) The award for gratuity bonus of P3,000.00 per employee is vacated for lack of basis. As no less
pointed out by the public respondent Secretary, the Union’s demand for a signing bonus is bereft of any
factual or legal basis considering that the CBA was not concluded in the bargaining table. Moreover, the
filing by the Union of a notice of strike, not to mention effecting a slowdown during the mandatory
cooling-off period prescribed under Article 263 (c) 35 of the Code ate up whatever goodwill – the
motivating basis for signing bonus - there was between labor and management. By parity of reasoning,
there can likewise be no basis for the award or conversion of the Union’s demand for a signing bonus
into gratuity pay inasmuch as the latter benefit was, in the first place, never an issue between the
parties nor part of the Union’s demand. It is not amiss to state, therefore, that the public respondent
Secretary abused her discretion when she extended to the Union an award not asked for, let alone
negotiated.
Parenthetically, the Company’s lament about the public respondent Secretary being in error when she
proceeded to extend to members of the rank-and-file of the bargaining unit the privilege of obtaining
half a month’s pay/salary by way of a salary loan for the employee’s benefit or that of the immediate
members of his family every start of the semestral school year is unacceptable. According to the
Company, such arrangement, as opposed to the present practice wherein the Company accords a
P5,000.00 educational loan semestrally for its employees or that of the immediate members of the
employee’s family, while seemingly innocuous, would in reality weigh heavily on its finances. Far from
being burdensome and confiscatory, as argued by the Company, this particular award appears to the
Court, as it did to the CA and the DOLE, to be reasonable and modest increase in benefits, being in the
form of a loan. A loan suggests repayment. At the end of the day, therefore, the Company will get its
money back and will be doing its share to promote industrial peace.
WHEREFORE, the assailed Decision and Resolution of the Court of Appeals dated February 7, 2003 and
May 15, 2003, respectively, in CA-G.R. SP 69107 and CA G.R. SP No. 69799 are hereby AFFIRMED, with
the following modifications:
1. The award of annual salary increases shall be at P900.00 effective during the initial three-year term of
the CBA; and
2. The award of gratuity bonus of P3,000.00 per covered employee is deleted.
ACCORDINGLY, except insofar as they delved on the awards immediately referred to above, the petition
of Nissan Motor Philippines, Inc. in G.R. Nos. 158190-91, and the petition of Bagong Nagkakaisang Lakas
Sa Nissan Motor Philippines, Inc. in G.R. Nos. 158276 and 158283 are both DENIED.
No Costs.
SO ORDERED.
CANCIO C. GARCIA
Associate Justice
WE CONCUR:
REYNATO S. PUNO
Associate Justice
Chairperson
ANGELINA SANDOVAL-GUTIERREZ RENATO C. CORONA

ADOLFO S. AZCUNA
Associate Justice
ATT ES T AT I O N
I attest that the conclusions in the above decision were reached in consultation before the case was
assigned to the writer of the opinion of the Court’s Division.
REYNATO S. PUNO
Associate Justice
Chairperson, Second Division
CE R T I F I C AT I O N
Pursuant to Article VIII, Section 13 of the Constitution, and the Division Chairperson's Attestation, it is
hereby certified that the conclusions in the above decision were reached in consultation before the case
was assigned to the writer of the opinion of the Court.
Chief Justice
Footnotes
1 Penned by Associate Justice Rebecca De-Guia-Salvador, concurred in by Associate Justice Remedios
Salazar-Fernando and Associate Justice Edgardo F. Sundiam, with Associate Justice Eloy R. Bello, Jr. (ret.)
and Associate Justice Danilo B Pine (ret.) dissenting; Rollo (G.R. Nos. 158276 & 158283), pp. 53 et seq.
2 Id. at 66 et seq.
3 Rollo (G.R. Nos. 158190-91), pp. 122-125.
4
Rollo (G.R. Nos. 158276 & 158283), pp. 199-232.
5 Id. at 44 et seq.
6 See Note #1, supra.
7 Penned by Associate Justice Eloy R. Bello (ret.) and concurred in by Associate Justices Godardo A.
Jacinto and Rebecca De Guia-Salvador; Rollo (G.R. Nos. 158276 & 158283) pp. 72-73.
8 CA Rollo, p. 1048.
9
Id. at 2 et seq.
10 Id. at 2030 et seq.
11
Id. at 1078 et seq.
12 Id. at 2017 et seq.
13
Rollo (G.R. Nos. 158276 & 158283), p. 706.
14
Id. at 916 et seq.
15
Page 15 of the Secretary of Labor’s decision; Id. at 24.
16 See Note #7, supra.
17 Baybay Water District vs. COA, G.R. Nos. 147248-49, Jan. 23, 2002, 374 SCRA 482; Brahm Industries,
Inc. vs. NLRC, G.R. No. 118853, Oct. 16, 1997, 280 SCRA 82 and other cases.
18 San Juan De Dios Educational Foundation Employees Union-Alliance of Filipino Workers vs. San Juan
De Dios Educational Foundation, Inc., G.R. No. 143341, May 28, 2004, 430 SCRA 193, citing Shoppes
Manila vs. NLRC, G.R. No. 147125, Jan. 14, 2004, 419 SCRA 354 and other cases.
19 CA Decision, p. 3.
20 At pp. 13-15.
21 Gold City Integrated Port Service, Inc. vs. NLRC, G.R. No. 103560, July 6, 1995, 245 SCRA 627.
22 Ibid.
23 PAL vs. Brilliantes, G.R. No. 119360, Oct. 10, 1997, 280 SCRA 515.
24 G.R. No. 125548, Sept. 25, 1998, 296 SCRA 432.
25 See Note # 23, supra.
26 G.R. Nos. 88710-12, Dec. 19, 1990, 192 SCRA 396.
27 G.R. No. 100158, June 29, 1992, 210 SCRA 565, 575-576.
28 G.R. Nos. 143013-14, December 18, 2000, 348 SCRA 565.
29
G.R. No. 1120505, March 25, 1999, 305 SCRA 219.
30 See Note # 22, supra.
31 C.A. Azucena, The Labor Code With Comments and Cases, Vol. II, Revised 1999 ed., p. 458, citing
NEECO vs. Minister of Labor, G.R. No. 61965, 184 SCRA 25.
32 Rollo (G.R. Nos.158190-91), pp. 1538-1622.

32 Rollo (G.R. Nos.158190-91), pp. 1538-1622.
33
R. Transport Corporation vs. Ejandra, G.R. No. 148508, May 20, 2004, 428 SCRA 725, citing cases.
34 Article 233. Privileged Communications.-Information and statements made at conciliation
proceedings shall be treated as privileged communication and shall not be used as evidence in the
Commission. xxx.
35
Art. 263. STRIKES, PICKETING, AND LOCKOUTS xxx (c) In cases of bargaining deadlocks, the duly
certified or recognized bargaining agent may file a notice of strike or the employers may file a notice of
lockout with the Ministry at least 30 days before the intended date thereof. In cases of unfair labor
practice, the period of notice shall be 15 days ….

Pentagon Steel vs. CA (2009)
12:54 AM
lawphil
Today is
Thursday
, July 01,
2004

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 174141 June 26, 2009
PENTAGON STEEL CORPORATION, Petitioner,
vs.
COURT OF APPEALS, NATIONAL LABOR RELATIONS COMMISSION and
PERFECTO BALOGO, Respondents.
DEC I SI O N
Before this Court is the Petition for Review on Certiorari 1 under Rule 45 of the
Rules of Court filed by Pentagon Steel Corporation (the petitioner). It seeks to set
aside:
(a) the Decision of the Court of Appeals (CA) dated June 28, 2006 2 modifying the
Decision of the National Labor Relations Commission (NLRC) dated January 31,
2005;3 and
(b) the Resolution of the CA dated August 15, 2006, 4 denying the motion for
reconsideration that the petitioner subsequently filed.
THE FACTUAL ANTECEDENTS
The petitioner, a corporation engaged in the manufacture of G.I. wire and nails,
employed respondent Perfecto Balogo (the respondent) since September 1, 1979
in its wire drawing department. The petitioner alleged that the respondent absented
himself from work on August 7, 2002 without giving prior notice of his absence. As
a result, the petitioner sent him a letter by registered mail dated August 12, 2002,
written in Filipino, requiring an explanation for his absence. The petitioner sent
another letter to the respondent on August 21, 2002, also by registered mail,
informing him that he had been absent without official leave (AWOL) from August
7, 2002 to August 21, 2002. Other letters were sent to the respondent by
registered mail, all pointing out his absences; however, the respondent failed to
respond. Thus, the petitioner considered him on AWOL from August 7, 2002. 5
On September 13, 2002, the respondent filed a complaint with the Arbitration
Branch of the NLRC for underpayment/nonpayment of salaries and wages,
overtime pay, holiday pay, service incentive leave, 13th month pay, separation
pay, and ECOLA. The respondent alleged that on August 6, 2002, he contracted
flu associated with diarrhea and suffered loose bowel movement due to the
infection. The respondent maintained that his illness had prevented him from
reporting for work for ten (10) days. When the respondent finally reported for work
on August 17, 2002, the petitioner refused to take him back despite the medical
certificate he submitted. On August 19, 2002, the respondent again reported for

certificate he submitted. On August 19, 2002, the respondent again reported for
work, exhibiting a note from his doctor indicating that he was fit to work. The
petitioner, however, did not allow him to resume work on the same date.
Subsequently, the respondent again reported for work on August 21 and 23, 2002
and October 10 and 18, 2002, to no avail. He was thus driven to file a complaint
against the petitioner. 6
During the conciliation proceedings on October 9, 2002, the respondent presented
the medical certificate covering his period of absence. The petitioner required him,
however, to submit himself to the company physician to determine whether he was
fit to return to work in accordance with existing policies. On October 22, 2002, still
during the conciliation proceedings, the respondent presented a medical certificate
issued by the company physician; according to the petitioner, the respondent
refused to return to work and insisted that he be paid his separation pay. The
petitioner refused the respondent‘s demand for separation pay for lack of basis.
On January 20, 2003, the respondent formally amended his complaint to include
his claim of illegal dismissal. 7
The Labor Arbiter Ruling
On October 27, 2003, the labor arbiter rendered his decision dismissing the illegal
dismissal charge, but directed the petitioner "to pay the complainant his SIL and
13th month pay in the amount of Five Thousand One Hundred Sixty -Six Pesos and
66/100 (P5,166.66)."8
In dismissing the respondent‘s claim of illegal dismissal, the labor arbiter found that
no dismissal took place; thus, the petitioner never carried the burden of proving the
legality of a dismissal. The labor arbiter noted that the respondent‘s allegation that
he reported for work is not reliable for lack of corroborating evidence, as the
respondent in fact failed to respond to the petitioner‘s memoranda. Thus, the
decision was confined to the directive to pay service incentive leave and 13th
month pay.
The NLRC Ruling
The respondent appealed the labor arbiter‘s decision to the NLRC on November
14, 2003, specifically questioning the ruling that no illegal dismissal took place. On
January 31, 2005, the NLRC Third Division vacated and set aside the decision of
the labor arbiter. 9 The decision directed the company to pay the respondent
separation pay, backwages, 13th month pay, and service incentive leave. 10
The NLRC ruled that the petitioner‘s defense of abandonment has no legal basis
since there was no clear intent on the respondent‘s part to sever the employer -
employee relationship. The NLRC found it difficult to accept the petitioner‘s
allegation that the respondent absented himself for unknown reasons; this kind of
action is inconsistent with the respondent‘s twenty -three (23) years of service and
lack of derogatory record during these years. As a consequence, the NLRC held
that the respondent was illegally dismissed. Together with this conclusion,
however, the NLRC also considered the strained relationship existing between the
parties and, for this reason, awarded separation pay in lieu of reinstatement, in
addition to backwages. On March 31, 2005, the NLRC denied the petitioner‘s
motion for reconsideration.
The CA Ruling
On May 6, 2006, the petitioner filed a special civil action for certiorari 11 with the CA,
alleging grave abuse of discretion on the part of the NLRC in ruling that illegal
dismissal took place, and in awarding the respondent separation pay and
backwages.
In a Decision dated June 28, 2006, the CA affirmed the NLRC‘s finding that the
dismissal was illegal, but modified the challenged decision by adding reinstatement
and the payment of "full backwages, inclusive of allowances and other benefits or
their monetary equivalent computed from the time his compensation was withheld
from him up to the time of his actual reinstatement." 12
The CA held that the respondent was constructively dismissed when the petitioner
repeatedly refused to accept the respondent back to work despite the valid medical
reason that justified his absence from work. The CA concluded that the respondent
complied with the petitioner‘s directive to submit a written explanation when the
former presented the medical certificate to explain his absences.
The CA also disregarded the petitioner‘s charge of abandonment against the
respondent. The appellate court ruled that the petitioner failed to prove a clear and

respondent. The appellate court ruled that the petitioner failed to prove a clear and
deliberate intent on the respondent‘s part to discontinue working with no intention
of returning. The CA took note of the respondent‘s eagerness to return to work
when he obtained a note from his doctor about his fitness to return to work. The
CA also ruled that the respondent‘s filing of a complaint for illegal dismissal with a
prayer for reinstatement manifested his desire to return to his job, thus negating
the petitioner‘s charge of abandonment.
The CA, however, disagreed with the NLRC‘s application of the doctrine of
"strained relations," citing jurisprudence that the doctrine should be strictly applied
in order not to deprive an illegally dismissed employee of his right to reinstatement.
The CA also held that to deny the respondent the benefits due from his long
service with the company would be very harsh since his long service would not be
amply compensated by giving him only separation pay.
Petitioner moved for reconsideration of the decision, but the CA denied the motion
for lack of merit in the Resolution dated August 15, 2006. 13
In this present petition, the petitioner imputes grave abuse of discretion against the
CA:
1) in basing its decision on the proceedings that transpired when the parties were
negotiating for a compromise agreement during the preliminary conference of the
case;
2) in declaring that respondent was illegally dismissed by the petitioner; and
3) in ordering that respondent be reinstated to his former position with backwages.
THE COURT‘S RULING
We do not find the petition meritorious.
Before going into the substantive merits of the controversy, we shall first resolve
the propriety of the CA‘s consideration of the proceedings that transpired during
the mandatory preliminary conference of the case.
Statements and/or agreements made at conciliation proceedings are privileged
and cannot be used as evidence
The petitioner contends that the CA cannot use the parties‘ actions and/or
agreements during the negotiation for a compromise agreement as basis for the
conclusion that the respondent was illegally dismissed because an offer of
compromise is not admissible in evidence under Section 27, Rule 130 of the Rules
of Court.14
We agree with the petitioner, but for a different reason. The correct reason for the
CA‘s error in considering the actions and agreements during the conciliation
proceedings before the labor arbiter is Article 233 of the Labor Code which states
that "[i]nformation and statements made at conciliation proceedings shall be
treated as privileged communication and shall not be used as evidence in the
Commission. Conciliators and similar officials shall not testify in any court or body
regarding any matters taken up at conciliation proceedings conducted by them."
This was the provision we cited in Nissan Motors Philippines, Inc. v. Secretary of
Labor 15 when we pointedly disallowed the award made by the public respondent
Secretary; the award was based on the information NCMB Administrator Olalia
secured from the confidential position given him by the company during
conciliation.
In the present case, we find that the CA did indeed consider the statements the
parties made during conciliation; thus, the CA erred by considering excluded
materials in arriving at its conclusion. The reasons behind the exclusion are two -
fold.
First, since the law favors the settlement of controversies out of court, a person is
entitled to "buy his or her peace" without danger of being prejudiced in case his or
her efforts fail; hence, any communication made toward that end will be regarded
as privileged. 16 Indeed, if every offer to buy peace could be used as evidence
against a person who presents it, many settlements would be prevented and
unnecessary litigation would result, since no prudent person would dare offer or
entertain a compromise if his or her compromise position could be exploited as a
confession of weakness. 17
Second, offers for compromise are irrelevant because they are not intended as
admissions by the parties making them. 18 A true offer of compromise does not, in
legal contemplation, involve an admission on the part of a defendant that he or she
is legally liable, or on the part of a plaintiff, that his or her claim is groundless or

is legally liable, or on the part of a plaintiff, that his or her claim is groundless or
even doubtful, since it is made with a view to avoid controversy and save the
expense of litigation. It is the distinguishing mark of an offer of compromise that it
is made tentatively, hypothetically, and in contemplation of mutual concessions. 19
While we agree with the petitioner that the CA should not have considered the
agreements and/or statements made by the parties during the conciliation
proceedings, the CA‘s conclusion on illegal dismissal, however, was not grounded
solely on the parties‘ statements during conciliation, but was amply supported by
other evidence on record, which we discuss below. Based on these other pieces of
evidence, the respondent was illegally dismissed; hence, our ruling regarding the
statement made during conciliation has no effect at all on our final conclusion.
Respondent did not abandon his job
The rule is that the burden of proof lies with the employer to show that the
dismissal was for a just cause. 20 In the present case, the petitioner claims that
there was no illegal dismissal since the respondent abandoned his job. The
petitioner points out that it wrote the respondent various memoranda requiring him
to explain why he incurred absences without leave, and requiring him as well to
report for work; the respondent, however, never bothered to reply in writing.
In evaluating a charge of abandonment, the jurisprudential rule is that
abandonment is a matter of intention that cannot be lightly presumed from
equivocal acts. 21 To constitute abandonment, two elements must concur: (1) the
failure to report for work or absence without valid or justifiable reason, and (2) a
clear intent, manifested through overt acts, to sever the employer -employee
relationship. The employer bears the burden of showing a deliberate and
unjustified refusal by the employee to resume his employment without any
intention of returning. 22
We agree with the CA that the petitioner failed to prove the charge of
abandonment.
First, the respondent had a valid reason for absenting himself from work. The
respondent presented a medical certificate from his doctor attesting to the fact that
he was sick with flu associated with diarrhea or loose bowel movement which
prevented him from reporting for work for 10 days. The petitioner never effectively
refuted the respondent‘s reason for his absence. We thus concur with the CA‘s
view that the respondent submitted a valid reason for his absence and thereby
substantially complied with the petitioner‘s requirement of a written explanation.
We quote with approval the following discussion in the CA‘s decision:
In his case, Balogo should be judged as having fully complied with the petitioner‘s
directive by his presenting of the medical certificate to justify or explain his
absences because the medical certificate already constituted the required "written
explanation." Another written explanation from him would be superfluous and even
redundant if the facts already appearing in the medical certificate would inevitably
be stated again in that other written explanation.
Why the petitioner persistently refused to accept Balogo back despite his
presentation of the medical certificate and the doctor‘s note about his fitness to
work was not credibly explained by the petitioner. The refusal is indicative of the
petitioner‘s ill motive towards him, using the lack of written explanation as a clever
ruse to terminate Balogo‘s employment.
Second, there was no clear intention on the respondent‘s part to sever the
employer-employee relationship. Considering that "intention" is a mental state, the
petitioner must show that the respondent‘s overt acts point unerringly to his intent
not to work anymore. 23 In this case, we see no reason to depart from the
unanimous factual findings of the NLRC and the CA that the respondent‘s actions
after his absence from work for ten (10) days due to illness showed his willingness
to return to work. Both tribunals found that after the respondent presented his
medical certificate to the petitioner to explain his absence, he even went back to
his doctor for a certification that he was already fit to return to work. These findings
of fact we duly accept as findings that we must not only respect, but consider as
final, since they are supported by substantial evidence. 24
In addition, the respondent‘s filing of the amended complaint for illegal dismissal on
January 20, 2003 strongly speaks against the petitioner‘s charge of abandonment,
for it is illogical for an employee to abandon his employment and, thereafter, file a
complaint for illegal dismissal.

complaint for illegal dismissal.
That abandonment is negated finds support in a long line of cases where the
immediate filing of a complaint for illegal dismissal was coupled with a prayer for
reinstatement; the filing of the complaint for illegal dismissal is proof enough of the
desire to return to work. 25 The prayer for reinstatement, as in this case, speaks
against any intent to sever the employer -employee relationship. 26
We additionally take note of the undisputed fact that the respondent had been in
the petitioner‘s employ for 23 years. Prior to his dismissal, the respondent‘s service
record was unblemished having had no record of infraction of company rules. As
the NLRC correctly held, we find it difficult to accept the petitioner‘s allegation that
the respondent absented himself for unjustifiable reasons with the intent to
abandon his job. To our mind, abandonment after the respondent‘s long years of
service and the consequent surrender of benefits earned from years of hard work
are highly unlikely. Under the given facts, no basis in reason exists for the
petitioner‘s theory that the respondent abandoned his job.
Respondent was constructively dismissed
The above conclusion necessarily leads us to sustain the NLRC‘s finding, as
affirmed by the CA, that the respondent was dismissed without just cause. Again,
we quote with approval the CA‘s disquisition:
That Balogo was dismissed in contravention of the letter and spirit of the
Constitution and the Labor Code on the security of tenure guaranteed to him as
employee is clear for us. A dismissal need not be expressed orally or in writing, for
it can also be implied. When the employer continuously refuses to accept the
employee back despite his having a valid reason for his absence from work, illegal
dismissal results because the employee is thus prevented from returning to work
under the façade of a violation of a company directive.
A dismissal effected through the fig leaf of an alleged violation of a company
directive is no less than an actual illegal dismissal that jurisprudence has labeled
as a constructive dismissal. Hyatt Taxi Services, Inc. v. Catinoy 27describes this
type of company action when it ruled that "[c]onstructive dismissal does not always
involve forthright dismissal or diminution in rank, compensation, benefit and
privileges – there may be constructive dismissal if an act of clear discrimination,
insensibility, or disdain by an employer becomes so unbearable on the part of the
employee that it could foreclose any choice by him except to forego his continued
employment."
The respondent‘s situation is no different from what Hyatt defined, given the result
of the petitioner‘s action and the attendant insensibility and disdain the employer
exhibited. We significantly note that by reporting for work repeatedly, the
respondent manifested his willingness to comply with the petitioner‘s rules and
regulations and his desire to continue working for the latter. The petitioner,
however, barred him from resuming his work under the pretext that he had violated
a company directive. This is a clear manifestation of the petitioner‘s lack of respect
and consideration for the respondent who had long served the company without
blemish, but who had to absent himself because of illness. The petitioner‘s
1avvphi 1
actions, under these circumstances, constitute constructive dismissal. 28

The respondent‘s illegal dismissal carries the legal consequence defined under
Article 279 of the Labor Code: the illegally dismissed employee is entitled to
reinstatement without loss of seniority rights and other privileges and to his full
backwages, inclusive of allowances and other benefits or their monetary
equivalent, computed from the time his compensation was withheld from him up to
the time of his actual reinstatement. 29 The imposition of this legal consequence is a
matter of law that allows no discretion on the part of the decision maker, except
only to the extent recognized by the law itself as expressed in jurisprudence.
Respondent is entitled to reinstatement not separation pay
As the CA correctly ruled, the NLRC erred when it awarded separation pay instead
of reinstatement. The circumstances in this case do not warrant an exception to
the rule that reinstatement is the consequence of an illegal dismissal.
First. The existence of strained relations between the parties was not clearly
established. We have consistently ruled that the doctrine of strained relations
cannot be used recklessly or applied loosely to deprive an illegally dismissed
employee of his means of livelihood and deny him reinstatement. Since the
application of this doctrine will result in the deprivation of employment despite the

application of this doctrine will result in the deprivation of employment despite the
absence of just cause, the implementation of the doctrine of strained relationship
must be supplemented by the rule that the existence of a strained relationship is
for the employer to clearly establish and prove in the manner it is called upon to
prove the existence of a just cause; the degree of hostility attendant to a litigation
is not, by itself, sufficient proof of the existence of strained relations that would rule
out the possibility of reinstatement. 30 Indeed, labor disputes almost always result in
"strained relations," and the phrase cannot be given an overarching interpretation;
otherwise, an unjustly dismissed employee can never be reinstated. 31
In the present case, we find no evidentiary support for the conclusion that strained
relations existed between the parties. To be sure, the petitioner did not raise the
defense of strained relationship with the respondent before the labor arbiter.
Consequently, this issue – factual in nature – was not the subject of evidence on
the part of both the petitioner and the respondent. There thus exists no competent
evidence on which to base the conclusion that the relationship between the
petitioner and the respondent has reached the point where their relationship is now
best severed. 32 We agree with the CA‘s specific finding that the conflict, if any,
occasioned by the respondent‘s filing of an illegal dismissal case, does not merit
the severance of the employee-employer relationship between the parties.
Second. The records disclose that respondent has been in the petitioner‘s employ
for 23 years and has no previous record of inefficiency or infraction of company
rules prior to his illegal dismissal from service. We significantly note that payment
of separation pay in lieu of respondent‘s reinstatement will work injustice to the
latter when considered with his long and devoted years in the petitioner‘s service.
Separation pay may take into account the respondent‘s past years of service, but
will deprive the respondent of compensation for the future productive years that his
security of tenure protects. We take note, too, that the respondent, after 23 years
of service, shall in a few years retire; any separation pay paid at this point cannot
equal the retirement pay due the respondent upon retirement.
For all these reasons, we uphold the CA ruling that the respondent should be
reinstated to his former position or to a substantially equivalent position without
loss of seniority rights.
WHEREFORE, premises considered, we hereby DENY the petition, and,
consequently, AFFIRM the Decision of the Court of Appeals dated June 28, 2006
and its Resolution dated August 15, 2006 in CA-G.R. SP No. 89587.
SO ORDERED.
ARTURO D. BRION
Associate Justice
WE CONCUR:
Associate Justice
Chairperson
CONSUELO YNARES-SANTIAGO* MINITA V. CHICO-NAZARIO**
TERESITA J. LEONARDO-DE CASTRO***
Associate Justice
ATT EST A TI O N
Court‘s Division.
Associate Justice
Chairperson
CER T IF I C A TI O N
Pursuant to Section 13, Article VIII of the Constitution, and the Division
Chairperson‘s Attestation, it is hereby certified that the conclusions in the above
Decision were reached in consultation before the case was assigned to the writer
of the opinion of the Court‘s Division.
REYNATO S. PUNO
Chief Justice
Footnotes
*
Designated additional Member of the Second Division per Special Order No. 645

Footnotes
*
Designated additional Member of the Second Division per Special Order No. 645
dated May 15, 2009.
** Designated additional Member of the Second Division effective June 3, 2009, per
Special Order No. 658 dated June 3, 2009.

*** Designated additional Member of the Second Division effective May 11, 2009,
per Special Order No. 635 dated May 7, 2009.

1 Rollo, pp. 3-23.
2
Penned by Associate Justice Lucas P. Bersamin (now a member of this Court),
and concurred in by Associate Justice Martin S. Villarama, Jr. and Associate
Justice Celia C. Librea-Leagogo; id., pp. 144-155.
3
Id., pp. 88-96.
4 Id., pp. 178-180.
5 Id., pp. 145.
6 Id., p. 145.
7 Id., pp. 45-46.
8 Penned by Labor Arbiter Gaudencio P. Demaisip, Jr.; id., pp. 71 -77.
9
Penned by then Presiding Commissioner Lourdes C. Javier, concurred in by
Commissioner Tito F. Genilo;id., pp. 88-96.
10
The dispositive portion reads:
WHEREFORE, the decision dated 27 October 2002 is VACATED and SET ASIDE.
The respondent company is directed to pay complainant the following computed as
of date herein promulgated.
1. Separation Pay (one month for = P 182,000.0
every Year of service) 0
Sept. 1, 1979 – Jan. 31, 2005 (25
yrs.)
2. Backwages = 193,895.00
Salary August 6, 2002 – Jan. 31,
2005
P250 x 26 x 29.83
3. 13th Month Pay = 16, 157.92
4. Service Incentive Leave Pay = 3,107.29
P250 x5/12 x 29.83
P 395,160.2
1
=========
===
The other claims are
dismissed.
11
Docketed as CA-G.R. SP No. 89587; rollo, pp. 117-143.
12
Supra note 2, p. 154.
13
Supra note 4, pp. 178-180.
14
Sec. 27. Offer of compromise not admissible. – In civil cases, an offer of
compromise is not an admission of any liability, and is not admissible in evidence
against the offeror.
15 G.R. Nos. 158190-91, June 21, 2006, 401 SCRA 604, 626 -627.
16 32 C.J.S. Evidence § 522.
17 Marshall v. Taylor, 168 Mo. 9, 240, 248, 153 S.W. 527; Perkins v. Concord R.
Co., 44 H.H. 223; Pirie v. Wyld, 11 Ont. 422; New Country Corp. v. Toronto Gravel
Road, etc. C., 3 Ant. 584.
18
15 A.L.R.3d 13, §2 (a).
19
Supra note 16.
20 Hanjin Engineering and Construction Co., Ltd. v. Court of Appeals, G.R. No.
165910, April 10, 2006 487 SCRA 78; Aliten v. U-Need Lumber & Hardware, G.R.
No. 168931, September 12, 2006, 501 SCRA 577.
21 Hantex Trading Co., Inc., et al. v. Court of Appeals, G.R. No. 148241, September
27, 2002, 390 SCRA 181.

22
Labor, et al. v. NLRC and Gold City Commercial Complex, Inc., and Uy, G.R. No.

22
Labor, et al. v. NLRC and Gold City Commercial Complex, Inc., and Uy, G.R. No.
110388, September 14, 1995, 248 SCRA 183.
23 Lambo v. National Labor Relations Commission, G.R. No. 111042, October 26,
1999, 317 SCRA 420; Dagupan Bus Company v. National Labor Relations
Commission, G.R. No. 94291, November 9, 1990, 191 SCRA 328.
24 Duldulao v. Court of Appeal, G.R. No. 164893, March 1, 2007, 517 SCRA 191;
Heirs of the Late Panfilo V. Pajarillo v. Court of Appeals, G.R. Nos. 155056 -57,
October 19, 2007, 537 SCRA 96.
25
Supra note 19.
26
Big AA Manufacturer v. Antonio, et al., G.R. No. 160854, March 3, 2006, 484
SCRA 33.
27 G.R. No. 143204, June 26, 2001, 359 SCRA 686.
28 See Ruperto Suldao v. Cimech System Construction, Inc., et al., G.R. No.
171392, October 30, 2006, 506 SCRA 256.

29 Premiere Development Bank v. Mantal, G.R. No. 167716, March 23, 2006, 485
SCRA 234; Philippine Amusement Gaming Corporation v. Angara, G.R. No.

142937, July 25, 2006, 496 SCRA 453.
30
Industrial Corporation v. Morales, G.R. No. 161158, May 9, 2005, 458 SCRA
339,347 citing Procter and Gamble Philippines v. Bondesto, G.R. No. 139847,
March 5, 2004, 425 SCRA 1.
31 Quijano v. Mercury Drug Corporation, G.R. No. 126561, July 8, 1998, 292 SCRA
109, citing Capili v. NLRC, 270 SCRA 488, 295 (1997).

32 Id., p.120.

July 21 Lecture
2:30 AM
Letran v. Union of Faculty and Admin

-which ULP was accused of LETRAN:
1. Refusal to bargain
2. Termination of Union president as interference on union activities
*sir pointed out to the management prerogative to reschedule the schedule of the employees. Why
considered interference? Taking consideration all factual circumstances (TOTALITY OF CIRCUMSTANCES
TEST), such as that the employee dismissed is the president of the union and that the said president
contested the decisions of the ER as to its refusal to bargain and failure to resolve the issue in a
grievance procedure, there is definitely anti-union animus on the part of the school/ER
Lesson which should be learned from LETRAN CASE:

• Bargain expeditiously, in GF
When the company is suffering economically. It may go either way.

1. Company may retrench employees
2. Employees (in an unorgainzed establishment) may form a union, then have stronger bargaining
position with regards financial assistance (separation benefits, other economic assistance to the
employees affected). The Union would now go to DOLE, argue that the company is not really
losing, but the ER wants to dismiss them in a form of union-busting. To add more pressure, the
Union would also file a notice of strike, arguing there was union-busting.
*in the realm of labor relations, it is not merely one sided. Just as the employer may come up with
reasons to justify retrenchment, so could the employees by unionizing.
Bargainable Issue in Collective Bargaining Negotiations

-wages, hours of work, all other terms and conditions of employment
Nonbargainable issues
-issues that are not subject to condonation and negotiation, such as the implementation of Wage Orders
Manila Fashions v. NLRC

-wage orders cannot be condoned, not subject to agreement of the parties because it is against public
policy to waive it.
-cannot waive the implementation of the wage order: the employees stand in a less powerful bargaining
stance than the employer
Republic Savings Bank v. CIR

-don't you find it odd that a libelous statement was made against the bank officer BUT, in effect, the
right procedure was for the officer to proceed to grievance procedure than a criminal proceeding for
libel against the said employees?
• NOT ODD: valid expression of grievances of the employees against the management; valid
exercise of constitutional right of freedom of expression
• YES ODD: also incumbent upon the Union to subject their issues in a grievance machinery.
Procedure they employed is not correct.
-this case is authority to say that CB is a never-ending, ever continuing process, and you see this at work
at the grievance procedure!!!
-the body and soul of collective bargaining is the grievance procedure
-Cf Art 260: grievance machinery on implementation and interpretation of CBA and company personnel
policies
SIR: Art 260 only speaks of EOJ of voluntary arbitrators (included productivity bonus, wage distortion

policies
SIR: Art 260 only speaks of EOJ of voluntary arbitrators (included productivity bonus, wage distortion
issues). "Grievance" usually defined as anything at all that has to do with EER. It's that broad, sweeping.
…Art. 260 came into being in 1989. This case was decided in 1967.
-concepts were already floating in the air in the 60s and partially followed or implemented. The doctrine
was distilled, found its way to Article 260.
Navarro v. Damasco
-rape case. The "rapist" argued that the matter should have undergone a grievance procedure. Court
held that the grievance procedure should cover interpretation and implementation of the CBA
procedure and company personnel policy. The issue is not a grievable matter, not a work-related
incident. Court also held that it is not necessary to undergo grievance procedure, to the prejudice of the
poor employee who has to wait for the grievance committee first before undergoing criminal
proceeding
Can you now reconcile the holding of the SC in Navarro and Republic Savings Bank?
Republic Savings bank involved or touched upon EER, while the Navarro case did not (private matter).
*but in Navarro case, the employee was dismissed based on the Code of Conduct (which is a company
personnel policy). Further, the CBA mentions that any complaint between employees may be subjected
to the grievance procedure
DUTY TO BARGAIN

July 28 Class Lecture
12:44 AM
Robert Frost poem

-was a poet lauriat - he was asked during state functions to compose poems, including that of JFK
---so around 30 minutes about Culture…
*"Men of culture would never be irrelevant in society"
What has this to do, at all, with our class in Labor Law?
When you become lawyers, you have to be "cultured".
Obsequitious
DUTY TO BARGAIN
-important: almost always, dito nagsisimula ung labor dispute
-start of the process where the parties would finally end up with Voluntary Arbitration
-if you examine the entire relationship (EER) and attempt to divide that relationship into portions, you
can start initially with bargaining, then conciliation, mediation, grievance procedure then finally
voluntary arbitration
-start: bargaining in GF
-end: VA
SAMAHAN SA PERMEX V. SOLE

F: Certification Election was conducted, wherein 61% of the employees voted "no union" (Feb 1991).
However, SMP wrote to PERMEX to be recognized as the SBR, and PERMEX complied with it. Employees
contested this, even saying they were coerced or misled into signing a document which turned out to be
in support of SMP as its CB Agent. CBA was entered into by SMP and PERMEX.
H: Since there is a question as to the majority status of the recognized BR, the CBA is not effective.
-Also, improper for the ER to voluntarily recognize SMP. Should have a CE to determine which Union all
the employees recognize as its EBR.
-found it dubious that SMP was recognized as EBR by the ER even after 10 months after the CE wherein
"No union" won
*on the 10 month period: if it was longer, would it change anything? No. the employer should not have
voluntarily recognized SMP, but should have held a CE to determine the sentiments of the employees as
to who they want to represent them - now, direct recognition by the ER is prohibited
ALU V. FERRER-CALLEJA
F: ALU asked to be the EBR of the employees, and ER wrote back asking that ALU show proof of majority
status. 2 days after, ALU and the ER entered into CBA negotiations. 2 other labor unions questioned the
status of ALU as the majority representative of the employees, petitioned for a Certification Election.
H: For there to be collective bargaining, 3 things should first be shown to exist (Kiok loy jurisdictional
requirements), one of which is proof of majority representation which in this case does not exist or was
not shown to exist.
-what is wrong with the ER voluntarily recognizing ALU as the sole bargaining rep? CHA: because the
status of ALU as the majority representative of the employees of the company is questionable
What factual circumstances show this:
• There are at least 2 other union in the company
• The 2 unions conducted a strike
WHAT IS WRONG ACCORDING TO SIR: the ER knew that there was an issue as to the majority status of
the Union. Even so, it voluntarily recognized ALU as the EBR of the employees. The circumstances should
have put the ER on notice of the issue of majority status of the Union.
"there was precipitate haste…"

have put the ER on notice of the issue of majority status of the Union.
"there was precipitate haste…"
"unusual promptitude"
"an apparent and suspicious hurry"
Show BF on the part of ER
Precipitate: sudden, too soon….
STANDARD CHARTERED BANK EMPLOYEES UNION V. CONFESSOR

F: Surface bargaining v. blue sky-bargaining
H: NO ULP in either side
-Duty to bargain does not compel either party to agree to a proposal or to require the making of a
concession
SMB v. NLRC (1999)

F: in an attempt to streamline its operations, SMC laid off some of its employess. The employees and
SMC underwent the grievance procedure provided in the CBA. Arguing that there was a deadlock in the
grievance procedure, the Union filed a notice for strike.
H: No deadlock yet because there was still a grievance procedure
CSR: corporate social responsibility
-in SMC's case, as part of its CSR even before it became a buzzword, before dismissing its employees,
SMC should first find a job among its units (when all that is required from the ER when it finds that the
services of an EE is redundant is TO GIVE 30-DAY notice to affected EE and DOLE).
-it's a precedent-setting case:
• SC agreed with the ER that NLRC has positive legal duty to stop an ongoing strike/prevent an
incoming strike when doing so is violative of a law/CBA
-strike:
 Deadlock in CBA
 Deadlock based in ULP
-if not strikeable, ER would file a motion to dismiss the notice of strike! (as was done in this
case) But before NLRC refused to do so, saying its not their duty to prevent a threatened
strike or stop an ongoing strike
• However, there is no clear express law providing that power. What NLRC/NCMB does is to convert
the notice to strike into a Preventive Mediation Case, considered the notice to strike as not having
been filed at all (which does not have any affect at all to Unions, who would still strike since there
is no clear order from NLRC/NCMB that the strike is illegal)
• University of San Agustin: SC penalized NCBM/NLRC for not stopping an illegal strike!
SAMAHAN SA TOP FORM v. NLRC (1998)

F: During the CBA negotiations, provisions mandating ACROSS THE BOARD implementation of wage
orders was not included in the CBA, with the ER promising to incorporate it in the CBA. When Wage
Orders were issued, the Union insisted on the Across the Board implementation of the wage, in
accordance with the minutes of the CBA negotiations. ER refused to comply, saying it is not included in
the CBA.
H: Only provisions included in the CBA should be interpreted and implemented - so minutes of the CBA
negotiations not binding upon the ER
-No BF bargaining:
1. ER was willing to negotiate - and did negotiate!
2. CBA was entered into
3. No BF to insist on a position to the point of stalemate - not required to give concessions and to
agree to a proposal
-it is one of management's negotiation strategies to tentatively agree to the demands of the union
-It is the union's duty to insist that the said "promise" be included in the CBA
...Whenever discussed: warn class not to be misled by some of the things the SC said:
• Minutes of the meeting walang kabuluhan unless/until find print in the CBA: here, the labor union
failed to give evidence that the employer agreed on the implementation of the across the board
wage increase. Union should have made that said agreement a part of the actual part of the CBA.

wage increase. Union should have made that said agreement a part of the actual part of the CBA.
SO MAKE IT A POINT THAT AN IMPORTANT AGREEMENT REACHED DURING THE NEGOTIATIONS
BE INCLUDED IN THE CBA!!!

August 4
Wednesday, August 04, 2010 Note: 20 minutes late ung relo ni sir
6:24 PM
Instead of Midterms, hand in a paper which would be the grade for the midterm
-September 1 deadline of paper (there's still classes on September 1)
-come up with a good paper
TOPICS:
• Almario vs. PAL: on liability of ER blah blah
• Short paper on the current dispute taking place in PAL
 Retirement age of PAL: PAL desires to further lower the retirement age to 40 (from
55-50-45)
 Employer's claim: the pilots that included Captains and first officers are in breach of their
contractual obligations without giving the required 180 day notice before submitting their
letters of resignation vs. Employer compelling them to return to their jobs vs. Ees: masaya
ka!
DRILON: PAL cannot compel the Pilots to comeback or else violates involuntary servitude
(consti leading case involved a maid in Kaungka v. Salazar (unreported case))
• Claim of some labor federation officials (boy herrera): if the law, QJA...are inclined upon the
presentation of required proof, to permit or allow an employer to resort to measures such
as retrenchment, downsizing, restructuring...to help employer survive its plight, why can't it
understand employees? Can further refine language used. Point is this: if the law allows or
permits corporations to resort to harsh and extreme measures to survive, why can't the law
understand the sufferings of the employees to survive?
• Not limited to these issues but sir wants us to focus on these suggested topics basta more or
less related to the PAL dispute
-come up with a short paper, 10-15 pages, double spaced with necessary footnotes
SMC vs. NLRC (403 SCRA 428) (2003)

-IBM (Union) filed a notice of strike. A non-strikeable issue was included so NCMB converted it to a
preventive mediation case. Still, union held strike.
H: 1. PAL v. DRILON: Declaration of preventive mediation has the effect of dropping the notice of strike
from the docket
2. SMC v. NLRC (1999): Failure to exhaust all steps in the grievance machinery and arbitration
proceedings in CBA. Notice of strike should be dismissed as illegal.
-the strike was illegal for lack of notice of strike
SIR: significance of these cases cannot be overestimated:
• Took JN of the fact that the NCMB has no coercive power to issue an injunction
-when the court takes JN of a fact, it means the parties need not prove the said allegation
-so can invoke it against NCMB when it exercises coercive powers, as opposed to the NLRC which
has the power to stop immediately an illegal strike and any threatened illegal strike (if you're for
the employer)
-strike cases: ER would go to the NLRC, say the Union has threatened an illegal strike, conducting an
illegal strike - so would ask for a TRO (good for 20 days)
...so the strike would be prevented or must be stopped. If continued, can sue the union
-while TRO existing, ER must present evidence for a permanent writ of injunction to justify the relief
sought
...during the actual trial, UNION must be present. Union must be given a chance to present their
evidence/side as due process requirement
-here, SMC opposed Union's motion to dismiss because they had reasonable grounds to believe that a
strike may be held. This was correct sabi ni sir.
CBA PROPER
RIVERA v ESPIRITU
-PAL employees went on a 3-week strike when PAL downsized its labor force (or vice versa? )
-PAL now wanted to close down...so union was forced to concede to the suspension of the CBA
negotiations for 10 years, provisions of which maintained PALEA as the union and respecting the closed-
shop agreement as contained in the existing CBA
-the petitioners were the breakaway group from PALEA
*Abdication of constitutional right to bargain: Court held that it was not, since the union voluntarily
entered it, it was meant for the stabilization of the industrial relations within the company and for the
parties to have specific time tables
* Argument that while the 10 year period running, the employees would not be able to exercise their
right to change the EBR after expiration of 5 years. Court held that the employees approved it. Included
in the right to collective bargaining is the right to suspend it.
-as to argument that PALEA in effect became a company union: no, it was meant to stabilize relations in
the company, it was for unionism in fact by ensuring the existence of PALEA
SIR: sa SC decision, they continually said that it was the union who asked for it so they should not
complain about it. Do you agree?

complain about it. Do you agree?
CHA: NO. The employees were pinned to agree to the suspension because the company was about to
close. If they do not agree, they would lose their jobs.
-the SC in effect says that the government could step in to prevent the closure of the company.
Recall Manila fashions: since the company was closing, the Union agreed to condone the minimum wage
orders. But here the court held that the waiver of the wage order is illegal. Why did the court not make
a similar declaration:
CHA: because that involved a negotiation of an issue which is not really subject to CBA negotiations, as it
should be provided by law
FASAP Case: they were illegally dismissed because PAL failed to present evidence that the retrenchment
was necessary. What the corporation should have presented was the balance sheet, audited financial
report.
-There was bad faith on the part of PAL: Right after they dismissed the employees, they hired another
set of new employees for probation.
...but in the end, justified daw PAL in terminating the employees. Now the Cabin crew are seeking
reconsideration of the ruling
INTERPHIL LAB UNION v. INTERPHIL LAB

F: ER refused to renegotiate with the union because allegedly it was "premature" (2 years first then
around 4 months early?) but the union insisted in renegotiating the CBA. When the ER refused to
renegotiate, they undertook a boycott of work schedule, arguing that the 2-shift schedule was not in the
CBA (note however that the employees have been complying with the 2-shift schedule and they were
paid overtime pay)
H: the union cannot invoke that since the2-shift work schedule is not in the CBA so they are not
compelled to follow it, it being that they have been observing it as company practice
SIR: In addition, there is a crucial fact that the CBA recognizes the discretion of the employer to change
the working hours
-why slowdown is not lawful: you are still being paid even if you are there in the premises of the
employer but not doing job for the employer
SMC EMPLOYEES UNION V. CONFESSOR

F:
Under the labor code, a CBA has a lifetime of only 5 years?
Substitutionary doctrine: after the lifetime of the EBR, a new union can argue that the former EBR does
not represent the majority of the employees in the bargaining unit. PCE...basta new union emerges
triumphant. But then the CBA is still not expiring. What will happen to the old CBA? The CBA continues,
has to be respected. The new union will assume the role of the administrator of the old CBA. What the
new EBR could do is to ask for the shortening of the period of the CBA.
-see the history of the HERRERA-VELOSO law

"Knowledge is Power": August 11, 2010 Class Lecture for Labor
Arbitration
Wednesday, August 11, 2010
6:10 PM
"knowledge is power" - francis bacon

Felix frankfurter- justice of US Federal SC
-Frankfurter- smoked sausage
-civil liberties union
-activist, contributed to the formation of labor standards in US (8-hour labor law, minimum wage law)
-when Cardozo died, he replaced the former
-hired first Afro-American law clerks
ANTONIO HALAGUENA CASE

-parang Almario case, pero binayaran nya ung PAL after sabi ng PAL may utang pa sha for the training. 2
years later, humirit pa ung PAL na milyon daw ung utang nya sa PAL.
RTC: PAL estopped from claiming additional amounts
CA: Affirmed RTC
SC: mukhang upheld din
For the paper:

• Can cite newspaper sources aside from books
• Purely for Labor Arbitration class
Davao Integrated Port Stevedoring Services v. Abarquez

-Company provided for sick leave benefits for its employees, convertible to cash. Both regular
employees and workpool employees enjoy said benefits. However, the employer withdrew this benefit
from the workpool employees.
H: the CBA was clear: the CBA considers two kinds of workers who enjoy the sick leave benefits:
* REGULAR EMPLOYEES enjoy the 15-day fixed sick leave
* INTERMITTENT EMPLOYEES enjoy variable number of sick leave but should not exceed 15 days
-It is not disputed that both classes of workers are entitled to sick leave with pay benefits provided they comply
with the conditions set forth under Section 1 in relation to the last paragraph of Section 3, to wit:
(1) the employee-applicant must be regular or must have rendered at least one year of service with the company;
and
(2) the application must be accompanied by a certification from a company-designated physician.
-since this ripened into company practice, it cannot be unilaterally withdrawn by the employer - or else
violation of LC
-when an existing employer practice becomes an enforceable right: a considerable amount of time has
lapsed and said act has been practiced or exercised or done by the employer
-did the court set a hard and fast rule for considering an act a company practice: no, no set number of
years
How many years would it take for a practice to ripen into a company practice? SC has not laid down any
hard and fast rule
Sevilla Trading: the requirement for the ER to be able to get back or make bawi the benefits given is that
to argue that it was given due to mistake - but should do it as early as possible, or else, it would be the
fault of the employer
-what is the rule now? The burden is upon the employer to prove that he did not know about the
mistake, the withdrawal was immediately done upon discovery of the error
-pwede ba, especially in CBA negotiations, change the existing policy being followed in replacement of
another benefit? Yes, allowed, but the substitute should correspond to the benefit withdrawn.
How to determine if it is in equal terms?
- If the parties agree, then no problem
If none, then labor arbiter

- If none, then labor arbiter
Kimberly Clark v. Lorredo (1st case - 1993)

-CBA provides that if an employee leaves the service of the employer, the employee who is leaving
Kimberly Clark part 2 - sorry ako nagrecite so not much case

-Voluntary arbitrator's power: VA should not dispense with their own type of justice
TSPIC v. TSPIC Union

-EE and ER entered into a CBA which provided for wage increases and regularization increase, but with a
crediting clause which provided that the said increases are deemed to be compliance with subsequent
wage orders. However, even with the said provision, the ER complied with subsequent wage orders, but
upon finding that they made a mistake, announced that they would deduct from the salaries of the
affected employees.
Court held that in interpreting the CBA, the specific provisions are followed vs. General provisions
Would not the deductions be tantamount to withdrawal of benefits? No. Not a company -practice as the
court held. It was made under a mistake.
Bobcock v. Union
-CBA provided a relocation allowance which is given to employees relocated. 2 branches, Bauan and
Makati. Those who live in Bauan, working previously in Makati, but relocated in Bauan now claim the
relocation allowance
-company refuses to pay, so complaint for relocation allowance filed
H: CBA clear. Upon relocation, the employee is entitled to relocation allowance
Cheniver printing press case

-the employee was to be relocated. He did not want to be transferred, so would just resign but asks for
separation pay/financial assistance
-Court required the employer to pay the affected employee financial assistance
-this ruling is dangerous, especially to pharmaceutical and distribution companies who always send its
employees in far flung places

August 18 Labor Arb Class notes
6:11 PM
Papers due on Sept1

Sept8: we will not meet
Discussion on the forms

Voluntary arbitration
-the parties already agree firsthand what the issue to be arbitrated are.
-the fact that the parties were the ones who have chosen the voluntary arbitrator, there should be no
MR because it is presumed that you have chosen the voluntary arbitrator because you trust him
-but the reality is, even if the decision is fair, isa lang pede manalo. So APPEAL
How: a party that is "aggrieved" by the decision of the voluntary arbitrator should go up to CA on
petition for certiorari on GADALEJ
-in case either party refuses to proceed to voluntary arbitration

...under the law, if the company refuses to go to voluntary arbitration, the union could file a notice to
arbitrate, saying:
• CBA provides voluntary arbitration
• CBA is the law between the parties
...filed with NCMB
NCMB usually issues order, saying:
• CBA is the law between the parties
• CBA provides that the parties should undergo voluntary arbitration
• Would designate the sole arbitrator from the list of arbitrators accredited by NCMB
• Arbitrator would call both parties to the preliminary mediation conference
...what if the employer still refuses to attend the proceedings?
The union could present ex parte its evidence. On the basis of the evidence presented by the
union, the VA would now be in a position to render a decision in the case.
...so pag ganyan, ER would now appeal the decision of the VA via Petition for Certiorari with CA for
GADALEJ and that he has not been accorded with right to due process...
How does one become a Voluntary Arbitrator?

Parang mediators din.
Mediators have to attend a seminar/training, satisfy requirements. When they pass the test, he or she
would be accredited, masasama sa list ng accredited mediators...
Only difference: Mediators are credited by SC
For VA: NCMB accredits them
Paper:
10-15 pages
Properly footnoted
Amor con amor se paja. Love begets love.
PAL V. SANTOS
The Officer who would hear the grievances of employees have been on leave for a long period. CBA
provided that after 5 years without reply from the management, the case is deemed resolved in their
favor.
Court held that the employees should not suffer from lack of efficiency of the management
Relate to preventive suspension of employees.

Relate to preventive suspension of employees.
Situation: Employee was found to have misappropriated some money. What are the steps that might be
undertaken:
- Administrative investigation
- Can put employee on preventive suspension, on the rationale that: preservation of evidence (for
and against him or her): Continued presence in the workplace constitutes a serious threat to
company property/to co-employees
What if it is difficult to find evidence against the employee. 30-day suspension runs. The employee
would argue that the speedy disposition of cases also applies to him/her. What if the 30-day suspension
is to expire but no evidence yet, what to do?
• Re-hire the employee, but put him/her in another job
• Resort to the grievance procedure in the CBA
• Get him back and entrap him!
• Give him paid-leave - that's what you should do! (meaning eto gusto ni sir) - resort to PAYROLL
Reinstatement "wag ka na lang pumasok muna, bata. Pero wag ka mag-alala, babayaran ka
namin."
-care and caution, however, may be exercised in opting for this condition. The employee may file
action for constructive illegal dismissal.
Master Iron Labor Union v. NLRC

-even with a no-strike clause in the CBA, the union held a strike (after bugging the employer to resort to
grievance proceedings with no avail) due to the hiring of the employer of casuals to do the work of
regular employees so as to prevent it from paying allowance for outside work.
Court held that no-strike clause would only apply for economic issues. But for ULP, can strike!
Economic strike: strike held to influence employer/employee to agree to economic gain
Skip extension/renewal
Sundower Case
-Sundower went to RTC, not NLRC, because there is no EER with the Union
-Union wanted Sundower to absorb the workers of the previous hotel, Mabuhay
Court held that Sundower is not compelled to absorb the employees of Mabuhay, absent clear provision
-if any, Sundower's only obligation is to consider for employment the employment (but not to hire
them)
Manlimos Case
-The company was sold to another company. Even with this knowledge, the employees of the previous
company still worked for the new company, even in probationary status. Subsequently though, the
employees were terminated for acts prejudicial to the new company. Thus, the employees filed a case
against the new company for nonpayment of wages, etc.
Court held that there is no evidence of BF on part of the two companies as to the sale of the corporation
so the new company is not obliged to absorb the employees of the old company.
*The employees, through the union, should have been more vigilant to protect the employees by
putting in the CBA a provision that in case of change in ownership, the employer should ensure the
hiring of the said employees by the new owner or else the old owner would be liable (in case the new
owner does not respect the said agreement).
-ang nangyayari naman, if a new owner buys, old employees are terminated. Would insist that its own
employees be hired (or choose new employees)
Expiration of contract:
Alam nyo na to: even if expired na contract, it would still be applicable
Disaffiliation: Doctrine of Substitution

Benguet Consolidated, Inc. v BCI Employees and Workers Union—PAFLU (1968)
It is unquestionable that the seeking of the

It is unquestionable that the seeking of the
union's help by one of its members in connection
with the latter's correct wages constitutes proper
union activity. Consequently, the refusal of the
employer to implement the proper salary scale to
respondent Andrada because he sought the help of
his union in pursuing what he believed was his
right to a salary adjustment, is unfair labor
practice.
Where there occurs a shift in employee’s
union allegiance after the execution of a collective
bargaining contract with their employer, the
employees can change their agent – the labor
union, but the CBA continues to exist.
Elisco-Elirol Labor Union v. Noriel (1977)
HELD: Union-NAFLU, consisting of employees
and members of the local union was the principal
party to the agreement.
NAFLU as the mother union" in participating in
the execution of the bargaining agreement acted
merely as agent of the local union freely to serve
the common interest of all its members, including
the freedom to disaffiliate when the circumstances
so warranted.
Locals are separate and distinct units primarily
designed to secure and maintain an equality of
bargaining power between the employer and their
employee-members in the economic struggle for
the fruits of the joint productive effort of labor and
capital. Association of the locals into the national
union was in furtherance of the same end. These
associations are consensual entities capable of
entering into such legal relations with their
members. The essential purpose was the affiliation
of the local unions into a common enterprise to
increase by collective action the common
bargaining power in respect of the terms and
conditions of labor.
Yet the locals remained the basic units of
association. Union to whom the employees owe
their allegiance has from the beginning expressly
avowed that it "does not intend to change and/or
amend the provisions of the present collective
bargaining agreement but only to be given the
chance to enforce the same since there is a shift of
allegiance in the majority of the employees at
respondent company. During the effectivity of a
collective bargaining agreement executed between
employer and employees thru their agent, the
employees can change said agent but the contract
continues to bind them up to its expiration date.
Effect f Expiry
New Pacific Timber and Supply Co. Inc v.
NLRC (2000)
WON the terms of an existing CBA particularly

NLRC (2000)
WON the terms of an existing CBA particularly
as to the economic provisions, can be extended
beyond the three year period prescribed by law in
the absence of a new agreement?
Until a new CBA has been executed by and
between the parties, they are duty bound to keep
the status quo and to continue in full force and
effect the terms and conditions of the existing
agreements.
The law does not provide for an exception nor
qualification as to which of the economic provisions
of the existing agreements are to retain force and
effect, therefore it encompasses all provisions.
The New CBA is given PROSPECTIVE effect
generally since 253 and 253-A provides for an
automatic renewal clause in existing CBAs.
PURPOSE: To avoid creating a gap during
which no agreement would govern. Better for
industrial peace if effectivity of the CBA is longer.
Philcom v. PhilTel
-if Union violates CBA. Is there ULP?
-CBA violation is no longer an unfair practice act, unless it involves a flagrant or malicious refusal to
comply with an economic provision in the CBA
-pagkaCBA violation, hindi na ULP yan unless the one alleging ULP would be able to demonstrate
flagrant or malicious refusal to comply with an economic provision of CBA. Pano pag hindi naman? How
to resolve the problem? Undergo grievance procedure in the CBA
(NOTE HOWEVER THAT NOW, THE LABOR CODE STILL ENUMERATES CBA VIOLATION AS ULP!)
NISSAN MOTORS V SECRETARY OF DOLE

- A 2000-2001 labor dispute betw een Nissan Motors Philippines, Inc. (Nissan Motors) and the union BANAL-NMPI-OLALIA-KMU
triggered by a collective bargaining deadlock resulted in the filing of four notices of strike and the dismissal from the service of a
number of company employees.
- August 22, 2001 – DOLE issued an order assuming jurisdiction over the case. In the same order, the DOLE Secretary expressly
enjoined any strike or lockout and directed the parties to cease and desist from committing any act that might aggravate the
situation. It also ordered the Union to refrain from engaging in any disruptive activity.
- December 5, 2001 – The DOLE secretary issued a decision w hich contained names of union officers and members w hom Nissan
Motors dismissed for defying the directives contained in the assumption order. The order can be summarized as follow s:
- That the suspension of 140 employees is affirmed and the dismissal of the union officers is sustained.
- But the dismissal of the union members w as recalled and it ordered for the reinstatement of the employees/union members
w ithout backwages. They were to be imposed a 1-month suspension w hich was to be deemed served already.
- January 22, 2002 – The DOLE affirmed w ith modification the December resolution. The modification consisted of deleting from the
list of union officers three employees.
- February 7, 2003 – The CA, acting on petitions filed by Nissan Motors and the union, affirmed the DOLE decision.
- June 21, 2006 – The SC affirmed that of the CA insofar as it upheld the DOLE Secretary on the suspension and dismissal angle of
her decision w hich included the follow ing: (a) affirming the suspension of the 140 employees w hich is the subject of the first notice of
strike; (b) sustaining the dismissal of the Union officers; and (c) downgrading the penalty of dismissal to a 1-month suspension to be
imposed on Union members w ho joined the striking Union officers in defying the assumption order and accordingly reinstating said
union members having already served the 1-month suspension.
CLASS NOTES:
During the conciliation proceedings, the parties should stop doing any act which may aggravate the
situation.
SOLE decided on the wages. The employer was arguing that the SOLE used paper submitted by them
which was the last position of the company when Nissan tried to settle...but the SOLE awarded said
award based on a revelation of NCMB (confidential position...), which provided that the employer said
that they could give the demands of the employees.
-what was wrong with that: prohibition on disclosure of information obtained during conciliation
proceedings, based on Art 233 of the labor code (privileged communications)

Compulsory Arbitration
Friday, August 20, 2010
10:27 AM
Art. 263

Chung Fu v. CA (1992)
10:27 AM
-Chung Fu and Roblecor Philippines entered into a construction agreement on May 17, 1989:
*Roblecor would construct and finish on December 31, 1989 Chung Fu's factory complex in Tanza,
Cavite for P42M
*in the event of disputes arising from the performance of the contract, issues shall be submitted
for resolution before a single arbitrator chosen by both parties
-The parties entered further ancillary contracts
• for the construction of the dormitory and support facilities for ~P4M (to be finished October 31)
and
• for installation of electrical, water and hydrant systems at the plant site for P12.1M (completed 1
month after civil works have been finished)
-DISPUTE: Roblecor failed to complete work despite extensions. Chung Fu took over the construction
when it became evident Roblecor could not fulfill its obligation
-Roblecor filed a PETITION FOR COMPULSORY ARBITRATION, pursuant to arb clause, for the unsatisfied
account of P10.5M and unpaid progress billings of ~P2M
-Chung fu MOVED TO DISMISS
-Subsequently, both parties agreed to an arbitration agreement which precludes further judicial
recourse if either party disagrees with the whole or any part of the arb agreement. Only exception is
when BOTH PARTIES AGREE that either is entitled to seek judicial assistance for purpose of enforcing the
arb award
-RTC approved arbitration agreement. Arbitrator appointed as sole arbiter.
-Arb Award: Chung Fu pay Roblecor P16,108,801. Final and unappelable
-Roblecor moved for the CONFIRMATIONOF THE AWARD
-Chung Fu: moved for remand, MR of the judgment award as Arbitrator committed 12 instances of
Grave Error by disregarding the parties' contract
-RTC:
>Denied Chung Fu's Motion to remand. MR denied.
> granted Motion for confirmation of award, entered judgment, granted motion for issuance of
writ of execution
-Chung Fu filed Petition for certiorari before CA
CA: Affirm RTC. Award which provides that is be final and unappealable are precluded from judicial
review.
H: Arb award providing that the award be final and unappealable are valid BUT when there's GADALEJ
on the part of the arbitrators, the aggrieved party may file a petition for certiorari under R65 or may ask
for the vacation of the award if the grounds enumerated under the Arbitration law are proven and
sufficiently showed.
G.R. No. 96283 February 25, 1992

CHUNG FU INDUSTRIES (PHILIPPINES) INC., its Directors and Officers namely: HUANG
KUO-CHANG, HUANG AN-CHUNG, JAMES J.R. CHEN, TRISTAN A. CATINDIG, VICENTE
B. AMADOR, ROCK A.C. HUANG, JEM S.C. HUANG, MARIA TERESA SOLIVEN and
VIRGILIO M. DEL ROSARIO, petitioners,
vs.
COURT OF APPEALS, HON. FRANCISCO X. VELEZ (Presiding Judge, Regional Trail
Court of Makati [Branch 57]) and ROBLECOR PHILIPPINES, INC., respondents.
ROMERO, J.:
This is a special civil action for certiorari seeking to annul the Resolutions of the Court of
Appeals* dated October 22, 1990 and December 3, 1990 upholding the Orders of July 31, 1990

Appeals* dated October 22, 1990 and December 3, 1990 upholding the Orders of July 31, 1990
and August 23, 1990 of the Regional Trial Court of Makati, Branch 57, in Civil Case No.
90-1335. Respondent Court of Appeals affirmed the ruling of the trial court that herein
petitioners, after submitting themselves for arbitration and agreeing to the terms and conditions
thereof, providing that the arbitration award shall be final and unappealable, are precluded from
seeking judicial review of subject arbitration award.
It appears that on May 17, 1989, petitioner Chung Fu Industries (Philippines) (Chung Fu for
brevity) and private respondent Roblecor Philippines, Inc. (Roblecor for short) forged a
construction agreement 1 whereby respondent contractor committed to construct and finish on
December 31, 1989, petitioner corporation's industrial/factory complex in Tanawan, Tanza,
Cavite for and in consideration of P42,000,000.00. In the event of disputes arising from the
performance of subject contract, it was stipulated therein that the issue(s) shall be submitted
for resolution before a single arbitrator chosen by both parties.
Apart from the aforesaid construction agreement, Chung Fu and Roblecor entered into two (2)
other ancillary contracts, to wit: one dated June 23, 1989, for the construction of a dormitory and
support facilities with a contract price of P3,875,285.00, to be completed on or before October
31, 1989; 2 and the other dated August 12, 1989, for the installation of electrical, water and
hydrant systems at the plant site, commanding a price of P12.1 million and requiring completion
thereof one month after civil works have been finished. 3
However, respondent Roblecor failed to complete the work despite the extension of time
allowed it by Chung Fu. Subsequently, the latter had to take over the construction when it had
become evident that Roblecor was not in a position to fulfill its obligation.
Claiming an unsatisfied account of P10,500,000.00 and unpaid progress billings of

P2,370,179.23, Roblecor on May 18, 1990, filed a petition for Compulsory Arbitration with
prayer for Temporary Restraining Order before respondent Regional Trial Court, pursuant to the
arbitration clause in the construction agreement. Chung Fu moved to dismiss the petition and
further prayed for the quashing of the restraining order.
Subsequent negotiations between the parties eventually led to the formulation of an arbitration
agreement which, among others, provides:
2. The parties mutually agree that the arbitration shall proceed in accordance with the following terms and
conditions: —
xxx xxx xxx
d. The parties mutually agree that they will abide by the decision of the arbitrator including any amount
that may be awarded to either party as compensation, consequential damage and/or interest thereon;
e. The parties mutually agree that the decision of the arbitrator shall be final and unappealable.
Therefore, there shall be no further judicial recourse if either party disagrees with the whole or any part of
the arbitrator's award.
f. As an exception to sub-paragraph (e) above, the parties mutually agree that either party is entitled to
seek judicial assistance for purposes of enforcing the arbitrator's award;
xxx xxx xxx 4
(Emphasis supplied)
Respondent Regional Trial Court approved the arbitration agreement thru its Order of May 30,
1990. Thereafter, Engr. Willardo Asuncion was appointed as the sole arbitrator.
On June 30, 1990, Arbitrator Asuncion ordered petitioners to immediately pay respondent
contractor, the sum of P16,108,801.00. He further declared the award as final and
unappealable, pursuant to the Arbitration Agreement precluding judicial review of the award.
Consequently, Roblecor moved for the confirmation of said award. On the other hand, Chung
Fu moved to remand the case for further hearing and asked for a reconsideration of the
judgment award claiming that Arbitrator Asuncion committed twelve (12) instances of grave
error by disregarding the provisions of the parties' contract.
Respondent lower court denied Chung Fu's Motion to Remand thus compelling it to seek
reconsideration therefrom but to no avail. The trial court granted Roblecor's Motion for

reconsideration therefrom but to no avail. The trial court granted Roblecor's Motion for
Confirmation of Award and accordingly, entered judgment in conformity therewith.
Moreover, it granted the motion for the issuance of a writ of execution filed by
respondent.
Chung Fu elevated the case via a petition for certiorari to respondent Court of Appeals. On
October 22,1990 the assailed resolution was issued. The respondent appellate court concurred
with the findings and conclusions of respondent trial court resolving that Chung Fu and its
officers, as signatories to the Arbitration Agreement are bound to observe the stipulations
thereof providing for the finality of the award and precluding any appeal therefrom.
A motion for reconsideration of said resolution was filed by petitioner, but it was similarly denied
by respondent Court of Appeals thru its questioned resolution of December 3, 1990.
Hence, the instant petition anchored on the following grounds:

First
Respondents Court of Appeals and trial Judge gravely abused their discretion and/or exceeded their
jurisdiction, as well as denied due process and substantial justice to petitioners, —
(a) by refusing to exercise their judicial authority and legal duty to review the arbitration award, and
(b) by declaring that petitioners are estopped from questioning the arbitration award allegedly in view of
the stipulations in the parties' arbitration agreement that "the decision of the arbitrator shall be final and
unappealable" and that "there shall be no further judicial recourse if either party disagrees with the whole
or any part of the arbitrator's award."
Second
Respondent Court of Appeals and trial Judge gravely abused their discretion and/or exceeded their
jurisdiction, as well as denied due process and substantial justice to petitioner, by not vacating and
annulling the award dated 30 June 1990 of the Arbitrator, on the ground that the Arbitrator grossly
departed from the terms of the parties' contracts and misapplied the law, and thereby exceeded the
authority and power delegated to him. (Rollo, p. 17)
Allow us to take a leaf from history and briefly trace the evolution of arbitration as a mode of
dispute settlement.
Because conflict is inherent in human society, much effort has been expended by men and
institutions in devising ways of resolving the same. With the progress of civilization, physical
combat has been ruled out and instead, more specific means have been evolved, such as
recourse to the good offices of a disinterested third party, whether this be a court or a private
individual or individuals.
Legal history discloses that "the early judges called upon to solve private conflicts were primarily
the arbiters, persons not specially trained but in whose morality, probity and good sense the
parties in conflict reposed full trust. Thus, in Republican Rome, arbiter and judge (judex) were
synonymous. The magistrate or praetor, after noting down the conflicting claims of litigants, and
clarifying the issues, referred them for decision to a private person designated by the parties, by
common agreement, or selected by them from an apposite listing (the album judicium) or else
by having the arbiter chosen by lot. The judges proper, as specially trained state officials
endowed with own power and jurisdiction, and taking cognizance of litigations from beginning to
end, only appeared under the Empire, by the so-called cognitio extra ordinem." 5
Such means of referring a dispute to a third party has also long been an accepted alternative to
litigation at common law. 6
Sparse though the law and jurisprudence may be on the subject of arbitration in the Philippines,
it was nonetheless recognized in the Spanish Civil Code; specifically, the provisions on
compromises made applicable to arbitrations under Articles 1820 and 1821. 7 Although said
provisions were repealed by implication with the repeal of the Spanish Law of Civil Procedure, 8
these and additional ones were reinstated in the present Civil Code. 9
Arbitration found a fertile field in the resolution of labor-management disputes in the Philippines.
Although early on, Commonwealth Act 103 (1936) provided for compulsory arbitration as the

state policy to be administered by the Court of Industrial Relations, in time such a modality gave
way to voluntary arbitration. While not completely supplanting compulsory arbitration which until
today is practiced by government officials, the Industrial Peace Act which was passed in 1953
as Republic Act No. 875, favored the policy of free collective bargaining, in general, and resort
to grievance procedure, in particular, as the preferred mode of settling disputes in industry. It
was accepted and enunciated more explicitly in the Labor Code, which was passed on
November 1, 1974 as Presidential Decree No. 442, with the amendments later introduced by
Republic Act No. 6715 (1989).
Whether utilized in business transactions or in employer-employee relations, arbitration was

gaining wide acceptance. A consensual process, it was preferred to orders imposed by
government upon the disputants. Moreover, court litigations tended to be time-consuming,
costly, and inflexible due to their scrupulous observance of the due process of law doctrine and
their strict adherence to rules of evidence.
As early as the 1920's, this Court declared:

In the Philippines fortunately, the attitude of the courts toward arbitration agreements is slowly
crystallizing into definite and workable form. . . . The rule now is that unless the agreement is such as
absolutely to close the doors of the courts against the parties, which agreement would be void, the courts
will look with favor upon such amicable arrangements and will only with great reluctance interfere to
anticipate or nullify the action of the arbitrator. 10
That there was a growing need for a law regulating arbitration in general was acknowledged
when Republic Act No. 876 (1953), otherwise known as the Arbitration Law, was passed. "Said
Act was obviously adopted to
supplement — not to supplant — the New Civil Code on arbitration. It expressly declares that
"the provisions of chapters one and two, Title XIV, Book IV of the Civil Code shall remain in
force." 11
In recognition of the pressing need for an arbitral machinery for the early and expeditious
settlement of disputes in the construction industry, a Construction Industry Arbitration
Commission (CIAC) was created by Executive Order No. 1008, enacted on February 4, 1985.
In practice nowadays, absent an agreement of the parties to resolve their disputes via a
particular mode, it is the regular courts that remain the fora to resolve such matters. However,
the parties may opt for recourse to third parties, exercising their basic freedom to "establish
such stipulation, clauses, terms and conditions as they may deem convenient, provided they are
not contrary to law, morals, good customs, public order or public policy." 12 In such a case,
resort to the arbitration process may be spelled out by them in a contract in anticipation of
disputes that may arise between them. Or this may be stipulated in a submission agreement
when they are actually confronted by a dispute. Whatever be the case, such recourse to an
extrajudicial means of settlement is not intended to completely deprive the courts of jurisdiction.
In fact, the early cases on arbitration carefully spelled out the prevailing doctrine at the time,
thus: ". . . a clause in a contract providing that all matters in dispute between the parties shall be
referred to arbitrators and to them alone is contrary to public policy and cannot oust the courts
of Jurisdiction." 13
But certainly, the stipulation to refer all future disputes to an arbitrator or to submit an ongoing
dispute to one is valid. Being part of a contract between the parties, it is binding and enforceable
in court in case one of them neglects, fails or refuses to arbitrate. Going a step further, in the
event that they declare their intention to refer their differences to arbitration first before taking
court action, this constitutes a condition precedent, such that where a suit has been instituted
prematurely, the court shall suspend the same and the parties shall be directed forthwith to
proceed to arbitration. 14
A court action may likewise be proven where the arbitrator has not been selected by the parties.
15
Under present law, may the parties who agree to submit their disputes to arbitration further
provide that the arbitrators' award shall be final, unappealable and executory?
Article 2044 of the Civil Code recognizes the validity of such stipulation, thus:

Article 2044 of the Civil Code recognizes the validity of such stipulation, thus:
Any stipulation that the arbitrators' award or decision shall be final is valid, without prejudice to Articles
2038, 2039 and 2040.
Similarly, the Construction Industry Arbitration Law provides that the arbitral award "shall be
final and inappealable except on questions of law which shall be appealable to the Supreme
Court." 16
Under the original Labor Code, voluntary arbitration awards or decisions were final,
unappealable and executory. "However, voluntary arbitration awards or decisions on money
claims, involving an amount exceeding One Hundred Thousand Pesos (P100,000.00) or forty-
percent (40%) of the paid-up capital of the respondent employer, whichever is lower, maybe
appealed to the National Labor Relations Commission on any of the following grounds: (a)
abuse of discretion; and (b) gross incompetence." 17 It is to be noted that the appeal in the
instances cited were to be made to the National Labor Relations Commission and not to the
courts.
With the subsequent deletion of the above-cited provision from the Labor Code, the voluntary
arbitrator is now mandated to render an award or decision within twenty (20) calendar days from
the date of submission of the dispute and such decision shall be final and executory after ten
(10) calendar days from receipt of the copy of the award or decision by the parties. 18
Where the parties agree that the decision of the arbitrator shall be final and unappealable as in
the instant case, the pivotal inquiry is whether subject arbitration award is indeed beyond the
ambit of the court's power of judicial review.
We rule in the negative. It is stated explicitly under Art. 2044 of the Civil Code that the finality of
the arbitrators' award is not absolute and without exceptions.
Where the conditions described in Articles 2038, 2039 and 2040 applicable to both
compromises and arbitrations are obtaining, the arbitrators' award may be annulled or
rescinded. 19
Additionally, under Sections 24 and 25 of the Arbitration Law, there are grounds for vacating,
modifying or rescinding an arbitrator's award. 20
Thus, if and when the factual circumstances referred to in the above-cited provisions are
present, judicial review of the award is properly warranted.
What if courts refuse or neglect to inquire into the factual milieu of an arbitrator's award to
determine whether it is in accordance with law or within the scope of his authority? How may the
power of judicial review be invoked?
This is where the proper remedy is certiorari under Rule 65 of the Revised Rules of Court. It is
to be borne in mind, however, that this action will lie only where a grave abuse of discretion or
an act without or in excess of jurisdiction on the part of the voluntary arbitrator is clearly shown.
For "the writ of certiorari is an extra-ordinary remedy and that certiorari jurisdiction is not to be
equated with appellate jurisdiction. In a special civil action of certiorari, the Court will not engage
in a review of the facts found nor even of the law as interpreted or applied by the arbitrator
unless the supposed errors of fact or of law are so patent and gross and prejudicial as to
amount to a grave abuse of discretion or an exces de pouvoir on the part of the arbitrator." 21
Even decisions of administrative agencies which are declared "final" by law are not exempt from
judicial review when so warranted. Thus, in the case of Oceanic Bic Division (FFW), et al. v.
Flerida Ruth P. Romero, et al., 22 this Court had occasion to rule that:
. . . Inspite of statutory provisions making "final" the decisions of certain administrative agencies, we have
tak en cognizance of petitions questioning these decisions where want of jurisdiction, grave abuse of
discretion, violation of due process, denial of substantial justice or erroneous interpretation of the law
were brought to our attention . . . 23 (Emphasis ours).
It should be stressed, too, that voluntary arbitrators, by the nature of their functions, act in a
quasi-judicial capacity. 24 It stands to reason, therefore, that their decisions should not be
beyond the scope of the power of judicial review of this Court.
In the case at bar, petitioners assailed the arbitral award on the following grounds, most of
which allege error on the part of the arbitrator in granting compensation for various items which
apparently are disputed by said petitioners:
1. The Honorable Arbitrator committed grave error in failing to apply the terms and conditions of the
Construction Agreement, Dormitory Contract and Electrical Contract, and in using instead the "practices"
in the construction industry;
2. The Honorable Arbitrator committed grave error in granting extra compensation to Roblecor for loss of

productivity due to adverse weather conditions;
3. The Honorable Arbitrator committed grave error in granting extra compensation to Roblecor for loss
due to delayed payment of progress billings;
4. The Honorable Arbitrator committed grave error in granting extra compensation to Roblecor for loss of
productivity due to the cement crisis;
5. The Honorable Arbitrator committed grave error in granting extra compensation to Roblecor for losses
allegedly sustained on account of the failed coup d'état;
6. The Honorable Arbitrator committed grave error in granting to Roblecor the amount representing the
alleged unpaid billings of Chung Fu;
7. The Honorable Arbitrator committed grave error in granting to Roblecor the amount representing the
alleged extended overhead expenses;
8. The Honorable Arbitrator committed grave error in granting to Roblecor the amount representing
expenses for change order for site development outside the area of responsibility of Roblecor;
9. The Honorable Arbitrator committed grave error in granting to Roblecor the cost of warehouse No. 2;
10. The Honorable Arbitrator committed grave error in granting to Roblecor extra compensation for
airduct change in dimension;
11. The Honorable Arbitrator committed grave error in granting to Roblecor extra compensation for
airduct plastering; and
12. The Honorable Arbitrator committed grave error in awarding to Roblecor attorney's fees.
After closely studying the list of errors, as well as petitioners' discussion of the same in their
Motion to Remand Case For Further Hearing and Reconsideration and Opposition to Motion for
Confirmation of Award, we find that petitioners have amply made out a case where the voluntary
arbitrator failed to apply the terms and provisions of the Construction Agreement which forms
part of the law applicable as between the parties, thus committing a grave abuse of discretion.
Furthermore, in granting unjustified extra compensation to respondent for several items, he
exceeded his powers — all of which would have constituted ground for vacating the award
under Section 24 (d) of the Arbitration Law.
But the respondent trial court's refusal to look into the merits of the case, despite prima facie
showing of the existence of grounds warranting judicial review, effectively deprived petitioners of
their opportunity to prove or substantiate their allegations. In so doing, the trial court itself
committed grave abuse of discretion. Likewise, the appellate court, in not giving due course to
the petition, committed grave abuse of discretion. Respondent courts should not shirk from
exercising their power to review, where under the applicable laws and jurisprudence, such
power may be rightfully exercised; more so where the objections raised against an arbitration
award may properly constitute grounds for annulling, vacating or modifying said award under
the laws on arbitration.
WHEREFORE, the petition is GRANTED. The Resolutions of the Court of Appeals dated
October 22, 1990 and December 3, 1990 as well as the Orders of respondent Regional Trial
Court dated July 31, 1990 and August 23, 1990, including the writ of execution issued pursuant
thereto, are hereby SET ASIDE. Accordingly, this case is REMANDED to the court of origin for
further hearing on this matter. All incidents arising therefrom are reverted to the status quo ante
until such time as the trial court shall have passed upon the merits of this case. No costs.
SO ORDERED.
Gutierrez, Jr., Feliciano, Bidin and Davide, Jr., JJ., concur.
Footnotes
* Justice Jose C. Campos, Jr., ponente, with Justices Oscar M. Herrera and Abelardo M. Dayrit
concurring.
1 Annex "K" to the petition, Rollo, pp. 146-155.
2 Annex "L"; Rollo pp. 156-161.
3 Annex "M"; Rollo pp. 162-168.
4 Annex "O"; Rollo pp. 172-175.
5 Reyes, J.B.L., Voluntary Arbitration (Proceedings of the Second Conference on Voluntary Arbitration —
1980), p. 6.
6 Under Chan Linte v. Law Union and Rock Insurance Co., etc., G.R. No. 16398, 14 December 1921, 42
Phil. 548, citing C.J. vol. 5, p. 16,
"[t]he settlement of controversies by arbitration is an ancient practice at common law. In its broad sense it
is a substitution, by consent of parties, of another tribunal for the tribunals provided by the ordinary
processes of law; . . . Its object is the final disposition, in a speedy and inexpensive way, of the matters
involved, so that they may not become the subject of future litigation between the parties."
7 "Art. 1820. Persons capable of making a compromise may also submit their contentions to a third
person for decision.
Art. 1821. The provisions of the next preceding chapter with respect to compromises shall also be

person for decision.
Art. 1821. The provisions of the next preceding chapter with respect to compromises shall also be
applicable to arbitrations.
With regard to the form of procedure in arbitration and to the extent and effects thereof, the provisions of
the Law of Civil Procedure shall be observed."
8 Cordoba v. Conde, 2 Phil. 445 (1903).
9 Articles 2042-2046, Republic Act No. 386 which was passed on June 18, 1949.
10 Malcolm, J. dissenting, in Vega v. San Carlos Milling Co., 51 Phil. 908 (1924); Manila Electric Co. v.
Pasay Transportation Co., 57 Phil. 600 (1932).
11 Umbao v. Yap, 100 Phil. 1008 (1957).
12 Civil Code, Article 1306.
13 Wahl, et al. v. Donaldson, Sims and Co., 2 Phil. 301 (1903); Puentebella v. Negros Coal Co., 50 Phil.
69 (1927); Cordoba v. Conde, 2 Phil. 445 (1903); and Labayen v. Hernaez, 1 Phil. 587 (1902).
14 Bengson v. Chan, No. L-27283, July 29, 1977, 78 SCRA 113.
15 Supra, footnote 11.
16 Executive Order No. 1008, Section 19.
18 Labor Code, Article 262-A.
19 "Art. 2038. A compromise in which there is mistake, fraud, violence, intimidation, undue influence, or
falsity of documents, is subject to the provisions of article 1330 of this Code.
However, one of the parties cannot set up a mistake of fact as against the other if the latter, by virtue of
the compromise, has withdrawn from a litigation already commenced.
Art. 2039. When the parties compromise generally on all differences which they might have with each
other, the discovery of documents referring to one or more but not to all of the questions settled shall not
itself be a cause for annulment or rescission of the compromise, unless said documents have been
concealed by one of the parties.
But the compromise may be annulled or rescinded if it refers only to one thing to which one of the parties
has no right, as shown by the newly-discovered documents.
Art. 2040. If after a litigation has been decided by a final judgment, a compromise should be agreed upon,
either or both parties being unaware of the existence of the final judgment, the compromise may be
rescinded.
Ignorance of a judgment which may be revoked or set aside is not a valid ground for attacking a
compromise.
20 Sec. 24. Grounds for vacating award. — In any one of the following cases, the court must make an
order vacating the award upon the petition of any party to the controversy when such party proves
affirmatively that in the arbitration proceedings:
(a) The award was procured by corruption, fraud, or other undue means; or
(b) That there was evident partiality or corruption in the arbitrators or any of them; or
(c) That the arbitrators were guilty of misconduct in refusing to postpone the hearing upon sufficient cause
shown, or in refusing to hear evidence pertinent and material to the controversy; that one or more of the
arbitrators was disqualified to act as such under section nine hereof, and wilfully refrained from disclosing
such disqualifications or of any other misbehavior by which the rights of any party have been materially
prejudiced; or
(d) That the arbitrators exceeded their powers, or so imperfectly executed them, that a mutual, final and
definite award upon the subject matter submitted to them was not made.
Where an award is vacated, the court, in its discretion, may direct a new hearing either before the same
arbitrators or before a new arbitrator or arbitrators chosen in the manner provided in the submission or
contract for the selection of the original arbitrator or arbitrators, and any provision limiting the time in
which the arbitrators may make a decision shall be deemed applicable to the new arbitration and to
commence from the date of the court's order.
Where the court vacates an award, costs, not exceeding fifty pesos and disbursements may be awarded
to the prevailing party and the payment thereof may be enforced in like manner as the payment of costs
upon the motion in an action.
Sec. 25. Grounds for modifying or correcting award. — In any one of the following cases, the court must
make an order modifying or correcting the award, upon the application of any party to the controversy
which was arbitrated:
(a) Where there was an evident miscalculation of figures, or an evident mistake in the description of any
person, thing or property referred to in the award; or
(b) Where the arbitrators have awarded upon a matter not submitted to them, not affecting the merits of
the decision upon the matter submitted; or
(c) Where the award is imperfect in a matter of form not affecting the merits of the controversy, and if it
had been a commissioner's report, the defect could have been amended or disregarded by the court.
The order may modify and correct the award so as to effect the intent thereof and promote justice
between the parties.
21 Sime Darby Pilipinas, Inc. v. Magsalin, G.R. No. 90426, December 15, 1989, 180 SCRA 177.
22 G.R. No. L-43890, July 16, 1984, 130 SCRA 392.

22 G.R. No. L-43890, July 16, 1984, 130 SCRA 392.
23 130 SCRA at 399.
24 Ibid.; Mantrade/FMMC Division Employees and Workers Union v. Bacungan, No. L-48437, September
30, 1986, 144 SCRA 510.

PAL v. NLRC (1989(
10:28 AM
Neither can proceedings on appeal before the NLRC en banc be considered as part of the
arbitration proceeding.
In its broad sense, arbitration is the reference of a dispute to an impartial thirdperson, chosen by the
parties or appointed by statutory authority to hear and decide the case in controversy [Chan Linte v. Law
Union and Rock,
Inc. Co., 42 Phil. 548 (1921)].
When the consent of one of the parties is enforced by statutory provisions, the proceeding is referred to
as compulsory arbitration.
In labor cases, compulsory arbitration is the process of settlement of labor disputes by a government
agency which has the authority to investigate and to make an award which is binding on all the parties
Under the Labor Code, it is the Labor Arbiter who is clothed with the authority to conduct compulsory
arbitration on cases involving termination disputes [Article 217, Pres. Decree No. 442, as amended].
When the Labor Arbiter renders his decision, compulsory arbitration is deemed terminated because by
then the hearing and determination of the controversy has ended.
Any appeal raised by an aggrieved party from the Labor Arbiter's decision is already beyond the scope of
arbitration since in the appeal stage, the NLRC en banc merely reviews the Labor Arbiter's decision for
errors of fact or law and no longer duplicates the proceedings before the Labor Arbiter. Thus, the clause
"pending final resolution
of the case by arbitration" should be understood to be limited only to the proceedings before the Labor
Arbiter, such that when the latter rendered his decision, the case was finally resolved by arbitration.
G.R. No. 55159 December 22, 1989

PHILIPPINE AIRLINES, INC., petitioner
vs.
NATIONAL LABOR RELATIONS COMMISSION and ARMANDO DOLINA, respondents.
Ermitano Manzano & Associates for petitioner.
Solon Garcia collaborating counsel for petitioner.
CORTES, J.:
Petitioner impugns in this petition for certiorari that part of the public respondent National Labor
Relations Commission's (NLRC) decision in NLRC Case No. RB-IV-9319-77 which ordered
petitioner to restore private respondent Dolina to its payroll, and to pay his salaries from 1 April
1979 "until this case is finally resolved" [Rollo, p. 33]. Petitioner contends that public respondent
NLRC gravely abused its discretion considering that in the same decision public respondent
affirmed the decision of the Labor Arbiter in toto granting respondent's application for clearance
to dismiss the private respondent.
The pertinent facts are as follows: F: Dolina was admitted in PAL Aviation
Private respondent Dolina was admitted to the Philippine Airlines (PAL) Aviation School for school, the training agreement of
training as a pilot beginning 16 January 1973. The training agreement bound PAL to provide which provided that after training, he
regular and permanent employment to Dolina upon completion of the training course. On 25 would be made a regular and
January 1974, Dolina completed the course, and undertook an equipment qualification course permanent employee of PAL. He was
up to 4 October 1974. On 9 October 1974, the Civil Aeronautics Administration issued him a initially appointed temporarily for 6
license as Commercial Pilot and PAL then extended him a temporary appointment for six (6) month durations but failed to comply
months as Limited First Officer. When his appointment was due to expire on 30 April 1975, with the required flying hours. When
Dolina had only logged eighty four (84) hours and fifty five (55) minutes flying time , short he finally complied with the required
of the minimum 500 flying hours required for regularization as First Officer . To enable him
flying hours, his Adaptability rating was
to complete the requirement, his employment was extended for another six months which
appointment was described as "permanent." On 31 October 1975, when his appointment was however found to be unsatisfying and
again due to expire, he was still short of the minimum flying time requirement such that his the Pilot Acceptance Qualification
appointment was again extended up to 30 April 1976. During this third extension of his Board did not recommend him for
appointment, Dolina completed the 500 flying hours requirement, and thus on 31 March regular employment. He was
1976 he applied for regularization as First Officer. Pending his physical examination by the recommended for termination.
chief Flight Surgeon, his appointment was again extended to 31 October 1976. On 17 -PAL applied for clearance of Dolina's
August 1976, Dolina took a psychological examination wherein his "Adaptability Rating" was termination, while putting Dolina in
found to be "unacceptable" [Annex "L" to the Petition. p. 8; Rollo, p. 116]. On 23 September preventive suspension pending the
1976, complainant was again subjected to an examination and interview by the Pilot clearance.
Acceptance Qualifications Board as part of the regularization process, which examination -Dolina countered with a COMPLAINT
revealed the following:
xxx xxx xxx
FOR ILLEGAL DISMISSAL
b. Armando Dolina - After thorough evaluation of the candidate's past records, his performance -DOLE regional office lifted the
and the result of his medical examination as submitted by the Medical Sub -Department, the preventive suspension and ordered
Board finds Mr. A. Dolina not qualified for regular employment in the Company. actual reinstatement with payment of
xxx xxx xxx backwages
[NLRC Decision, pp. 3-4; Rollo, pp. 25-26]. -issue of termination and damages was
referred to Exec. Labor Arbiter
Conformably, the Board recommended the termination of the complainant pursuant to which -PAL appealed the order lifting the
PAL filed a clearance application [Rollo, p. 34] for Dolina's termination. In the meantime Dolina
preventive suspension w/ SOLE
was placed under preventive suspension effective 1 October 1976. Dolina countered with a
complaint for illegal dismissal on 6 October 1976 [Rollo, 35]. On 26 January 1977 the -pending resolution of SOLE, PAL and
Officer-in-Charge of the Department of Labor Regional Office No. IV lifted the preventive DOLINA entered into an AGREEMENT
suspension, and ordered petitioner to reinstate Dolina to his former position with full before Undersec:
backwages from 1 October 1976 up to actual reinstatement. The issue of termination and AGREEMENT

backwages from 1 October 1976 up to actual reinstatement. The issue of termination and AGREEMENT
damages was referred to the Executive Labor Arbiter for compulsory arbitration [Rollo, p. 71]. The undersigned parties hereby agree to
the following:
Petitioner appealed the order lifting Dolina's suspension to the Secretary of Labor. However, on 1 While pending final resolution of the
2 March 1977, pending the resolution of petitioner's appeal, the parties signed an agreement complaint of Mr. Armando Dolina against
before the Undersecretary of Labor, the terms of which are as follows: the Philippine Airlines, he shall be
AGREEMENT considered in the payroll effective 1
The undersigned parties hereby agree to the following: October 1976.
1 While pending final resolution of the complaint of Mr. Armando Dolina against the Philippine 2 The order of Regional Director Vicente
Airlines, he shall be considered in the payroll effective 1 October 1976 . Leogardo for the reinstatement with
2 The order of Regional Director Vicente Leogardo for the reinstatement with backwages of Mr. Dolina is backwages of Mr. Dolina is hereby
hereby rendered moot and academic. rendered moot and academic.
3 The parties shall consider this arrangement pending final resolution of the case by arbitration . 3 The parties shall consider this
xxx xxx xxx
arrangement pending final resolution of
the case by arbitration.
Subsequently, on 30 May 1977, the Acting Secretary of Labor issued an order finding that the xxx xxx xxx
propriety of the suspension had been rendered moot and academic by the above agreement
-case referred to compulsory
and referred the case for compulsory arbitration to the Executive Labor Arbiter [Annex "J"
to the Petition; Rollo, p. 85]. On 23 March 1979, the Labor Arbiter rendered its decision, the arbitration to the Exec. Labor arbiter
dispositive portion of which reads as follows: -LA: for PAL
IN VIEW OF ALL THE FOREGOING, it is our considered opinion that there is merit on the application for • Termination is in order
clearance, and therefore, the same should be as it is hereby GRANTED. Consequently, the • Claim for MD denied
oppositor's TERMINATION IS IN ORDER. -PAL then removed Dolina from Payroll
Since the termination is upheld, perforce the claim for moral damages is denied. Besides pursuant to P.D.
effective 1 April 1979
No. 1367 dated May 1, 1978, this office is devoid of jurisdiction to entertain said claim.
SO ORDERED. [Decision of Labor Arbiter, p. 12; Rollo, p. 97]. -Dolina appealed LA's decision to NLRC,
prayed that he should still be
By virtue of the above decision, PAL removed Dolina from its payroll effective 1 April 1979. considered in the payroll because LA's
Dolina then appealed the Labor Arbiter's decision to the public respondent NLRC on 29 April decision not yet final due to his appeal
1979 and there filed a motion praying that PAL be ordered to return him to PAL's payroll, -NLRC: For DOLINA
contending that the Labor Arbiter's decision was not yet final because of his timely • Termination is in order -
appeal. PAL opposed the motion claiming that it was no longer obliged to return Dolina to its clearance approved; BUT
payroll since the decision of the Labor Arbiter dated 23 March 1979 in its favor was a final • Dolina should still be included in
resolution of the case by arbitration [Annex "N" to the Petition, p. 1; Rollo, p. 137]. the payroll and be paid his
On 8 February 1980, public respondent NLRC rendered its decision containing the assailed salaries from 1 April 1979 until
portion to wit: the case is finally resolved!
xxx xxx xxx -so Petition for Certiorari here
In fine it is our considered view that the respondent's application for clearance to dismiss the complainant
has sufficiently surmounted the test of validity. WON NLRC GADALEJ when it ruled that
DOLINA was still entitled to SALARY
Be that as it may, we are not in accord with the discontinuation of the payment of complainant's salaries.
The agreement of the parties stipulated in no uncertain terms that the complainant [Dolina] is to be "until the case is finally resolved"? YES
carried in respondent's payroll until this case is finally resolved. As things stand, the main issue is still -PAL argues: stipulation only refers to
being litigated. The complainant, therefore, must be restored to the payroll and paid for his salaries from 1 resolution of case by LA
April 1979, the date he was dropped from the respondent's payroll. -NLRC: arbitration is a continuing
WHEREFORE, the Decision appealed from should be as it is hereby affirmed in toto. However the process. Since no final resolution of the
respondent is ordered to restore the complainant to its payroll and to pay his salaries from 1 April 1979
until this case is finally resolved. case yet, still in payroll
SO ORDERED. [NLRC Decision, pp. 10-11; Rollo, pp. 32-33; Italics supplied] H: Interpretation of contracts:
circumstances under which an
Hence, this petition, with a prayer for a temporary restraining order. The Court issued a instrument was made, including the
temporary restraining order on 10 October 1980. Private respondent Dolina failed to file his situation of the subject thereof and the
comment and the Solicitor General submitted his own Comment supporting the stand of parties to it may be considered so that
petitioner. Due to the adverse stand of the Solicitor General, public respondent NLRC submitted the intention of the contracting parties
its own Comment. may be adjudged correctly
The issue before the Court is whether or not the NLRC committed grave abuse of discretion in
-HERE: Agreement was intended to
holding that private respondent Dolina was entitled to his salaries from 1 April 1979 "until this
case is finally resolved." supersed the order of the Regional
PAL contends that inasmuch as the respondent Commission acting en banc had affirmed in toto DOLE director; in lieu of reinstatement
the decision of the Labor Arbiter granting petitioner the clearance for the dismissal of private with backwages, Dolina would just be
respondent Dolina, it is an act of grave abuse of discretion amounting to lack of jurisdiction on included in the payroll from time of
its part to order petitioner to pay private respondent's salaries from 1 April 1979 until the case is preventive suspension until the final
finally terminated. PAL contends that said stipulation refers only to the resolution of the case by resolution of the case by arbitration,
arbitration and said arbitration of the case was terminated when the Labor Arbiter rendered its w/o having to perform any work for
decision dated 23 March 1979. PAL argues that the arbitration of the case is limited to and PAL
comprises merely the proceedings before the Labor Arbiter such that when the latter renders a -it would be absurd if the parties
decision, arbitration of the dispute is terminated . intended that "final resolution of the
Public respondent NLRC on the other hand contends that arbitration is a continuing process
case by arbitration" would include the
from the time the case is referred by the Secretary of Labor to the Arbitration Branch until the
final judgment is had on appeal. Since the Labor Arbiter's decision in favor of petitioner did not whole adjudicatory process, even upon
finally resolve the case in view of the timely appeal by private respondent from said decision, petition for certiorari, w/o Dolina
the case was not yet finally terminated by arbitration and Dolina is entitled to be placed in rendering any service to PAL
petitioner's payroll until the complaint is finally resolved. -ARBITRATION, DEF: arbitration is the
The above contentions call for the proper interpretation of the agreement between the parties, reference of a dispute to an impartial
specifically the third stipulation containing the clause "pending final resolution of the case by third person, chosen by the parties or
arbitration." appointed by statutory authority to
It is a basic rule in interpretation of contracts that the circumstances under which an instrument hear and decide the case in
was made, including the situation of the subject thereof and the parties to it, may be considered controversy [Chan Linte v. Law Union
so that the intention of the contracting parties may be judged correctly [Art. 1371, Civil Code of and Rock, Ins. Co., 42 Phil. 548 (1921)].
the Philippines; Section 11, Rule 130, Rules of Court; Lim v. Court of Appeals, G.R. No.
When the consent of one of the parties
L-40258, September 11, 1980, 99 SCRA 668.] In the instant case, the stipulation in the 2 March
1977 agreement that Dolina shag be included in the payroll of PAL until final resolution of the is enforced by statutory provisions, the
case by arbitration was intended to supersede the order of the Regional Director which, by proceeding is referred to as

case by arbitration was intended to supersede the order of the Regional Director which, by proceeding is referred to as
stipulation of the parties, was rendered moot and academic. In lieu of reinstatement and the compulsory arbitration.
payment of his backwages, private respondent was included in petitioner's payroll, effective ... In labor cases, compulsory
from the time he was preventively suspended until final resolution of the case by arbitration, arbitration is the process of settlement
without having to perform any work for the petitioner. In entering into the agreement, the parties of labor disputes by a government
could not have intended to include in the clause "final resolution of the case by arbitration" the agency which has the authority to
whole adjudicatory process, including appeal. For if it were so, even proceedings on certiorari investigate and to make an award
before this Court would be embraced by the term "arbitration" and private respondent will which is binding on all the parties [See
continue to receive monthly salary without rendering any service to the petitioner regardless of Wood v. Seattle, 23 Wash. 1, 62 P 135,
the outcome of the proceedings before the Labor Arbiter, for as long as one of the parties
52 LRA 369 (1920); Amalgamated
appeal to the NLRC and until the case is finally resolved by this Court. This is clearly an
absurdity which could not have been contemplated by the parties. Association v. Wisconsin Employees'
Neither can proceedings on appeal before the NLRC en banc be considered as part of the Relations Board, 340 U.S. 383-410,95 L.
arbitration proceeding. In its broad sense, arbitration is the reference of a dispute to an impartial Ed. 381 (1951)].
third person, chosen by the parties or appointed by statutory authority to hear and decide the -WHY APPEAL TO NLRC NOT INCLUDED
case in controversy [Chan Linte v. Law Union and Rock, Ins. Co., 42 Phil. 548 (1921)]. When IN ARBITRATION: Under the Labor
the consent of one of the parties is enforced by statutory provisions, the proceeding is referred Code, it is the Labor Arbiter who is
to as compulsory arbitration. In labor cases, compulsory arbitration is the process of settlement clothed with the authority to conduct
of labor disputes by a government agency which has the authority to investigate and to make an compulsory arbitration on cases
award which is binding on all the parties [See Wood v. Seattle, 23 Wash. 1, 62 P 135, 52 LRA involving termination disputes [Article
369 (1920); Amalgamated Association v. Wisconsin Employees' Relations Board, 340 U.S. 217, Pres. Decree No. 442, as
383-410,95 L. Ed. 381 (1951)]. Under the Labor Code, it is the Labor Arbiter who is clothed with
amended]. When the Labor Arbiter
the authority to conduct compulsory arbitration on cases involving termination disputes [Article
217, Pres. Decree No. 442, as amended]. When the Labor Arbiter renders his decision, renders his decision, compulsory
compulsory arbitration is deemed terminated because by then the hearing and determination of arbitration is deemed terminated
the controversy has ended. Any appeal raised by an aggrieved party from the Labor Arbiter's because by then the hearing and
decision is already beyond the scope of arbitration since in the appeal stage, the NLRC en banc determination of the controversy has
merely reviews the Labor Arbiter's decision for errors of fact or law and no longer duplicates the ended. Any appeal raised by an
proceedings before the Labor Arbiter. Thus, the clause "pending final resolution of the case by aggrieved party from the Labor
arbitration" should be understood to be limited only to the proceedings before the Labor Arbiter, Arbiter's decision is already beyond the
such that when the latter rendered his decision, the case was finally resolved by arbitration. scope of arbitration since in the appeal
stage, the NLRC en banc merely
More important, however, is the fact that the NLRC's order for the continued payment of
reviews the Labor Arbiter's decision for
Dolina's salaries is inconsistent with its affirmance of the Labor Arbiter's decision upholding the
validity of Dolina's dismissal. In affirming the Labor Arbiter's decision granting the termination errors of fact or law and no longer
clearance, the NLRC held that: duplicates the proceedings before the
With respect to the issue of whether or not the complainant's [Dolina] dismissal was sufficiently grounded, Labor Arbiter. Thus, the clause
we are not persuaded that the respondent [herein petitioner PAL] is under obligation to employ him as "pending final resolution of the case by
regular employee simply because he was certified physically fit and technically to proficient by the CAA. arbitration" should be understood to
This is understandable for it concerns the safety of its properties, and above all, the safety of the lives and be limited only to the proceedings
properties of its passengers, which by law it is committed to transport safely. In the absence, therefore, of
any showing that its standards are unreasonable and discriminatory, which we do not find here, We before the Labor Arbiter, such that
cannot disturb them. We can only say that for exercising extraordinary diligence in the selection of its when the latter rendered his decision,
pilots, We join the public in commending it. the case was finally resolved by
xxx xxx xxx arbitration.
In fine, it is Our considered view that the respondent's application for clearance to dismiss the -NLRC'S affirmance of validity of
complainant has sufficiently surmounted the test of validity.
In view of the above finding of valid dismissal, the NLRC had no authority to order the continued granting termination clearance runs
payment of Dolina's salaries from 1 April 1979 until the case is finally resolved. The NLRC's counter to its order of inclusion of
order would result in compensating Dolina for services no longer rendered and when he is no Dolina in the payroll
longer in PAL's employ. This is contrary to the age-old rule of "a fair day's wage for a fair day's • plus it runs counter to the age-
labor" which continues to govern the relation between labor and capital and remains a basic old rule of "a fair day's wage for a
factor in determining employees' wages [Durabilt Recapping Plant & Co. v. National Labor fair day's labor"
Relations Commission, G.R. No. 76746, July 27, 1987, 152 SCRA 328]. So that, if there is no • Plus it in effect awarded
work performed by the employee there can be no wage or pay unless the laborer was able, backwages notwithstanding the
willing and ready to work but was prevented by management or was illegally locked out, finding of a valid dismissal
suspended or dismissed. Where the employee's dismissal was for a just cause, it would neither  Backwages are granted for
be fair nor just to allow the employee to recover something he has not earned and could not
earnings lost due to illegal
have earned [Santos v. National Labor Relations Commission, G.R. No. 76721, September 21,
1987, 154 SCRA 166]. dismissal
Moreover, in ordering the continued payment of Dolina's salaries from 1 April 1979 until the • It is unjust enrichment!
case is finally resolved, the NLRC in effect ordered the payment of backwages to Dolina • Plus Dolina would be in a better
notwithstanding its finding of a valid dismissal. position than those illegally
This is clearly untenable. dismissed by employers (still paid
In the first place, backwages in general are granted on grounds of equity for earnings which a backwages even if LEGALLY and
worker or employee has lost due to his illegal dismissal [New Manila Candy Workers Union VALIDLY terminated)
(NACONWA-PAFLU) v. Court of Industrial Relations, G.R. No. L-29728, October 30, 1978, 86
SCRA 37; Durabilt Recapping Plant & Co. v. National Labor Relations Commission, supra;
Chong Guan Trading v. National Labor Relations Commission, G. R. No. 81471, April 26, 1989;
Santos v. National Labor Relations Commission, supra]. Where, as in this case, the dismissal
was for a just cause, there is no factual or legal basis for ordering the payment of backwages.
The order of the NLRC for the continued payment of Dolina's salaries would allow the latter to
unjustly enrich himself at the expense of the petitioner. This Court has reiterated time and again
that the law, in protecting the rights of the laborer, authorizes neither oppression nor self -
destruction of the employer [Colgate Palmolive Philippines, Inc. v. Ople, G.R. No. 73681, June
30,1988,163 SCRA 323]. In this case, the NLRC chose not to adhere with fidelity to this
doctrine.
Secondly, NLRC's order for continued payment of Dolina's salary from 1 April 1979 up to the
final resolution of the case would place Dolina in a better position than those workers who were
found to have been illegally dismissed by their employer. For in the latter case, the backwages
that can be recovered by the worker is limited to three years [Mercury Drug Co., Inc. v. Court of

Industrial Relations, G.R. No. L-23357, April 30, 1974, 56 SCRA 694; Philippine Airlines, Inc. v.
National Labor Relations Commission, G.R. No. 64809, November 29, 1983, 126 SCRA 223;
Madrigal & Co., Inc. v. Zamora, G.R. No. L-48237, Madrigal & Co., Inc. v. Minister of Labor,
G.R. No. L-49023, June 30,1987] while Dolina, whose dismissal was found to be valid, can
recover approximately ten years backwages, which corresponds to the period from 1 April 1979
until "final resolution" of the instant case.
Considering the foregoing, the Court holds that respondent NLRC's order for the continued
payment of Dolina's salaries from "l April 1979 until the case is finally resolved" is contrary to
law and established jurisprudence and the NLRC acted in excess of its jurisdiction in issuing the
assailed order. In the recent case of Llora Motors, Inc. v. Drilon, G.R. No. 82895, November 7,
1989 the Court held as an act without or in excess of jurisdiction the portion of the Labor
Arbiter's award, which required the employer to pay to its employee an amount equivalent to a
half month's pay for every year of service as retirement benefits, for being without basis either in
law or contract. Similarly, there is in this case an excess of jurisdiction on the part of the NLRC
in ordering the continued payment of Dolina's salaries "from 1 April 1979 until the case is finally
resolved."
WHEREFORE, that part of the dispositive portion of the decision of the National Labor Relations
Commission in NLRC CASE NO. RB-IV-9319-77 requiring petitioner to restore private
respondent to its payroll and ordering the payment of his salaries from 1 April 1979 until the
case is finally resolved is hereby declared NULL and VOID and SET ASIDE. The temporary
Restraining Order issued by the Court on 10 October 1980 is made PERMANENT.
SO ORDERED.
Fernan, C.J., Gutierrez, Jr., Feliciano and Bidin, JJ., concur.

Reformist Union of RB Lines v. NLRC (1997)
10:33 AM
REFORMIST UNION OF R.B. LINER, INC. V NLRC (R.B. LINER, INC.)

266 SCRA 713
DAVIDE; January 27, 1997
FACTS
- Petitioner Reformist Union of R.B. Liner, Inc. is composed of drivers, conductors, and mechanics of private respondent R.B. Liner,
Inc. Private respondents all surnamed Dejero, are the incorporators of R.B. Liner, Inc.
- Petitioner union w as organized "by affiliating itself w ith Lakas Manggagaw a sa Pilipinas." Lakas filed a notice of strike because of
alleged acts of unfair labor practice committed by the private respondents. Despite conciliation hearings, the parties failed to reach
an agreement.
- Later, another act of unfair labor practice allegedly committed by the private respondents impelled Reformist, w ith the authorization
of Lakas, to go on strike even as conciliation proceedings continued.
- Secretary Franklin Drilon of the DOLE certified the dispute to the NLRC for compulsory arbitration and issued a return-to-w ork
order.
- The certified case w as dismissed after the union and the company reached an agreement providing, among other matters, for the
holding of a certification election.
- A certification election w as held w ere Lakas w on as the collective bargaining agent of the rank-and-file employees.
- The petitioners filed NLRC Case charging the private respondents w ith unfair labor practice, i.e., illegal lock-out. The private
respondents countered with NLRC Case w hich sought to declare as illegal the union's strike, as w ell as other "w ork
stoppages/boycotts" staged by the petitioners.
- The tw o cases were consolidated and simultaneously tried.
- Labor Arbiter dismissed the complaint of Reformist for Unfair Labor Practice (Illegal lockout) for lack of merit; declared the strike
by the Reformist as Illegal and that all the Offices and Members of the Reformist to have lost their employment status for
participating in an Illegal Strike.
- On appeal, the NLRC affirmed the decision of the Labor Arbiter but allow ed reinstatement of the dismissed employees:
- Reformist and its members moved to consider the NLRC decision, w hich w as, however, denied . Hence this petition.
ISSUE
WON respondents can still contest the legality of the strike.
HELD
NO.
- The dispute or strike w as settled w hen the company and the union entered into an agreement w here the private respondents
agreed to accept all employees w ho, by then, had not yet returned to w ork. By acceding to the peaceful settlement brooked by the
NLRC, the private respondents w aived the issue of the illegality of the strike.
- The very nature of compulsory arbitration makes the settlement binding upon the private respondents, for compulsory arbitration
has been defined both as "the process of settlement of labor disputes by a government agency which has the authority to
investigate and to make an award which is binding on all the parties," and as mode of arbitration where the parties are "compelled to
accept the resolution of their dispute through arbitration by the a third party."
- The Labor Code provides that the decision in compulsory arbitration proceedings "shall be final and executory ten (10) calendar
days after receipt thereof by the parties."
- The parties w ere informed of the dismissal of the case and w hile nothing in the record indicates w hen the said letter w as received
by the parties, it is reasonable to infer that more than ten days elapsed hence, the NLRC decision had already become final and
executory before the private respondents filed their complaint w ith the Labor Arbiter
- A final judgment is no longer susceptible to change, revision, amendment, or reversal. Neither the Labor Arbiter nor the NLRC,
therefore, could review the same issue passed upon in NLRC and their decisions to the contrary have been rendered in grave
abuse of discretion amounting to excess of jurisdiction.
- The agreement entered into by the company and the union, moreover, w as in the nature of a compromise agreement, i.e. "an
agreement between two or more persons, who, for preventing or putting an end to a lawsuit, adjust their difficulties by mutual
consent in the manner which they agree on, and which everyone of them prefers to the hope of gaining, balanced by the danger of
losing." Thus in the agreement, each party made concessions in favor of the other to avoid a protracted litigation. While w e do not
abandon the rule that "unfair labor practice acts are beyond and outside the sphere of compromises." the agreement herein w as
voluntarily entered into and represents a reasonable settlement, thus it binds the parties.
- The Labor Code bestow s finality to unvitiated compromise agreements:

Art. 227 Compromise agreements Any compromise settlement, including those involving labor standard law s, voluntarily agreed
upon by the parties w ith the assistance of the Bureau or the regional office of the Department of Labor, shall be final and binding
upon the parties. The National Labor Relations Commission or any court shall not assume jurisdiction over issues involved therein
except in case of non-compliance thereof or if there is prima facie evidence that the settlement w as obtained through fraud,
misrepresentation or coercion.
- The agreement in this case complies w ith the above requisites, forged as it w as under authority of the Labor Secretary, with
representatives from both the union and the company signing the handw ritten agreement to signify their consent thereto. The private
respondents never alleged in their answ er to the petitioners' complaint before the Labor Arbiter, nor in their complaint, that the
petitioners did not comply w ith the agreement. The binding effect of the agreement on the private respondents in thus unimpaired.
- The private respondents' cause likew ise fails in light of Article 2037 of the Civil Code, w hich gives compromise agreements "the
effect and authority of res judicata" upon the parties to the same, even w hen effected without judicial approval. The Labor Arbiter
and the NLRC therefore erroneously reviewed an issue which had already been laid to rest by the parties themselves and w hich,
applying the principle of res judicata, they could no longer re-litigate.
Disposition Petition GRANTED.
G.R. No. 120482 January 27, 1997

REFORMIST UNION OF R.B. LINER, INC., HEVER DETROS, ET AL., petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, R.B. LINER, INC., BERNITA DEJERO,
FELIPE DEJERO, RODELIO DEJERO, ANA TERESA DEJERO, and RODELIO RYAN
DEJERO, respondents.
DAVIDE, JR., J.:

This is a special civil action for certiorari Rule 65 of the Rules of Court seeking to set aside the
decision 1 of the National Labor Relations Commission (NLRC) in NLRC NCR CA No.
004115-92, which affirmed the decision 2 of the Labor Arbiter in the consolidated cases NLRC
NCR Case Nos.00-03-01392-90 and 00-04-02088 -90, and the resolution of the former denying
the motion for the reconsideration of its decision. 3
Petitioner Reformist Union of R.B. Liner, Inc. (hereinafter Reformist), with Hever Detros as its
president, is composed of drivers, conductors, and mechanics of private respondent R.B. Liner,
Inc. Private respondents Bernita, Felipe, Rodelio, Ana Teresa, and Rodelio Ryan, all surnamed
Dejero, are the incorporators of R.B. Liner, Inc.
From the record and the pleadings filed by the parties, we cull the following material facts in this
case:
Petitioner union was organized in May 1989 "by affiliating itself with Lakas Manggagawa sa
Pilipinas (hereinafter Lakas)." 4 Lakas filed a notice of strike on 13 November 1989 because of
alleged acts of unfair labor practice committed by the private respondents. 5 Despite conciliation
hearings held on 4 and 6 December 1989, the parties failed to reach an agreement. Later,

hearings held on 4 and 6 December 1989, the parties failed to reach an agreement. Later,
another act of unfair labor practice allegedly committed by the private respondents impelled
Reformist, with the authorization of Lakas, to go on strike on 13 December 1989 even as
conciliation proceedings continued. 6
On 21 December 1989, R.B. Liner, Inc. petitioned then Secretary Franklin Drilon of the
Department of Labor and Employment (DOLE) to assume jurisdiction over the ongoing dispute
or certify it to the NLRC. 7 Secretary Drilon determined that "[t]he ongoing work stoppage in the
company . . . adversely affects an industry indispensable to the national interest;" thus on 28
December 1989, he certified the dispute to the NLRC for compulsory arbitration and issued a
return-to-work order. 8
The certified case (NLRC Certified Case No. 0542, entitled in Re: Labor Dispute at RB Liner,
Inc.) was dismissed on 13 February 1990 9 after the union and the company reached an
agreement 10 on 19 January 1990 providing, among other matters, for the holding of a
certification election.
On 31 January 1990, a certification election was held were Lakas won as the collective
bargaining agent of the rank-and-file employees. 11 On 13 February 1990, Lakas presented a
proposal for a collective bargaining agreement to Bernita and Rodelia Dejero, 12 but they refused
to bargain. 13 Meanwhile, as admitted by private respondents' witness Arcile Tanjuatco, Jr., eight
R.B. Liner buses were "converted" to Sultran Lines, one "became MCL," and another "became
SST Liner." 14
The petitioners filed NLRC NCR Case No. NCR-00-03-01392-90 charging the private
respondents with unfair labor practice, i.e., illegal lock-out. The private respondents countered
with NLRC Case No. NCR-00-04-02088-90, which sought to declare as illegal the union's 13
December 1989 strike, as well as other "work stoppages/boycotts" staged by the petitioners.
The two cases were consolidated and simultaneously tried. 15
In his decision of 27 October 1992, Labor Arbiter Ricardo Nora ruled that the evidence, e.g., the
private respondents' proof of payment of percentage taxes for 1990 and Conductors/Inspectors
Daily Reports, "indicate[d] against an illegal lockout," while finding that Reformist staged an
illegal strike for the following reasons:
1. The Reformist failed to show that they observed the legal requirements of a legal strike, like the
following:
First, the Reformist failed to show and present evidence that the approval of majority vote of its members
were obtained by the secret ballot before the strike; Second, they failed to show that they submitted the
strike vote to the department of Labor at least seven (7) days prior to the intended strike; and Third, all
members of the Reformist Union struck even before the certification election, when there was no
definitive bargaining unit duly recognized and while the conciliation process was still on-going and in
progress. Exh. 7-D is clear which states the following: "The Union object[s] with [sic] the position of
Management for the reason that considering that they are on strike such election is moot and academic.
All employees as per union allegation participate[d] in that concerted action.
2. The Reformist engaged in illegal, prohibited activities by obstructing the free ingress and egress to and
from the R.B. liner's garage premises where the trucks were parked; (Exhs. "8" "8-A to "8-D"). -Reformist Union (Reformist) was organized in May
3. The Reformist failed to present clear evidence . . . rebutting respondents' claim that the Reformist 1989 by affiliating with Lakas ng Manggagawa ng
blatantly defied the Secretary's return to work Order dated December 28, 1989. The evidence adduced Pilipinas (Lakas)
particularly Exhibit "12" (the minutes of the conference on January 19, 1990 in Office of the NLRC -for alleged acts of ULP by RB Liner, Lakas filed a
Commissioner Diokno) includes the following: "That the Union assured to cause the return within five (5)
days or January 24, of all employees who have not reported for work and management agreed to accept NOTICE OF STRIKE (13 Nov 1989)
them." This clearly indicates an admission by the Reformist that its members did not comply with the -conciliation hearings were conducted (4 & 6 Dec 198)
Return-to-work order of the Secretary of Labor. It may be noted though that some members complied with but nothing happened
the Order as per testimony of respondents' witness, however, the same workers had earlier participated -another set of alleged ULP made by RB Liner, so
in prohibited and illegal activities like illegal picketing that characterized an illegal strike. 16 Reformist (with authorizatin of Lakas) went on strike
The Labor Arbiter then disposed as follows:
IN VIEW OF THE FOREGOING, judgment is hereby rendered:
(13 DEC 1989) even as conciliation proceedings
1. Dismissing the complaint of Reformist in NLRC-NCR-Case No. 00-03-01392-90 for Unfair Labor continued
Practice (Illegal lockout) for lack of merit; -21 DEC 1989: RB liner petitioned SOLE Drilon to
2. Declaring the December 13, 1989 Strike by the Reformist as Illegal in NLRC-NCR-Case No. assume jurisdiction
00-04-02088-90; -SOLE Drilon assumed jurisdiction, certified dispute to
3. Declaring all the Offices and Members of the Reformist to have lost their employment status for
participating in an Illegal Strike. They are named as follows
NLRC for compulsory arbitration, issued RTWO (28 Dec
xxx xxx xxx 1989)
All other issues are Dismissed for lack of merit. 17 -even after certification to NLRC, RB Liner and
Reformist reached an AGREEMENT which provided
On appeal, the NLRC affirmed the Labor Arbiter's finding that Reformist held an illegal strike, the holding of a certification election (19 January
reasoning as follows: 1990)
It [Reformist] disputes the holding that an illegal strike was staged on December 13, 1989 on the ground
that previous thereto, conciliation and mediation conferences were conducted and which thus
-31 January 1990: CE was held, Lakas won as CBA
constituted . . . evidence that there was a notice of strike filed consequent to a strike vote had among the -Lakas presented proposals for CBA to RB Liner but RB
members of the union. This, assuming for the sake of argument is true, did not out rightly put a stamp of Liner refused to bargain
validity for such concerted action as the fact remains that no certification election was conducted previous -later, 8 RB Liner buses were converted to buses of
to the strike. Hence, the union could not have validly claimed that it was the exclusive bargaining agent to other liners
the workers in petitioners' premises when is staged the subject strike. Nevertheless, such flaw, as
correctly assumed by the appellants, could have been corrected by the Return to Work Order of then -so Lakas/Reformist filed w/ NLRC ULP case for illegal
Secretary of Labor Franklin Drilon. The finding that this Order was defied is contested by the appellants lockout
alleging that the logbook which contains an entry of all those who reported for work was never presented -RB Liner countered saying that the strike held by the
by management, thus constituting suppression of evidence. This could have been true had the said union is ILLEGAL
logbook constituted as the sole evidence in support of petitioners' assertion as to appellants' failure to ...the 2 cases were consolidated and tried jointly
comply with the return to work order. However, the minutes of the January 19, 1990 conference before
then Commissioner Diokno establishes such fact on the strength of the Union's admission when it
LA (kasi before NLRC):
undertook to assure "the return within five (5) days or January 24 of all employees who have not reported a. There was no illegal lockout (proof of payment
for work . . ." 18 Further, it was also established that the strikers were guilty of committing illegal activities, of percentage taxes and conductors/inspectors
particularly the obstruction of free ingress and egress to and from the Liner's garage premises as shown daily reports)
by the pictures taken thereat. All told, the foregoing established circumstances yield no other conclusion b. There was an illegal strike (no evidence of strike
except to declare the strike staged by the union as a illegal. 19
Anent the illegal lockout, the NLRC deemed R.B. Liner, Inc's conversion of some of its buses vote held, submitted to DOLE and they held a
into those of other bus companies as sufficient reason for the petitioners to believe, in good strike even pending conciliation process... Plus
faith, that the private respondents were committing an act of unfair labor practice. The NLRC there was an alleged violation of SOLE Drilon's
ruled that this circumstance: RTWO)
[M]itigate[d] the liability of the striking union as well as its members not only in considering the propriety of -NLRC (on appeal): affirm LA: strike was illegal (not yet
administering the avowed principle of equity in labor case[s] but likewise on the strength to the the exclusive bargaining rep as there was allegedly no
pronouncements of the Supreme Court in aline of cases where it was held that a strike undertaken on CE conducted previous to the strike); RTWO violated
account of what the workers perceived to be unfair labor practices acts on the part to the employer should
not be outrightly taken as illegal even if the allegations of unfair labor practice acts are subsequently to be through the Union's alleged admission as stated in the
untrue. 20 minutes of the conference before Commissioner
Diokno that there are some employees who have not

Diokno that there are some employees who have not
Thus, the NLRC affirmed the decision of the Labor Arbiter but allowed reinstatement of the yet returned to work even after the RTWO was
dismissed employees: issued...; plus alleged illegal acts during strike
Accordingly, as a measure of social justice, resumption of employment relations between the parties shall ...conversion of some of buses into other bus
be decreed without however granting any monetary relief considering that both parties had, to a certain
extent, engaged in the commission of acts which rendered them underserving of their prayer for damages companies was a sufficient ground for UNION to
and other concomitant reliefs akin to their causes of action. 21 believe in GF that there was ULP so allowed
reinstatement of the dismissed employees
Reformist and its members moved to consider the NLRC decision, which was, however, denied -MR denied
on 31, March 1995. 22 The petitioners then came to us with this special civil action for certiorari,
citing the following in support thereof: WON RB Liner could still contest the legality of the
1. RESPONDENT NLRC GRAVELY ABUSED ITS DISCRETION AMOUNTING TO LACK OF
strike conducted by the Union on 13 Dec 1989? NO
JURISDICTION IN FAILING TO GIVE WEIGHT TO THE OVERWHELMING EVIDENCE OF THE
PETITIONERS SHOWING [AN] ILLEGAL LOCKOUT COMMITTE D BY THE RESPONDENTS. 1. RB Liner submitted the issue of the legality of strike
2. RESPONDENTS NLRC DENIED SUBSTANTIAL JUSTICE TO THE PETITIONE RS BY NOT already to Compulsory Arbitration, and the
AWARDING THEM THE MONETARY RELIEFS PRAYED FOR. subsequent agreement it entered with the Union
3. RESPONDENTS NLRC ERRONEOUSLY INTERPRE TED THE LAW ENUNCIATED BY THE HON. finally disposed of the issue
SUPREME COURT GIVING SEPARATION PAY PLUS BACKWAGES TO EMPLOYEES WHOSE
-RB Liner itself sought compulsory arbitration (by
REINSTATEMENT TO THEIR FORMER POSITIONS HAVE BEEN RENDERED IMPOSSIBLE BY THE
RESPONDENTS. writing a letter to SOLE Drilon) in order to resolve the
legality of the said strike
The private respondents insist that the petitioners-employees were validity dismissed for serious -RB Liner and Union entered into an agreement,
misconduct and violations of labor laws and lawful orders of the Labor Secretary, hence not pursuant to the compulsory arbitration. In the said
entitled to reinstatement nor separation pay in lieu of reinstatement. agreement, they agreed to accept all employees who
This petition must be granted, albeit not on the grounds advocated by the petitioners. have not returned to work yet. By acceding to the
The private respondents can no longer contest the legality of the strike held by the petitioners peaceful settlement brooked by the NLRC, the private
on 13 December 1989, as the private respondents themselves sought compulsory arbitration in respondents waived the issue of the illegality of the
order to resolve that very issue hence their letter to the Labor Secretary read, in part:
This is to request your good office to certify for compulsory arbitration or to assume jurisdiction over the strike.
labor dispute (strike continuing) between R.B. Liner, Inc. . . . and the Lakas Manggagawa sa Pilipinas. -The very nature of compulsory arbitration makes the
The current strike by Lakas which started on December 13, 1989 even before Certification Election could settlement binding upon the private respondents, for
be held not be resolved by the NCR Conciliation-Mediation Division after six meetings/conferences compulsory arbitration has been defined both as "the
between the parties. 23 process of settlement of labor disputes by a
government agency which has the authority to
The dispute or strike was settled when the company and the union entered into an agreement
investigate and to make an award which is binding on
on 19 January 1990 where the private respondents agreed to accept all employees who, by
then, had not yet returned to work. By acceding to the peaceful settlement brooked by the all the parties," and as mode of arbitration where the
NLRC, the private respondents waived the issue of the illegality of the strike. parties are "compelled to accept the resolution of
their dispute through arbitration by the a third party."
The very nature of compulsory arbitration makes the settlement binding upon the private -The legality of the strike could no longer be reviewed
respondents, for compulsory arbitration has been defined both as "the process of settlement of by the LA nor the NLRC, as it had already been
labor disputes by a government agency which has the authority to investigate and to make an resolved. It was the sole issue submitted for
award which is binding on all the parties," 24 and as mode of arbitration where the parties are compulsory arbitration, as referred by RB Liner to
"compelled to accept the resolution of their dispute through arbitration by the a third party." 25 SOLE Drilon. Due to the agreement entered between
RB Liner and Union, the case certified by SOLE Drilon
Clearly then, the legality of the strike could no longer be reviewed by the Labor Arbiter, much to NLRC was dismissed. This dismissal conclusively
less by the NLRC, as this had already been resolved. It was the sole issue submitted for
disposed of the strike issue.
compulsory arbitration by the private respondents, as is obvious from the portion of their letter
quoted above. The case certified by the Labor Secretary to the NLRC was dismissed after the 2. THE DECISION IS ALREADY FINAL AND EXECUTORY:
union and the company drew up the agreement mentioned earlier. This conclusively disposed of LC, Art 263(i): the decision in compulsory arbitration
the strike issue. proceedings "shall be final and executory ten (10)
calendar days after receipt thereof by the parties."
The Labor Code provides that the decision in compulsory arbitration proceedings "shall be final -parties were informed of the dismissal of the case in a
and executory ten (10) calendar days after receipt thereof by the parties." 26 The parties were letter dated 14 February 1990 and RB Liner only filed
informed of the dismissal of the case in a letter dated 14 February 1990, and while nothing in complaint with LA for illegal strike on 13 January 1990
the record indicates when the said letter was received by the parties, it is reasonable to infer so it may be reasonably inferred that more than 10
that more than ten days elapsed — hence, the NLRC decision had already become final and days have elepsed for RB liner to appeal the decision
executory — before the private respondents filed their complaint with the Labor Arbiter on 13 in the CA proceedings.
July 1990. 27 A final judgment is no longer susceptible to change, revision, amendment, or
- A final judgment is no longer susceptible to change,
reversal. 28 Neither the Labor Arbiter nor the NLRC, therefore, could review the same issue
passed upon in NLRC Certified Case No. 0542, and their decisions to the contrary have been revision, amendment, or reversal. Neither the Labor
rendered in grave abuse of discretion amounting to excess of jurisdiction. Arbiter nor the NLRC, therefore, could review the
same issue passed upon in NLRC Certified Case No.
The agreement entered into by the company and the union, moreover, was in the nature of a 0542, and their decisions to the contrary have been
compromise agreement, i.e. "an agreement between two or more persons, who, for preventing rendered in grave abuse of discretion amounting to
or putting an end to a lawsuit, adjust their difficulties by mutual consent in the manner which excess of jurisdiction.
they agree on, and which everyone of them prefers to the hope of gaining, balanced by the 3. NATURE OF AGREEMENT BET COMPANY AND
danger of losing." 29 Thus in the agreement, each party made concessions in favor of the other UNION IS A COMPROMISE AGREEMENT
to avoid a protracted litigation. While we do not abandon the rule that "unfair labor practice acts -COMPROMISE AGREEMENT DEFINED: an agreement
are beyond and outside the sphere of compromises." 30 the agreement herein was voluntarily between two or more persons, who, for preventing or
entered into and represents a reasonable settlement, thus it binds the parties. 31 On this score,
the Labor Code bestows finality to unvitiated compromise agreements: putting an end to a lawsuit, adjust their difficulties by
Art. 227 Compromise agreements — Any compromise settlement, including those involving labor mutual consent in the manner which they agree on,
standard laws, voluntarily agreed upon by the parties with the assistance of the Bureau or the regional and which everyone of them prefers to the hope of
office of the Department of Labor, shall be final and binding upon the parties. The National Labor gaining, balanced by the danger of losing."
Relations Commission or any court shall not assume jurisdiction over issues involved therein except in -Although ULP acts are beyond and outside the sphere
case of non-compliance thereof or if there is prima facie evidence that the settlement was obtained
through fraud, misrepresentation or coercion.
of compromises, LC bestows finality to unvitiated
compromise agreements:
The agreement in this case complies with the above requisites, forged as it was under authority Art. 227 Compromise agreements — Any compromise
of the Labor Secretary, with representatives from both the union and the company signing the settlement, including those involving labor standard
handwritten agreement to signify their consent thereto. The private respondents never alleged in laws, voluntarily agreed upon by the parties with the
their answer 32 to the petitioners' complaint before the Labor Arbiter, nor in their complaint, 33 that assistance of the Bureau or the regional office of the
the petitioners did not comply with the agreement. The binding effect of the agreement on the Department of Labor, shall be final and binding upon
private respondents in thus unimpaired. the parties. The National Labor Relations Commission
The private respondents' cause likewise fails in light of Article 2037 of the Civil Code, which or any court shall not assume jurisdiction over issues
gives compromise agreements "the effect and authority of res judicata" upon the parties to the involved therein except in case of non-compliance
same, even when effected without judicial approval. 34 The Labor Arbiter and the NLRC
thereof or if there is prima facie evidence that the
therefore erroneously reviewed an issue which had already been laid to rest by the parties
themselves and which, applying the principle of res judicata, they could no longer re-litigate. 35 settlement was obtained through fraud,
misrepresentation or coercion.

The only barrier then to the petitioners-employees' reinstatement is their defiance of the Labor misrepresentation or coercion.
Secretary's return-to-work order, which the private respondents claim as one reason to validly -HERE:
dismiss the petitioners-employees. We disagree, however, with the finding that Lakas/Reformist 1. Agreement was forged under authority of SOLE
violated the said order. 2. Reps of Union and company signed the
handwritted agreement to signify their consent
It is upon the private respondents to substantiate the aforesaid defiance, as the burden of 3. RB liner never alleged that the UNION did not
proving just and valid cause for dismissing employees from employment rests on the employer, comply with the agreement
and the latter's failure to do so results in a finding that the dismissal was unfounded. 36 The -A2037, NCC: Compromise agreements have effect
private respondents fell short of discharging this burden.
and authority of res judicata. SO LA and NLRC
Contrary to the Labor Arbiter's and the NLRC's view, the union's undertaking to cause absentee erroneously reviewed the said issue, as this should no
employees to return to work was not an admission that its members defied the Labor longer be re-litigated
Secretary's order. Those who did not report for work after the issuance of the Labor Secretary's
order may not have been informed of such order, or they may have been too few so as to WON UNION VIOLATED THE RTWO? NO
conclude that they deliberately defied the order. The private respondents failed to eliminate -RB Liner failed to sufficiently substantiate the
these probabilities. defiance of the Union to comply with the RTWO
-the union's undertaking to cause absentee employees
The most conclusive piece of evidence that the union members did not report for work would be to RTW was NOT AN ADMISSION: hose who did not
the company's logbook which records the employees' attendance. 37 The private respondents' report for work after the issuance of the Labor
own witness, Administrative Manager Rita Erni, admitted that the logbook would show who
Secretary's order may not have been informed of such
among the employees reported for work. 38 The logbook was supposed to be marked as Exhibit
order, or they may have been too few so as to
"14" for the private respondents, but was withdrawn, 39 then the private respondents' counsel,
Atty. Godofredo Q. Asuncion, later intimated that the said logbook was "stolen or lost." 40 conclude that they deliberately defied the order. The
We are not prepared to conclude that the private respondents willfully suppressed this particular private respondents failed to eliminate these
piece of evidence, in which case the same would be presumed adverse to them if produced. 41 probabilities.
However, other evidence indicate that the petitioners-employees complied with the Labor -on the COMPANY LOGBOOK (which allegedly showed
Secretary's return-to-work order, namely, the private respondents' Exhibits "11" to "11-E." 42 the union members who did not report to work even
These are Conductors/Inspectors Daily Reports which detail the bus trips made by a particular after RTWO): logbook was withdrawn as an exhibit,
conductor-driver tandem, as well as the numbers of the bus tickets used during each trip, and and was allegedly either lost or stolen
these reports are all dated 30 December 1989 — merely two days after Secretary Drilon issued -Other evidence indicated that UNION members
his order — indicating that a number of employees did report for work in compliance with the complied with the RTWO through the
Secretary's order. Moreover, the said exhibits were executed by some of the employees ordered
Conductors/Inspectors Daily Reports (dated 2 days
dismissed by the Labor Arbiter. 43
after RTWO, detail the bus trips made by a particular
The private respondents intended the exhibits to prove that only a handful of employees conductor-driver + number of bus tickets used during
reported for work following the issuance of the Labor Secretary's order, but they never each trip), some of which were executed by the
established that these exhibits were the only reports filed on 30 December 1989, thus, there dismissed employees
may have been employees other than those named in the said exhibits who reported for work in
obeisance to the Labor Secretary. Certainly, the Daily Reports accomplished by drivers and WON THERE WAS ILLEGAL LOCKOUT TO JUSTIFY THE
conductors would not reflect the attendance of mechanics. Besides, it was not shown by the REINSTATEMENT OF THE EMPLOYEES? YES
private respondents that their employees were required to the file the Conductors/Inspectors 1. NO defiance of RTWO proven
Daily Reports such that those who did not file would be instantly deemed absent. 2. No cause to decree dismissal in the first instance
The private respondents thus failed to satisfactorily establish any violation of the Labor
Secretary's return-to-work order, and consequently, the Labor Arbiter's and the NLRC's
contrary finding is not anchored on substantial evidence. Grave abuse of discretion was
thus committed once more.
As regards the illegal lockout alleged by the petitioners, we agree with the NLRC's finding that
the petitioners had sufficient basis to believe in good faith that the private respondents were
culpable. The NLRC found this circumstance to justify the petitioners-employees' reinstatement;
we add that since there was, in fact, no defiance of the Labor Secretary's return-to-work order,
and no cause to decree the petitioners-employees' dismissal in the first instance, reinstatement
of the dismissed employees can be the only outcome in this case.
The possibility of reinstatement is a question of fact, and where a factual determination is
indispensable to the complete resolution of the case, this Court usually remands the case to the
NLRC. 44 In view, however, of both parties' assertion that reinstatement has become impossible
because, as claimed by the petitioners, "the buses were already disposed of"; or as claimed by
the private respondents, R.B. Liner, Inc., had "ceased operations" because "its Certificate of
Public Convenience had expired and was denied renewal," and further, of "closure of the
company" due to "lack of operational trucks and buses and high costs of units," 45 there is no
need to remand this case to the NLRC. Due to the infeasiblity of reinstatement, the petitioners'
prayer for separation pay must be granted. Separation pay, equivalent to one month's salary for
every year of service, is awarded as an alternative to reinstatement when the latter is no longer
an option, 46 and is computed from the commencement of employment up to the time of
termination, including the period of imputed service for which the employee is entitled to back
wages. The salary rate prevailing at the end of the period of putative service should be the basis
for computation. 47
The petitioners are also entitled to back wages. The payment of back wages "is a form of relief
that restores the income that was lost by reason of unlawful dismissal." 48 The petitioners'
dismissal being unwarranted as aforestated, with the employees dismissed after R.A. No. 6715
49 took effect, then, pursuant to the said law and the latest rule on the matter laid down in the
Resolution of 28 November 1996 of this Court, sitting en banc, in Bustamante vs. National
Labor Relations Commission, 50 the petitioners-employees are entitled to payment of full back
wages from the date of their dismissal up to the time when reinstatement was still possible, i.e.,
in this instance, up to the expiration of the franchise of R.B. Liner, Inc.
WHEREFORE, the instant petition is GRANTED. The assailed decision of the National Labor
Relations Commission in NLRC NCR CA No. 004115-92, as well as that of the Labor Arbiter in
the consolidated cases of NLRC NCR Case Nos. 00-03-01392-90 and 00-04-02088-90 are SET
ASIDE Petitioners-employees are hereby awarded full back wages and separation pay to be
determined by the Labor Arbiter as prescribed above within thirty (30) days from notice of this
judgment.
SO ORDERED.
Narvasa, C.J, Melo, Francisco and Panganiban, JJ., concur.
Footnotes
1 Annex "A" of Petition; Rollo, 25-43. Per Carale, B., Pres Comm., with Veloso., and Quimpo, A.,
Comms., concurring.
2 Annex "D," Id., Id., 53-70.

3 Annex "B" Id.; Id., 44-46.
4 Petition, 5: Rollo, 6.
5 Exhibit "6"; Original Record (OR), vol. 1, 158.
7 Exhibit "9"; OR, vol. 1, 165.
8 Exhibit "10"; Id., 166-167.
9 Exhibit "13"; Id., 176.
10 Exhibit "12"; Id., 174-175.
11 Exhibit "F"; Id., 122.
12 Exhibit "G"; Id., 123.
14 TSN, 8 April 1991, 30-31, 37-48.
15 Id., 2.
16 Rollo, 66-68.
17 Id., 69-70.
18 More precisely, the minutes read:
2. That the Union assured to cause the return within five (5) or January 24, of all employees who have not
reported back for work and management agreed to accept them. (OR, vol. 1, 174)
19 Rollo, 38-39.
20 OR, vol. 1, 18; Id., 42 (citations omitted.)
21 Id.: Id.
22 Rollo, 44-45.
23 Exhibit "9"; OR, vol. 1, 165.
24 Philippine Airlines, Inc. vs. NLRC, 180 SCRA 555, 564 [1989], citing Wood vs. Settle, 23 Wash. 1, 62
P 135, 52 LRA 369 [1920]; Amalgamated Association vs. Wisconsin Employee's Relations Board, 340 US
383-410, 95 L.Ed. 381 [1951].
25 Luzon Development Bank, Inc. vs. Association of Luzon Development Bank Employees, 249 SCRA
162, 166 [1995], citing SEIDE, A DICTIONARY OF ARBITRATION, [1970].
26 Article 263(i), Labor Code, as amended by R.A. No. 6715.
27 See Position Paper, OR, vol. 1, 55.
28 Yu vs. NLRC, 245 SCRA 134,142[1995], citing Miranda vs. Court of Appeals, 71 SCRA 295 [1976].
29 David vs. Court of Appeals, 214 SCRA 644, 650 [1992], citing Rovero vs. Amparo, 91 Phil 228, 235
[1952].
30 AFP Mutual Benefit Association, Inc. vs. AFP-MBAI-EU, 97 SCRA 715, 732 [1980]. See also CLLC
E.G. Gochango Workers Union vs. NLRC, 161 SCRA 655, 667 [1988].
31 Periquet vs. NLRC, 186 SCRA 724,730-731 [1990].
32 OR, vol. 1, 19-22.
33 Id., 55-60.
34 Olaybar vs. NLRC, 237 SCRA 819, 824 [1994], citing Cochingyan, Jr. vs. Cloribel, 76 SCRA 361,
288-389 [1977].
35 Lucero vs. COMELEC, 234 SCRA 280, 294 [1994].
36 Reno Foods, Inc. vs. NLRC, 249 SCRA 379, 386 [1995]. See also Madlos vs. NLRC, G.R. No.
115365, 4 March 1996, 8.
37 TSN, 2 April 1991, 94-95.
38 TSN, 8 March 1991, 104-105.
39 TSN, 8 March 1991, 104-105.
40 Id., 99.
41 Section 3(e), Rule 131, Rules of Court.
42 OR, vol. 1, 168-173.
43 Named driver and conductor, respectively, were: in Exhibit "11," F. Fuentes and J. Florig; in Exhibit
"11-A'', Eddie Albalate and J. Braga; in Exhibit "11-B," F. Republica and Eduardo Hallasgo; in Exhibit "11-
C," R. Tidoy and R. Llaneta; and in Exhibit "11-D," J. Montes and Fred Borgonia. Named driver in Exhibit
"11-E" was J. dela Cerna. The Labor Arbiter declared the following, among the other R.B. Liner, Inc.,
employees, to have lost their employment status: Francisco Fuentes, Jaime Florig, Eddie Albalate, Jose
Braga Wilfredo Ripublica, Eduardo Hallasgo, Rolando Tedoy, Reynaldo Llanita, Jaonito Montes, Alfredo
Borgonia, and Jessie Dela Serna (Rollo, 70.)
44 See for example, Evangelista vs. NLRC, 195 SCRA 603, 604 [1991]. See also, Pepsi Cola Sales and
Advertising Union vs. Med-Arbiter Falconitin, G.R. No. 90148, Minute Resolution, 3 December 1990.
45 Petition, 13; Rollo, 14; Memorandum for the private Respondents, 2; Rollo, 186.
46 Sealand Service, Inc. vs. NLRC, 190 SCRA 347, 356 [1990]; Globe-Mackay Cable vs. NLRC, 206
SCRA 701, 710 [1992].
47 Sealand Service, Inc. vs. NLRC, supra note 46.
48 Escareal vs. NLRC, 213 SCRA 472, 492 [1992], citing Santos vs. NLRC, 154 SCRA 166 [1987].
49 The Act took effect on 21 March 1989. See Development Bank of the Philippines vs. Secretary of
Labor, 179 SCRA 630, 636 [1989].
50 G.R. No. 111651, where the Court re-examined and abandoned the ruling in Pines City Educational
Center vs. NLRC (227 SCRA 655 [1993] which reinstated the rule prior to the Mercury Drug case (56
SCRA 694 [1974] that in ascertaining the total amount of back wages due the employee, the total amount
derived from employment elsewhere from the date of his dismissal up to the date of his reinstatement, if
any, should be deducted therefrom. Henceforth, no such deduction shall be made, the Court ruling thus:
The clear legislative intent of the amendment in Rep. Act No. 6715 is to give more benefits to workers
than was previously given then under the Mercury Drug rule or the "deduction of earnings elsewhere"
rule. Thus, a closer adherence to the legislative policy behind Rep. Act No. 6715 points to "full
backwages" as meaning exactly that, i.e., without deducting from backwages the earnings derived
elsewhere by the concerned employee during the period of his illegal dismissal. In other words, the
provision calling for "full backwages" to illegally dismissed employees is clear, plain and free from
ambiguity and, therefore, must be applied without attempted or strained interpretation. Index animi sermo
est. (at 8)

Phimco Industries v. Brillantes (1999)
10:35 AM
G.R. No. 120751 March 17, 1999

PHIMCO INDUSTRIES, INC., petitioner,
vs.
HONORABLE ACTING SECRETARY OF LABOR JOSE BRILLANTES and PHIMCO
INDUSTRIES LABOR ASSOCIATION, respondents.
PURISIMA, J.:
At bar is a Petition for Certiorari under Rule 65 of the Revised Rules of Court, seeking to set
aside the July 7, 1995 Order 1 of the then Acting Secretary Jose Brillantes of the Department of
Labor and Employment, in NCMB-NCR-NS-03-122-95, on the ground of grave abuse of
discretion amounting to lack or excess of jurisdiction.
The antecedent facts are, as follows:

On March 9, 1995, the private respondent, Phimco Industries Labor Association (PILA), duly
certified collective bargaining representative of the daily paid workers of the petitioner, Phimco
Industries Inc. (PHIMCO), filed a notice of strike with the National Conciliation and Mediation
Board, NCR, against PHIMCO, a corporation engaged in the production of matches, after a
deadlock in the collective bargaining and negotiation. On April 21, 1995, when the several
conciliation conferences called by the contending parties failed to resolve their differences PILA,
composed of 352 2 members, staged a strike.
On June 7, 1995, PILA presented a petition for the intervention of the Secretary of Labor in
the resolution of the labor dispute, to which petition PHIMCO opposed. Pending resolution of
the said petition or on June 26, 1995, to be precise, PHIMCO sent notice of termination to
some 47 3 workers including several union officers.
On July 7, 1995, the then Acting Secretary of Labor Jose Brillantes assumed jurisdiction over
the labor dispute and issued his Order ruling, thus:
WHEREFORE, ABOVE PREMISES CONSIDERED, and pursuant to Article 263 (g) of the Labor Code, as
amended, this office hereby assumes jurisdiction over the dispute at, Phimco industries, Inc.
Accordingly, all the striking workers, except those who have been handed down termination papers
-PHIMCO is a corporation engaged in
on June 26, 1995, are hereby directed to return to work with twenty-four (24) hours from receipt of the production of matches
this Order and for the Company to accept them back under the same terms and conditions prevailing -PILA filed a NOTICE OF STRIKE w/
prior to the strike. NCMB based on an alleged deadlock in
The parties are further ordered to cease and desist from committing any act that will aggravat e the the CBA negotiations
situation.
To expedite the resolution of this dispute, the parties are directed to submit their position papers and -after several conciliation conferences
evidence within ten (10) days from receipt of this Order. without any resolution, PILA staged a
SO ORDERED. 4 strike
-PILA presented a PETITION FOR THE
On July 12, 1995, petitioner brought the present petition; theorizing, that: INTERVENTION OF SOLE
I
>PHIMCO opposed
THE HONORABLE ACTING SECRETARY JOSE BRILLANTES ACTED WITH THE GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OF EXCESS OF JURISDICTION IN ISSUING THE ASSAILED >PHIMCO also terminated some
ORDER. employees, including several union
II officers, pending the resolution of the
THE HONORABLE ACTING SECRETARY JOSE BRILLANTES ACTED WITH GRAVE ABUSE OF said petition
DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN HE WENT BEYOND
>>Acting SOLE Brillantes ASSUMED
THE BASIS FOR ASSUMPTION OF JURISDICTION UNDER ART. 263 OF THE LABOR CODE. 5
JURISDICTION OVER THE LABOR
On July 31, 1995, two weeks after the filing of the Petition, the public respondent issued another DISPUTE:
Order 6 temporarily holding in abeyance the implementation of the questioned Order the prolonged work disruption has
dated July 7, 1995 for a period of thirty (30) day; directing, as follows: adversely affected not only the
WHEREFORE PREMISES CONSIDERED, the implementation of our Order dated 7 July 1995 hereby protagonists, i.e., the workers and the
temporarily held in abeyance for a period of thirty (30) days effective from receipt thereof pending the Company, but also those directly and
private negotiations of the parties for the settlement of their labor dispute. Thereafter, both the
Union and the Company are directed to submit to this Office the result of their negotiations for our
indirectly dependent upon the
evaluation and appropriate action. unhampered and continued
SO ORDERED. 7 operations of the Company for their
means of livelihood and existence. In
The pivotal issue here is: whether or not the public respondent acted with grave abuse of addition, the entire community where
discretion amounting to lack or excess of jurisdiction in assuming jurisdiction over the plant is situated has also been
subject labor dispute. placed in jeopardy. If the dispute at
the Company remains unabated,
possible loss of employment, not to
Art. 263, paragraph (g) of the Labor Code, provides: mention consequent social problems,
(g) When, in his opinion, there exist a labor dispute causing or likely to cause a strike or lockout in an might result thereby compounding the
industry indispensable to the national interest, the Secretary of Labor and Employment may assume unemployment problem of the
jurisdiction over the dispute and decide it or certify the same to the Commission for compulsory country.
arbitration . . . Thus we cannot be unmindful of the
The Labor Code vests in the Secretary of Labor the discretion to determine what industries are possible dire consequences that might
indispensable to the national interest. Accordingly, upon the determination by the Secretary of ensue if the present dispute is allowed
Labor that such industry is indispensable to the national interest, he will assume jurisdiction over to remain unresolved, particularly
the labor dispute in the said industry. 8 This power, however, is not without any limitation. In when alternative dispute resolution
upholding the constitutionality of B.P. 130 insofar as it amends Article 264 (g) 9 of the Labor mechanism obtains to dispose of the
Code, it stressed in the case of Free telephone Workers Union vs. Honorable Minister of Labor differences between the parties
and Employment, et al., 10 the limitation set by the legislature on the power of the Secretary of herein.
Labor to assume jurisdiction over a labor dispute, thus:

herein.
Labor to assume jurisdiction over a labor dispute, thus: ...ordered that all the striking workers
Batas Pambansa Blg. 130 cannot be any clearer, the coverage being limited to "strikes or lockouts
(except those already terminated) to
adversely affecting the national interest. 11
RTW
In this case at bar, however, the very admission by the public respondent draws the labor -PHIMCO brought petition before
dispute in question out of the ambit of the Secretary's prerogative, to wit. court assailing the assumption of
While the case at bar appears on its face not to fall within the strict categorization of cases imbued jurisdiction of Acting SOLE
with "national interest", this office believes that the obtaining circumstances warrant the exercise of the
powers under Article 263 (g) of the Labor Code, as amended. 12
WON SOLE acted w/ GADALEJ in
The private respondent did not even make any effort to touch on the indispensability of the assuming jurisdiction over the labor
match factory to the national interest. It must have been aware that a match factory, though of dispute in a match factory? YES
value, can scarcely be considered as an industry "indispensable to the national interest" as it -A263(g) vests in SOLE the discretion
cannot be in the same category as "generation and distribution of energy, or those undertaken to determine what IINI (industries
by banks, hospitals, and export-oriented industries." 13 Yet, the public respondent assumed indispensable to national interest)
jurisdiction thereover, ratiocinating as follows: BUT power is not w/o limitation
For one, the prolonged work disruption has adversely affected not only the protagonists, i.e., the workers -Free Telephone workers Union vs.
and the Company, but also those directly and indirectly dependent upon the unhampered and continued
MOLE: the coverage is limted to strikes
operations of the Company for their means of livelihood and existence. In addition, the entire community
where the plant is situated has also been placed in jeopardy. If the dispute at the Company remains or lockouts adversely affecting the
unabated, possible loss of employment, not to mention consequent social problems, might result thereby national interest (as set by legislature)
compounding the unemployment problem of the country. -HERE: SOLE even admitted that the
Thus we cannot be unmindful of the possible dire consequences that might ensue if the present dispute is match factory dispute is not imbued
allowed to remain unresolved, particularly when alternative dispute resolution mechanism obtains to
w/ national interest; he did not even
dispose of the differences between the parties herein. 14
make any effort to touch on the
It is thus evident from the foregoing that the Secretary's assumption of jurisdiction indispensability of the match factory to
grounded on the alleged "obtaining circumstances" and not on a determination that the the national interest
industry involved in the labor dispute is one indispensable to the "national interest", the -SOLE assumed jurisdiction based on
standard set by the legislature, constitutes grave abuse of discretion amounting to lack the alleged "obtaining circumstances"
of or excess of jurisdiction. To uphold the action of the public respondent under the premises and not on a determination that the
would be stretching too far the power of the Secretary of Labor as every case of a strike or industry involved in the labor dispute
lockout where there are inconveniences in the community, or work disruptions in an industry is one indispensable to the "national
though not indispensable to the national interest, would then come within the Secretary's power. interest"
It would be practically allowing the Secretary of Labor to intervene in any Labor dispute at his
pleasure. This is precisely why the law sets and defines the standard: even in the exercise of his -THUS GADALEJ
power of compulsory arbitration under Article 263 (g) of the Labor Code, the Secretary must
follow the law. For "when an overzealous official by-passes the law on the pretext of retaining a
laudable objective, the intendment or purpose of the law will lose its meaning as the law itself is
disregarded" 15
In light of the foregoing, we hold that the public respondent gravely abused his discretion in
assuming jurisdiction over the labor dispute sued upon in the case.
WHEREFORE, the petition is hereby GRANTED; and the assailed Order, dated July 7, 1995, of
the Acting Secretary of Labor SET ASIDE. No pronouncement as to costs.
SO ORDERED.
Romero, Vitug, Panganiban and Gonzaga-Reyes, JJ., concur.
Panganiban, J., see concurring opinion.
---------------------------------------------------------------------------
Separate Opinions
PANGANIBAN, J., concurring opinion;
I now agree with Justice Purisima's revised ponencia that the labor secretary acted with grave
abuse of discretion in assuming jurisdiction over a labor dispute without any showing that the
disputants were engaged in an industry indispensable to national interest. Quite the contrary,
the respondent secretary himself admits that the industry, of which petitioner is a part, is not
indispensable to national interest. Indeed, a labor dispute must seriously and deleteriously affect
an industry indispensable to national interest before the secretary may assume jurisdiction over
it.
Art. 263 (g) Requires a Labor Dispute in an
Industry Indispensable to National Interest.
Art. 263 of the Labor Code speaks of the right of workers to engage in concerted activities for
their mutual benefit and protection. 1 Concerted activities, like the holding of a strike, are
resorted to by employees in their effort to obtain more favorable terms and conditions of work
for themselves. Due to its importance, the exercise of such right is limited only by the demands
of national interest under paragraph (g) of said article:
(g). When, in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout in an
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.
xxx xxx xxx
The foregoing notwithstanding, the President of the Philippines shall not be precluded from determining
the industries that, in his opinion, are indispensable to the national interest, and from intervening at any
time and assuming jurisdiction over any such labor dispute in order to settle or terminate the same.
From the text and the tenor of the law, it is clear as daylight that the secretary's assumption of
jurisdiction over a labor dispute is meant to be used sparingly and only if the national interest
demands it. He, like everyone else, must respect labor's paramount right to stage concerted
activities.
Jurisprudence Requires National Interest
to Justify Assumption of Jurisdiction

Indeed, the Court has consistently ruled that the secretary's assumption of jurisdiction is
intended not to interfere with or impede workers' rights, but to obtain speedy settlement of labor
disputes and only if national interests will be affected. 2 Admittedly, the Court has allowed the
secretary's assumption of jurisdiction in many cases, some of which are worth mentioning to
show the care with which such plenary power should be used.
In Philippine School of Business Administration v. Noriel, 3 the Court has declared that the
administration of a school is of national interest because
" . . . [it] is engaged in the promotion of the physical, intellectual and emotional well-being of the
country's youth." Work stoppage at a school unduly prejudices the students and entails great
loss to all concerned in terms of time, effort and money.
In Sarmiento v. Tuico, 4 an enterprise exporting 90 percent of its production and generating
more than $12 million dollars per year was declared to be of national interest. Any disruption of
operations would have caused the delay of shipments of export consisting of finished products
previously committed to customers abroad, a delay that would have hampered the economic
recovery program pursued by the government.
The manufacture of drugs and pharmaceuticals has also been declared to belong to the same
classification. 5 Likewise, the operation of an airline that services domestic routes has been
deemed to be imbued with national interest. 6 In one case, a company was considered to be
indispensable to national interest, as it was responsible for 22 percent of the tire production in
the Philippines, and work disruption would have or only aggravated the already worsening
unemployment situation but also discouraged foreign and domestic entrepreneurs from further
investing in the country. 7
On the other hand, the Court has disallowed the imprudent use of this power in even more
cases. Perhaps the most eloquent of these GTE Directories Corporation v. Sanchez, 8 wherein
the Court declared the secretary to be without jurisdiction to take over a labor dispute involving
a company that produced telephone directories, viz:
The production and publication of telephone directories, which is the principal activity of GTE, can
scarcely be described as an industry affecting the national interest. GTE is a publishing firm chiefly
dependent on the marketing and sale of advertising space for its not inconsiderable revenues. Its
services, while of value, cannot be deemed to be in the same category of such essential activities as "the
generation or distribution of energy" or those undertaken by "banks, hospitals, and export-oriented
industries." It cannot be regarded as playing as vital a role in communication as other mass media. The
small number of employees involved in the dispute, the employer's payment of "P10 million in income tax
alone to the Philippine Government," and the fact that the "top officers of the union were dismissed during
the conciliation process," obviously do not suffice to make the dispute in the case at bar one "adversely
affecting the national interest."
The Secretary is Vested with Broad Powers
When He Assumes Jurisdiction
When the secretary assumes jurisdiction under Art. 263(g), he is granted "great breadth of
discretion" in order to find a solution to a labor dispute. In The Philippine America Management
Co., Inc. v. The Philippine American Management Employees Association (PAMEA-FFW), 9 the
Court clarified the extent of the powers vested in the then Court of Industrial Relations, as
follows:
. . . If the Court of Industrial Relations is granted authority to find a solution in an industrial dispute and
such solution consists in the ordering of employees to return back to work, it cannot be contended that
the Court of Industrial Relations does not have the power of jurisdiction to carry that solution into effect.
And of what use is its power of conciliation and arbitration if it does not have the power and jurisdiction to
carry into effect the solution it has adopted. Lastly; if the Court of Industrial Relations has the power to fix
the terms and conditions of employment, it certainly can order the return of the workers with or without
backpay as a term or condition of the employment.
The most obvious of these powers is the automatic enjoinment of an impending strike or lockout
or the lifting thereof if one has already taken place. Assumption of jurisdiction always coexist
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. Defiance of return-
to-work order produces forfeiture of workers' employment. 10 Thus, not only does it diminish the
right of labor to strike; it also limits the prerogatives of management to hire workers under its
own terms and conditions. 11
The secretary is conferred other powers, including jurisdiction over incidents arising from the
labor dispute, in order to avoid the undesirable result of diametrically opposed rulings being
issued by the secretary and the labor arbiter. These powers comprehend those that the
secretary needs to dispose of the primary dispute effectively and efficiently. 12
The almost unlimited breadth of such powers calls for caution on the part of its possessor add
strict scrutiny of the excesses of government on the part of the judiciary.
Precursor of Article 263(g)
The power to restrict strikes and lockouts is of martial law vintage. Before Republic Act. 6715
was enacted, then President Ferdinand Marcos sought to quell mass expressions of dissent,
including strikes, through General Order No. 5 which provided:
WHEREAS, Proclamation No. 1081 dated Sept. 21, 1972, was issued by me because of a grave national
emergency now prevailing throughout the country which has been brought about by the activities of
groups of men now actively engaged in criminal conspiracy to seize political power and state power in the
Philippines in order to take over the Government by force and violence, the extent of which has now
assumed the proportion of an actual war against our people and their legitimate Government; and
WHEREAS, in order to restore the tranquillity and stability of the nation in the quickest possible manner, it
is necessary to prohibit the inhabitants of the country from doing certain acts of undertaking certain
activities such as rallies, demonstrations, picketing or strikes in certain vital industries, and other forms of
group actions which would cause hysteria or panic among the populace or would incense the people
against their legitimate Government, or would generate sympathy for the radical and lawless elements, or
would aggravate the already critical political and social turmoil now prevailing throughout the land;
NOW, THEREFORE, I, Ferdinand E. Marcos, Commander-in-Chief of all the Armed Forces of the
Philippines, and pursuant to Proclamation No. 1081 dated Sept. 21, 1972, do hereby order that
henceforth and until otherwise ordered by me or by my duly designated representative, all rallies,
demonstrations and other forms of group actions by persons within the geographical limits of the
Philippines, including strikes and picketing in vital industries such as in companies engaged in the
manufacture or processing as well in the distribution of fuel gas, gasoline, and fuel or lubricating oil, in
companies engaged in the production or processing of essential commodities or products for exports, and

in companies engaged in banking of any kind, as well as in hospitals and in schools and colleges, are
strictly prohibited and any person violating this order shall forthwith be arrested and taken into custody
and held for the duration of the national emergency or until he or she is otherwise ordered released by me
or by my duly designated representative.
General Order No. 5, which was accompanied by Letter of Instructions No. 368, specifically
detailed the vital industries or firms referred to, as follows:
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:
A. Transportation:
1) All land, air and water companies or firms engaged in passenger, freight or tourist transport;
2) All brokerage, arrastre, warehousing companies or firms;
B. Communications:
firms;
2) Radio and television companies or firms;
3) Print Media companies;
4) Postal and messengerial service companies;
C. Companies engaged in electric, light, gas, steam and water power generation and distribution and
sanitary service companies;
D. Other Public Utilities:
1) Ice and Refrigeration plants
2. Companies or firms engaged in the manufacture or processing of the following essential commodities:
A. Animal feeds
B. Cement
C. Chemicals and fertilizers
D. Drugs and medicines
E. Flour
F. Products which are classified as essential commodities in the list of National Economic and
Development Authority except the following: rice, corn, some basic cuts of meat, cooking oil, laundry
soap, lumber and plywood, galvanized iron sheets, writing pads and notebooks.
G. Iron, steel, copper, tin plates and other basic mineral products;
H. Milk
I. Newsprint
J. Tires
K. Sugar
L. Textile and garments
3. Companies engaged in the production and processing of products for export which are holders of
Central Bank or Board of Investment Certificate of Export Orientation, including hotels and restaurants
classified as three (3), four (4) or five (5) star by the Department of Tourism;
4. Companies engaged in exploration, development, mining, smelting, or refining coal, oil, iron, copper,
gold, and other minerals;
5. Companies or firms engaged in banking, including:
A. Commercial Banks
B. Saving Banks
C. Development Banks
D. Investment Banks
E. Rural Banks
F. Savings and Loans Associations
G. Cooperative Banks
H. Credit Unions
6. Companies or firms which are actually engaged in government infrastructure projects and in activities
covered by Defense contracts;
7. Hospitals as defined in Section 2, Rule 1-A, Book III of the Rules and Regulations Implementing the
Labor Code of the Philippines;
8. School and Colleges duly recognized by the Government.
The Secretary of Labor may include in/or exclude from the above list any industry, firm, or company as
the national interest, national security, or general welfare may require.
When Republic Act 6715 took effect and General Order No. 5 was repealed, there was no more
listing of industries indispensable to national interest. The labor and employment secretary was
given discretion in determining which industries would qualify as such. But the discretion cannot
be abused. It is subject to judicial review.
Under General Order No. 5, the state prohibited the holding of strikes for a stated public
purpose: a national emergency and only in enumerated industries considered vital to the ailing
economy. Even the height of martial rule in the country, there was no intention to provide a
blanket authority to the secretary to assume jurisdiction over labor disputes without any showing
that national interest, national security or general welfare demanded it.
Police Power Requires Public Necessity
After martial law was lifted and democracy was restored, the assumption of jurisdiction in Art.
263(g) has now been viewed as an exercise of the police power of the state with the aim of
promoting the common good. A prolonged strike or lockout can be inimical to the national
economy. 13 Therefore, it is imbued with public necessity and the right of the state and the public
to self-protection. But such public necessity and need for self-protection are absent in labor
disputes industries not indispensable to national interest. In the spirit of free enterprise, it is
more in keeping with national interest to allow labor to negotiate with management for decent
pay and humane working conditions without intervention from the government.
Not Always Beneficial to Labor
Even for labor, it is not always beneficial to allow the secretary's intervention in a labor dispute
under Art. 263. Although the intention may be to find a balance between the demands of labor
and the resources of management, intervention from the state and the derogation of the right to
strike are not always the solutions to the just demands of labor. More often than not, the
intervention is more to the advantage of management, which would not incur overhead
expenses that would otherwise be wasted during a work stoppage. For the same reason, it does
not necessarily follow that intervention works for the protection of labor.
Other Available Remedies

Even without compulsory arbitration, other remedies for resolving their labor disputes are still
available to labor and management. Striking employees can file illegal dismissal cases if they
are dismissed without cause. On the other hand, management can dismiss employees engaged
in illegal strikes, or it can negotiate with those involved in legal strikes.
The Secretary Found No National Interest
As stated earlier, Petitioner PHIMCO is a company which manufactures matches and, thus,
does not qualify as one engaged in an "industry indispensable to national interest." The
respondent labor and employment secretary admits this facts, expressly declaring that "the case
at bar appears on its face not to fall within the strict categorization of cases imbued with
"national interest."" He nevertheless assumed jurisdiction over petitioner's labor dispute with
PHIMCO Industries Labor Association (PILA), rationalizing thus: 14
While the case at bar appears on its face not to fall within the strict categorization of cases imbued with
"national interest", this Office believes that obtaining circumstances warrant the exercise of the powers
under Article 263(g) of the Labor Code, as amended.
For one, the prolonged work disruption has adversely affected not only the direct protagonists, i.e., the
workers and the Company, but also those directly and indirectly dependent upon the unhampared and
continued operations of the Company for their means of livelihood and existence. In addition, the entire
community where the plant is situated has also been placed in jeopardy. If the dispute at the Company
remains unabated, possible loss of employment, not to mention consequent social problems, might result
thereby compounding the unemployment problem of the country.
Thus; we cannot be unmindful of the possible dire consequences that might ensue if the present dispute
is allowed to remain unresolved, particularly when an alternative dispute resolution mechanism obtains to
dispose of the differences between the parties herein.
These excuses fail to show how petitioner falls within the category of "industries indispensable
to national interest." The allegation of the public respondent that the "match industry like the
textile or garment industry may be classified as export-oriented" is sufficiently rebutted by
petitioner's simple argument pointing out that its export is very negligible and would not qualify
under the definition of "export-oriented industries" in Section 14, Book V, Rule XIII of the
Omnibus Rules Implementing the Labor Code. 15 Besides, such allegation does not appear to
be supported by the secretary, who in his assailed Order, found that petitioner's business was
not an industry indispensable to national interest.
The case at bar is peculiar in the sense that it was the union (PILA), rather than management,
that petitioned the secretary to assume jurisdiction over the controversy. It appears that PILA
had lost belief in the efficacy of its own strike and had chosen to seek refuge in the secretary's
power of compulsory arbitration. Petitioner, on the other hand, questions the intervention,
obviously because it is not amenable to accepting all the returning workers, some of whom were
dismissed by reason of the strike. 16 The assumption of jurisdiction merely muddled the issues.
How true it is that the road to damnation is paved with good intentions. The secretary's intention
to reconcile the disputants may have been noble but it does not imbue the labor dispute with
national interest. Neither does it clothe him with power to assume jurisdiction over the case.
WHEREFORE, I vote to GRANT the petition.
# Separate Opinions
I now agree with Justice Purisima's revised ponencia that the labor secretary acted with grave
abuse of discretion in assuming jurisdiction over a labor dispute without any showing that the
disputants were engaged in an industry indispensable to national interest. Quite the contrary,
the respondent secretary himself admits that the industry, of which petitioner is a part, is not
indispensable to national interest. Indeed, a labor dispute must seriously and deleteriously affect
an industry indispensable to national interest before the secretary may assume jurisdiction over
it.
Art. 263 (g) Requires a Labor Dispute in an
Industry Indispensable to National Interest.
Art. 263 of the Labor Code speaks of the right of workers to engage in concerted activities for
their mutual benefit and protection. 1 Concerted activities, like the holding of a strike, are
resorted to by employees in their effort to obtain more favorable terms and conditions of work
for themselves. Due to its importance, the exercise of such right is limited only by the demands
of national interest under paragraph (g) of said article:
(g). When, in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout in an
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.
xxx xxx xxx
The foregoing notwithstanding, the President of the Philippines shall not be precluded from determining
the industries that, in his opinion, are indispensable to the national interest, and from intervening at any
time and assuming jurisdiction over any such labor dispute in order to settle or terminate the same.
From the text and the tenor of the law, it is clear as daylight that the secretary's assumption of
jurisdiction over a labor dispute is meant to be used sparingly and only if the national interest
demands it. He, like everyone else, must respect labor's paramount right to stage concerted
activities.
Jurisprudence Requires National Interest
Indeed, the Court has consistently ruled that the secretary's assumption of jurisdiction is
intended not to interfere with or impede workers' rights, but to obtain speedy settlement of labor
disputes and only if national interests will be affected. 2 Admittedly, the Court has allowed the
secretary's assumption of jurisdiction in many cases, some of which are worth mentioning to
show the care with which such plenary power should be used.
In Philippine School of Business Administration v. Noriel, 3 the Court has declared that the
administration of a school is of national interest because

" . . . [it] is engaged in the promotion of the physical, intellectual and emotional well-being of the
country's youth." Work stoppage at a school unduly prejudices the students and entails great
loss to all concerned in terms of time, effort and money.
In Sarmiento v. Tuico, 4 an enterprise exporting 90 percent of its production and generating
more than $12 million dollars per year was declared to be of national interest. Any disruption of
operations would have caused the delay of shipments of export consisting of finished products
previously committed to customers abroad, a delay that would have hampered the economic
recovery program pursued by the government.
The manufacture of drugs and pharmaceuticals has also been declared to belong to the same
classification. 5 Likewise, the operation of an airline that services domestic routes has been
deemed to be imbued with national interest. 6 In one case, a company was considered to be
indispensable to national interest, as it was responsible for 22 percent of the tire production in
the Philippines, and work disruption would have or only aggravated the already worsening
unemployment situation but also discouraged foreign and domestic entrepreneurs from further
investing in the country. 7
On the other hand, the Court has disallowed the imprudent use of this power in even more
cases. Perhaps the most eloquent of these GTE Directories Corporation v. Sanchez, 8 wherein
the Court declared the secretary to be without jurisdiction to take over a labor dispute involving
a company that produced telephone directories, viz:
The production and publication of telephone directories, which is the principal activity of GTE, can
scarcely be described as an industry affecting the national interest. GTE is a publishing firm chiefly
dependent on the marketing and sale of advertising space for its not inconsiderable revenues. Its
services, while of value, cannot be deemed to be in the same category of such essential activities as "the
generation or distribution of energy" or those undertaken by "banks, hospitals, and export-oriented
industries." It cannot be regarded as playing as vital a role in communication as other mass media. The
small number of employees involved in the dispute, the employer's payment of "P10 million in income tax
alone to the Philippine Government," and the fact that the "top officers of the union were dismissed during
the conciliation process," obviously do not suffice to make the dispute in the case at bar one "adversely
affecting the national interest."
The Secretary is Vested with Broad Powers
When He Assumes Jurisdiction
When the secretary assumes jurisdiction under Art. 263(g), he is granted "great breadth of
discretion" in order to find a solution to a labor dispute. In The Philippine America Management
Co., Inc. v. The Philippine American Management Employees Association (PAMEA-FFW), 9 the
Court clarified the extent of the powers vested in the then Court of Industrial Relations, as
follows:
. . . If the Court of Industrial Relations is granted authority to find a solution in an industrial dispute and
such solution consists in the ordering of employees to return back to work, it cannot be contended that
the Court of Industrial Relations does not have the power of jurisdiction to carry that solution into effect.
And of what use is its power of conciliation and arbitration if it does not have the power and jurisdiction to
carry into effect the solution it has adopted. Lastly; if the Court of Industrial Relations has the power to fix
the terms and conditions of employment, it certainly can order the return of the workers with or without
backpay as a term or condition of the employment.
The most obvious of these powers is the automatic enjoinment of an impending strike or lockout
or the lifting thereof if one has already taken place. Assumption of jurisdiction always coexist
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. Defiance of return-
to-work order produces forfeiture of workers' employment. 10 Thus, not only does it diminish the
right of labor to strike; it also limits the prerogatives of management to hire workers under its
own terms and conditions. 11
The secretary is conferred other powers, including jurisdiction over incidents arising from the
labor dispute, in order to avoid the undesirable result of diametrically opposed rulings being
issued by the secretary and the labor arbiter. These powers comprehend those that the
secretary needs to dispose of the primary dispute effectively and efficiently. 12
The almost unlimited breadth of such powers calls for caution on the part of its possessor add
strict scrutiny of the excesses of government on the part of the judiciary.
Precursor of Article 263(g)
The power to restrict strikes and lockouts is of martial law vintage. Before Republic Act. 6715
was enacted, then President Ferdinand Marcos sought to quell mass expressions of dissent,
including strikes, through General Order No. 5 which provided:
WHEREAS, Proclamation No. 1081 dated Sept. 21, 1972, was issued by me because of a grave national
emergency now prevailing throughout the country which has been brought about by the activities of
groups of men now actively engaged in criminal conspiracy to seize political power and state power in the
Philippines in order to take over the Government by force and violence, the extent of which has now
assumed the proportion of an actual war against our people and their legitimate Government; and
WHEREAS, in order to restore the tranquillity and stability of the nation in the quickest possible manner, it
is necessary to prohibit the inhabitants of the country from doing certain acts of undertaking certain
activities such as rallies, demonstrations, picketing or strikes in certain vital industries, and other forms of
group actions which would cause hysteria or panic among the populace or would incense the people
against their legitimate Government, or would generate sympathy for the radical and lawless elements, or
would aggravate the already critical political and social turmoil now prevailing throughout the land;
NOW, THEREFORE, I, Ferdinand E. Marcos, Commander-in-Chief of all the Armed Forces of the
Philippines, and pursuant to Proclamation No. 1081 dated Sept. 21, 1972, do hereby order that
henceforth and until otherwise ordered by me or by my duly designated representative, all rallies,
demonstrations and other forms of group actions by persons within the geographical limits of the
Philippines, including strikes and picketing in vital industries such as in companies engaged in the
manufacture or processing as well in the distribution of fuel gas, gasoline, and fuel or lubricating oil, in
in companies engaged in banking of any kind, as well as in hospitals and in schools and colleges, are
strictly prohibited and any person violating this order shall forthwith be arrested and taken into custody
and held for the duration of the national emergency or until he or she is otherwise ordered released by me
or by my duly designated representative.
General Order No. 5, which was accompanied by Letter of Instructions No. 368, specifically
detailed the vital industries or firms referred to, as follows:
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

A. Transportation:
1) All land, air and water companies or firms engaged in passenger, freight or tourist transport;
2) All brokerage, arrastre, warehousing companies or firms;
B. Communications:
firms;
2) Radio and television companies or firms;
3) Print Media companies;
4) Postal and messengerial service companies;
C. Companies engaged in electric, light, gas, steam and water power generation and distribution and
sanitary service companies;
D. Other Public Utilities:
1) Ice and Refrigeration plants
2. Companies or firms engaged in the manufacture or processing of the following essential commodities:
A. Animal feeds
B. Cement
C. Chemicals and fertilizers
D. Drugs and medicines
E. Flour
F. Products which are classified as essential commodities in the list of National Economic and
Development Authority except the following: rice, corn, some basic cuts of meat, cooking oil, laundry
soap, lumber and plywood, galvanized iron sheets, writing pads and notebooks.
G. Iron, steel, copper, tin plates and other basic mineral products;
H. Milk
I. Newsprint
J. Tires
K. Sugar
L. Textile and garments
3. Companies engaged in the production and processing of products for export which are holders of
Central Bank or Board of Investment Certificate of Export Orientation, including hotels and restaurants
classified as three (3), four (4) or five (5) star by the Department of Tourism;
4. Companies engaged in exploration, development, mining, smelting, or refining coal, oil, iron, copper,
gold, and other minerals;
5. Companies or firms engaged in banking, including:
A. Commercial Banks
B. Saving Banks
C. Development Banks
D. Investment Banks
E. Rural Banks
F. Savings and Loans Associations
G. Cooperative Banks
H. Credit Unions
6. Companies or firms which are actually engaged in government infrastructure projects and in activities
covered by Defense contracts;
7. Hospitals as defined in Section 2, Rule 1-A, Book III of the Rules and Regulations Implementing the
Labor Code of the Philippines;
8. School and Colleges duly recognized by the Government.
The Secretary of Labor may include in/or exclude from the above list any industry, firm, or company as
the national interest, national security, or general welfare may require.
When Republic Act 6715 took effect and General Order No. 5 was repealed, there was no more
listing of industries indispensable to national interest. The labor and employment secretary was
given discretion in determining which industries would qualify as such. But the discretion cannot
be abused. It is subject to judicial review.
Under General Order No. 5, the state prohibited the holding of strikes for a stated public
purpose: a national emergency and only in enumerated industries considered vital to the ailing
economy. Even the height of martial rule in the country, there was no intention to provide a
blanket authority to the secretary to assume jurisdiction over labor disputes without any showing
that national interest, national security or general welfare demanded it.
Police Power Requires Public Necessity
After martial law was lifted and democracy was restored, the assumption of jurisdiction in Art.
263(g) has now been viewed as an exercise of the police power of the state with the aim of
promoting the common good. A prolonged strike or lockout can be inimical to the national
economy. 13 Therefore, it is imbued with public necessity and the right of the state and the public
to self-protection. But such public necessity and need for self-protection are absent in labor
disputes industries not indispensable to national interest. In the spirit of free enterprise, it is
more in keeping with national interest to allow labor to negotiate with management for decent
pay and humane working conditions without intervention from the government.
Not Always Beneficial to Labor
Even for labor, it is not always beneficial to allow the secretary's intervention in a labor dispute
under Art. 263. Although the intention may be to find a balance between the demands of labor
and the resources of management, intervention from the state and the derogation of the right to
strike are not always the solutions to the just demands of labor. More often than not, the
intervention is more to the advantage of management, which would not incur overhead
expenses that would otherwise be wasted during a work stoppage. For the same reason, it does
not necessarily follow that intervention works for the protection of labor.
Other Available Remedies
Even without compulsory arbitration, other remedies for resolving their labor disputes are still
available to labor and management. Striking employees can file illegal dismissal cases if they
are dismissed without cause. On the other hand, management can dismiss employees engaged
in illegal strikes, or it can negotiate with those involved in legal strikes.
The Secretary Found No National Interest
As stated earlier, Petitioner PHIMCO is a company which manufactures matches and, thus,
does not qualify as one engaged in an "industry indispensable to national interest." The
respondent labor and employment secretary admits this facts, expressly declaring that "the case
at bar appears on its face not to fall within the strict categorization of cases imbued with

PHIMCO Industries Labor Association (PILA), rationalizing thus: 14
While the case at bar appears on its face not to fall within the strict categorization of cases imbued with
"national interest", this Office believes that obtaining circumstances warrant the exercise of the powers
under Article 263(g) of the Labor Code, as amended.
For one, the prolonged work disruption has adversely affected not only the direct protagonists, i.e., the
workers and the Company, but also those directly and indirectly dependent upon the unhampared and
continued operations of the Company for their means of livelihood and existence. In addition, the entire
community where the plant is situated has also been placed in jeopardy. If the dispute at the Company
remains unabated, possible loss of employment, not to mention consequent social problems, might result
thereby compounding the unemployment problem of the country.
Thus; we cannot be unmindful of the possible dire consequences that might ensue if the present dispute
is allowed to remain unresolved, particularly when an alternative dispute resolution mechanism obtains to
dispose of the differences between the parties herein.
These excuses fail to show how petitioner falls within the category of "industries indispensable
to national interest." The allegation of the public respondent that the "match industry like the
textile or garment industry may be classified as export-oriented" is sufficiently rebutted by
petitioner's simple argument pointing out that its export is very negligible and would not qualify
under the definition of "export-oriented industries" in Section 14, Book V, Rule XIII of the
Omnibus Rules Implementing the Labor Code. 15 Besides, such allegation does not appear to
be supported by the secretary, who in his assailed Order, found that petitioner's business was
not an industry indispensable to national interest.
The case at bar is peculiar in the sense that it was the union (PILA), rather than management,
that petitioned the secretary to assume jurisdiction over the controversy. It appears that PILA
had lost belief in the efficacy of its own strike and had chosen to seek refuge in the secretary's
power of compulsory arbitration. Petitioner, on the other hand, questions the intervention,
obviously because it is not amenable to accepting all the returning workers, some of whom were
dismissed by reason of the strike. 16 The assumption of jurisdiction merely muddled the issues.
How true it is that the road to damnation is paved with good intentions. The secretary's intention
to reconcile the disputants may have been noble but it does not imbue the labor dispute with
national interest. Neither does it clothe him with power to assume jurisdiction over the case.
WHEREFORE, I vote to GRANT the petition.
Footnotes
1 Annex "A"; Rollo, pp. 17-21.
2 Petition, Rollo, p. 52.
3 Order, Rollo, p. 110.
4 Rollo, pp. 20-21.
5 Petition; Rollo, pp. 4-5.
6 Annex "A"; Rollo, pp. 107-112.
7 Order; Rollo, p. 112.
8 Philtread Workers Union (PTWU), et, al., vs. Confesor, et. al., 269 SCRA 393, p. 394 [March 12, 1997].
9 Now Article 263 (g).
10 108 SCRA 757 [ OCTOBER 30, 1991].
11 Id., pp. 769- 770.
12 Order; Rollo, p.19.
13 GTE Directors Corporation vs. Honorabe Augosto Sanchez et. al.,. 197 SCRA 452. P. 471.
14 Order; Rollo, pp. 19-20.
15 Colgate Palmolive Philippines Inc. vs. Ople, et al., 163 SCRA 323, P. 330 [JUNE 30, 1988].
1 Art. 263. Strikes, picketing, and lockouts. — . . .
(b) Workers shall have the right to engage in concerted activities for purposes of collectiive bargaining or
for their mutual benefit and protection. The right of legitimate labor organizations to strike and picket and
of employers to lockout, consistent with the national interest, shall continue to be recognized and
respected. . . .
2 Philtread Workers Union (PTWU) v. Confesor, 269 SCRA 393, 399, March 12, 1997.
3 164 SCRA 402, 407, August 15, 1988, per Cortes, J.
4 162 SCRA 676, 683-684, June 27, 1988.
5 International Pharmaceuticals, Inc. v. Secretary of Labor 205 SCRA 59, 62, January 9, 1992.
6 Philippine Airlines, Inc. v. Secretary of Labor and Employment, 193 SCRA 223, 226, January 23, 1991.
7 Philthread Workers Union (PTWU) v. Coonfessor, 269 SCRA 393, 400-401, March 12, 1997.
8 197 SCRA 452, 470-471, May 27, 1991, per Narvasa, J.
9 49 SCRA 194, 201-202, January 29, 1973, per Fernando, J.
10 Asians Transmission Corporation v. National Labor Relations Commission, November 22,1989; St.
Scholastica's College v. Torres, 210 SCRA 565, 574-578, June 29, 1992; Sarmiento v. Tuico, 162 SCRA
676, 686, June 27, 1988.
11 Metrolab Industries, Inc. v. Roldan Confesor, 254 SCRA 182, 190, February 28, 1996.
12 International Pharmaceuticals, Inc. v. Secretary of Labor, 205 SCRA 59, 65-67, January 9,1992.
13 Philtread Workers Union (PTWU) v. Confesor, supra, p. 399; and Union of Filipino Employees v. Nesle
Philippines, Inc., 192 SCRA 336, 409, December 19, 1990.
14 Rollo, pp. 19-20.
15 Export-oriented industries are firms exporting 50 per cent or more of their products worth atleast
$1million or those annually exporting at least $10 million worth of their products or those exporting
manufactured or processed goods with high value or labor value added as distinguished from traditional
exports
16 Reply, p. 5; rollo, p. 148.

GTE Directories v. Sanchez (1991)
10:38 AM

NFL v. MOLE (1983)
10:39 AM

PSBA vs. Noriel (1988)
10:50 AM
G.R. No. 80648 August 15, 1988

PHILIPPINE SCHOOL OF BUSINESS ADMINISTRATION - MANILA, petitioner,
vs.
ACTING SECRETARY CARMELO C. NORIEL of the Department of Labor and
Employment, PHILIPPINE SCHOOL OF BUSINESS ADMINISTRATION EMPLOYEES
UNION-FFW CHAPTER, EDGARDO B. REYES, WILLIAM BUCE, RICARDO ABREU, LEILA
ACUNA, MENDY FARRALES, SUSAN CRUZ, CRISTINA PASICOLAN, MODESTO MEJIA,
ERLINDA PINEDA, DANILO SAMAR, NADIA YAMBAO, ANTONETTE SANCHEZ,
ANNABELLA YUTUC, MAXIMO TUNDAG, METODIO OLAHAY, GLORIA PEREZ, FELINO
REYES, VIRGINIA ANTONIO, FELIZARDA SALVIEJO, BENITO ANG, MARIO DIAZ,
LOURDES ESPION, ROMELLE TAMAYO, MA. LUISA PALMA, CARLITO ANTONIO,
ERLINDA BESANA, CYNTHIA LANDOY, ELIZABETH MACATULAD, EDNA DE LOS
SANTOS, PRISCILLA GARCIA, ASUNCION ALON, MARIFE DE GUZMAN, EMMANUEL
AGUSTIN, ENRIQUE ADALLA and EMILIO ERANA, respondents.
Balgos & Perez Law Office for petitioner.
Ma. Vicenta Y. De Guzman for respondent Union and its individually named officers and
members.
CORTES, J.:
On September 8, 1987, respondent union, alleging the support of the majority of petitioner's
non-academic personnel in its Manila campus, filed with the Department of Labor and
Employment a petition for direct certification docketed as NLR-OD-M-9-642-87 [Rollo, pp.
18-21.] On September 25, 1987, a notice of strike docketed as BLR-NS-9-423-87 was filed by
respondent union with the Bureau of Labor Relations, alleging union busting, coercion of
employees and harassment [Rollo, P. 26.]
Petitioner filed on October 2, 1987, its position paper in NLR-OD-M-9-642-87 praying for the
denial of respondent union's petition on the ground that it did not represent a majority of the
non-academic personnel, and in support thereof attached a letter from one Josefino Sacro, who
claimed to represent a group composing the majority [Rollo, pp. 22-25.] However, it was only on
October 8, 1987 that PSBA-AL-GRO-WELL the group that Sacro represented, filed its
application for registration as a legitimate labor organization with the Bureau of Labor Relations.
On October 4, 1987, the members of respondent union, by a vote of 36 to 0, decided to go on
strike [Rollo, p. 103.1 Several conciliation conferences were held by the Bureau of Labor
Relations, but to no avail. The strike pushed through on October 16, 1987.
A complaint for unfair labor practice and for a declaration of illegality of the strike with a prayer
for preliminary injunction docketed as ULP Case No. 00-10-03666-87 was filed by petitioner
against respondent union in the National Labor Relations Commission on October 19, 1987
[Rollo, pp. 37-44.] The parties were again called to conciliation conferences, including a
scheduled meeting with the Secretary of Labor and the Director of the Bureau of Labor
Relations on November 9, 1987, but petitioner refused to attend the conferences (Rollo, p. 15.]
While the certification, strike and unfair labor practice cases were pending in the Department of
Labor and Employment, a complaint docketed as Civil Case No. 87-42470 was filed in the
Regional Trial Court of Manila on October 19, 1987 by some PSBA students against petitioner
and respondent union and its members, basically seeking to enjoin respondent union and its
members from maintaining and continuing with their picket and from barricading themselves in
front of the school's main gate [Rollo, pp. 27-35.] A temporary restraining order enjoining
respondent union and its members from picketing and barricading the school's main gate was
issued by the presiding judge [Rollo, p. 36.] In its answer filed on October 28, 1987, petitioner
joined the plaintiffs prayer for injunction and included a crossclaim against respondent union,
asking that it be indemnified by respondent union for any damages that may be assessed
against it and awarded P500,000.00 as and for expenses of litigation and attorney's fees (Rollo,
pp. 96-102.] On November 6, 1987, respondent union filed a motion to dismiss the complaint on
the premise that the case involves a labor dispute over which the Regional Trial Court had no
jurisdiction [Rollo, pp. 88-91.]
On November 17, 1987, respondent Acting Secretary Noriel issued the assailed order, which we
quote in full:
ORDER
On September 25, 1987, the PSBA Employees Union-FFW filed a Notice of Strike before the Bureau of
Labor Relations on the following grounds:
1. Union busting
2. Coercion of employees
3. Harassment
Several conciliation conferences were held by the Bureau of Labor Relations.
On October 16, 1987, the union struck.
The parties were again called for conciliation conferences including the scheduled meeting with the
Director of Labor Relations and the Secretary of Labor and Employment on November 9, 1987, but still
the management refused to attend the said conferences.
In the meantime, the strike at the school continues.
There is no doubt that the on-going labor dispute at the School adversely affects the national interest. The
School is a duly registered educational institution of higher learning with more or less 9,000 students. The
ongoing work stoppage at the School unduly prejudices the students and will entail great loss in terms of
time, effort and money to everyone concerned. More important, it is not amiss to mention that the school
is engaged in the promotion of the physical, intellectual and emotional well-being of the country's youth.
WHEREFORE, this Office hereby assumes jurisdiction over the labor dispute at the Philippine School of
Bus. Administration-Manila pursuant to Article 263 (g) of the Labor Code, as amended. Accordingly, all
the striking employees are directed to return to work immediately and for the management of PSBA to
accept all the returning employees under the same terms and conditions prevailing Prior to the strike.
The parties are strictly enjoined to maintain [the] status quo and to cease and desist from committing any

The parties are strictly enjoined to maintain [the] status quo and to cease and desist from committing any
and all acts that will prejudice either party and aggravate the situation.
The Director, Bureau of Labor Relations is hereby directed to hear and receive evidence of the parties
and to submit her report and recommendation within ten (10) days from submission of the dispute for
resolution.
SO ORDERED.
Manila, Philippines, 17 November, 1987
(Sgd.) CARMELO C. NORIEL
Acting Secretary
[Rollo, pp. 15-16]
The members of respondent union returned to work but were allegedly prevented by petitioner
from doing so. Consequently, a motion for the issuance of a writ of execution was filed by
respondent union on November 23, 1987.
On November 23, 1987, petitioner filed the instant petition, which seeks the nullification of the
assailed order of November 17, 1987 and its enjoinment pending resolution of the case, on the
following grounds:
1. The respondent Secretary acted without or in excess of jurisdiction or with grave abuse of discretion
amounting to lack or excess of jurisdiction over the request for issuance of a return to work order by an
official otherwise disqualified from appearing before him.
2. The respondent Secretary erred in finding that the strike by a minority who had already been restrained
by a court of competent jurisdiction from preventing the school, its faculty and its students from attending
to their usual functions was a fit subject for a return to work order.
3. The respondent Secretary erred when he ordered the petitioner "to accept all the returning employees
under the same terms and conditions prevailing prior to the strike" despite the pendency of ULP Case No.
00-10-03666-87. [Rollo, pp. 5-6.] F: Union filed w/ DOLE a PETITION FOR
On February 4, 1988, Secretary Drilon issued a writ of execution of the order dated November DIRECT CERTIFICATION
17, 1987, [Rollo, pp. 61-62.] Thus, petitioner filed in this Court on February 8, 1988 an "Urgent -Union subsequently filed NOTICE TO
Motion to Implead Secretary Drilon as Additional Respondent and to Restrain Enforcement of STRIKE w/ BLR:
Writ of Execution" [Rollo, pp. 57-65], which the Court noted [Rollo, p. 66.] • Union busting
In the meantime, the complaint in Civil Case No. 87-42470 was dismissed by the Regional Trial • Coercion of employees
Court on February 10, 1 988 for lack of jurisdiction. • Harrassment
-PSBA opposed, prayed the denial of
After petitioner refused to readmit the striking employees, a motion for the issuance of an alias
writ of execution and motion to cite petitioner in contempt was filed by respondent union in the Petition for direct certification:
Department of Labor and Employment on February 19, 1988. Secretary Drilon, after petitioner • Union did not represent majority of
had complied with his show cause order, issued an order dated March 30, 1988 ordering non-academic personnel, attaching a
petitioner to pay a fine of P10,000.00 and to immediately readmit the striking employees with full letter from one Sacro allegedly
backwages and benefits computed from November 17, 1987 up to the date of their actual representing a group which
readmission [Rollo, pp. 118-119.] Thus, petitioner filed in this Court on April 8, 1988 an "Urgent composed the majority
Supplemental Petition and Motion Reiterating Urgent Motion to Restrain Enforcement of Writ of • The group represented by Sacro
Execution" seeking the nullification of the order and the issuance of a restraining order [Rollo, (PSBA-AL-Gro-WELL) filed its
pp. 110-120.] application for registration as a
legitimate labor org w/BLR
These are the antecedent and contemporaneous facts. Now, to consider petitioner's arguments
-Union, after voting 36 to 0, decided to g
in support of the petition.
1. Petitioner makes much of the handwritten letter of Congressman Ramon Jabar, Vice- on strike
President of the Federation of Free Workers, to Secretary Drilon dated October 22, 1987, which -conciliation conferences held by BLR but
reads: to no avail
Dear Mr. Secretary, -strike pushed through
The bearer is Mr. Rey Malilin of VEGA - FFW, together wit our leader, at PSBA which is on strike. -complaint for ULP and for declaration fo
The barricades at PSBA have already been removed, and our members are picketing peacefully, illegal strike w/ prayer for preliminary
however, police authorities prohibit them from engaging in peaceful picketing.
They will explain to you everything, Conciliation conferences were held but management refused to
injunction filed by PSBA in NLRC
attend. -conciliation conferences agains called but
Possible solution is for you to order a return to work and early certification election. PSBA refused to attend the said
Thank you very much. conferences
Very truly yours, -some PSBA students filed before RTC
(Sgd.) RAMON J. JABAR
[Rollo, p. 45.]
Manila, seeking to enjoin Union and its
Petitioner contends that it was "totally improper and without jurisdiction and in grave abuse of members from maintaining and continuing
his discretion" for the Secretary to have acted on this request because of the prohibition in Art. w/ their picket and from barricading
VI, Sec. 14 of the Constitution, which provides: themselves in front of the school's main
No Senator or Member of the House of Representatives may personally appear as counsel before any gate. TRO issued by court
court of justice or before the Electoral Tribunals, or quasi-judicial and other administrative bodies. Neither >PSBA filed a prayer, joining the students
shall he, directly or indirectly, be interested financially in any contract with, or in any franchise or special
in their prayer for injunction and filed a
privilege granted by the Government, or any subdivision, agency, or instrumentality thereof, including any
government-owned or controlled corporation, or its subsidiary, during his term of office. He shall not crossclaim against union.
intervene in any matter before any office of the Government for his pecuniary benefit or where he may be >Union filed MTD: case involves labor
called upon to act on account of his office. dispute:: RTC has no jurisdiction
>Acting SOLE Noriel: assumed jurisdiction,
The premise of petitioner's argument, however, is flawed. Its conclusion that the Acting saying the labor dispute involves an
Secretary's order was vitiated by a jurisdictional defect is anchored on the premise that the only industry imbued with national interest
basis for, and what impelled him to issue, the order was Congressman Jabar's letter to
• School has more or less 9k students
Secretary Drilon. But this is not so. Respondent union petitioned for its direct certification as
sole and exclusive bargaining representative of petitioner's non-academic personnel. A notice of • Ongoing work stoppage unduly
strike was filed by respondent union after petitioner allegedly engaged in union busting, prejudices the students and will
coercion and harassment. Conciliation conferences were held, but to no avail. A strike took entail great loss in terms of time,
place, thereby causing the disruption of the operations of the school. Thus, petitioner filed a effort and money to everyone
complaint for unfair labor practice and declaration of illegality of the strike with the National concerned
Labor Relations Commission while some of its students filed a civil case and obtained a • School is engaged in the promotion
temporary restraining order from the Regional Trial Court. In the subsequent conciliation of physical, intellectual and
conferences petitioner's representatives failed to attend, leading to an impasse. Given these emotional well-being of the
circumstances, the existence of an unresolve labor despite in petitioner's Manila campus which country's youth
needed the immediate attention of the labor authorities certainly cannot be denied.
...issued RTWO + ordered management to
In the opinion of Acting Secretary Noriel, the labor dispute adversely affected the national
accept all returning employees
interest, affecting as it did some 9,000 students. He was authorized by law to assume

accept all returning employees
interest, affecting as it did some 9,000 students. He was authorized by law to assume
jurisdiction over the labor dispute, after finding that it adversely affected the national interest. ...parties enjoined to maintain status
This power is expressly granted by Art. 263 (g) of the Labor Code, as amended by B.P. Blg. quo...
227, which provides: -Union members returned to work BUT
xxx xxx xxx were allegedly prevented by PSBA from
(g) When in his opinion there exists a labor dispute causing or likely to cause strikes or lockouts adversely doing so
affecting the national interest, such as may occur in but not limited to public utilities, companies engaged -Union thus filed Motion for issuance of
in the generation or distribution of energy, banks, hospitals, and export-oriented industries, including
those within export processing zones, the Minister of Labor and Employment shall assume jurisdiction writ of execution
over the dispute and decide it or certify the same to the Commission for compulsory arbitration. Such -PSBA filed instant petition
assumption or certification shall have the effect of automatically enjoining the intended or impending -SOLE Drilon: issued writ of execution
strike or lockout as specified in the assumption or certification order. If one has already taken place at the -so PSBAmade its petition URGENT
time of assumption or certification, all striking or locked out employees shall immediately return to work -Civil case before RTC dismissed for lack of
and the employer shall immediately resume operations and readmit all workers under the same terms
and conditions prevailing before the strike or lock-out, The Minister may seek the assistance of law jurisdiction
enforcement agencies to ensure compliance with this provision as well as with such orders as he may -even with writ of execution, PSBA still
issue to enforce the same. refused to readmit the striking employees.
The foregoing notwithstanding, the President of the Philippines shall not be precluded from determining Thus, Motion for the issuance of alias writ
the industries where in his opinion labor disputes may adversely affect the national interest, and from of execution and motion to cite petitioner
intervening at any time and assuming jurisdiction over any labor dispute adversely affecting the national
interest in order to settle or terminate the same. in contempt was filed by Union in DOLE
Acting Secretary Noriel did exactly what he was supposed to do under the Labor Code. -SOLE issued show cause order to PSBA,
Hence, even if the writing of the letter to Secretary Drilon constituted an appearance as counsel afterwards, SOLE Drilon issued order
by Congressman Jabar before a quasi-judicial body (although the Court is not disposed to agree ordering petitioner to pay a fine of P10k
to such contention), still the fact remains that under the circumstances the Acting Secretary had and to immediately readmit striking
the power and the duty to assume jurisdiction over the labor dispute and, corrollary to the employees w/ full backwages
assumption of jurisdiction, issue a return-to-work order. Given this factual and legal backdrop, -so PSBA again amended its petition,
no grave abuse of discretion can be attributed to the Acting Secretary. providing supplements...
2. Petitioner contends that the Acting Secretary erred when he found that the strike staged by
ON THE LETTER OF REP. JABAR
respondent union and its members, who had already been restrained by the Regional Trial
Court from picketing and barricading the main gate of the school, was a fit subject of a return to -f: Rep. Jabar, Vice-president of FFW,
work order. wrote to SOLE Drilon, saying that the
However, the Court finds that no error was made by the Acting Secretary. Union members were picketing peacefully
First of all, the Regional Trial Court was without jurisdiction over the subject matter of the case but Policed authorities have been
filed by some PSBA students, involving as it does a labor dispute over which the labor agencies prohibiting them from engaging in
had exclusive jurisdiction. That the regular courts have no jurisdiction over labor disputes and to peaceful picketing and that management
issue injunctions against strikes is well-settled [Art. 254, Labor Code, amended; Leoquinco v. refused to attend the conciliation
Canada Dry Bottling Co. of the Phils., Inc. Employees Association, G.R. No. L-28621, February conferences. He then asked SOLE Drilon to
22, 1971, 37 SCRA 535; Antipolo Highway Lines Employees Union v. Aquino, G.R. No. issue RTWO and early CE
L-31785, September 25, 1979, 93 SCRA 225; Kaisahan ng mga Manggagawa sa La Campana -PSBA argued that this was against Art VI,
v. Sarmiento, G.R. No. L-47853, November 16, 1984, 133 SCRA 220.] This the Regional Trial
Court recognized when it subsequently corrected its error and dismissed the complaint for Section 14
damages and injunction upon respondent union's motion. H: The argument is based on a wrongful
Then, as discussed above in connection with petitioner's first argument, the facts and the law premise that SOLE Drilon's only reason for
fully support the Acting Secretary's assumption of jurisdiction over the labor dispute and the assuming jurisdiction is the letter by Rep.
issuance of a return-to-work order. Jabar. However, it was shown that the
It may also be added that due to petitioner's intransigent refusal to attend the conciliation Union petitioned for its direct certification;
conferences called after the union struck, assumption of jurisdiction by the Secretary of Labor it filed a notice of strike; conciliation
and the issuance of a return-to-work order had become the only way of breaking the deadlock conferences were held but to no avail (so
and maintaining the status quo ante pending resolution of the dispute. The Solicitor General basically summarized all the proceedings
was correct when he stated that by assuming jurisdiction over the labor dispute, the Acting before and during the petition was filed
Secretary of Labor merely provided for a formal forum for the parties to ventilate their positions with the SC)
with the end in view of settling the dispute [Rollo, p. 132.] Thus, the contention that the Acting
-given these circumstances, the existence
Secretary favored respondent union when he issued the assailed order cannot be seriously
considered. A similar charge that certification of a labor dispute and the issuance of a return-to- of an unresolved labor dispute in PSBA
work order favored a party was rejected by the Court in United CMC Textile Workers Union v. needed the immediate attention of the
Ople [G.R. No. L- 62037, January 27, 1983, 120 SCRA 335]: labor authorities
It is, therefore, error for the petitioners to allege that by the mere act of certifying a labor dispute for -In SOLE Noriel's opinion, the labor
compulsory arbitration and issuing a return to work order, the Minister of Labor and Employment thereby dispute adversely affected the national
"enters the picture on the side of the Company,' and violates the freedom of expression of workers interest.
engaged in picketing, "in utter subversion of the constitutional rights of workers." As contended by the
Solicitor General, "there can be no such unconstitutional application (of Batas Pambansa Blg. 227) -SOLE was authorized to assume
because all that respondent Minister has done is to certify the labor dispute for arbitration and thereafter jurisdiction over the labor dispute, after
personally assume jurisdiction over it. He has not rendered any decision; he has not favored one party finding that it adversely affected national
over the other. interest
With more reason should such a charge be rejected in this case, coming as it does from -legal basis: Art 263 (g)
management, for as explained by the Court in Free Telephone Workers Union vs. Minister of
Labor and Employment [G.R. No. L-58184, October 30, 1981, 108 SCRA 7571, the exercise of
ON WON ACTING SOLE ERRED IN FINDING
the power, to be in full accord with the Constitution, must be with a view to the protection of
labor: THAT THE STRIKE WAS A FIT SUBJECT OF A
... It must be stressed anew, however, that the power of compulsory arbitration, while allowable under the RTWO:
[1973] Constitution, and quite understandable in labor disputes affected with a national interest, to be free a. RTC was w/o jurisdiction over the
from the taint of unconstitutionality, must be exercised in accordance with the constitutional mandate of subject matter of the case: it
protection to labor. The arbiter then is called upon to take due care that in the decision to be reached, involved a labor dispute over which
there is no violation of "the rights of workers to self-organization, collective bargaining, security of tenure,
and just and humane conditions of work." [Art. II, Sec. 9, 1973 Constitution.] It is of course manifest that the labor agencies had exclusive
there is such unconstitutional application if a law "fair on its face and impartial in appearance (is) applied jurisdiction
and administered by a public authority with an evil eye and an unequal hand." Yick Wo v. Hopkins, 118 b. Due to PSBA's refusal to attend the
U.S. 356, 372 (1886).] It does not even have to go that far. An instance of unconstitutional application conciliation conferences even after
would be discernible if what is ordained by the fundamental law, the protection of law, is ignored or the union struck, assujption of
disregarded.
jurisdiction by SOLE and the issuance
3. Finally, petitioner contends that the Acting Secretary erred when he ordered petitioner to
accept all returning employees under the same terms and conditions prevailing prior to the of RTWO had become the only way
strike despite the pendency of the case for unfair labor practice and declaration of illegality of of breaking the deadlock and
maintaining status quo

the strike filed by petitioner (ULP Case No. 00-10-D-3666-87). maintaining status quo
Again, the Court can discern no error on the part of the Acting Secretary. c. By assuming jurisdiction over the
The case filed by petitioner against respondent union in the National Labor Relations labor dispute, SOLE merely provided
Commission was not an isolated circumstance, but one in a series of cases filed by the parties. a formal forum for the parties to
Thus, it cannot be completely detached from the chain of events that led to the filing of the ventilate their positions w/ the end
instant petition in this Court. It will be recalled that respondent union filed a petition for direct view of settling the dispute
certification, that respondent union filed a notice of strike, alleging union-busting, coercion and
harassment; that petitioner opposed the petition for direct certification, citing a letter from ON WON ACTING SECRETARY ERRED
another group (PSBA-AL-GRO-WELL) that purportedly represented the majority of petitioner's
WHEN HE ORDERED PETITIONER TO
non-academic personnel; that conciliation conferences were held but the dispute remained
unresolved; that respondent union conducted a strike vote wherein its members voted to stage ACCEPT ALL RETURNING EMPLOYEES
a strike; that respondent union and its members subsequently staged a strike; that petitioner DESPITE THE PENDENCY OF THE CASE FOR
filed a case against respondent union in the National Labor Relations Commission; that a civil ULP
case was filed and an order was issued by the Regional Trial Court restraining respondent H: no GADALEJ
union from picketing and barricading the main gate of the school; that petitioner refused to -all the circumstances in this case, taken
attend the conciliation conferences called by labor authorities during the strike. These together, reveal the intensity of the
circumstances, taken together, reveal the intensity of the dispute and how it had worsened, dispute and how it had worsened, which
which virtually left the Acting Secretary with no recourse but to assume jurisdiction over it, to virtually left the Acting SOLE w/ no
prevent the situation from getting out of hand. recourse but to assume jurisdiction over it
Once the Secretary of Labor assumes jurisdiction over, or certifies for compulsory arbitration, a -Acting SOLE merely implemented the
labor dispute adversely affecting the national interest, the law mandates that if a strike or
clear mandate of the law: from time of
lockout 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 assumption of jurisdiction, SOLE would
operations and readmit all workers under the same terms and conditions prevailing before the order all the striking employees to return
strike." [Art. 263 (g), Labor Code, as amended.] Far from erring, the Acting Secretary, in issuing to work and for the employer to readmit
the return to work order, merely implemented the clear mandates of the law. Thus, the the striking employees
contention that error attended the issuance of such order is without any legal basis.
In conclusion, the Court cannot but note the apparent hostility exhibited by petitioner towards
respondent union and its members. Lest it be forgotten, the dispute arose from a petition filed by
respondent union to be directly certified as the sole and exclusive bargaining representative of
the non-academic personnel of PSBA Manila. By doing so, the workers did not engage in any
activity prejudicial to the leg itimate interests of petitioner, for they were just exercising their
rights to self-organization and collective bargaining and negotiation guaranteed them by our
Fundamental Law. The harassment of employees to dissuade them from supporting respondent
union alleged to have been committed by petitioner was not warranted. But petitioner persisted
with its hostile actions against the union members through both legal and extra-legal channels,
taking an undue interest in opposing respondent union's petition when it should have been
PSBA-AL-GRO-WELL if at all it had already existed at that time, that should have done so. That
PSBA-AL-GRO-WELL was suspiciously silent all throughout the proceedings before the labor
authorities leaving the fight to petitioner, certainly lends credence to the charge that PSBA-AL-
GRO-WELL was a creation of management.
Petitioner may not have preferred respondent union as its non-academic personnel's collective
bargaining representative. But then it had no right to intervene. The choice was for the
employees to make, not petitioner.
Time and again the Court has reminded employers that the choice of their employees of who
shall be their collective bargaining representative is the employees' exclusive concerned
employers have no business dipping their fingers into this matter, unless it was the employer
which filed the petition for certification election after being requested by a union to bargain
collectively or when the contract-bar rule applies [Arts. 254 and 232, Labor Code, as amended;
Consolidated Farms, Inc. v. Noriel, G.R. No. L-47752, July 31, 1978, 84 SCRA 469; Filipino
Metals Corp. v. Ople, G.R. No. L-43861, September 14, 1981, 107 SCRA 211; Trade Union of
the Phils. and Allied Services v. Trajano, G.R. No. L-61153, January 17, 1983, 120 SCRA 64.] It
cannot be otherwise, for the Constitution guarantees workers their rights to self-organization
and collective bargaining and negotiations [Art. XIII, Sec. 3], of which the choice of the collective
bargaining representative forms an integral part.
In the instant case, the undisguised interest of petitioner, an educational institution, in the choice
of the sole and exclusive bargaining agent of its non-academic personnel cannot be ignored. To
borrow the phraseology of the Solicitor General, petitioner has "shown his hand" (Rollo, p. 130.]
This much is home by the records.
The Court will not be a party to any attempt to deprive workers, or any other person for that
matter, of their constitutionally guaranteed rights. Petitioner's actions cannot be countenanced
in this jurisdiction if adherence to democratic principles and fealty to the Constitution is to be
observed and the rule of law upheld.
WHEREFORE, the instant petition is hereby DISMISSED and the Order dated November 17,
1987 issued by Acting Secretary Noriel is AFFIRMED.
Petitioner's motion to restrain the enforcement of the writ of execution issued by Secretary
Drilon on February 4, 1988 is DENIED. Likewise, the "Urgent Supplemental Petition and Motion
Reiterating Urgent Motion to Restrain Enforcement of Writ of Execution' dated April 7, 1988 is
also DENIED.
SO ORDERED.
Fernan, C.J., Gutierrez, Jr., Feliciano and Bidin. JJ., concur.
Pasted from <http://www.lawphil.net/judjuris/juri1988/aug1988/gr_80648_1988.html>

Manila Cordage vs. CIR (1971)
10:50 AM
Disposition
The decision appealed from is hereby affirmed
G.R. No. L-25943 January 30, 1971

MANILA CORDAGE COMPANY, petitioner,
vs.
THE COURT OF INDUSTRIAL RELATIONS AND MANILA CORDAGE WORKERS UNION-
PAFLU, respondents.
Sycip, Salazar, Luna, Manalo and Feliciano for petitioner.
Cipriano Cid and Associates for respondent Manila Cordage Workers
Union-PAFLU.
BARREDO, J.:
Petition for review on appeal from the order of the Court of Industrial Relations of November 11,
1965 denying petitioner's motion to either dismiss or suspend the proceedings in Case No. 62-
IPA of said court which were started by virtue of a Presidential certification dated October 22,
1965 of "a labor dispute between the management of the Manila Cordage Company (herein
petitioner) and the members of the Manila Cordage Workers Union—PAFLU (herein private
respondent) ...," as well as its subsequent order dated November 26, 1965 but released much
later and received by petitioner only on April 19, 1966 denying petitioner's motion for
reconsideration of the denial order.
The grounds of the petition are substantially stated in petitioner's assignment of errors thus:
I
THE RESPONDENT COURT ERRED IN NOT INHIBITING ITSELF FROM EXERCISING JURISDICTION
OVER THE CASE, THE PRESIDENTIAL CERTIFICA TION, UNDER WHICH IT ASSUMED
JURISDICTION. HAVING BEEN MADE WITHOUT BASIS IN FACT.
II
ASSUMING ARGUENDO THAT THE RESPONDENT COURT COULD HAVE ASSUMED
JURISDICTION UNDER THE PRESIDENTIAL CERTIFICA TION, IT ERRED IN NOT REFRAINING
FROM EXERCISING ITS COMPULSORY ARBITRATION POWERS, A RETURN-TO-WORK
AGREEMENT AND A COLLECTIVE BARGAINING AGREEMENT HAVING BEEN REACHED BY
PETITIONER AND RESPONDENT UNION.
III
THE RESPONDENT COURT ERRED IN NOT DISMISSING OR AT LEAST SUSPENDING THE
PROCEEDINGS IN VIEW OF THE PENDENCY OF CASES BETWEEN THE SAME PARTIES
INVOLVING THE SAME ISSUES COVERED BY THE PRESIDENTIA L CERTIFICA TION.
Unfortunately, the background facts upon which the legal issues in which parties joined in the
lower court may be resolved are not stated in the impugned orders, and precisely because of
the failure of the respondent court to make a finding on the principal factual issue raised by
private respondent that this case is hereby being ordered returned to respondent court for
further proceedings. Such failure, however, does not preclude this Court from passing now on
some of the questions raised in the pleadings on the basis of the other facts in the record which
are undisputed although they appear to have been merely assumed in the order under review, if
only to guide the course of such further proceedings.
On or about May 16, 1965, respondents union which is composed of workers in petitioner
company declared a strike against said company. On October 14, 1965, an agreement was
signed by C.A. Carter, the President of the Company, on its behalf, and by certain persons,
headed by Juanito Tabuyan, purportedly as president, vice-president, secretary, treasurer,
auditor and directors of respondent Union, on behalf of the said union, providing as follows:
1. The UNION shall, upon the signing of this Agreement, call off and withdraw the picketing at or about
the COMPANY's premises and officially terminate the strike declared on May 16, 1965 and the said
picketing.
2. The COMPANY agrees to accept on a staggered basis, depending upon the requirements of the
COMPANY's business and operations, all employees who have not yet returned to work as of the date of
this Agreement, with the exception of employees facing or involved in criminal cases and other cases
pending in any court, office, agency or instrumentality of the government whose readmission for work will
depend upon the resolution of said cases.
The employees not falling within the exception above mentioned shall report to the COMPANY not later
than October 31, 1965 for advice as to when they can actually start working. Should these employees fail
to report on or before October 31, 1965, they shall be considered to have abandoned their jobs with the
COMPANY and the COMPANY shall then be free to hire their replacements.
3. The COMPANY hereby reserves its right, which the UNION hereby expressly recognizes, to prosecute
all the cases it (the COMPANY) has filed and are pending, and to file and prosecute any other cases, in
any court, office, agency and/or instrumentality of the government, in connection with the said strike and
picketing and to take such action as the COMPANY sees fit upon the resolution of these cases. It is
hereby understood and agreed that this Agreement shall not be construed, in any manner and for any
reason, as a condonation by the COMPANY of any and all acts committed by the employees during the
said strike and picketing subject of the cases already filed and to be filed against said employees.
4. The UNION assures and guarantees the re-establishment and maintenance of industrial peace in the
COMPANY.
5. Any grievance of the UNION and the employees, represented by the UNION, shall be processed in
accordance with the provisions of the Collective Bargaining Agreement existing between the UNION and
the COMPANY.
6. The UNION guarantees that this Agreement has been duly ratified by its membership. -factual background not stated
because the lower court failed to
There seems to be no controversy as to the fact that this above return-to-work provision was

because the lower court failed to
There seems to be no controversy as to the fact that this above return-to-work provision was
immediately duly implemented by the Company as well as the members of the Union, other than make a finding on the principal
those herein purportedly acting for the Union, "200" in number, represented by Atty. Israel factual issue raised by Union
Bocobo. -Manila Cordage and the labor union
had a labor dispute: Union declared
It was at this juncture that the aforementioned presidential certification was issued, and a strike against the company.
pursuant thereto the respondent court assumed jurisdiction over this case. -Labor Union and the company
As a first step to take the case out of the industrial court, petitioner requested the President in a allegedly entered into an agreement
letter dated October 30, 1965 to withdraw or recall the certification. This request was endorsed which provides the ff:
by the Executive Secretary to the Secretary of Labor and the latter, in a 2nd indorsement dated 1. The Unin shall call off and
November 12, 1965 recommended to the President favorable action on petitioner's request, but withdraw the picketing at the
no action appears to have been taken by the President on this recommendation.
company premises and
In the meanwhile, on December 23, 1965, a new collective bargaining agreement was signed officially terminate the strike
between the same persons who signed the above-mentioned return-to-work agreement of 2. The Company agrees to accept
October 14th, except that, on behalf of the Union, a certain Adolfo Espano signed additionally on a staggered basis all the
as Executive Vice-President and, on the other hand, none of the directors were included, in this employees who have not
later agreement. returned to work
In two successive motions, the first on October 30, 1965 and the second on November 5, 1965, 3. The company reserves the
petitioner sought again to take the case out of the court by asking for either the dismissal or right to prosecute all teh cases
suspension of the proceedings upon the grounds that: the company has filed and are
(A) it was seeking recall of the presidential certification and
pending...
(B) 1. This Honorable Court has no jurisdiction over this case because —
(a) The presidential certification is not valid and conclusive; 4. The Union assures and
(b) In any case, there is doubt as to the propriety of the presidential certification and/or the exercise by guarantees the re-
this Court of compulsory arbitration powers for the reasons that — establishment and
(i) There is no labor dispute between the petitioner and the respondent; maintenance of industrial
(ii) The business of respondent is one not indispensable to the national interest;
(iii) The so-called "dispute," granting, arguendo, that there is any, is one involving a small faction in the
peace
petitioner union, which "dispute" does not warrant presidential certification and/or operation of compulsory 5. Any grievance would be
arbitration. processed in accordance w/
2. Granting, without admitting, that this Court has jurisdiction, this Court should not exercise its the grievance procedure in the
compulsory arbitration powers for such exercise would — CBA
(a) Modify, alter or weaken, if not impair, the existing collective bargaining agreement between the
6. Union guarantees that the
petitioner and the respondent;
(b) Violate the letter and the spirit of the Industrial Peace Act and destroy the fabric of free and voluntary agreement has been duly
collective bargaining. ratified by members
In connection with said motions, on November 15, 1965, the same persons who signed the -RTW provision in agreement
collective bargaining agreement of December 23, 1965, as aforestated, filed over their immediately duly implemented,
signatures a manifestation to the effect that "there exists no labor dispute between the petitioner other than the respondents herein
and the respondent company, that the strike declared last May 16, 1965 has been officially -President certified the said dispute
terminated last October 14, 1965, and that petitioner has instructed its members to stop for compulsory arbitration to CIR
picketing."
-Manila Cordage wrote to the
In the foregoing circumstances, the orders of denial of the respondent court would indeed seem
to be less than justified. It appears, however, albeit not in the said orders nor in the answer but, President to withdraw or recall the
in the petition itself, (Par. 13, pp. 8-9) that a so-called "small group of strikers — being certification. Even with
represented by Atty. Israel Bocobo," evidently the one referred to in the questioned order of endorsement by Executive Secretary
November 11, 1965 as "200" others, (Exhibits "A" — "A-1," Strikers), [p. IV Appendix A, to the SOLE, President did not act on
Petitioner's Brief] actually took part in the hearing of petitioner's two motions for dismissal or the said request
suspension and thereat alleged that: -pending proceedings, a new CBA
During the initial hearings, a certain group headed by Mr. Tabuyan (who had even at the early stages of was signed between those who
the strike, crossed the picket lines) through counsel, made representations to this Honorable Court that signed the RTW agreement, except
even before the issuance of the presidential certification, there had been a 'return to work agreement'
between them and the respondent management. The implication therefore is that they were not on strike that, on behalf of the union, a
at the time of the presidential certification. Obviously therefore they have nothing to do with the strikers certain Adolfo Espano signed
and the strike certified by the President. additionally as Exec. VP and none of
This group during, the hearings submitted to court the purported "agreement," a document showing the the directors were included
list of their "members" and a certification by the company that several of these workers had returned to -in 2 successive months, Manila
work.
To this, the petitioner union made the following manifestations and observations, among others: Cordage again souht to take the
1. The Tabuyan group is a spurious group headed by 'strike-brakers"; case out of CIR by either dismissal or
2. It does not recognize the agreement; suspension fo the proceedings
3. Since the hearing was for a possible return-to-work order by the court, it was premature to go into the  The same persons who
merits as to the validity of the claims of Tabuyan who after all admits they are not strike at all. allegedly represented the
With these observations, petitioner union reserved the contesting of the claims of Tabuyan. Tabuyan
however was allowed to hand over the documents to the court, but without benefit of a hearing on the Union filed a manifestation to
merits. There could possibly be no judicial finding then as to the existence of such a return-to-work the effect that there exists no
agreement. labor dispute between the
It may also be considered that if there was such a return-to-work agreement then there was no strike at Company and the employeees
all that could be certified to the court by the President of the Philippines. Indeed, the respondent -In the petition by Manila Cordage,
management raised this contention on several occasions.
We hasten to add also that respondent management aside from claiming falsely that there is no more there was mention of a so-called
strike has used this spurious agreement to sow confusion and demoralization among the strikers by "small group of strikers - being
announcing that those who would not follow the return to work provided in the agreement are subject to represented by Atty. Israel Bocobo",
dismissal. evidently the one referred to in the
questioned order of the CIR as "200"
It was on the backdrop of these circumstances that respondent court issued the first challenged
others . The said "200" strikers
order which reads thus:
This refers to respondent company's motion to suspend proceedings filed with the Court on November 3, actually took part in the hearing ,
1965, and to its motion to dismiss for lack of jurisdiction which it verbally interposed at the hearing of the alleging that there was a TABUYAN
same date and formally filed on November 6, 1965, under the heading "Motion to Dismiss and to GROUP which alleged that even
Suspend Proceedings." before the Presidential Certification
In assailing the jurisdiction of the Court, respondent questions the wisdom and propriety of the
for compulsory arbitration, there
presidential certification. This is no concern of the Court but exclusively devolves upon the President
(Pampanga Sugar Development Co. Inc. vs. CIR, et al., G.R. No. L-13178, March 25, 1961). The was already a RTW agreement
existence of a labor dispute between the parties is no longer disputed; hence, the Court should proceed between them and the

existence of a labor dispute between the parties is no longer disputed; hence, the Court should proceed between them and the
to exercise jurisdiction under Sec. 10, of R.A. 875. Confronted with the same issue, this Court, in "Central management. However, the "200"
Ma-ao Workers Amalgamated-PAFLU vs. Ma-ao Sugar Central Company, Inc.," Case No. 56-IPA, upheld strikers had nothing to do with the
jurisdiction. There is no reason to deviate from that stand and from the ruling of the Supreme Court.
Tabuyan Group. The "200" strikers
The number of employees involved in a certified case, whether great or small, is immaterial. Section 10 of
Republic Act 875 merely requires that the labor dispute involve an industry indispensable to the national further alleged that the Tabuyan
interest. The business of respondent company has been found to be one such industry. group is a spurious group headed by
It is also argued that under the theory of exhaustion of administrative remedies, the Court should suspend strike-breakers and the 200 strikers
proceedings pending action on respondent's letter to the President for the recall of his certification. While does not recognize the agreement.
respondent may avail itself of administrative remedies, the Court, whose function to arbitrate without
(thus there was still a strike when
delay is clear, may meantime legally proceed to exercise jurisdiction provided the rights of the parties are
not thereby prejudiced and vital industrial peace as well as pre-conflict operation of the business the President certified the dispute
concerned, restored. In the event the President recalls his certification, the parties may revert to their for compulsory arbitration to CIR)
positions prior thereto. -CIR first order: upheld the
Anyway, at this stage, the Court is most concerned with the return to work of the strikers. Respondent has President's order certifying the
entered into a return-to-work agreement with the Manila Cordage Workers Union — PAFLU, and has
dispute to compulsory arbitration
admitted back to work the striking employees who were represented by the signatories on behalf of the
union. Such an agreement does not bar a presidential certification of the dispute inasmuch as "the ...the number of employees involved
relations between capital and labor are not merely contractual. They are so impressed with public interest in the case is immaterial. Sectionj 10
that labor contracts must yield to the common good ..." (Art. 1700, Civil Code). In virtue of said of RA 875 merely requires that the
certification it will be discriminatory under the circumstances for respondent not to readmit the other labor dispute involve an industry
strikers not so represented. There is therefore no harm if a return to work of the striking members is
effected.
indispensable to the national
The Court is aware of the pendency of Cases Nos. 175-INJ and 4325-ULP, involving the same parties interest. President found that the
and, among others, the issue of illegality of strike arising from the means employed during the picketing. business of the company is such
Some strikers were criminally charged for acts allegedly committed during the strike. And were it not for industry
the return-to-work agreement earlier adverted to, the issue of illegality of the strike would take preference ...on theory of exhaustion of
over the reinstatement of the workers still on strike. Likewise the Court notes that were it not for the
matter of the reinstatement of the workers criminally charged, there would have been complete accord
administrative remedies (since
between the parties as to the return to work of the other striking workers. For this reason, in order that the President has not yet acted on their
issues raised in those two cases be not prejudiced by the exercise of jurisdiction in the instant case, the MR on the assumption of
strikers who have been charged with criminal offenses in the conduct of the strike should not, in the jurisdiction): Court may proceed to
meanwhile, return to work. exercise jurisdiction provided the
From manifestations before the Court, there are only 33 of these employees so charged criminally, as
rights of the parties are not thereby
against 200 others, (Exhibits "A" — "A-1," Strikers) who will not stand to be benefited by a return to work.
The records also show that respondent management, if there would be a return to work at all, would be prejudiced and vital industrial peace
willing to reduce their number. Respondent manifested however, that because of the difficulty of as well as pre-conflict operation of
determining the degree of culpability of each, it may not be in a position to reduce their number the business concerned is restored.
meantime. IF President recalls the certification,
WHEREFORE, upholding jurisdiction, the motion to dismiss and/or suspend proceedings, is hereby
DENIED. Consequently, the strikers represented by Atty. Israel Bocobo are hereby directed to lift their
the parties may revert to their
picket lines and return to work forthwith, excepting the 33 strikers who have been charged criminally and positions prior thereto.
who should not return to work as yet. Respondent is hereby directed to accept back to work the strikers ...the existence of the RTW
whose names appear in the payroll of the company immediately preceding the strike, excepting those agreement does not bar a
criminally charged. presidential certification of the
The above-entitled case is hereby set for hearing on November 17, 1965, at 2:00 P.M., to find out
whether management would be able to reduce the number of those who would not return to work
dispute inasmuch as the "relations
meantime. between capital and labor are not
SO ORDERED. merely contractual, they are also
On these premises, the main target of petitioner's attack is the respondent court's refusal to impressed w/ public interest
declare itself without jurisdiction to give due course to the presidential certification above- ...but the workers who have been
mentioned. Petitioner's theory in support of this posture is that the said certification "appears to charged w/ criminal offenses in the
have been made on (the) erroneous factual bases" of the existence of "a labor dispute between conduct of the strike should not
the COMPANY and the UNION," "that the business of the COMPANY is not indispensable to return to work for the meanwhile
the national interest" and if, at all, "the 'dispute' involves only a minority faction in the UNION."
...ENDING: MTD and/or suspend the
Alternatively, petitioner contends that the industrial court's assumption of jurisdiction in this case
would "set at naught the return-to-work agreement ... between the COMPANY and the UNION, proceedings is hereby denied
impair the obligation of an existing collective bargaining agreement ... and violate the Industrial
Peace Act and weaken the system of free and voluntary collective bargaining." (p. 12, Petition) WON CIR HAS NO JURISDICTION TO
As far as this Court is concerned, there can be no argument against the validity and efficacy of GIVE DUE COURSE TO TEH
the presidential certification here in issue. Petitioner argues that the President's action was PRESIDENTIAL CERTIFICATION
issued on erroneous factual bases. Whether it was so issued or not, this Court is not -ARGUMENT:
constitutionally permitted to inquire into, in exactly the same manner that the Executive cannot • There is no labor dispute
refuse to accord respect and sanction to a decision of this Court merely for the reason that in his • The business of the company
opinion the same is without sufficient factual or legal basis. Otherwise, the principle of is not indispensable to the
separation of powers among the three great departments of our government, the legislative, the national interest
executive and the judicial, with its necessary implications of independence from and
interdependence upon each other, would be a myth wherein it is most likely that the judiciary • Dispute invloves only a
would be supreme, a role naturally to be relished but firmly not to be desired, if it will cause the minority faction in the Union
abandonment of a juridical and constitutional formula that has served through the decades as • Assumption of jurisdiction was
the invulnerable bastion of individual liberties as well as the indestructible cornerstone of the set at naught by the RTW
rule of law in this country. Agreement
As We see it, the root issue of jurisdiction in this case related to the validity of the challenged H: SEPARATION OF POWERS stops
presidential certification cannot be resolved on the factual premises assumed by the industrial the court from ruling on the validity
court. There is here a vital issue of fact, which unfortunately, as stated at the outset of this of the assumption of jurisdiction by
opinion, the respondent court omitted to resolve. It is the question of whether or not Juanito the Prexi
Tabuyan and his co-signers of the disputed agreements were legitimate officers of the Court is not constitutionally
respondent Union.
permitted to inquire into, in exactly
It will be recalled that petitioner's principal objection to the assumption of jurisdiction by the
respondent court was that there was no longer any labor dispute which said court could arbitrate the same manner that the Executive
at the time of the issuance of the presidential certification on October 22, 1965 because as early cannot refuse to accord respect and
as October 14, 1965, petitioner Company and respondent Union had already forged a return to sanction to a decision of this Court
work agreement that put an end to the strike declared by the latter against the former in May of merely for the reason that in his
that year and that, furthermore, the parties were already negotiating and were well on the way to opinion, the same is w/o sufficient
formalizing a renewal of their collective bargaining agreement which was due to expire on factual or legal basis.
December 6, 1965, as, in fact, such an agreement was signed by the Union and the Company

factual or legal basis.
December 6, 1965, as, in fact, such an agreement was signed by the Union and the Company -on FACTUAL ISSUE NOT RESOLVED:
on December 23, 1965. Putting aside the question of whether or not the alleged return-to-work on WON Tabuyan and his co-signers
agreement of October 14th and the claimed actual termination of the strike on said date should were legitimate officers of the
be considered as having foreclosed the legality or propriety of the issuance of any presidential respondent Union to validly
certification of the dispute between petitioner and the respondent Union, it being clear that
represent the Union in the signing of
compulsory arbitration may be certified by the President as long as, in his opinion, a "labor
dispute," which this Court has defined as "any controversy concerning the terms, conditions and the disputed agreement
tenure of employment,"1 exists in an industry indispensable to the national interest, whether a
strike therein be impending, going on or already terminated without a final settlement of the WON THE CIR LOST ITS
dispute, We are of the opinion that the conclusion of the negotiations for a collective bargaining JURISDICTION UPON ENRY INTO A
agreement on December 23, 1965, if entered into by those properly authorized to do so, could RTW AGREEMENT BY THE PARTIES:
have ousted the jurisdiction of the CIR, except to determine whether or not said agreement was NO.
not contrary to law, morals or public policy, in line with the dominant policy of the Industrial -there was no determination yet
Peace Act of favoring unionism and free bargaining between labor and management as against WON the alleged representatives of
compulsory arbitration with governmental intervention. (Section 1, Republic Act 875). It does not the union were indeed authorized to
appear, however, that, although the petitioner's motion for reconsideration was still pending in sign the agreements with the
the CIR at the time of the said agreement on December 23, the same was brought to its
company in behalf of its members
attention, much less made the basis of any pleading.
In other words, as matters stood in the respondent court when it denied petitioner's motion for • If it is so authorized, then CIR
reconsideration, there was already signed between the petitioner and, purportedly, the would not have jurisdiction, or
respondent Union a collective bargaining agreement, and, if, contrary to the allegations of Atty. could have suspended the
Bocobo, the persons who signed the same as officers of the Union were the legitimate officers proceedings before it due to
they represented themselves to be, it would be quite clear that the industrial court should have the signed CBA and the RTW
declared itself without further basis or authority to continue trying to arbitrate between parties agreement
who have already settled the differences between themselves, precisely in the manner sought • If they are not authorized, the
to be encouraged and protected by the Industrial Peace Act — free collective bargaining — or, it jurisdiction remained
should have at least, suspended the proceedings until the decisive issue of who were the -purpose of presidential
genuine and legitimate officers of the Union had been settled by it. If, as contended by herein certification: nothing more than to
respondents, Juanito Tabuyan and the others who signed the agreement as officers of the
bring about soonest, thru arbitration
Union "had no right to represent the Union and the strikers" (p. 5, Respondents' Brief) and that
the agreement signed by them "was unauthorized, spurious, illegal and immoral, (p. 8, Id.) there by the industrial court, a fair and
can be no question that the jurisdiction and authority of the respondent court remained just solution of the differences
unaffected by the said collective bargaining agreement relied upon by petitioner. The purpose of between an employer and his
a presidential certification is nothing more than to bring about soonest, thru arbitration by the workers regarding the terms and
industrial court, a fair and just solution of the differences between an employer and his workers conditions of work in the industry
regarding the terms and conditions of work in the industry concerned which in the opinion of the concerned which in the opinion of
President involves the national interest, so that the damage such employer-worker dispute the President involves the national
might cause upon the national interest may be minimized as much as possible, if not totally interest, so that the damage such
averted by avoiding the stoppage of work as a result of a strike or lock out or any lagging of the employer-worker dispute might
activities of the industry or the possibility of these contingencies which might cause detriment to
cause upon the national interest
such national interest. This is the foundation of that court's jurisdiction in what may be termed as
a certification case. Naturally, if the employer and the workers are able to arrive at an amicable may be minimized as much as
settlement by free and voluntary collective bargaining preferably thru a labor union, before the possible, if not totally averted by
court is able to use its good offices, it is but in consonance with the objective of the Industrial avoiding the stoppage of work as a
Peace Act to promote unionism and free collective bargaining that the court should step out of result of a strike or lock out or any
the picture and declare its function in the premises at an end, except as it may become lagging of the activities of the
necessary to determine whether or not the agreement forged by the parties is not contrary to industry or the possibility of these
law, morals or public policy. This is clear from the terms of Section 10 of the Act, from which the contingencies which might cause
industrial court derives its jurisdiction in a certification case, since it expressly provides that "the detriment to such national interest.
Court may issue an order fixing the terms and conditions of employment," "if no other solution to This is the foundation of that court's
the dispute is found." Besides, a presidential certification to the industrial court automatically jurisdiction in what may be termed
makes operative in regard to the certified dispute all the provisions of Commonwealth Act 103
as a certification case.
needed to carry out the intent of said section of the Industrial Peace Act, 2 and among the
provisions which so come into play is the second paragraph of Section 4 which reads thus: -if there is indeed a valid CBA
The Court shall, before hearing the dispute and in the course of such hearing, endeavor to reconcile the entered between the parties, no
parties and induce them to settle the dispute by amicable agreement. If any agreement as to the whole or need for the certification to
any part of the dispute is arrived at by the parties, a memorandum of its terms shall be made in writing, Compulsory arbitration: the
signed and acknowledged by the parties thereto before the Judge of the Court or any official acting in his entering into a voluntary and valid
behalf and authorized to administer oaths or acknowledgments, or, before a notary public.lâwphî1.ñèt
The memorandum shall be filed in the office of the Clerk of the Court, and, unless otherwise ordered by
collective bargaining agreement
the Court, shall, as between the parties to the agreement, have the same effect as, and be deemed to be, between an employer and a labor
a decision or award. union of its workers before or after
Otherwise stated, in the case at bar, We need not decide whether or not the return-to-work a presidential certification is issued
agreement of October 14, 1965 rendered the presidential certification on October 22, 1965 under Section 10 of the Industrial
factually and legally baseless or inoperative. Neither is it incumbent upon Us to rule here Peace Act ousts the jurisdiction of
whether or not a presidential certification once issued can be withdrawn, and, consequently, the Court of Industrial Relations,
whether or not the presidential certification herein involved may be considered as withdrawn in except as to the question of
view of the favorable recommendation to such effect by the Undersecretary of Labor. All that
whether or not the agreement is
We hold now is that the entering into a voluntary and valid collective bargaining agreement
between an employer and a labor union of its workers before or after a presidential certification contrary to law, morals or public
is issued under Section 10 of the Industrial Peace Act ousts the jurisdiction of the Court of policy, should such question be
Industrial Relations, except as to the question of whether or not the agreement is contrary to raised by any of the parties, and in
law, morals or public policy, should such question be raised by any of the parties, and in this this connection and with respect to
connection and with respect to the laborers or workers, whether the question be raised by the the laborers or workers, whether
Union as such or by any of the members thereof. the question be raised by the Union
as such or by any of the members
Petitioner contends that the workers represented by Atty. Bocobo constitute a mere "minority thereof.
faction" and as such they do not have legal personality to obstruct the course of the return-to-
work and collective bargaining agreements entered into by the majority. The trouble with this ON ARGUMENT THAT MERELY "200"
argument is that except for the casual reference in the order of November 11, 1965 to "200
EMPLOYEES - A MINORITY - PRAYED
others" which seem to indicate the number of workers who did not return to work pursuant to the
return-to-work agreement of October 14th, the record is remarkably bare of any facts or FOR THE SAID CERTIFICATION BY

return-to-work agreement of October 14th, the record is remarkably bare of any facts or FOR THE SAID CERTIFICATION BY
evidence on which this Court may make a factual finding in connection with the point raised by THE PRESIDENT: MAJORITY rule is
petitioner. In any event, the majority rule is not an absolute one in labor cases of this kind. 3 More not an absolute on in labor cases of
importantly, as already indicated above, any number of members of a labor union may question, this kind. Any number of members
in the appropriate cases, any agreement entered into by its officers or the majority if it is of a labor union may question, in the
contrary to law, morals or public policy. Thus, even if We do not consider respondents' appropriate cases, any agreement
contention that strictly speaking, the presidential certification here refers expressly not to the entered into by its officers or the
Union but to the members thereof as being the ones having a dispute with petitioner, a point majority if it is contrary to law,
which, to be sure, We cannot decide since there are not enough facts in the record for the morals or public policy.
purpose, it is quite clear that the pivotal issue in this case is due representation of the Union in
the collective bargaining agreement in question.
Accordingly, what the respondent court should have determined was whether or not Juanito Dispositive: affirm as to RTWO,
Tabuyan and the others who signed the agreements relied upon by petitioner, as officers of except to the 33 strikers who are
respondent Union, were duly chosen by the majority of the members as such. After this criminally charged
important factual point is decided, the respondent court may proceed to resolve the rights of the And remand the case to Court!
parties in line with views expressed in the above opinion.
WHEREFORE, the order of November 11, 1965 of respondent court is affirmed in so far as it
ordered the return to work of all the workers of petitioner, except the 33 strikers who have been
charged criminally, and their acceptance by the petitioner, but this case is ordered returned to
respondent court for further proceedings in accordance with the above opinion regarding the
effect of the purported renewal collective bargaining agreement of December 23, 1965 upon its
jurisdiction acquired by virtue of presidential certification. Without costs.
Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Castro, Fernando, Teehankee,
Villamor and Makasiar, JJ., concur.
Footnotes
1 Caltex (Phil.) Inc. vs. Katipunan Labor Union, L-7496, January 31, 1956, 98 Phil. 340.
2 PAFLU vs. Tan, L-9115, Aug. 31. 1956, 52 O.G. 5836; National Garments & Textiles Workers' Union vs. Caluag, L -9104 Sept. 10, 1956;
Allied-Free Workers' Union vs. Apostol, L-8876, Oct. 31, 1957, 54 O. G. 981; SMB Box Factory Workers' Union vs. Victoriano, L -12820, Dec.
20, 1957; Benguet Consolidated Mining Co. vs. vs. Coto Labor Union, L -12394, May 29, 1959: Chua Workers' Union vs. City Automotive Co.,
L-11655, April 29, 1959; Rizal Cement Co. vs. Rizal Cement Workers' Union, L -12747, July 30, 1960; Rizal Cement Workers' Union vs. CIR,
L-18442, Nov. 30, 1962.
3 La Campana Food Products, Inc. vs. CIR, L-27907, May 22, 1969, 28 SCRA 314; Heirs of Teodolo M. Cruz vs. CIR, L-23331-32, Dec. 27,
1969,30 SCRA 917.

Saulog vs. Lazaro (1984)
10:50 AM
G.R. No. L-63284 April 4, 1984

SAULOG TRANSIT, INC., petitioner,
vs.
HON. MANUEL M. LAZARO, in his capacity as Presidential Assistant for Legal Affairs,
HON. BLAS F. OPLE, Minister of Labor and Employment, and ROBERT AREVALO,
respondents.
GUTIERREZ, JR., J.:ñé+.£ªwph!1 The Employer (SAULOG) contests the

This is a petition for certiorari to set aside the order of the respondent Presidential Assistant
assumption of jurisdiction of the
for Legal Affairs dated January 21, 1983 which affirmed the decision of the respondent
Minister of Labor and Employment dated January 20, 1982, ordering the petitioner to comply MOLE, alleging:
with the wage rates in the Supplemental Collective Bargaining Agreement and to pay its 1. The issues in the labor dispute
qualified employees the 13th month pay and various allowances under applicable Presidential are under jurisdiction of the LA
Decrees, and both parties to obey the implementation of the return to work orders. 2. There was no notice of strike
nor a formal complaint filed with
The antecedent facts are stated in the order of the Presidential Assistant for Legal Affairs:têñ. MOLE
£îhqwâ£ 3. There was no proper class suit
It appears that in the morning of January 23, 1981, Complaints-Appellees staged a strike against H: for the Union.
Respondent Appellant at the latter's station in Cavite City and, thereafter, picketed the premises thereof.
All efforts at mediation and conciliation by the Minister of Labor and Employment failed. And in the
1. Conciliation proceedings were
evening of the same date, January 23, 1981, the Minister issued the following Return-to-Work Order:têñ. already conducted even before
£îhqwâ£ the assumption of jurisdiction of
"All striking workers of Saulog Transit, Inc. are hereby ordered to return to work immediately and to desist the Presidential Assistant for
from striking whether the strike is for cause or otherwise. Legal Affairs. Since no resolution
"The management is likewise ordered to allow all workers to return to work under the same terms and
of the case, then it was proper
conditions prevailing previous to the work stoppage.
"The Ministry shall however continue conciliating the dispute with a view to amicable settlement by the for the Presidential Assistant for
parties on the issues raised." legal affairs to assume
More conciliation conferences followed. But the parties remained deadlocked on the key issues. ... jurisdiction
2. No need for notice of strike if
On January 29, 1981, the respondent Minister of Labor and Employment issued another order vital industry involved
which provided as follows:têñ.£îhqwâ£ 3. There was a proper class suit, as
l. All workers concerned shall return to work within two (2) days from 30 January 1981 and management
shall accept them back under the same terms and conditions existing prior to the walkout; Robert Arevalo was authorized
2. The issues raised by the workers /employees as listed above shall be submitted for arbitration and by the 260 drivers, conductors,
decision by the Ministry of Labor and Employment within ten (10) days from the submission of the etc. Of Saulog
respective position papers by the parties.
On February 4, 1981, respondent Robert Arevalo, acting on behalf of the private respondents,
filed the required position paper attaching the respondents' documentary evidence. On February
9, 1981, the petitioner filed a motion to secure an order requiring the private respondents to
specify the names of the "more or less 250 other complainants' referred to in the position paper.
On the same date, the respondents wrote a letter to the Minister complaining about the
petitioner's refusal to comply with the return-to-work order. The next day, the respondents
submitted the list of the names of the two hundred sixty (260) other complainants.
On March 2, 1981, the petitioner filed an omnibus motion praying that the case be dismissed
on the following grounds: (1) the Ministry of Labor and Employment did not have jurisdiction
over the case; (2) no complaint or petition of whatever kind or nature was filed with the Ministry,
and, no one among the private respondents invoked the authority or jurisdiction of the Ministry;
(3) the class suit maintained by Robert Arevalo was improper and (4) the private respondents
had no cause of action against petitioner, the charge of unfair labor practice being groundless.
Petitioner also incorporated in its motion a position paper it submitted in connection with a case
filed against it by Robert Arevalo and adopted said paper as part of its motion.
On April 1, 1981, the Ministry of Labor and Employment issued a resolution, the dispositive
portion of which reads:têñ.£îhqwâ£
WHEREFORE, premises considered, the following are hereby ordered:
1) For the respondent to upgrade effective immediately the percentage commission of drivers and
conductors to 7.5% and 6.5%, respectively;
2) For respondent to pay the 13th month pay of the mechanics and other employees who are not paid on
purely commission basis if they have served for at least one (1) month within the calendar year and their
month salary does not exceed P1,000.00;
3) For the respondent to pay the drivers and conductors paid on purely commission basis the allowances
under P.D. 525, 1123, 1678 and 1713, if their total monthly earnings do not exceed the salary ceiling set
by the respective decrees and whose right thereto has not yet prescribed. Respondent, however, shall
pay all the mechanics and other employees who are not paid on purely commission basis all the
allowances under all the decrees;
4) For the drivers and conductors to share with the respondent the responsibility of cleaning/washing the
bus.
On April 28, 1981, the petitioner filed a motion for reconsideration and alleged among others
that the resolution of the Minister "effectively amended the present certified Collective
Bargaining Agreement which has yet to expire on September 1, 1981; ...".
On January 20, 1982, the Minister rendered a decision modifying the earlier resolution stating
that:têñ.£îhqwâ£

that:têñ.£îhqwâ£
As regard the alleged disregard by this Office of free collective bargaining processes, this Office never
intended to subvert the will of the employees in matters affecting their interest. In this connection, a more
careful re-examination of the records of the case discloses the existence of a Supplemental Collective
Bargaining Agreement dated 15 January 1979. ...
In the said supplemental collective bargaining agreement, the petitioner agreed to pay higher
percentages based on either the employees' gross earnings or monthly daily wage. The
Minister stated that in the proceedings before it, management never made reference to these
higher wage rates while the complaining workers appeared to be unaware of the specific
provision in the supplemental collective bargaining agreement which provided even
better terms than what the Minister ordered in his initial resolution.
In the dispositive portion of the decision, the Minister therefore further ordered the following:têñ.
£îhqwâ£
xxx xxx xxx
4. For management to faithfully comply with the rates of wages as agreed upon and provided for in the
Supplemental Collective Bargaining Agreement executed on 15 January 1979, the pertinent portions
of which were quoted earlier in this decision; and
5. All strikers who refused to comply with the return-to-work orders of 29 January 1981 and 19 February
1981 are hereby deemed to have abandoned their work and those who reported for work but were
refused admission by management be immediately admitted back to work.
Petitioner filed an appeal with the Office of the President but the said appeal was denied on
January 21, 1983.
The petitioner filed its petition on April 7, 1983. Considering the nature of the issues raised by
both the petitioner and the respondents, we have decided to give due course to the petition and
to treat the comments of the public respondents, adopted by the private respondents as their
comments, as the answer of both public and private respondents. We have likewise given
careful consideration to the 60 Pages memorandum filed by the petitioner on September 8,
1983.
The issues raised in the petition are:têñ.£îhqwâ£

(1) Has the Honorable Minister of Labor and Employment, by himself alone, exclusive jurisdiction or even
jurisdiction at all to pass on and decide labor disputes, involving highly conflicting claims of disputants
thereto, without the parties being given the opportunity to present their witnesses, without the opportunity
of parties to test, explain or refute, and made findings of fact by administrative fiat?
(2) If, His Honor, has the power of jurisdiction to pass on and decide such disputes, and decided the
same without notice and opportunity for hearing, did he not violate both 1935 and 1973 Constitution,
which ordained, that no person shall be deprived of life, liberty or property without due process of law;
(3) May the said Minister of Labor and Employment entertain a matter not in dispute, such as, violation of
CBA, an unfair labor practice act, without a complaint first filed and not even included as one of the issues
raised in complainants' position paper or pleading?
(4) Does the Minister of Labor and Employment acquire jurisdiction over the persons of Drivers,
Conductors and Mechanics on the employ of your petitioner, on the strength merely of the sole
representation of one Robert Arevalo he is their leader of the employees concerned without authority and
without an inquiry first conducted about the correctness of such claims, more so that the great majority of
your petitioner's employees did not wish to be involved in said action or proceeding below?
(5) In such situation, would not the proceedings below be rendered completely null and void, consistent
with the teaching laid down in the case of Lim Tanhu v. Ramolete, 66 SCRA 448-449?
(6) Did not the Honorable Minister of Labor and Employment commit grave abuse of discretion in
authorizing the increase of commission rates from 4.5% and 6.5% to 6.5% and 8.5% for conductors and
drivers, respectively, of the total gross earning, without first giving your petitioner the opportunity to
present evidence in support of its defenses.
The above issues are subsumed into two main issues of jurisdiction and due process,
namely: (1) Whether or not the respondent Minister acquired jurisdiction over the subject-matter
of the dispute and the parties of the same; and (2) Whether or not the petitioner's right to due
process had been violated.
Petitioner maintains that the Minister gravely abused his discretion in assuming jurisdiction over
the dispute between the petitioner and respondents when said dispute involves matters
which are clearly within the jurisdiction of the Labor Arbiter, namely: unfair labor practice
and money claims. Petitioner also questions the jurisdiction of the Minister over the persons of
the respondents on the grounds that neither a notice of strike nor a formal complaint was
filed with him by any of said respondents; and that respondent Arevalo cannot institute a
class suit on their behalves because the former is only an authorized representative of
Saulog Workers-National Federation of Labor while the real party in interest is the
Kapisanan Ng Manggagawa sa Saulog Transit which is the recognized bargaining agent
of all rank-and-file employees of the Saulog Transit, Inc.
The above contentions are without merit.
It is true that no notice of strike was filed by the respondents and neither did they present any
formal complaint to the Ministry before they actually went on strike. Such facts, however, do not
preclude the Minister from assuming jurisdiction. The petitioner has not shown that its
business of public transportation covering not only the entire province of Cavite but also
connecting Cavite to Metro Manila and to various other provinces and cities is not
covered within the meaning and purview of "vital industries" under Section 2(e) of the
Rules and Regulations Implementing Presidential Decree No. 823 as amended by
Presidential Decree No. 849. As a vital industry, the business of the petitioner is
governed by the strict prohibition against all forms of strikes, picketing, and lockouts
found in said decrees which were applicable at that time.
The petitioner contends that the Minister acted even before three conditions necessary to confer

The petitioner contends that the Minister acted even before three conditions necessary to confer
jurisdiction were present, namely:
(1) Conciliation and mediation over the labor disputes must first be exerted;
(2) The Bureau of Labor Relations the Regional Office, the National Labor Relations
Commission or Voluntary Arbitrator should be unable to resolve the dispute within the
reglementary period; and
(3) Assumption of jurisdiction may be made only upon the advice and recommendation of the
Under Secretary of Labor and Employment, the Chairman of the National Labor Relations
Commission, and the Director of the Bureau of Labor Relations.
The contentions have no merit. Before the respondent Minister his January 23, 1981 return to
work order, efforts at mediation and conciliation had already been taken but the same
were not successful.
The resolution dated April 1, 1981 states:têñ.£îhqwâ£

The dispute was ultimately taken cognizance of by the Minister of Labor and Employment. After a series
of conciliation conferences with the end and view of full settlement of their differences, the parties
remained deadlocked on the key issues. As a result thereof, the Ministry on January 19, 1981 after
consultations with the parties and with their conformity issued an Order, requiring all workers concerned
to return to work within two (2) days from January 20, 1981 and the management on the other hand shall
accept them back under the same terms and conditions existing prior to the walkout and that the issues
raised shall be submitted for decision.
Significantly, the return to work order expressly declared that the Ministry of Labor and
Employment shall continue its conciliation efforts and would still try to bring about an amicable
settlement even at that stage. More conciliation conferences actually followed the return to work
order but the parties remained deadlocked on the main issues. There was, therefore, a failure
to resolve the disputes through the very methods which the petitioner now claims should
first have been applied
Confronted with the strike which virtually paralyzed the transportation services of the petitioner
and taking into account the inability of his Ministry's intervention to bring about an amicable
settlement between the parties, the Minister rightly assumed jurisdiction. He did not have to
wait for any notice of strike or formal complaint about a strike already in progress before
he could exercise the powers given to him by law to avoid the strikes, picketing, or
lockouts contemplated in the grant of power.
An actual strike effectively paralyzing an industry where strikes were not allowed and
compulsory arbitration was mandated, called for his immidiate action. The respondent
Minister did not need the recommendation of his own under Secretary or Deputy Minister, under
the facts of this case, to know what steps were necessary or that they were necessary to
achieve compulsory arbitration of the main issues which led to the impasse and the strike.
As the Minister correctly stated in his decision:têñ.£îhqwâ£

On the question of jurisdiction while it may be conceded that there was no notice of strike, the fact is, this
Office took cognizance of the labor dispute. It cannot be denied that immediately upon learning of the
actual strike, this Office summoned the parties to several conciliation conferences to which the parties
voluntarily submitted. When no amicable settlement was forthcoming this Office decided to assume
jurisdiction over the dispute.
This Office cannot just wait in the background in the face of a real and actual labor dispute on the
argument that there was no formal notice of strike filed. A technical error on the part of the disputants
cannot divest this Office of its jurisdiction over strikes once taken cognizance of.
With respect to the alleged absence of hearing, aside from the conciliation conferences conducted, the
records show that herein respondent filed before this Office its formal pleadings to the case where it
extensively ventilated its stand on the issue.
Furthermore, the petitioner is now estopped from questioning the jurisdiction of the respondent
Minister. It should be noted that in its omnibus motion, the petitioner, although questioning
the assumption of jurisdiction by the Minister, nevertheless invoked the Minister's
jurisdiction in order to have the case filed against it by respondent Arevalo dismissed.
This is borne out by the petitioner's position paper which was incorporated with the Omnibus
motion. The petitioner stated in its position paper:têñ.£îhqwâ£
Reasons of public policy, which prevent multiplicity of suits, demand that the above entitled case be
DISMISSED outright. This is so, for the simple reason, that the Honorable Minister of Labor already
assumed jurisdiction over all disputes, demands or issues involved in the so-called strik e, for which
complainant Robert S. Arevalo was a very active participants thereto. Otherwise, there will be conflict of
decisions. (emphasis supplied)
It is a settled rule that a party cannot invoke the jurisdiction of a court to secure affirmative
relief against his opponent and after failing to obtain such relief, repudiate or question
that same jurisdiction. A party cannot invoke jurisdiction at one time and reject it at another
time in the same controversy to suit its interests and convenience. The Court frowns upon and
does not tolerate the undesirable practice of some litigants who submit voluntarily a cause and
then accepting the judgment when favorable to them and attacking it for lack of jurisdiction when
adverse. (Tajonera v. Lamaroza, 110 SCRA 447, citing Tijam v. Sibonghanoy, 23 SCRA 35).
The petitioner questions the personality of Robert Arevalo, "alleged leader of the so-called
Saulog Transit Workers" to act for the petitioner's employees. It stated in the proceedings before
the respondent Minister that "an insignificant few" were dragging the great majority into a
dispute in which they refused to have any part.
We sustain the institution of a class suit by respondent Arevalo on behalf of the "drivers,
conductors, and mechanics of Saulog Transit, Inc."

During the conciliation conferences, there was an agreement between the parties to limit the
number of representatives of the striking employees. The representatives chose Robert
Arevalo to be their leader and the spokesman for all the strikers. It is true that the private
respondents failed to state their individual names as the real parties in interest when
their position paper was filed. However, this defect was cured because the respondent
Minister, taking cognizance of the petitioner's objections, ordered the respondents to
specify who were the "complainants numbering about 250 more or less (who) are all
regular drivers, conductors, conductresses, and mechanics of respondent and is (sic)
represented by their leader Robert Arevalo ..." The respondents immediately furnished their
list of 260 names in addition to Arevalo. Not one of those listed as complainants has objected or
repudiated Arevalo's authority to represent him or her, in the Ministry, in the Office of the
President, and before the Supreme Court. Hence, for equitable reasons, we hold that the steps
taken by the private respondents are sufficient for the purpose of instituting a class suit. In
Lakas Ng Manggagawa v. Marcelo Enterprises (118 SCRA 422) we applied the same liberal
rule and stated: têñ.£îhqwâ£
In fairness to the complaining employees, however, We treated their Motion for Reconsideration of the
Decision subject of appeal as curing the defect of the complaint as the said motion expressly manifested
their collective desire to pursue the complaint for and in their own behalves and disauthorizing LAKAS'
counsel from further representing them. And We have also treated their petition before Us in the same
manner, disregarding the fact that LAKAS remained the petitioning party, as it appears from the
verification that the petition in L-38258 was for and in behalf of the complaining employees. ...
The Kapisanan ng Manggagawa ng Saulog Transit, Inc. cannot be the real party in interest even
though it is alleged to be the recognized bargaining unit as it does not appear from the
records that the respondents are members thereof. It may be noted that we have a peculiar
situation in this case where a supplemental collective bargaining agreement provides wage
rates unknown to the workers and higher than those ordered by the Minister in his first
Resolution of April 1, 1981 thus compelling him to modify his decision when he acted on the
petitioner's motion for reconsideration and to order the payment of wage rates pursuant to the
Collective Bargaining Agreement.
The contention that petitioner was denied due process of law is likewise devoid of merit. A
perusal of the records shows that the petitioner was initially given the chance to air its
views during the conference presided by Brigadier General Prosper Olivas. There were
various other occasions during the proceedings below — not only at the conciliation
conferences but before the respondent Minister and the respondent Presidential
Assistant — where the petitioner not only had the opportunity to be heard but where it
was actually heard.
We agree with the public respondents who stated: têñ.£îhqwâ£

It is respectfully submitted that petitioner had been afforded its right to due process. As held in Cornelio v.
Secretary of Justice, 57 SCRA 663 (1974), "lack of opportunity to be heard, and not absence of previous
notice, constitutes violation of due process." In another case, it was held that "all that due process
requires is an opportunity to be heard." (Auyong Hian v. Court of Tax Appeals, 59 SCRA 110 [1974];
citing Aspec v. Itchon, et al., 16 SCRA 921 [1966]).
In the instant case, petitioner submitted a position paper (Annex "C") wherein it stated and discussed
its side on the issues enumerated in the respondent Minister's Order of January 29, 1981. Such fact alone
would negate the claim of denial of due process (Cebu Institute of Technology v. Minister of Labor, 113
SCRA 257, 265-266 [1982] ). In a later case, Mamerto, et al v. Inciong, et al, G.R. No. 53060,
promulgated on November 15, 1982, this Court ruled out the claim of due process violation where the
"petitioners were required to submit their position paper to be supported by affidavits and documentary
evidence, during the conciliation stage of the proceedings, but they failed to do so and instead, they filed
a motion to certify the issues for compulsory arbitration, which was denied." (at p. 5, Id.). It was there
observed that while the action of the Regional Director had been summary , it was undeniable that the
petitioners were given a chance to be heard (id.)
This was not all. Petitioner filed a motion for reconsideration dated April 24, 1981 (Annex "E"),
discussing and extensively ventilating its stand on the various issues involved in the case. The
respondent Minister considered the arguments and/or evidence presented therein and still denied the
motion (Caltex [Phil] v. Castillo, 21 SCRA 1071 [1967]; cf. Edwards v. McCoy, 22 PhiL 598 [1912]). This
fact, again, would militate against the claim of denial of due process. In Maglasang v. Ople, 63 SCRA
508, this Court ruled: têñ.£îhqwâ£
The relevant excerpt from Batangas Laguna Tayabas Bus Company v. Cadico makes that clear. Thus:
"As far back as 1935, it has already been a settled doctrine that a plea of denial of procedural due
process does not lie where a defect consisting of an absence of notice of hearing was thereafter cured by
the alleged aggrieved party having had the opportunity to be heard on a motion for re-consideration.
'What the law prohibits is not the absence of previous notice, but the absolute absence thereof and lack of
opportunity to be heard." There is then no occasion to impute deprivation of property without due process
where the adverse party was heard on a motion for reconsideration constituting as it does "sufficient
opportunity" for him to inform the Tribunal concerned of his side of the controversy. As was stated in a
recent decision, what "due process contemplates is freedom from arbitrariness and what it requires is
fairness or justice, the substance rather than the form being paramount," the conclusion being that the
hearing on a motion for reconsideration meets the strict requirement of due process (Ibid. [at pp. 511-512,
Id]).
From this denial, appeal was made to the Office of the President which, through the Presidential Assistant
for Legal Affairs, "denied" it. Thus, another opportunity was given to the petitioner to ventilate its side;
again, due process had been afforded it (Demaronsing v. Tandayag, 58 SCRA 484 [1974]).
In this connection, there is no truth to the assertion of petitioner that its position paper was incorporated in
the omnibus motion only to demonstrate that Robert Arevalo had no personality to sue for and in behalf of
all the employees of petitioner. Such position paper was adopted by the petitioner also to ventilate all
other issues in the instant labor dispute. ...
As earlier noted, the questioned decisions of the public respondents ordered-(1) the payment of
thirteenth-month pay to employees not paid on purely commission basis and who are entitled

under the law to such payment, (2) the payment of allowances under various decrees,
distinguishing between employees paid on commission basis and employees who are not; (3)
the sharing by drivers and conductors with the petitioners of the responsibility to clean and wash
the buses, (4) the compliance by management with the wage rates provided in the supplemental
collective bargaining agreement, and (5) the admission by the petitioner of employees who
report for work while those who violate the return to work orders would be deemed as having
abandoned their employment.
We note that the petitioner relies on purely procedural grounds in its efforts to have the above
orders revoked. There has been no invocation of a denial of substantial justice. The petitioner
has failed to show that, in considering and resolving the merits of the cases before them,
the public respondents committed reversible error, much less grave abuse of discretion.
The Labor Code provides that proceedings before the adjudicatory bodies of the Ministry
of Labor are not governed by the technical rules of procedure prevailing in courts of law
or equity and are summary in nature. (See Tajonera v. Lamaroza, 110 SCRA 428, citing
Maglasang v. Ople, 63 SCRA 511-513; Art. 221, Labor Code of the Philippines). Moreover, the
decisions and orders of the public respondents are in keeping with the constitutional provisions
on social justice and protection to labor. (Sections 6 and 9, Article II, Constitution.) A denial of
due process not having been clearly substantiated, the decisions may not be set aside on the
basis of procedural technicalities.
WHEREFORE, the petition is hereby DISMISSED for lack of merit. The questioned decisions of
the public respondents are AFFIRMED. Costs against the petitioner.
SO ORDERED.1äwphï1.ñët
Melencio-Herrera, (Actg. Chairperson) Plana, Relova and De la Fuente, JJ., concur.
Teehankee, J., is on leave.
Pasted from <http://www.lawphil.net/judjuris/juri1984/apr1984/gr_l63284_1984.html>

Union of Filipro Employees vs. Nestle (1990)
10:50 AM
The clear mandate of the aforequoted article was stressed in the case of Union of Filipro
Employees v. Nestle Philippines, Inc. (G.R. Nos. 88710-13, December 19, 1990, 192 SCRA
396, 411) where it was held that a strike that is undertaken despite the issuance by the
Secretary of Labor of an assumption or certification order becomes a prohibited activity and thus
illegal, pursuant to the second paragraph of Art. 264 of the Labor Code as Amended and the
Union officers and members, as a result, are deemed to have lost their employment status for
having knowingly participated in an illegal act.
UNION OF FILIPRO EMPLOYEES (UFE-DFA-KMU) V NESTLÉ PHILIPPINES, INC.

499 SCRA 521
CHICO-NAZARIO; August 22, 2006
FACTS
- Due to the impending expiration of the existing collective bargaining agreement (CBA) betw een Nestlé and UFE-DFA-KMU, the
Presidents of the Alabang and Cabuyao Divisions of UFE-DFA-KMU, informed Nestlé of their intent to ―open our new Collective
Bargaining Negotiation for the year 2001-2004 x x x as early as June 2001.‖
- Nestlé acknow ledged receipt of the aforementioned letter. It also informed UFE-DFA-KMU that it w as preparing its ow n counter-
proposal and proposed ground rules that shall govern the conduct of the collective bargaining negotiations.
- Nestlé underscored its position that ―unilateral grants, one-time company grants, company-initiated policies and programs, w hich
include, but are not limited to the Retirement Plan, Incidental Straight Duty Pay and Calling Pay Premium, are by their very nature
not proper subjects of CBA negotiations and therefore shall be excluded therefrom.‖
- In addition, it clarified that w ith the closure of the Alabang Plant, the CBA negotiations w ill only be applicable to the covered
employees of the Cabuyao Plant; hence, the Cabuyao Division of UFE-DFA-KMU became the sole bargaining unit involved in the
subject CBA negotiations.
- Thereafter, dialogue betw een the company and the union ensued.
- Nestlé, claiming to have reached an impasse in said dialogue, requested the National Conciliation and Mediation Board to conduct
preventive mediation proceedings betw een it and UFE-DFA-KMU.
- Conciliation proceedings nevertheless proved ineffective. Complaining, in essence, of bargaining deadlock – pertaining to
economic issues, i.e., ―retirement (plan), panel composition, costs and attendance, and CBA,‖ UFE-DFA-KMU filed a Notice of
Strike .
- One w eek later, another Notice of Strike w as filed by the UFE-DFA-KMU, this time predicated on Nestlé‘s alleged unfair labor
practices i.e., bargaining in bad faith in that it w as setting pre-conditions in the ground rules by refusing to include the issue of the
Retirement Plan in the CBA negotiations.
- In view of the looming strike, Nestlé filed w ith the DOLE a Petition for Assumption of Jurisdiction
- Sto. Tomas issued an Order assuming jurisdiction over the subject labor dispute betw een the parties stating that any strike or
lockout is enjoined, that the parties are further directed to meet and convene for the discussion of the union proposals and company
counter-proposals before the National Conciliation and Mediation Board and that if no settlement of all the issues is reached, the
Office shall define the outstanding issues and order the filing of position papers for a ruling on the merits.
- UFE-DFA-KMU sought reconsideration of the Assumption of Jurisdiction Order
- In an Order, Sec. Sto. Tomas denied the aforequoted motion for reconsideration
- The employee members of UFE-DFA-KMU at the Nestlé Cabuyao Plant w ent on strike.
- Notw ithstanding a Return-To-Work Order, the members of UFE-DFA-KMU continued w ith their strike and refused to go back to
w ork as instructed. Thus, Sec. Sto. Tomas sought the assistance of the Philippine National Police (PNP) for the enforcement of said
order.
- At the hearing called, Nestlé and UFE-DFA-KMU filed their respective position papers.
- Tomas denied the motion for reconsideration of UFE-DFA-KMU.
- Frustrated w ith the foregoing turn of events, UFE-DFA-KMU filed a petition for certiorari w ith application for the issuance of a
temporary restraining order or a w rit of preliminary injunction before the Court of Appeals.
- Meanw hile, in an attempt to finally resolve the crippling labor dispute betw een the parties, then Acting Secretary of the DOLE, Hon.
Arturo D. Brion, came out w ith an Order
- UFE-DFA-KMU moved to reconsider the aforequoted position of the DOLE.
- Secretary of the DOLE, Hon. Sto. Tomas, issued the last of the assailed Orders. This order resolved to deny the preceding motion
for reconsideration of UFE-DFA-KMU.
- Undaunted still, UFE-DFA-KMU, for the second time, w ent to the Court of Appeals
- The Court of Appeals, acting on the tw in petitions for certiorari, determined the issues in favor of UFE-DFA-KMU
- Dissatisfied, both parties separately moved for the reconsideration of the abovequoted decision
- The Court of Appeals stood pat in its earlier pronouncements and denied the motions for reconsideration
ISSUES
1. WON the Retirement Plan w as a proper subject to be included in the CBA negotiations betw een the parties hence, negotiable.
2. WON the assumption pow ers of the Secretary of Labor and Employment should have been limited merely to the grounds alleged
in the second Notice of Strike
3. WON Nestlé w as guilty of unfair labor practice
HELD
1. YES
- In Nestlé Philippines, Inc. v. NLRC, ironically involving the same parties herein, the Court has had the occasion to affirm that a
retirement plan is consensual in nature. The Court, through Madame Justice Griño-Aquino, declared that:
The fact that the retirement plan is non-contributory, i.e., that the employees contribute nothing to the operation of the plan, does not make it a non-issue in the CBA
negotiations. As a matter of fact, almost all of the benefits that the petitioner has granted to its employees under the CBA – salary increases, rice allowances, midyear bonuses,

negotiations. As a matter of fact, almost all of the benefits that the petitioner has granted to its employees under the CBA – salary increases, rice allowances, midyear bonuses,
13th and 14th month pay, seniority pay, medical and hospitalization plans, health and dental services, vacation, sick & other leaves with pay – are non-contributory benefits.
Since the retirement plan has been an integral part of the CBA since 1972, the Union‘s demand to increase the benefits due the employees under said plan, is a valid CBA
issue.
x x x [E]mployees do have a vested and demandable right over existing benefits voluntarily granted to them by their employer. The latter may not unilaterally withdraw, eliminate
or diminish such benefits
- In the case at bar, it cannot be denied that the CBA that w as about to expire at that time contained provisions respecting the
Retirement Plan. As the latter benefit w as already subject of the existing CBA, the members of UFE-DFA-KMU w ere only exercising
their prerogative to bargain or renegotiate for the improvement of the terms of the Retirement Plan just like they w ould for all the
other economic, as w ell as non-economic benefits previously enjoyed by them.
- The purpose of collective bargaining is the acquisition or attainment of the best possible covenants or terms relating to economic
and non-economic benefits granted by employers and due the employees. The Labor Code has actually imposed as a mutual
obligation of both parties, this duty to bargain collectively.
- The duty to bargain collectively is categorically prescribed by Article 252 of the said code. It states:
ART. 252. MEANING OF DUTY TO BARGAIN COLLECTIVELY. – The duty to bargain collectively means the performance of a mutual obligation to meet and confer promptly
and expeditiously and in good faith for the purpose of negotiating an agreement with respect to wages, hours of work, and allother terms and conditions of employment
including proposals for adjusting any grievances or questions arising under such agreement and executing a contract incorporating such agreement if requested by either party,
but such duty does not compel any party to agree to a proposal or to make any concession.
- Further, Article 253, also of the Labor Code, defines the parameter of said obligation w hen there already exists a CBA, viz:
ART. 253. DUTY TO BARGAIN COLLECTIVELY WHEN THERE EXISTS A COLLECTIVE BARGAINING AGREEMENT. – The duty to bargain collectively shall also mean that
either party shall not terminate nor modify such agreement during its lifetime. However, either party can serve a written noti ce to terminate or modify the agreement at least sixty
(60) days prior to its expiration date. It shall be the duty of both parties to keep the status quo and to continue in full force and effect the terms and conditions of the existing
agreement during the sixty day period and/or until a new agreement is reached by the parties.
- In demanding that the terms of the Retirement Plan be opened for renegotiation, the members of UFE-DFA-KMU are acting w ell
w ithin their rights as w e have, indeed, declared that the Retirement Plan is consensual in character; and so, negotiable.
2. NO.
- Declaring the Secretary of the DOLE to have acted w ith grave abuse of discretion for ruling on substantial matters or issues and
not restricting itself merely on the ground rules, the appellate court and UFE-DFA-KMU w ould have the Court treat the subject labor
dispute in a piecemeal fashion.
- The pow er granted to the Secretary of the DOLE by Paragraph (g) of Article 263 of the Labor Code, authorizes her to assume
jurisdiction over a labor dispute, causing or likely to cause a strike or lockout in an industry indispensable to the national interest,
and correlatively, to decide the same.
- In the case at bar, the Secretary of the DOLE simply relied on the Notices of Strike that w ere filed by UFE-DFA-KMU. Thus, based
on the Notices of Strike filed by UFE-DFA-KMU, the Secretary of the DOLE rightly decided on matters of substance.
- The issue of w hether or not the Secretary of the DOLE could decide issues incidental to the subject labor dispute had already been
answ ered in the affirmative. The Secretary‘s assumption of jurisdiction pow er necessarily includes matters incidental to the labor
dispute, that is, issues that are necessarily involved in the dispute itself, not just to those ascribed in the Notice of Strike; or,
otherw ise submitted to him for resolution.
- In any event, the query as to w hether or not the Retirement Plan is to be included in the CBA negotiations betw een the parties
ineluctably dictates upon the Secretary of the DOLE to go into the substantive matter of the CBA negotiations.
3. NO.
- Basic is the principle that good faith is presumed and he w ho alleges bad faith has the duty to prove the same. By imputing bad
faith unto the actuations of Nestlé, it w as UFE-DFA-KMU, therefore, w ho had the burden of proof to present substantial evidence to
support the allegation of unfair labor practice.
- A perusal of the allegations and arguments raised by UFE-DFA-KMU in the Memorandum w ill readily disclose that it failed to
discharge said onus probandi as there is still a need for the presentation of evidence other than its bare contention of unfair labor
practice in order to make certain the propriety or impropriety of the unfair labor practice charge hurled against Nestlé.
- There is no per se test of good faith in bargaining. Good faith or bad faith is an inference to be draw n from the facts, to be precise,
the crucial question of w hether or not a party has met his statutory duty to bargain in good faith typically turns on the facts of the
individual case. Necessarily, a determination of the validity of the Nestlé‘s proposition involves an appraisal of the exercis e of its
management prerogative.
- Employers are accorded rights and privileges to assure their self-determination and independence and reasonable return of
capital. This mass of privileges comprises the so-called management prerogatives. In this connection, the rule is that good faith is
alw ays presumed. As long as the company‘s exercise of the same is in good faith to advance its interest and not for purpose of
defeating or circumventing the rights of employees under the law or a valid agreement, such exercise w ill be upheld.
Disposition Petition seeking that Nestlé be declared to have committed unfair labor practice w as DENIED. The Petition w as
PARTLY GRANTED, the ruling of the Court of Appeals w as REVERSED in so far as it ruled that the Secretary of the DOLE gravely
abused her discretion in failing to confine her assumption of jurisdiction pow er over the ground rules of the CBA negotiations; but the
ruling of the Court of Appeals on the inclusion of the Retirement Plan as a valid issue in the collective bargaining negotiations
betw een UFE-DFA-KMU and Nestlé is AFFIRMED.

International Pharmaceuticals vs. Secretary of Labor (1992)
10:50 AM
G.R. Nos. 92981-83 January 9, 1992

INTERNATIONAL PHARMACEUTICALS, INC., petitioner,
vs.
HON. SECRETARY OF LABOR and ASSOCIATED LABOR UNION (ALU), respondents.
E.B. Ramos & Associates for petitioner.
Celso C. Reales for private respondent.
REGALADO, J.:
The issue before us is whether or not the Secretary of the Department of Labor and
Employment has the power to assume jurisdiction over a labor dispute and its incidental
controversies, including unfair labor practice cases, causing or likely to cause a strike or lockout
in an industry indispensable to the national interest.
The operative facts which culminated in the present recourse are undisputed.
Prior to the expiration on January 1, 1989 of the collective bargaining agreement between
petitioner International Pharmaceuticals, Inc. (hereafter, Company) and the Associated Labor
Union (Union, for brevity), the latter submitted to the Company its economic and political
demands. These were not met by the Company, hence a deadlock ensued.
On June 27, 1989, the Union filed a notice of strike with Regional Office No. VII of the National
Conciliation and Mediation Board, Department of Labor and Employment, which was docketed
as NCMB-RBVII-NS-06-050-89. After all conciliation efforts had failed, the Union went on strike
on August 8, 1989 and the Company's operations were completely paralyzed.
Subsequently, three other labor cases involving the same parties were filed with the National
Labor Relations Commission (NLRC) to wit:
1. International Pharmaceutical s, Inc. vs. Associated Labor Union, NLRC Case No. VII-09-0810-89, 1 a
petition for injunction and damages with temporary restraining order filed by the Company against the
Union and some of its members for picketing the Company's establishment in Cebu, Davao, and Metro
Manila allegedly without the required majority of the employees approving and agreeing to the strike and
with simulated strike votes, in direct violation of the provisions of their collective bargaining agreement
and in total and complete defiance of the provisions of the Labor Code;
2. Associated Labor Union vs. International Pharmaceutical s, Inc., et al., NLRC Case No-
VII-08-0715-89, 2 a complaint for unfair labor practice with prayer for damages and attorney's fees filed
by the Union against the Company, its personnel manager, and the Workers Alliance of Trade Unions
(WATU) as a result of the Company's refusal to include the sales workers in the bargaining unit resulting
in a deadlock in the bargaining negotiations; for coddling the respondent WATU as a separate bargaining
agent of the sales workers despite a contrary ruling of the Med-Arbiter; and undue interference by the
Company in the right of the workers to self-organization through harassment and dispersal of a peaceful
picket during the strike; and
3. International Pharmaceutical s, Inc., et al. vs. Associated Labor Union, NLRC Case No.
VII-08-0742-89, 3 a petition to declare the strike illegal with prayer for damages filed by the Company
alleging, among others, that the notice of strike filed by the Union with the National Conciliation and
Mediation Board did not conform with the requirements of the Labor Code, and that the Union, in
violation of the Labor Code provisions on the conduct of the strike, totally blockaded and continued to
blockade the ingress and egress of the Company's premises by human barricades, placards, benches
and other obstructions, completely paralyzing its business operations.
Meanwhile, considering that the Company belongs to an industry indispensable to national
interest, it being engaged in the manufacture of drugs and pharmaceuticals and employing
around 600 workers, then Acting Secretary of Labor, Ricardo C. Castro, invoking Article 263
(g) of the Labor Code, issued an order dated September 26, 1989 assuming jurisdiction over
the aforesaid case docketed as NCMB-RBVII-NS-06-050-89 and directing the parties to return
to the status quo before the work stoppage. The decretal portion of the order reads:
WHEREFORE, PREMISES CONSIDERED, this Office hereby assumes jurisdiction over the labor
dispute at the International Pharmaceuticals, Incorporated pursuant to Article 263 (g) of the Labor
Code, as amended.
Accordingly, all striking workers are hereby directed to return to work and management to accept them
under the same terms and conditions prevailing before the work stoppage, within twenty four (24) hours

under the same terms and conditions prevailing before the work stoppage, within twenty four (24) hours
from receipt of this Order. Management is directed to post copies of this Order in three (3) conspicuous
places in the company premises.
The parties are likewise ordered to cease and desist from committing any and all acts that will prejudice
either party and aggravat e the situation as well as the normalization of operations.
SO ORDERED. 4
On January 15, 1990, the Union filed a motion in NCMB-RBVII-NS-06-050-85, the case over
which jurisdiction had been assumed by the Secretary of Labor and Employment (hereafter
referred to as the Secretary), seeking the consolidation of the three NLRC cases (NLRC Cases
Nos. VII-09-0810-89, VII-08-0715-89, and VII-08-0742-89) with the first stated case.
In an order dated January 31, 1990, Secretary of Labor Ruben D. Torres granted the motion
and ordered the consolidation of the three NLRC cases with NCMB-RBVII-NS-06-050-89, as
follows:
WHEREFORE, finding the Associated Labor Union's Motion to be meritorious, the same is granted and
NLRC Cases Nos. VII-09-0810-89, VII-08-0715-89 and VII-08-0742-89 are hereby ordered consolidated
with the instant proceedings. The Labor Arbiter handling the same is directed to immediately transmit the
records of the said cases to the Asst. Regional Director, DOLE Regional Office No. 7 who has been
designated to hear and receive the evidence of the parties.
SO ORDERED. 5
The Company's subsequent motion for reconsideration of the order consolidating the cases was
denied by the Secretary on March 5, 1990. 6 Thereafter, the Assistant Regional Director of
Regional Office No. VII, as directed, assumed jurisdiction over the consolidated cases and set
the same for reception of evidence.
Petitioner Company now comes to this Court assailing the aforesaid orders and alleging grave
abuse of discretion on the part of the public respondent in the issuance thereof. The Union, as
the bargaining agent of the rank and file workers of the Company, was impleaded as the private
respondent.
Petitioner Company submits that the exclusive jurisdiction to hear and decide the three NLRC
cases above-specified is vested in the labor arbiter as provided in paragraph (a) (1) and (5) of
Article 217 of the Labor Code.
Moreover, petitioner insists that there is nothing in Article 263 (g) of the Labor Code which
directs the labor arbiter to hold in abeyance all proceedings in the NLRC cases and await
instruction from the Secretary. Otherwise, so it postulates, Section 6, Rule V of the Revised
Rules of the NLRC which is invoked by the Secretary is null and void since it orders the
cessation of all proceedings before the labor arbiter and orders him to await instructions from
the Secretary in labor disputes where the Secretary bas assumed jurisdiction, thereby
amending Article 263 (g) of the Labor Code by enlarging the jurisdiction of the Secretary.
Petitioner further contends that, granting arguendo that Section 6, Rule V of the Revised Rules
of the NLRC is in accordance with Article 263 (g) of the Labor Code, still the Secretary should
not have ordered the consolidation of the three unfair labor practice cases with NCMB-RBVII-
NS-06-050-89, since the Secretary assumed jurisdiction only over the deadlock in the
negotiation of the collective bargaining agreement and the petition for contempt as a result of
the said deadlock.
Respondents, on the other band, assert that the authority to assume jurisdiction over labor
disputes, vested in the Secretary by Article 263 (g) of the Labor Code, extends to all questions
and incidents arising therein causing or likely to cause strikes or lockouts in industries
indispensable to national interest.
Moreover, respondents counter that Section 6, Rule V of the Revised Rules of the NLRC is in
accordance with Article 263 (g) of the Labor Code, notwithstanding the provisions of Article 217
of the Labor Code. To rule otherwise, they point out, would encourage splitting of jurisdiction,
multiplicity of suits, and possible conflicting findings and decisions which could only result in
delay and complications in the disposition of the labor disputes.
It was also stressed that the three NLRC cases which respondent Secretary ordered
consolidated with the labor dispute over which he had assumed jurisdiction arose from or are
directly related to and are incidents of the said labor dispute.
Finally, respondents invoke the rule that all doubts in the implementation and interpretation of
the Labor Code provisions should be resolved in favor of labor. By virtue of the assailed orders,
the Union and its members were relieved of the burden of having to litigate their interrelated
cases in different fora.
There are three governing labor law provisions which are determinative of the present issue of
jurisdiction, viz.:

jurisdiction, viz.:
1. Article 217 (a) (1) and (5) of the Labor Code which provides:
Art. 217. Jurisdiction of Labor Arbiters and the Commission — (a) Except as otherwise provided under
this Code the Labor Arbiters shall have original and exclusive jurisdiction to hear and decide . . . the
following cases involving all workers. . . .
xxx xxx xxx
5. Cases arising from any violation of Article 264 of this Code, including questions involving the legality of
strikes and lockouts; . . .
2. Article 263 (g) of the Labor Code which declares:
(g) When, in his opinion, there exists a labor dispute causing or likely to cause a strike of lockout in an
arbitration. . . .
3. Section 6, Rule V of the Revised Rules of the NLRC which states:
Sec. 6. Disposition of cases. — . . .
Provided, that when the Minister (Secretary) of Labor and Employment has assumed jurisdiction over a
strike or lockout dispute or certified the same to the Commission, the parties to such dispute shall
immediately inform the Minister (Secretary) or the Commission as the case may be, of all cases between
them pending before any Regional Arbitration Branch, and the Labor Arbiter handling the same of such
assumption or certification, whereupon all proceedings before the Labor Arbiter concerning such cases
shall cease and the Labor Arbiter shall await instructions from the Minister (Secretary) or the
Commission.
The foregoing provisions persuade us that the Secretary did not gravely abuse his discretion
when he issued the questioned orders.
As early as 1913, this Court laid down in Herrera vs. Baretto, et al., 7 the fundamental normative
rule that jurisdiction is the authority to bear and determine a cause — the right to act in a case.
However, this should be distinguished from the exercise of jurisdiction. The authority to decide a
case at all and not the decision rendered therein is what makes up jurisdiction. Where there is
jurisdiction over the person and the subject matter, the decision of all other questions arising in
the case is but an exercise of that jurisdiction. 8
In the present case, the Secretary was explicitly granted by Article 263 (g) of the Labor Code
the authority to assume jurisdiction over a labor dispute causing or likely to cause a strike or
lockout in an industry indispensable to the national interest, and decide the same accordingly.
Necessarily, this authority to assume jurisdiction over the said labor dispute must include and
extend to all questions and controversies arising therefrom, including cases over which the
labor arbiter has exclusive jurisdiction.
Moreover, Article 217 of the Labor Code is not without, but contemplates, exceptions thereto.
This is evident from the opening proviso therein reading "(e)xcept as otherwise provided under
this Code . . ." Plainly, Article 263 (g) of the Labor Code was meant to make both the Secretary
(or the various regional directors) and the labor arbiters share jurisdiction, subject to certain
conditions. 9 Otherwise, the Secretary would not be able to effectively and efficiently dispose of
the primary dispute. To hold the contrary may even lead to the absurd and undesirable result
wherein the Secretary and the labor arbiter concerned may have diametrically opposed rulings.
As we have said, "(i)t is fundamental that a statute is to be read in a manner that would breathe
life into it, rather than defeat it." 10
In fine, the issuance of the assailed orders is within the province of the Secretary as authorized
by Article 263 (g) of the Labor Code and Article 217 (a) (1) and (5) of the same Code, taken
conjointly and rationally construed to subserve the objective of the jurisdiction vested in the
Secretary.
Our pronouncement on this point should be distinguished from the situation which obtained and
our consequent ruling in Servando's, Inc. vs. The Secretary of Labor and Employment, et al. 11
wherein we referred to the appropriate labor arbiter a case previously decided by the
Secretary. The said case was declared to be within the exclusive jurisdiction of the labor arbiter
since the aggregate claims of each of the employees involved exceeded P5,000.00. In
Servando, the Secretary invoked his visitorial and enforcement powers to assume jurisdiction
over the case, the exclusive and original jurisdiction of which belongs to the labor arbiter. We
said that to uphold the Secretary would empower him, under his visitorial powers, to hear and
decide an employee's claim of more than P5,000.00. We held that he could not do that and we,
therefore, overruled him.
In the present case, however, by virtue of Article 263 (g) of the Labor Code, the Secretary has
been conferred jurisdiction over cases which would otherwise be under the original and

exclusive jurisdiction of labor arbiters. There was an existing labor dispute as a result of a
deadlock in the negotiation for a collective bargaining agreement and the consequent strike,
over which the Secretary assumed jurisdiction pursuant to Article 263 (g) of the Labor Code.
The three NLRC cases were just offshoots of the stalemate in the negotiations and the strike.
We, therefore, uphold the Secretary's order to consolidate the NLRC cases with the labor
dispute pending before him and his subsequent assumption of jurisdiction over the said NLRC
cases for him to be able to competently and efficiently dispose of the dispute in its totality.
Petitioner's thesis that Section 6, Rule V of the Revised Rules of the NLRC is null and void has
no merit. The aforesaid rule has been promulgated to implement and enforce Article 263 (g) of
the Labor Code. The rule is in harmony with the objectives sought to be achieved by Article 263
(g) of the Labor Code, particularly the Secretary's assumption of jurisdiction over a labor
dispute and his subsequent disposition of the same in the most expeditious and conscientious
manner. To be able to completely dispose of a labor dispute, all its incidents would have to be
taken into consideration. Clearly, the purpose of the questioned regulation is to carry into effect
the broad provisions of Article 263 (g) of the Labor Code.
By and large, Section 6, Rule V of the Revised Rules of the NLRC is germane to the objects
and purposes of Article 263 (g) of the Labor Code, and it is not in contradiction with but
conforms to the standards the latter requires. Thus, we hold that the terms of the questioned
regulation are within the statutory power of the Secretary to promulgate as a necessary
implementing rule or regulation for the enforcement and administration of the Labor Code, in
accordance with Article 5 of the same Code.
Besides, to uphold petitioner Company's arguments that the NLRC cases are alien and totally
separate and distinct from the deadlock in the negotiation of the collective bargaining agreement
is to sanction split jurisdiction which is obnoxious to the orderly administration of justice. 12
Moreover, the rule is that all doubts in the interpretation and implementation of labor laws
should be resolved in favor of labor. In upholding the assailed orders of the Secretary, the
Court is only giving meaning to this rule. The Court should help labor authorities provide
workers immediate access to their rights and benefits, without being hampered by arbitration or
litigation processes that prove to be not only nerve-wracking, but financially burdensome in the
long run. 13 Administrative rules of procedure should be construed liberally in order to promote
their object and assist the parties, especially the workingman, in obtaining just, speedy, and
inexpensive determination of their respective claims and defenses. By virtue of the assailed
orders. The Union and its members are relieved of the burden of litigating their interrelated
cases in different tribunals.
WHEREFORE. there being no grave abuse of discretion committed by the Secretary of Labor
and Employment, the petition at bar is hereby DISMISSED.
SO ORDERED.
Melencio-Herrera, Paras and Padilla, JJ., concur.
Nocon, J., took no part.
Footnotes
1 Annex "G", Petition; Rollo, 41-50.
2 Rollo, 90-102.
3 Annex "H", Petition; Rollo, 51-58.
4 Rollo, 30-31.
5 Rollo, 35.
6 Annex "D", Petition; Rollo, 36-37.
7 25 Phil. 245 (1913).
8 De la Cruz vs. Moir, etc., et al., 36 Phil. 213 (1917); Cf. Associated Labor Union, et al., vs. Ramolete,
etc., et al, 13 SCRA 582 (1965).
9 Briad Agro Development Corp. vs. De la Serna, etc., et al., 174 SCRA 524, 532 (1989).
10 Id., id., at 533.
11 G.R. No. 85840, June 5, 1991.
12 Associated Labor Union vs. Gomez, et al., 19 SCRA 304 (1967).
13 Maternity Children's Hospital vs. Secretary of Labor, 174 SCRA 632, 647 (1989).

q=cache:Ek1gmZKx8xsJ:www.lawphil.net/judjuris/juri1992/jan1992/gr_92981_1992.html+International+Pharmaceuticals+vs.
+Secretary+of+Labor+(1992)&cd=1&hl=en&ct=clnk&ie=UTF-8>

FEATI v. BAUTISTA (1966)
7:14 AM
FEATI UNIVERSITY V BAUTISTA

18 SCRA 1191
ZALDIVAR; December 27, 1966
NATURE
Consolidated cases/petitions for certiorari, prohibition w/ writ of preliminary injunction
FACTS
-Jan 14, 1963: the President of the Faculty Club wrote to the President of the University a letter informing the latter of the
organization of the Faculty Club as a labor union, duly registered with the Bureau of Labor Relations
-Jan 22, 1963: another letter was sent, to which was attached a list of demands consisting of 26 items, and asking the President
of the University to answer within ten days from date of receipt thereof.
-The University questioned the right of the Faculty Club to be the exclusive representative of the majority of the employees and
asked proof that the Faculty Club had been designated or selected as exclusive representative by the vote of the majority of said
employees.
-Feb 1, 1963: the Faculty Club filed with the Bureau of Labor Relations a notice of strike alleging as reason therefore the refusal
of the University to bargain collectively with the representative of the faculty members.
-Feb 18, 1963: the members of the Faculty Club went on strike and established picket lines in the premises of the University,
thereby disrupting the schedule of classes.
-March 1, 1963: the Faculty Club filed Case No. 3666-ULP for unfair labor practice against the University, but which was later
dismissed (on April 2, 1963 after Case 41-IPA was certified to the CIR).
-March 7, 1963: a petition for certification election, Case No. 1183-MC, was filed by the Faculty Club in the CIR
ISSUES
1. WON the definition of employer in RA875 covers an educational institution like Feati University
2. WON the members of the Faculty Club are independent contractors (If they are, then they are not employees within the
purview of the said Act.)
HELD
1. YES. It is true that the SC has ruled that certain educational institutions and other juridical entities are beyond the purview of
RA875 in the sense that the CIR has no jurisdiction to take cognizance of ULP charges against them, but the principal reason in
ruling in those cases is that those entities are not organized, maintained and operated for profit and do not declare dividends to
stockholders.
-In the decisions in the cases of the Boy Scouts of the Philippines, the University of San Agustin, the UST, and LaConsolacion
College, this Court was not unanimous in the view that the Industrial Peace Act (Republic Act No. 875) is not applicable to
charitable, or non-profit organizations which include educational institutions not operated for profit. There are members of this
Court who hold the view that the Industrial Peace Act would apply also to non-profit organizations or entities, the only exception
being the Government, including any political subdivision or instrumentality thereof, in so far as governmental functions are
concerned. However, in the Far Eastern University case this Court is unanimous in supporting the view that an educational
institution that is operated for profit comes within the scope of the Industrial Peace Act. We consider it a settled doctrine of this
Court, therefore, that the Industrial Peace Act is applicable to any organization or entity whatever may be its purpose when it was
created.
-TEST: Does the University operate as an educational institution for profit? Does it declare dividends for its stockholders? If it
does not, it must be declared beyond the purview of Republic Act No. 875; but if it does, Republic Act No. 875 must apply to it. In
this case, Feati University itself admits that it has declared dividends. CIR also found that the University is not for strictly
educational purposes and that "It realizes profits and parts of such earning is distributed as dividends to private stockholders or
individuals. Under this circumstance, and in consonance with the rulings in the decisions of this Court, above cited, it is obvious
that Republic Act No. 875 is applicable to herein petitioner Feati University.
-RA 875, Sec 2(c): The term employer includes any person acting in the interest of an employer, directly or indirectly, but shall
not include any labor organization (otherwise than when acting as an employer) or any one acting in the capacity or agent of
such labor organization.
-It will be noted that in defining the term "employer" the Act uses the word "includes" and not the word "means". In using the word
"includes" and not "means", Congress did not intend to give a complete definition of "employer", but rather that such definition
should be complementary to what is commonly understood as employer. Congress intended the term to be understood in a
broad meaning because, firstly, the statutory definition includes not only "a principal employer but also a person acting in the
interest of the employer"; and, secondly, the Act itself specifically enumerated those who are not included in the term
"employer", namely: (1) a labor organization (otherwise than when acting as an employer), (2) anyone acting in the
capacity of officer or agent of such labor organization [Sec. 2(c)], and (3) the Government and any political subdivision or
instrumentality thereof insofar as the right to strike for the purpose of securing changes or modifications in the terms and

instrumentality thereof insofar as the right to strike for the purpose of securing changes or modifications in the terms and
conditions of employment is concerned (Section 11). Among these statutory exemptions, educational institutions are not
included; hence, they can be included in the term "employer". This Court, however, has ruled that those educational institutions
that are not operated for profit are not within the purview of Republic Act No. 875.
-RA 875 does not give a comprehensive but only a complementary definition of the term "employer". The term encompasses
those that are in ordinary parlance "employers." What is commonly meant by "employer"? The term "employer" has been given
several acceptations. The lexical definition is "one who employs; one who uses; one who engages or keeps in service;" and "to
employ" is "to provide work and pay for; to engage one's service; to hire." [see full case for other definitions of the word employer
as provided for by the Workmen's Compensation Act, the Minimum Wage Law, the Social Security Act, etc]
-Jurisprudence: An employer is one who employs the services of others; one for whom employees work and who pays their
wages or salaries (Black Law Dictionary, 4th ed., p. 618).
-Under none of these definitions may the University be excluded. The University engaged the services of the professors,
provided them work, and paid them compensation or salary for their services. Even if the University may be considered as a
lessee of services under a contract between it and the members of its Faculty, still it is included in the term "employer". "Running
through the word `employ' is the thought that there has been an agreement on the part of one person to perform a certain service
in return for compensation to be paid by an employer.
2. NO.
-RA 875, Section 2 (d): The term "employee" shall include any employee and shall not be limited to the “employee” of a
particular employer unless the act explicitly states otherwise and shall include any individual whose work has ceased as a
consequence of, or in connection with, any current labor dispute or because of any unfair labor practice and who has
not obtained any other substantially equivalent and regular employment.
-This definition, by the use of the term “include” is again complementary. This Court has defined the term "employer" as "one
who employs the services of others; one for whom employees work and who pays their wages or salaries. Correlatively, an
employee must be one who is engaged in the service of another; who performs services for another; who works for salary or
wages.
-It is admitted by the University that the striking professors and/or instructors are under contract to teach particular courses and
that they are paid for their services. They are, therefore, employees of the University.
-The contention of the University that the professors and/or instructors are independent contractors, because the University does
not exercise control over their work, is likewise untenable. This Court takes judicial notice that a university controls the work of
the members of its faculty; that a university prescribes the courses or subjects that professors teach, and when and where to
teach; that the professors' work is characterized by regularity and continuity for a fixed duration; that professors are compensated
for their services by wages and salaries, rather than by profits; that the professors and/or instructors cannot substitute others to
do their work without the consent of the university; and that the professors can be laid off if their work is found not satisfactory. All
these indicate that the university has control over their work; and professors are, therefore, employees and not independent
contractors.
-Moreover, even if university professors are considered independent contractors, still they would be covered by RA 875. This law
modelled after the Wagner Act, or the National Labor Relations Act, of the United States, did not exclude "independent
contractors" from the orbit of "employees". It was in the subsequent legislation the Labor Management Relation Act (Taft-Harley
Act) that "independent contractors" together with agricultural laborers, individuals in domestic service of the home, supervisors,
and others were excluded.
ISSUES
WON there is a labor dispute between the University and the Faculty Club
HELD
YES.
-RA 875 provides that the term "labor dispute" includes any controversy concerning terms, tenure or conditions of employment,
or concerning the association or representation of persons in negotiating, fixing, maintaining, changing, or seeking to arrange
terms or conditions of employment regardless of whether the disputants stand in proximate relation of employer and employees.
-The test of whether a controversy comes within the definition of "labor dispute" depends on whether the controversy
involves or concerns "terms, tenure or condition of employment" or "representation."
-All the admitted facts show that the controversy between the University and the Faculty Club involved terms and conditions of
employment, and the question of representation. Hence, there was a labor dispute between the University and the Faculty Club,
as contemplated by Republic Act No. 875.
-Recall: RA 875, sec10: When in the opinion of the President of the Philippines there exists a labor dispute in an industry
indispensable to the national interest and when such labor dispute is certified by the President to the Court of Industrial
Relations, said Court may cause to be issued a restraining order forbidding the employees to strike or the employer to lockout
the employees, and if no other solution to the dispute is found, the Court may issue an order fixing the terms and conditions of
employment.
-To certify a labor dispute to the CIR is the prerogative of the President under the law, and this Court will not interfere in, much
less curtail, the exercise of that prerogative. Once the jurisdiction is acquired pursuant to the presidential certification, the CIR
may exercise its broad powers as provided in Commonwealth Act 103. All phases of the labor dispute and the employer-
employee relationship may be threshed out before the CIR, and the CIR may issue such order or orders as may be necessary to
make effective the exercise of its jurisdiction. The parties involved in the case may appeal to the Supreme Court from the order

make effective the exercise of its jurisdiction. The parties involved in the case may appeal to the Supreme Court from the order
or orders thus issued by the CIR.
Pasted from <file:///D:\5y,%201s\Labor%20Ar b\COMPILED%20LABOR2-disini\LABOR%202%

20COMPILED%20DIGEST.docx>
Disposition Petition for certiorari & prohibition with preliminary injunction dismissed. Writs prayed for therein denied. Writ of
preliminary injunction dissolved. Costs against Feati University.
Pasted from <file:///D:\5y,%201s\Labor%20Ar b\COMPILED%20LABOR2-disini\LABOR%202%

20COMPILED%20DIGEST.docx>

MANILA CORDAGE V. CIR
7:14 AM
MANILA CORDAGE CO. V CIR (MANILA CORDAGE WORKERS UNION)

78 SCRA 398
FERNANDEZ; August 31, 977
NATURE
Petitions to review the decision and the resolution dated of the Court of Industrial Relations
FACTS
-In 1957, the Manila Cordage Company and the Manco Labor Union, then acting as the exclusive bargaining representative of the
former's employees, entered into a collective bargaining agreement w hich contained, among others, the follow ing stipulation: Both
parties agree that all employees of the COMPANY w ho are already members of the UNION at the tim e of the signing of this
AGREEMENT shall continue to remain members of the UNION for the duration of this AGREEMENT.
-The foregoing stipulation w as also embodied in the 1959 CBA betw een the tw o
-When the collective bargaining agreements w ere entered into, the employees Rabago, Trajano and Nisperos w ere already
members of Manco Labor Union.
-Shortly after 1959, some employees of Manila Cordage Company formed the Manila Cordage Workers Union.
-Some employees w ho w ere members of the Manco Labor Union resigned from said union and joined the Manila Cordage Workers
Union.
-At the instance of the Manco Labor Union, the Manila Cordage Company dismissed those w ho resigned from the Manco Labor
Union
-Manila Cordage Workers Union caused the filing of a complaint w ith the CIR for unfair labor practice against Manila Cordage
Company and the Manco Labor Union
-The Manco Labor Union averred in its answ er that the complainants w ere dismissed on the basis of an existing collective
bargaining contract betw een said union and the Manila Cordage Company.
-The Manila Cordage Company alleged: that one of the conditions of employment provided in said collective bargaining agreement
is the maintenance-of-membership clause requiring all members of the Manco Labor Union to remain as such members thereof
during the life of the contract; that the Manco Labor Union demanded of the Manila Cordage Company the dismissal of the individual
complainants from employment for the reason that said complainants had failed to continue and maintain their membership in the
union; that acting in good faith and in pursuance of its obligations under the said contract, respondent company had to terminate the
employment of said complainants, otherw ise the Manila Cordage Company w ould be charged w ith contractual breach and
confronted with the Manco Labor Union's reprisal.
-Court of Industrial Relations ordered the petitioner, Cordage Company, and the Manco Labor Union "To reinstate complainants
Silvino Rabago, Natalio Nisperos and Ricardo Trajano to their former positions
-The motions for reconsideration of the Manila Cordage Company and the Manco Labor Union w ere denied, hence this petition
ISSUE
WON under the maintenance-of-membership clause in the CBA, employees of the company w ho are already members of the said
union w ere required to remain as such as a condition for continued employment in the company
HELD
No.
-It is a fact that the complainants w ere employees of the Manila Cordage Company and members of the Manco Labor Union w hen
the follow ing stipulation w as included in the collective bargaining agreement: Both parties agree that all employees of the
COMPANY w ho are already members of the UNION at the time of the signing of this AGREEMENT shall continue to remain
members of the UNION for the duration- of this AGREEMENT"
-The foregoing stipulation, how ever, does not clearly state that maintenance of membership in the Manco Labor Union is a condition
of continuous employment in the Manila Labor Cordage Company.
-In consonance w ith the ruling in Confederated Sons of Labor vs. Anakan Lumber Co., et al., 107 Phil. 915, in order that the Manila
Cordage Company may be deemed bound to dismiss employees w ho do not maintain their membership in the Manco Labor Union,
the stipulation to this effect m ust be so clear as to leave no room for doubt thereon
-An undertaking of this nature is so harsh that it m ust be strictly construed and doubts m ust be resolved against the
existence of the right to dismiss.
-Aware of the deficiency of the maintenance- of membership clause, the petitioner urges that the same should be construed
together w ith the "Whereas" provision of the contract which reads: WHEREAS, the parties hereto nave decided to enter into an
agreement relating to the terms and conditions of employment and reference to those employees to w hom the provisions of this
AGREEMENT apply.
-To construe the stipulations above-quoted as imposing as a condition to continued employment in the Manila Cordage Company
the maintenance of membership in the Manco Labor Union is to violate the natural and constitutional right of the laborer to organize
freely. Such interpretation w ould be inconsistent with the constitutional mandate that the State shall afford protection to labor.
-The respondent Court of Industrial Relations correctly found that the disputed "maintenance-of-membership" clause in question did
not give the Manila Cordage Company the right to dismiss just because they resigned as members of the Manco Labor Union.
Disposition
The decision appealed from is hereby affirmed

Sarmiento v. Tuico (1988)
7:15 AM
GR L-75271-73

International Pharmaceuticals vs. Secretary of Labor (1992)
10:50 AM
G.R. Nos. 92981-83 January 9, 1992

INTERNATIONAL PHARMACEUTICALS, INC., petitioner,
vs.
HON. SECRETARY OF LABOR and ASSOCIATED LABOR UNION (ALU), respondents.
E.B. Ramos & Associates for petitioner.
Celso C. Reales for private respondent.
REGALADO, J.:
The issue before us is whether or not the Secretary of the Department of Labor and
Employment has the power to assume jurisdiction over a labor dispute and its incidental
controversies, including unfair labor practice cases, causing or likely to cause a strike or lockout
in an industry indispensable to the national interest.
The operative facts which culminated in the present recourse are undisputed.
Prior to the expiration on January 1, 1989 of the collective bargaining agreement between
petitioner International Pharmaceuticals, Inc. (hereafter, Company) and the Associated Labor
Union (Union, for brevity), the latter submitted to the Company its economic and political
demands. These were not met by the Company, hence a deadlock ensued.
On June 27, 1989, the Union filed a notice of strike with Regional Office No. VII of the National
Conciliation and Mediation Board, Department of Labor and Employment, which was docketed
as NCMB-RBVII-NS-06-050-89. After all conciliation efforts had failed, the Union went on strike
on August 8, 1989 and the Company's operations were completely paralyzed.
Subsequently, three other labor cases involving the same parties were filed with the National
Labor Relations Commission (NLRC) to wit:
1. International Pharmaceutical s, Inc. vs. Associated Labor Union, NLRC Case No. VII-09-0810-89, 1 a
petition for injunction and damages with temporary restraining order filed by the Company against the
Union and some of its members for picketing the Company's establishment in Cebu, Davao, and Metro
Manila allegedly without the required majority of the employees approving and agreeing to the strike and
with simulated strike votes, in direct violation of the provisions of their collective bargaining agreement
and in total and complete defiance of the provisions of the Labor Code;
2. Associated Labor Union vs. International Pharmaceutical s, Inc., et al., NLRC Case No-
VII-08-0715-89, 2 a complaint for unfair labor practice with prayer for damages and attorney's fees filed
by the Union against the Company, its personnel manager, and the Workers Alliance of Trade Unions
(WATU) as a result of the Company's refusal to include the sales workers in the bargaining unit
resulting in a deadlock in the bargaining negotiations; for coddling the respondent WATU as a
separate bargaining agent of the sales workers despite a contrary ruling of the Med-Arbiter; and undue
interference by the Company in the right of the workers to self-organization through harassment and
dispersal of a peaceful picket during the strike; and
3. International Pharmaceutical s, Inc., et al. vs. Associated Labor Union, NLRC Case No.
VII-08-0742-89, 3 a petition to declare the strike illegal with prayer for damages filed by the Company
alleging, among others, that the notice of strike filed by the Union with the National Conciliation and
Mediation Board did not conform with the requirements of the Labor Code, and that the Union, in
violation of the Labor Code provisions on the conduct of the strike, totally blockaded and continued to
blockade the ingress and egress of the Company's premises by human barricades, placards, benches
and other obstructions, completely paralyzing its business operations.
Meanwhile, considering that the Company belongs to an industry indispensable to national

interest, it being engaged in the manufacture of drugs and pharmaceuticals and employing
around 600 workers, then Acting Secretary of Labor, Ricardo C. Castro, invoking Article 263
(g) of the Labor Code, issued an order dated September 26, 1989 assuming jurisdiction over
the aforesaid case docketed as NCMB-RBVII-NS-06-050-89 and directing the parties to return
to the status quo before the work stoppage. The decretal portion of the order reads:
WHEREFORE, PREMISES CONSIDERED, this Office hereby assumes jurisdiction over the labor
dispute at the International Pharmaceuticals, Incorporated pursuant to Article 263 (g) of the Labor
Code, as amended.
Accordingly, all striking workers are hereby directed to return to work and management to accept them 3 CASES WERE
under the same terms and conditions prevailing before the work stoppage, within twenty four (24) hours PENDING WITH THE
from receipt of this Order. Management is directed to post copies of this Order in three (3) conspicuous
NLRC (THUS, WITH LA)
places in the company premises.
The parties are likewise ordered to cease and desist from committing any and all acts that will prejudice WHEN SOLE ASSUMED
either party and aggravat e the situation as well as the normalization of operations. JURISDICTION OVER
SO ORDERED. 4 THE CASE
-Union filed a motion
On January 15, 1990, the Union filed a motion in NCMB-RBVII-NS-06-050-85, the case over in NCMB seeking
which jurisdiction had been assumed by the Secretary of Labor and Employment (hereafter consolidation of the 3
referred to as the Secretary), seeking the consolidation of the three NLRC cases (NLRC Cases
NLRC cases. Since SOLE
Nos. VII-09-0810-89, VII-08-0715-89, and VII-08-0742-89) with the first stated case.
assumed jurisdiction,

assumed jurisdiction,
In an order dated January 31, 1990, Secretary of Labor Ruben D. Torres granted the motion SOLE was the one who
and ordered the consolidation of the three NLRC cases with NCMB -RBVII-NS-06-050-89, as resolved the case, and
follows: ordered the
WHEREFORE, finding the Associated Labor Union's Motion to be meritorious, the same is granted and consolidation of the
NLRC Cases Nos. VII-09-0810-89, VII-08-0715-89 and VII-08-0742-89 are hereby ordered consolidated cases
with the instant proceedings. The Labor Arbiter handling the same is directed to immediately transmit the
records of the said cases to the Asst. Regional Director, DOLE Regional Office No. 7 who has been
designated to hear and receive the evidence of the parties.
SO ORDERED. 5
The Company's subsequent motion for reconsideration of the order consolidating the cases was
denied by the Secretary on March 5, 1990. 6 Thereafter, the Assistant Regional Director of
Regional Office No. VII, as directed, assumed jurisdiction over the consolidated cases and set
the same for reception of evidence.
Petitioner Company now comes to this Court assailing the aforesaid orders and alleging grave
abuse of discretion on the part of the public respondent in the issuance thereof. The Union, as
the bargaining agent of the rank and file workers of the Company, was impleaded as the private
respondent.
Petitioner Company submits that the exclusive jurisdiction to hear and decide the three NLRC
cases above-specified is vested in the labor arbiter as provided in paragraph (a) (1) and (5) of
Article 217 of the Labor Code.
Otherwise, so it postulates, Section 6, Rule V of the Revised Rules of the NLRC which is
invoked by the Secretary is null and void since it orders the cessation of all proceedings before
the labor arbiter and orders him to await instructions from the Secretary in labor disputes
where the Secretary bas assumed jurisdiction, thereby amending Article 263 (g) of the Labor
Code by enlarging the jurisdiction of the Secretary.
Petitioner further contends that, granting arguendo that Section 6, Rule V of the Revised Rules
of the NLRC is in accordance with Article 263 (g) of the Labor Code, still the Secretary should
not have ordered the consolidation of the three unfair labor practice cases with NCMB-RBVII-
NS-06-050-89, since the Secretary assumed jurisdiction only over the deadlock in the
negotiation of the collective bargaining agreement and the petition for contempt as a result of
the said deadlock.
Respondents, on the other band, assert that the authority to assume jurisdiction over labor
disputes, vested in the Secretary by Article 263 (g) of the Labor Code, extends to all questions
and incidents arising therein causing or likely to cause strikes or lockouts in industries
indispensable to national interest.
Moreover, respondents counter that Section 6, Rule V of the Revised Rules of the NLRC is in
accordance with Article 263 (g) of the Labor Code, notwithstanding the provisions of Article 217
of the Labor Code. To rule otherwise, they point out, would encourage splitting of jurisdiction,
multiplicity of suits, and possible conflicting findings and decisions which could only result in
delay and complications in the disposition of the labor disputes.
It was also stressed that the three NLRC cases which respondent Secretary ordered
consolidated with the labor dispute over which he had assumed jurisdiction arose from or are
directly related to and are incidents of the said labor dispute.
Finally, respondents invoke the rule that all doubts in the implementation and interpretation of
the Labor Code provisions should be resolved in favor of labor. By virtue of the assailed orders,
the Union and its members were relieved of the burden of having to litigate their interrelated
cases in different fora.
There are three governing labor law provisions which are determinative of the present issue of
jurisdiction, viz.:
1. Article 217 (a) (1) and (5) of the Labor Code which provides:
Art. 217. Jurisdiction of Labor Arbiters and the Commission — (a) Except as otherwise provided under
this Code the Labor Arbiters shall have original and exclusive jurisdiction to hear and decide . . . the
following cases involving all workers. . . .
xxx xxx xxx
strikes and lockouts; . . .
2. Article 263 (g) of the Labor Code which declares:
(g) When, in his opinion, there exists a labor dispute causing or likely to cause a strike of lockout in an
arbitration. . . .
3. Section 6, Rule V of the Revised Rules of the NLRC which states:
Sec. 6. Disposition of cases. — . . .
Provided, that when the Minister (Secretary) of Labor and Employment has assumed jurisdiction over a

strike or lockout dispute or certified the same to the Commission, the parties to such dispute shall
immediately inform the Minister (Secretary) or the Commission as the case may be, of all cases between
them pending before any Regional Arbitration Branch, and the Labor Arbiter handling the same of such
assumption or certification, whereupon all proceedings before the Labor Arbiter concerning such cases
shall cease and the Labor Arbiter shall await instructions from the Minister (Secretary) or the
Commission.
The foregoing provisions persuade us that the Secretary did not gravely abuse his discretion
when he issued the questioned orders.
As early as 1913, this Court laid down in Herrera vs. Baretto, et al., 7 the fundamental normative
rule that jurisdiction is the authority to bear and determine a cause — the right to act in a case.
However, this should be distinguished from the exercise of jurisdiction. The authority to decide a
case at all and not the decision rendered therein is what makes up jurisdiction. Where there is
jurisdiction over the person and the subject matter, the decision of all other questions arising in
the case is but an exercise of that jurisdiction. 8
In the present case, the Secretary was explicitly granted by Article 263 (g) of the Labor Code
the authority to assume jurisdiction over a labor dispute causing or likely to cause a strike or
lockout in an industry indispensable to the national interest, and decide the same accordingly.
Necessarily, this authority to assume jurisdiction over the said labor dispute must include and
extend to all questions and controversies arising therefrom, including cases over which the
labor arbiter has exclusive jurisdiction.
Moreover, Article 217 of the Labor Code is not without, but contemplates, exceptions thereto.
This is evident from the opening proviso therein reading "(e)xcept as otherwise provided under
this Code . . ." Plainly, Article 263 (g) of the Labor Code was meant to make both the Secretary
(or the various regional directors) and the labor arbiters share jurisdiction, subject to certain
conditions. 9 Otherwise, the Secretary would not be able to effectively and efficiently dispose of
wherein the Secretary and the labor arbiter concerned may have diametrically opposed rulings.
As we have said, "(i)t is fundamental that a statute is to be read in a manner that would breathe
life into it, rather than defeat it." 10
In fine, the issuance of the assailed orders is within the province of the Secretary as authorized
by Article 263 (g) of the Labor Code and Article 217 (a) (1) and (5) of the same Code, taken
conjointly and rationally construed to subserve the objective of the jurisdiction vested in the
Secretary.
AS REGARDS SERVANDO CASE

Our pronouncement on this point should be distinguished from the situation which obtained and
our consequent ruling in Servando's, Inc. vs. The Secretary of Labor and Employment, et al. 11
wherein we referred to the appropriate labor arbiter a case previously decided by the
Secretary. The said case was declared to be within the exclusive jurisdiction of the labor arbiter
since the aggregate claims of each of the employees involved exceeded P5,000.00. In
Servando, the Secretary invoked his visitorial and enforcement powers to assume jurisdiction
over the case, the exclusive and original jurisdiction of which belongs to the labor arbiter. We
said that to uphold the Secretary would empower him, under his visitorial powers, to hear and
decide an employee's claim of more than P5,000.00. We held that he could not do that and we,
therefore, overruled him.
In the present case, however, by virtue of Article 263 (g) of the Labor Code, the Secretary has
exclusive jurisdiction of labor arbiters. There was an existing labor dispute as a result of a
deadlock in the negotiation for a collective bargaining agreement and the consequent strike,
over which the Secretary assumed jurisdiction pursuant to Article 263 (g) of the Labor Code.
The three NLRC cases were just offshoots of the stalemate in the negotiations and the strike.
We, therefore, uphold the Secretary's order to consolidate the NLRC cases with the labor
dispute pending before him and his subsequent assumption of jurisdiction over the said NLRC
cases for him to be able to competently and efficiently dispose of the dispute in its totality.
Petitioner's thesis that Section 6, Rule V of the Revised Rules of the NLRC is null and void has
no merit. The aforesaid rule has been promulgated to implement and enforce Article 263 (g) of
the Labor Code. The rule is in harmony with the objectives sought to be achieved by Article 263
(g) of the Labor Code, particularly the Secretary's assumption of jurisdiction over a labor
dispute and his subsequent disposition of the same in the most expeditious and conscientious
manner. To be able to completely dispose of a labor dispute, all its incidents would have to be
taken into consideration. Clearly, the purpose of the questioned regulation is to carry into effect
the broad provisions of Article 263 (g) of the Labor Code.
By and large, Section 6, Rule V of the Revised Rules of the NLRC is germane to the objects
and purposes of Article 263 (g) of the Labor Code, and it is not in contradiction with but
conforms to the standards the latter requires. Thus, we hold that the terms of the questioned
regulation are within the statutory power of the Secretary to promulgate as a necessary
implementing rule or regulation for the enforcement and administration of the Labor Code, in
accordance with Article 5 of the same Code.

Besides, to uphold petitioner Company's arguments that the NLRC cases are alien and totally
separate and distinct from the deadlock in the negotiation of the collective bargaining agreement
is to sanction split jurisdiction which is obnoxious to the orderly administration of justice. 12
Moreover, the rule is that all doubts in the interpretation and implementation of labor laws
should be resolved in favor of labor. In upholding the assailed orders of the Secretary, the
Court is only giving meaning to this rule. The Court should help labor authorities provide
workers immediate access to their rights and benefits, without being hampered by arbitration or
litigation processes that prove to be not only nerve-wracking, but financially burdensome in the
long run. 13 Administrative rules of procedure should be construed liberally in order to promote
their object and assist the parties, especially the workingman, in obtaining just, speedy, and
inexpensive determination of their respective claims and defenses. By virtue of the assailed
orders. The Union and its members are relieved of the burden of litigating their interrelated
cases in different tribunals.
WHEREFORE. there being no grave abuse of discretion committed by the Secretary of Labor
and Employment, the petition at bar is hereby DISMISSED.
SO ORDERED.
Melencio-Herrera, Paras and Padilla, JJ., concur.
Nocon, J., took no part.
Footnotes
1 Annex "G", Petition; Rollo, 41-50.
2 Rollo, 90-102.
3 Annex "H", Petition; Rollo, 51-58.
4 Rollo, 30-31.
5 Rollo, 35.
6 Annex "D", Petition; Rollo, 36-37.
7 25 Phil. 245 (1913).
8 De la Cruz vs. Moir, etc., et al., 36 Phil. 213 (1917); Cf. Associated Labor Union, et al., vs. Ramolete,
etc., et al, 13 SCRA 582 (1965).
9 Briad Agro Development Corp. vs. De la Serna, etc., et al., 174 SCRA 524, 532 (1989).
10 Id., id., at 533.
11 G.R. No. 85840, June 5, 1991.
12 Associated Labor Union vs. Gomez, et al., 19 SCRA 304 (1967).
13 Maternity Children's Hospital vs. Secretary of Labor, 174 SCRA 632, 647 (1989).

q=cache:Ek1gmZKx8xsJ:www.lawphil.net/judjuris/juri1992/jan1992/gr_92981_1992.html+International+Pharmaceuticals+vs.
+Secretary+of+Labor+(1992)&cd=1&hl=en&ct=clnk&ie=UTF -8>

Telefunken Semi-Conductor Employees Union vs. Secretary of
Labor and Employment (1997)
11:12 AM
lawphil
Today is
Friday,
August
20, 2010

SUPREME COURT
Manila
FIRST DIVISION
G.R. Nos. 122743 & 127215 December 12, 1997
TELEFUNKEN SEMICONDUCTORS EMPLOYEES UNION — FFW,
petitioner,
vs.
SECRETARY OF LABOR AND EMPLOYMENT AND TEMIC TELEFUNKEN
MICRO-ELECTRONICS (PHILS.), INC., respondent.
TEMIC TELEFUNKEN MICRO-ELECTRONICS (PHIL.), INC., petitioner,
vs.
HON. LEONARDO A. QUISUMBING in his capacity as Secretary of Labor
& Employment, and TELEFUNKEN SEMICONDUCTORS EMPLOYEES
UNION — FFW, respondents.
BELLOSILLO, J.:
Two (2) petitions for certiorari are before us: first, the petition instituted by
Telefunken Semiconductors Employees Union-FFW (UNION for brevity),
questioning the exclusion of union officers, shop stewards and those with
pending criminal charges in the order of the Acting Secretary of the Department
of Labor and Employment (DOLE) directing the company to accept back all
striking workers, docketed as G.R. No. 122743, and second, the petition filed a
year later by Temic Telefunken Microelectronics (Phil.), Inc. (COMPANY for
brevity), seeking to set aside altogether the writ of execution issued to
implement the order, docketed as G.R. No. 127215.
On 25 August 1995 the dispute between the parties started when the
COMPANY and the UNION reached a deadlock in their negotiations for a new
collective bargaining agreement. Hence on 28 August 1995 the UNION filed a
Notice of Strike with the National Conciliation and Mediation Board. On 8
September 1995, upon petition of the COMPANY considering the nature of its
business and the corresponding effects to the country's economy, then Acting
Secretary of Labor and Employment Jose S. Brillantes, after ascertaining that
the labor dispute involved a matter of national interest, intervened and
assumed jurisdiction over the dispute pursuant to Art. 263, par. (g), of the Labor

assumed jurisdiction over the dispute pursuant to Art. 263, par. (g), of the Labor
Code.
Nevertheless, on 14 September 1995 the UNION struck. Two (2) days later, or
on 16 September 1995, Acting Secretary Brillantes ordered the striking workers
to return to work within twenty-four (24) hours. But the striking UNION
members failed to return to work; instead, they continued with their pickets. As
a result, on 23 September 1995 violence erupted in the picket lines. The
service bus ferrying non-striking workers was stoned causing injuries to its
passengers. Thereafter complaints for threats, defamation, illegal detention and
physical injuries were filed against the strikers.
Meanwhile, on 26 September 1995 the COMPANY sent show cause
memoranda to the UNION members who joined the strike and defied the
return-to-work orders, directing them to submit their written explanation why
they should not be disciplined or dismissed from employment. Not one
reportedly submitted an explanation. Still, a number of UNION members
continued refusing to return to work. Thus on 1 October 1995 the UNION
members were placed under preventive suspension and asked to appear in the
administrative hearing that was conducted. Only two (2) workers appeared.
Consequently, on 2 October 1995 letters of termination for cause were
personally delivered to UNION members who failed to report for work
notwithstanding the assumption and return-to-work orders.
On 29 October 1995 Acting Secretary Brillantes issued an Order dated 27
October 1995 a portion of which reads —
Atty. Tito F. Genilo, Technical Assistant, Office of the Secretary, this Department, is
hereby designated to immediately call the parties and hear and receive evidence on the
matter of illegal strike, including the reciprocal demands of the parties for damages
arising therefrom, and to submit the appropriate report and recommendations on the
case within ten (10) days from termination of the proceedings thereon.
Pending resolution of the issue involving the legality of the strike, the Company is
hereby directed to accept back all strik ing work ers, except the Union Officers, shop
stewards, and those with pending criminal charges, whose termination shall be among
the issues to be heard by Atty. Genilo.
Relative thereto, the parties are hereby directed to submit their position papers and
evidence within ten (10) days from receipt of this Order (emphasis supplied). 1
On 9 November 1995 both the COMPANY and the UNION filed their respective
motions for reconsideration. On 24 November 1995 Acting Secretary Brillantes
issued an order modifying in part his 27 October 1995 Order, but affirmed that
portion which excluded the union officers, shop stewards and those with
pending criminal charges, from the order to accept back all striking workers
pending the resolution of the issue involving the legality of the strike.
On 5 December 1995, the UNION, aggrieved by the Order of 27 October 1995
instituted a petition for certiorari before this Court questioning the order
excluding all union officers, shop stewards and all those with pending criminal
charges. The UNION argued that since, as stated in the Order of 27 October
1995, the "termination (of all union officers, shop stewards and all those with
pending criminal charges) shall be among the issues to be heard by Atty.
Genilo," they should not have been excluded at all in the first place, as their
immediate exclusion is in effect termination without due process.
Meanwhile, as a result of the dispute, some 1,500 striking workers many of
whom had been charged before the Office of the Prosecutor after 27 October
1995 have yet to be reinstated. On 7 December 1995 Acting Secretary
Brillantes issued a clarificatory order the dispositive portion of which states —
WHEREFORE, as clarified above, we hereby rule that the phrase "those with pending
criminal charges" shall only cover those workers with pending criminal charges at the
time of the issuance of the Order dated 27 October 1995. 2
Pending resolution of the petition filed by the UNION before this Court,
Secretary of Labor and Employment Leonardo A. Quisumbing issued a Writ of
Execution the dispositive portion of which states —
ACCORDINGLY, a Writ of Execution is here issued commanding Sheriff Edgar
Paredes of the National Capital Regional Office, this Department, to proceed to the
premises of Temic Telefunken Microelectronics (Phils.), Inc., at the Temic Building,

premises of Temic Telefunken Microelectronics (Phils.), Inc., at the Temic Building,
Bagsakan Road, FTI Estate, Taguig, Metro Manila, and execute fully and faithfully the
Decision of the Secretary dated October 27, 1995 and November 24, 1995 by seeing
the actual and physical reinstatement of the remaining striking workers listed in the 32-
page Annex A who are yet to be readmitted as ordered in the Decisions under the
same terms and conditions prevailing before the strike on September 14, 1995 and, if
necessary, to seek the aid of the Taguig Police Station, Taguig, Metro Manila, which is
here deputized for the purpose of aiding this Office in the enforcement of its Orders and
to make a return within thirty (30) days from issuance of the Writ to the Office of the
Secretary, copy furnished the Legal Service. 3
The COMPANY filed a Motion to Quash, Recall or Suspend the Writ of
Execution. On 17 October 1996 the motion was denied for lack of merit and an
alias writ of execution was issued directing the reinstatement of the strikers in
the payroll if actual and physical reinstatement was not possible. On 23
October 1996 the COMPANY filed a motion for reconsideration which on 21
November 1996 was denied. On 9 December 1996 the COMPANY, not
satisfied with the rulings of the Secretary of Labor and Employment, petitioned
this Court for a writ of certiorari:
In these twin petitions, the UNION argues that the exclusion of union officers,
shop stewards and those with pending criminal charges from the directive to
the COMPANY to accept back the striking workers is tantamount to illegal
dismissal since the workers are in effect being terminated without due process
of law. The COMPANY on the other hand maintains that the dismissal of those
who failed to comply with the assumption and return-to-work orders is valid and
in accordance with jurisprudence.
Furthermore, the Company asserts that the Secretary of Labor and
Employment should have refrained from issuing a writ of execution mandating
the immediate reinstatement of some 1,500 dismissed striking workers since
the exclusion of union officers, shop stewards and those with pending criminal
charges from the directive to the COMPANY to accept back the striking
workers is still pending before this Court. Also, the COMPANY claims that the
Secretary of Labor gravely abused his discretion when he ruled that complaints
lodged with the police authorities before 27 October 1995 and subsequently
filed with the provincial prosecutor after 27 October 1995 are not within the
ambit of the phrase "with pending criminal charges."
In the main, the consolidated cases raise three (3) issues: whether the
Secretary of Labor and Employment gravely abused his discretion, first, in
excluding union officers, shop stewards and those with pending criminal
charges in his order to the COMPANY to accept back the striking workers;
second, in issuing a writ of execution pending resolution of a related petition for
certiorari before this Court; and third, in holding that complaints lodged before
the police authorities before 27 October 1995 and subsequently filed with the
provincial prosecutor after 27 October 1995 are not within the ambit of the
phrase "with pending criminal charges."
We first resolve the exclusion of certain employees. In Union of Filipro
Employees v. Nestle Philippines, Inc., 4 we said —
. . . an assumption and/or certification order of the Secretary of Labor automatically
results in a return-to-work of all striking workers, whether or not a corresponding order
has been issued by the Secretary of Labor . . . Article 264 (g) is clear. Once an
assumption/certification order is issued, strikes are enjoined, or if one has already
taken place, all strikers shall immediately return to work.
A strike that is undertaken despite the issuance by the Secretary of Labor of an
assumption or certification order becomes a prohibited activity and thus illegal,
pursuant to the second paragraph of Art. 264 of the Labor Code as amended
(Zamboanga Wood Products, Inc. v. NLRC, G.R. No. 82088, October 13, 1989; 178
SCRA 482).
In Gold City Integrated Port Service, Inc. v. National Labor Relations
Commission 5 we explained —
The effects of such illegal strikes, outlined in Article 265 (now Article 264) of the Labor
Code, make a distinction between workers and union officers who participate therein.
A 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

officer who knowingly participates in the commission of illegal acts during a strike may
be declared to have lost their employment status. An ordinary striking worker cannot be
terminated for mere participation in an illegal strike. There must be proof that he
committed illegal acts during a strike. A union officer, on the other hand, may be
terminated from work when he knowingly participates in an illegal strike, and like other
workers, when he commits an illegal act during a strike.
But as we said in Batangas Laguna Tayabas Bus Company v. NLRC 6 —
That is only half the picture. As the NLRC further explained, it was "not inclined to
declare a wholesale forfeiture of employment status of all those who participated in the
strike" because, first of all, there was inadequate service of the certification order on the
union as of the date the strike was declared and there was no showing that the striking
members had been apprised of such order by the NAFLU . . . We agree with the
Solicitor General that the mere filing of charges against an employee for alleged illegal
acts during a strike does not by itself justify his dismissal. The charges must be proved
at an investigation duly called where the employee shall be given an opportunity to
defend himself. This is true even if the alleged ground constitutes a criminal
offense . . . .
In the case before us, we cannot see how respondent Secretary of Labor and
Employment arrived at his decision of excluding union officers, shop stewards
and those with pending criminal charges in his directive to the COMPANY to
accept back the striking workers. For in the same assailed Order he said on the
illegal strike issue —
Taking into account that the determination of this issue requires the appreciation of
evidentiary matters and testimonies of the parties involved, this Office likewise finds it
appropriate to conduct further hearing hereon. Hence, resolution on this issue is hereby
deferred until the termination of the appropriate proceedings hereon.
Thus in the dispositive portion of his Order the Secretary of Labor stated that
the termination of subject employees shall be among the issues yet to be heard
by Atty. Genilo who was designated to "immediately call the parties and hear
and receive evidence on the matter of illegal strike, including the reciprocal
demands of the parties for damages arising therefrom . . ." 7
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. 8 But, the liability of each of the union officers and the workers,
if any, has yet to be determined. More so in the instant case where the UNION
alleges inadequate service upon the UNION leadership of the Assumption
Order of 8 September 1995 and the return-to-work Order of 16 September
1995. 9 Thus, did all or some of the UNION leaders knowingly participate in the
illegal strike? Did any or all of the members of the UNION who then had
pending criminal charges knowingly participate in the commission, if any, of
illegal acts during the strike? The records do not bear the answers to these
questions, but only expectedly so, for Atty. Genilo of the DOLE has yet to hear
and receive evidence on the matter, and to submit a report and
recommendation thereon.
Thus to exclude union officers, shop stewards and those with pending criminal
charges in the directive to the COMPANY to accept back the striking workers
without first determining whether they knowingly committed illegal acts would
be tantamount to dismissal without due process of law. We therefore hold that
the Honorable Secretary of Labor gravely abused his discretion in excluding
union officers, shop stewards and those with pending criminal charges in the
order to the COMPANY to accept back the striking workers pending resolution
of the issue involving the legality of the strike.
We however sustain the authority of the Secretary of Labor and Employment to
issue the assailed writ of execution 10 —
We likewise do not find any merit in the Company's contention that when the Union
filed a Petition for Certiorari with the Supreme Court (docketed as G.R. No. 122743),
with a prayer that the Company be directed to accept back all striking workers without
any exception, it has effectively raised the matter to the Supreme Court.
We must emphasize that the issue involved in the certiorari case now pending before

any exception, it has effectively raised the matter to the Supreme Court.
We must emphasize that the issue involved in the certiorari case now pending before
the Supreme Court is the legality of the exclusion of the Union officers, shop stewards
and those against whom criminal charges were filed on October 27, 1995, vis-a-vis, this
Office's return-to-work order. On the other hand, the pending issue before this Office is
the propriety of the issuance of a Writ of Execution to enforce the twin orders dated
October 27, 1995 and November 24, 1995 which have long become final and
executory.
We need not remind the Company that the decision of this Office is final and executory
ten (10) calendar days after receipt thereof by the parties. Thus, in clear and
categorical language, Art. 263 (1) of the Labor Code, as amended, provides.
Art. 263 (1) The Secretary of Labor and Employment, the Commission or the Voluntary
Arbitrator shall decide or resolve the dispute, as the case may be. The decision of the
President, the Secretary of Labor and Employment, the Commission or the Voluntary
Arbitrator shall be final and executory ten (10) calendar days after receipt thereof by the
parties.
In the case at bar, the Supreme Court did not issue any Temporary Restraining Order.
There is therefore no legal impediment to the enforcement of the Writ of Execution and
Alias Writ of Execution previously issued by this Office.
This, to say the least, is elementary. Thus, as correctly cited by the UNION, 11
this Court in Santiago v. Vasquez 12 said —

Petitioner further posits, however, that the filing of the instant special civil action for
certiorari divested the Sandiganbayan of its jurisdiction over the case therein. Whether
generated by misconception or design, we shall address this proposition which, in the
first place, had no reason for being and should not hereafter be advanced under like or
similar procedural scenarios.
The original and special civil action filed with this Court is, for all intents and purposes,
an invocation for the exercise of its supervisory powers over the lower courts. It does
not have the effect of divesting the inferior courts of jurisdiction validly acquired over
the case pending before them. It is elementary that the mere pendency of a special civil
action for certiorari, commenced in relation to a case pending before a lower court,
does not even interrupt the course of the latter when there is no writ of injunction
restraining it. The inevitable conclusion is that for as long as no writ of injunction or
restraining order is issued in the special civil action for certiorari, no impediment exists
and there is nothing to prevent the lower court from exercising its jurisdiction and
proceeding with the case pending before it. And, even if such injunctive writ or order is
issued, the lower court nevertheless continues to retain its jurisdiction over the principal
action.
The COMPANY likewise argues that the Secretary of Labor gravely abuse his
discretion when he ruled that complaints filed with the police authorities before
27 October 1995 and subsequently with the provincial prosecutor after 27
October 1995 are not within the ambit of the phrase "with pending criminal
charges." Suffice it to say that this issue has been rendered moot. For, we have
earlier said that no striker should have been excluded it appearing from the
record that the strike has yet to be ruled upon and the liability of each striker
still to be determined.
But if only for the sake of argument, the contention of the COMPANY is still
specious. The Secretary of Labor could not have explained this point any better
13 —
In clarifying the workers excluded by the Order dated 27 October 1995, we are guided
by the principle that the return-to-work Order issued herein was designed to restore the
Company's normal operations and al the same time provide employment to the greater
majority of its employees pending resolution of the labor dispute. It would thus be
absurd, nay, illogical for us to interpret and conclude that the phrase "those with
pending criminal charges" covers criminal cases filed against the striking workers after
the issuance of the Order dated 27 October 1995. To our mind, such an interpretation
would open the floodgates to the massive exclusion from work of the striking workers
thru the simple expedient of filing criminal charges against them long after the issuance
of the return-to-work Order.
At best the raising of this issue by COMPANY appears to be an afterthought as
the COMPANY has failed to seek the reversal of the Order of 7 December
1995 holding that "the phrase 'those with pending criminal charges' shall only
cover those workers with pending criminal charges at the time of the issuance
of the Order dated 27 October 1995." The COMPANY merely questioned this
ruling after a writ of execution was already issued on 27 June 1996, or long

ruling after a writ of execution was already issued on 27 June 1996, or long
after the clarificatory order dated 7 December 1995 had become final and
executory.
In fine, we repeat what the Solicitor General astutely observed in Batangas
Laguna Tayabas Bus Company v. NLRC 14 —
The assailed Resolution does not prevent petitioner from continuing with its
investigations and come up with evidence against these workers. But they have to be
admitted back to their work first. This is clearly a situation where the social justice
provisions of our laws and jurisprudence come in aid of labor. Since such investigations
might be extended, intentionally or otherwise, the workers are in danger of losing their
livelihood. As compared to the management that is in a position to wage an extended
legal struggle against labor, the latter cannot do so. This is where the State intervenes
to equalize matters between labor and management.
While this Court prefers to rule likewise on the legality or illegality of the strike
and determine the individual liability of the strikers, if any, to put an end to this
protracted labor dispute, this Court is unable to do so as the record is wanting
of any evidence to support a conclusion. We thus order the Secretary of Labor
to resolve the instant case with utmost dispatch and determine whether the
strike was illegal and the liability of the individual strikers, if any.
A word of admonition to petitioner-employees who camped in front of the
Supreme Court Building, commenced a "hunger strike," and who now appear to
have vowed to continue with their protest march until the end —
The right of petition is conceded to be an inherent right of the citizen under all free
governments. However, such right, natural and inherent though it may be, has never
been invoked to shatter the standards of propriety entertained for the conduct of courts.
For, it is a traditional conviction of civilized society everywhere that courts and juries, in
the decision of issues of fact and law, should be immune from every extraneous
influence; that facts should be decided upon evidence produced in court; and that the
determination of such facts should be uninfluenced by bias, prejudice or
sympathies . . . Moreover, "parties have a constitutional right to have their causes tried
fairly in court by an impartial tribunal, uninfluenced by publication or public clamor.
Every citizen has a profound personal interest in the enforcement of the fundamental
right to have justice administered by the courts, under the protection and forms of law
free from outside coercion or interference. The aforecited acts or the respondents are
therefore not only an affront to the dignity of this Court, but equally a violation of the
above-stated right of the adverse parties and the citizenry at large ". . . . The Court will
not hesitate in future similar situations to apply the full force of the law and punish for
contempt those who attempt to pressure the Court into acting one way or the other in
any case pending before it. Grievances, if any, must be ventilated through the proper
channels, i.e., through appropriate petitions, motions or other pleadings in keeping with
the respect due to the Courts as impartial administrators of justice entitled to "proceed
to the disposition of its business in an orderly manner, free from outside interference
obstructive of its functions and tending to embarrass the administration of justice. 15
Here, the Court will do no less. It will not yield its judicial prerogatives to
petitioning strikers if only to appease them, much less give in to their demand
for a favorable decision and violate the basic tenets of due process. For when
petitioners marched with their placards in front of the premises of the Court,
pitched their tents on the sidewalk across the street and went on "hunger
strike" while demanding an early disposition in their favor, until they moved over
to the Department of Justice next door, the petition in G.R. No. 127215 was not
even submitted yet for decision. The pleadings had yet to be completed.
Indeed, it would be unfeeling, if not unchristian, to ignore the "hunger strike" of
the workers and allow them to be exposed to the elements — the cold of the
night and the scorching heat of the noonday sun. But the strikers must realize
that judicial decisions are not issued on pity and sympathy. They are weighed
according to the established facts and the merits of the arguments of the
parties. This Court at times may show compassion and mercy but it cannot
hem and haw to lay aside its emotional nuance and sacrifice the broader
interest of fair play and justice. Let this then be a stern warning to all those who
hanker for justice yet desire to obtain it through improper pressure and
influence, e.g., demonstrations, pretensions, mass actions, etc. This schematic
artifice will take them nowhere. On the contrary, such wantonness and

artifice will take them nowhere. On the contrary, such wantonness and
unrestrained misconduct gravely offend and affront the dignity of the Court.
WHEREFORE, the petition in G.R. No. 122743 is GRANTED. Respondent
TEMIC TELEFUNKEN MICROELECTRONICS (PHILS.), INC., is ORDERED to
accept back immediately all striking workers of TELEFUNKEN
SEMICONDUCTORS EMPLOYEES UNION — FFW WITHOUT EXCEPTION.
In G.R. No. 127215, the petition is DISMISSED for lack of merit. Accordingly,
respondent Secretary of Labor and Employment is DIRECTED to ensure the
effective enforcement of the writ of execution he issued and determine WITH
DISPATCH the legality of the strike as well as the liability of the individual
strikers, if any. The members of the TELEFUNKEN SEMICONDUCTORS
EMPLOYEES UNION — FFW are WARNED that a repetition of the same or
similar mass demonstration within or about the premises of this Court will be
dealt with severely.
SO ORDERED.
Davide, Jr., Vitug and Kapunan, JJ., concur.
Footnotes
1 Order of Acting Secretary Jose S. Brillantes dated 27 October 1995, p. 21; Rollo of
G.R. No. 127215, p. 167.
2 Order of Acting Secretary Jose S. Brillantes dated 7 December 1995, p. 3; Rollo of
G.R. No. 127215, p. 70.
3 Rollo of G.R. No. 127215, pp. 54-55.
4 G.R. Nos. 88710-13, 19 December 1990, 192 SCRA 396, 411.
5 G.R. Nos. 103599-60, 6 July 1995, 245 SCRA 627, 637-638.
6 G.R. No. 101858, 21 August 1992, 212 SCRA 792, 799-801.
7 Order of Acting Secretary Jose S. Brillantes of 27 October 1995, p. 20.
8 St. Scholastic's College v. Torres, G.R. No. 100158, 29 June 1992, 210 SCRA 565.
9 Consolidated Reply filed by the UNION, p. 4; Rollo of G.R. No. 122743, p. 188.
10 Order of Secretary of Labor Leonardo A. Quisumbing dated 21 November 1996, p.
5; Rollo of G.R. No. 127215, p. 51.
11 Comment, pp. 5-6; Rollo of G.R. No. 127215, pp. 225-226.
12 G.R. Nos. 99289-90, 27 January 1993, 217 SCRA 633, 647-648.
13 Order of the Acting Secretary of Labor and Employment dated 7 December 1995,
pp. 2-3; Rollo of G.R. No. 127215, pp. 169-170.
14 See Note 6, p. 802.
15 Nestle Philippines, Inc. v. Sanchez, G.R. No. 75209, 30 September 1987, 154
SCRA 542, 546-547.

United CMC Textile Workers Union vs. Clave (1982)
11:17 AM

Philtread Workers Union (PTWU) vs. Confessor (1997)
11:34 AM
SECOND DIVISION
[G.R. No. 117169. March 12, 1997]
PHILTREAD WORKERS UNION (PTWU), MAURICIO BARTOLO, CESAR DAVID, EMMANUEL AGUSTIN,
PECSON BARANDA, NELSON BAGUIO, ROLANDO MATALOG, PEPITO DAMICOG, EDUARDO SANTOS,
ISABELO GALOPE, REYNALDO MALEON, AL PEDRIQUE, BAYANI HERNANDEZ, ROBERT LORESCA,
LEONARDO LACSINA, petitioners, vs. SECRETARY NIEVES R. CONFESOR, NATIONAL LABOR RELATIONS
COMMISSION, GEN. RECAREDO SARMIENTO, PHILIPPINE NATIONAL POLICE, PHILTREAD TIRE & RUBBER
CORPORATION, GERARD BRIMO, HARRY McMILLAN, respondents.
DE C I S I O N
TORRES, JR., J.:
Petitioners challenge in this petition the order of the Secretary of Labor dated September 8, 1994, the
“WHEREFORE, PREMISES CONSIDERED, this Office hereby certifies the entire labor dispute at
Philtread Tire and Rubber Corporation to the National Labor Relations Commission for compulsory
arbitration.
Accordingly, any strike or lockout, whether actual or intended, is hereby strictly enjoined.
All striking workers, except those dismissed employees based on the 15 August 1994 decision of
the Labor Arbiter and those who have been retrenched by the Company and have received
separation pay, are hereby directed to return-to-work within twenty-four (24) hours upon receipt
thereof.
The issue involving the retrenched employees who refused to receive separation benefits shall be
included in the certified case.
The parties are further directed to cease and desist from committing any and all acts that might
exacerbate the situation.
SO ORDERED.[1]
The records reveal the following facts:
On May 27, 1994, petitioner Philtread Tire Workers Union (PTWU), filed a notice of strike, docketed as
NCMB-NCR Case No. 05-281-94, on grounds of unfair labor practice, more specifically union busting and
violation of CBA.[2] On the other hand, on May 30, 1994, private respondent Philtread Tire and Rubber
Corporation filed a notice of lockout, docketed as NCMB-NCR Case No. 05-013-94.[3] It also filed a
petition to declare illegal the work slowdowns staged by the petitioner Union. Both cases were then
consolidated. Several conciliation meetings were conducted but the parties failed to settle their
dispute. Then on June 15, 1994, private respondent declared a company wide lockout which continued
until August 22, 1994. There were about eighty union members who were consequently dismissed. This
also brought about the filing of the union members of a notice to strike in self-defense in NCMB-NCR
Case No. 05-281-94.[4]
On August 15, 1994, the National Labor Relations Commission declared the slowdowns illegal, to wit:
“WHEREFORE, premises considered, the petition is hereby GRANTED. The slowdowns engaged in
by respondents are declared illegal and by engaging in such illegal activities, respondents whose
name appear in Annex “A” of the petition are deemed to have lost their employment with
petitioner. However, this Office, as a measure of compassion to the working man, resolves not to
order respondents to pay petitioner the damages the latter prays for. As for the costs and
attorney’s fees, since these were not substantiated by the petitioner, this Office likewise resolves
not to award them to petitioner.
SO ORDERED.”[5]
On August 31, 1994, private respondent corporation requested the Secretary of Labor to assume
jurisdiction over the labor dispute. Hence, on September 8, 1994, Secretary Confesor issued the assailed
order. Petitioners filed a motion for reconsideration of the order but the same was denied on
September 26, 1994 for lack of merit.
Petitioners now challenge the order of the public respondent, raising the following issues: 1) Whether

September 26, 1994 for lack of merit.
Petitioners now challenge the order of the public respondent, raising the following issues: 1) Whether
or not Article 263 (g) of the Labor Code is unconstitutional; and 2) Whether or not public respondent
acted with grave abuse of discretion in issuing the questioned orders.
Petitioners contend that Article 263 (g) of the Labor Code violates the workers’ right to strike which is
provided for by Section 3, Article XIII of the Constitution. The assailed order of the Secretary of Labor,
which enjoins the strike, is an utter interference of the workers’ right to self-organization, to manage
their own affairs, activities and programs, and therefore is illegal. The order is likewise contrary to
Article 3 of the International Labor Organization Convention No. 87, which specifically prohibits public
authorities from interfering in purely union matters, viz.:
“Article 3.
1. Workers’ and Employers’ organizations shall have the right to draw up their constitutions and
rules, to elect their representatives in full freedom, to organize their administration and activities
and to formulate their programs.
2. The public authorities shall refrain from any interference which would restrict this right or
impede the lawful exercise thereof.”[6]
Petitioners also argue that the assailed order was issued with grave abuse of authority. A cursory
reading of Article 263 (g) allegedly shows that the power of the Secretary of Labor to assume jurisdiction
or to certify a dispute for compulsory arbitration is strictly restricted to cases involving industries that
are indispensable to national interest. Petitioners posit that the instant labor dispute does not adversely
affect the national interest. The tire industry has long ceased to be a government protected industry
and, moreover, Philtread Tire and Rubber Corporation is not indispensable to the national interest. The
strike in Philtread will not adversely affect the supply of tires in the market and the supply of imported
tires is more than sufficient to meet the market requirements.
The petition is devoid of merit.
On the issue of the constitutionality of Article 263 (g) of the Labor Code, the same had already been
resolved in Union of Filipino Employees vs. Nestle Philippines, Inc.,[7] to wit:
“In the case at bar, no law has ever been passed by Congress expressly repealing Articles 263 and
264 of the Labor Code. Neither may the 1987 Constitution be considered to have impliedly
repealed the said Articles considering that there is no showing that said articles are inconsistent
with the said Constitution. Moreover, no court has ever declared that the said articles are
inconsistent with the 1987 Constitution.
On the contrary, the continued validity and operation of Articles 263 and 264 of the Labor Code
has been recognized by no less than the Congress of the Philippines when the latter enacted into
law R.A. 6715, otherwise known as Herrera law, Section 27 of which amended paragraphs (g) and
(l) of Article 263 of the Labor Code.
At any rate, it must be noted that Articles 263 (g) and 264 of the Labor Code have been enacted
pursuant to the police power of the State, which has been defined as the power inherent in a
government to enact laws, within constitutional limits, to promote the order, safety, health,
morals and general welfare of society (People vs. Vera Reyes, 67 Phil. 190). The police power,
together with the power of eminent domain and the power of taxation, is an inherent power of
government and does not need to be expressly conferred by the Constitution. Thus, it is submitted
that the argument of petitioners that Articles 263 (g) and 264 of the Labor Code do not have any
constitutional foundation is legally inconsequential.”
Article 263 (g) of the Labor Code does not violate the workers’ constitutional right to strike. The section
provides in part, viz.:
“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... .”
The foregoing article clearly does not interfere with the workers’ right to strike but merely regulates it,
when in the exercise of such right, national interests will be affected. The rights granted by the
Constitution are not absolute. They are still subject to control and limitation to ensure that they are not
exercised arbitrarily. The interests of both the employers and employees are intended to be protected
and not one of them is given undue preference.
The Labor Code vests upon the Secretary of Labor the discretion to determine what industries are

and not one of them is given undue preference.
The Labor Code vests upon the Secretary of Labor the discretion to determine what industries are
indispensable to national interest. Thus, upon the determination of the Secretary of Labor that such
industry is indispensable to the national interest, it will assume jurisdiction over the labor dispute of said
industry. The assumption of jurisdiction is in the nature of police power measure. This is done for the
promotion of the common good considering that a prolonged strike or lockout can be inimical to the
national economy. The Secretary of Labor acts to maintain industrial peace. Thus, his certification for
compulsory arbitration is not intended to impede the workers’ right to strike but to obtain a speedy
settlement of the dispute. This is well-articulated in International Pharmaceuticals, Inc. vs. Secretary of
Labor, in this wise:
“Plainly, Article 263 (g) of the Labor Code was meant to make both the Secretary (or the various
regional directors) and the labor arbiters share jurisdiction, subject to certain
conditions. Otherwise, the Secretary would not be able to effectively and efficiently dispose of
wherein the Secretary and the labor arbiter concerned may have diametrically opposed
rulings. As we have said, “(i)t is fundamental that a statute is to be read in a manner that would
breathe life into it, rather than defeat it.”[8]
On the second issue raised by the petitioners, We find that the Secretary of Labor did not act with grave
abuse of discretion in issuing the certification for compulsory arbitration. It had been determined by the
Labor Arbiter in NLRC-NCR Case No. 00-05-04156-94 that the work slowdowns conducted by the
petitioner amounted to illegal strikes. It was shown that every time the respondent company failed to
accede to the petitioner’s demands, production always declined. This resulted to the significant drops in
the figures of tires made, cured, and warehoused. However, when the demand of the petitioner union
for the restoration of overtime work was allowed, production improved. The work slowdowns, which
were in effect, strikes on installment basis, were apparently a pattern of manipulating production
depending on whether the petitioner union’s demands were met. These strikes, however, had greatly
affected the respondent company that on November 11, 1994, it had indefinitely ceased operations
because of tremendous financial losses.
We do not agree with the petitioners that the respondent company is not indispensable to national
interest considering that the tire industry has already been liberalized. Philtread supplies 22% of the tire
products in the country. Moreover, it employs about 700 people. As observed by the Secretary of Labor,
viz.:
“The Company is one of the tire manufacturers in the country employing more or less 700
workers. Any work disruption thereat, as a result of a labor dispute will certainly prejudice the
employment and livelihood of its workers and their dependents. Furthermore, the labor dispute
may lead to the possible closure of the Company and loss of employment to hundreds of its
workers. This will definitely aggravate the already worsening unemployment situation in the
country and discourage foreign and domestic investors from further investing in the
country. There is no doubt, therefore, that the labor dispute in the Country is imbued with
national interest.
At this point in time when all government efforts are geared towards economic recovery and
development by encouraging both foreign and domestic investments to generate employment,
we cannot afford to derail the same as a result of a labor dispute considering that there are
alternative dispute resolution machineries available to address labor problems of this nature.” [9]
The intervention of the Secretary of Labor was therefore necessary to settle the labor dispute which had
lingered and which had affected both respondent company and petitioner union. Had it not been so,
the deadlock will remain and the situation will remain uncertain. Thus, it cannot be deemed that the
Secretary of Labor had acted with grave abuse of discretion in issuing the assailed order as she had a
well-founded basis in issuing the assailed order. It is significant at this point to point out that grave
abuse of discretion implies capricious and whimsical exercise of judgment. Thus, an act may be
considered as committed in grave abuse of discretion when the same was performed in a capricious or
whimsical exercise of judgment which is equivalent to lack of jurisdiction. The abuse of discretion must
be so patent and gross as to amount to an evasion of positive duty or to a virtual refusal to perform a
duty enjoined by law, or to act at all in contemplation of law, as where the power is exercised in an
arbitrary and despotic manner by reason of passion or personal hostility.[10]
Considering the foregoing premises, we find no merit in the instant petition.

arbitrary and despotic manner by reason of passion or personal hostility.[10]
Considering the foregoing premises, we find no merit in the instant petition.
ACCORDINGLY, the assailed order of the Secretary of Labor dated September 8, 1992 is hereby
AFFIRMED.
SO ORDERED.
Regalado, (Chairman), Romero, Puno, and Mendoza, JJ., concur.
[1] Annex “A”, Rollo, pp. 34-36.

[2] Annex “C”, Rollo, p. 43.
[3] Annex “E”, Rollo, p.45.
[4] Annex “H”, Rollo, pp.54-56.
[5] Decision, Rollo, pp.137-138.
[6] Petition, Rollo, p. 15.
[7] 192 SCRA 396.
[8] 205 SCRA 59.
[9] Order, Rollo, p. 35.
[10] Litton Mills, Inc. vs. Galleon Trader, Inc. 163 SCRA 489.
Pasted from <http://sc.judiciary.gov.ph/jurisprudence/1997/mar1997/117169.htm>

Nissan Motors vs. Secretary (2006)
11:58 AM

Philcom Employees Union v. Philippine Global Telecommunications
2006
11:59 AM

University of San Agustin Employees Union -FFW vs. Court of
Appeals (2006)
12:00 PM
SECOND DIVISION
UNIVERSITY OF SAN AGUSTIN EMPLOYEES’ UNION-FFW G.
(USAEU-FFW), and individual union officers THEODORE
NEIL LASOLA, MERLYN JARA, JULIUS MARIO, FLAVIANO R.
MANALO, RENE CABALUM, HERMINIGILDO CALZADO, No.
MA. LUZ CALZADO, RAY ANTHONY ZUÑIGA, RIZALENE
VILLANUEVA, RUDANTE DOLAR, ROVER JOHN TAVARRO, 1696
RENA LETE, ALFREDO GORIONA, RAMON VACANTE and 32
MAXIMO MONTERO,
Petitioners, Pres
ent:
- versus -
PU
THE COURT OF APPEALS and UNIVERSITY OF SAN NO, J.,
AGUSTIN, Chairpe
Respondents. rson,
SA
NDOVA
L-
GUTIER
REZ,
CO
RONA,
AZ
CUNA,
and
GA
RCIA,
JJ.
Pro
mulgate
d:

M
arhc 28,
2006
x------------------------------------------------------------------------------------x
DE CI S IO N
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
Decision[1] 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 CBA[2] 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

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” clause[4] 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 Order[5] (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 Status[7] 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 Decision[9] 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:

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 Resolution[10] 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 Decision[11] 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

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

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

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 ponencias[18] 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 Arbitration[21]
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.

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 lockout[22] 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 Arbitration[23] 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:

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

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.
CANCIO C. GARCIA
Associate Justice
WE CONCUR:

REYNATO S. PUNO
Associate Justice
Chairperson

ADOLFO S. AZCUNA
Associate Justice
AT T E ST AT I O N
I attest that the conclusions in the above decision were reached in

consultation before the case was assigned to the writer of the opinion of
the Court’s Division.
REYNATO S. PUNO
Associate Justice
Chairperson, Second Division
CERTIF ICATI ON
Pursuant to Article VIII, Section 13 of the Constitution, and the

Division Chairperson's Attestation, it is hereby certified that the conclusions
in the above decision were reached in consultation before the case was
assigned to the writer of the opinion of the Court.
Chief Justice

[1] Penned by Associate Justice Isaias P. Dicdican with Associate Justices Pampio A. Abarintos
and
Vicente L. Yap, concurring; Rollo, pp. 50-59.
[2] Rollo, pp. 371-381.
[3] Rollo, pp. 413-416.
[4] The provision reads:
“Section 1. Considering that the University is a non-stock, non-profit educational
institution which needs a stable and peaceful atmosphere in the classroom, campus and academe
in order to fully achieve its mission in fully educating the youth, the Union binds itself not to go on
strike, picketing, work-slowdown, mass leave or any other concerted activity including but not
limited to those mentioned in Section 2 hereof, during the lifetime of this Agreement, and
likewise, the University agrees that no lockout against any or all of its workers shall take place
during the lifetime of this Agreement. In case of unfair labor practice, except when the existence
of the Union and/or the employment of Union offices are threatened, the Union instead of a strike
or other acts mentioned in the Article, may resort to other remedies under the Labor Code (Art.
XIII, Sec. 6, CBA).”
[5] Rollo, pp. 344-346.
[6] Sheriff’s Report, Rollo, pp. 347-349.
[7] Rollo, pp. 407-412.
[8] Rollo, pp. 423-426.
[9] Rollo, pp. 350-368.
[10] Id. at 369-370.
[11] Id. at 60-71.
[12] Supra note 1.
[13] Mea Builders, Inc., et al. vs. Court of Appeals, et al., G.R. No. 121484, January 31, 2005, 450
SCRA 155.
[14] Naguiat vs. Court of Appeals, G.R. No. 118375, October 3, 2003, 412 SCRA 591, 595-596.
[15] Supra note 3.
[16] G.R. No. 145428, July 7, 2004; 433 SCRA 610.
[17] Rollo, p. 348.

[18] Union of Filipro Employees vs. Nestle Philippines, Inc., G.R. Nos. 88710-12, December 19,
1990, 192 SCRA 396; St. Scholastica’s College vs. Torres, G.R. No. 100158, June 29, 1992, 210 SCRA
565; Telefunken Semiconductors Employees Union-FFW vs. Court of Appeals, G.R. Nos. 143013-14,
December 18, 2000, 348 SCRA 565; Grand Boulevard Hotel vs. Genuine Labor Organization of Workers in
Hotel, Restaurant and Allied Industries (GLOWHRAIN), G.R. No. 153664, July 18, 2003, 406 SCRA 688.
[19] CBA, Article V, Section 1; Rollo, p. 375.
[20] Ibid, Section 4(f); Rollo, p. 376.
[21] Supra note 2.
[22] Article XIII of the CBA, Rollo, p. 380.
[23] Supra note 2.
[24] 91 Phil. 72 (1952).

[24] 91 Phil. 72 (1952).
[25] G.R. Nos. 92981-83, January 9,1992, 205 SCRA 59.
Pasted from <http://sc.judiciary.gov.ph/jurisprudence/2006/mar2006/G.R.%20No.%20169632.htm>

Sukhotai Cuisine and Restaurant vs. CA (2006)
12:08 PM

Supreme Court
Manila
FIRST DIVISION
SUKHOTHAI CUISINE and G.R.

RESTAURANT, No.
150437
Petitioner,
Prese
nt:
- versus -
PAN
GANIBA
N,
C.J.,
COURT OF APPEALS, (C
hairpers
on)
NATIONAL LABOR YNA
RES-
SANTIAG
O,
RELATIONS COMMISSION, AUS
TRIA-
MARTIN
EZ,
PHILIPPINE LABOR CAL
LEJO,
SR., and
ALLIANCE COUNCIL CHI
CO-
NAZARIO
, JJ.
(PLAC) Local 460 Sukhothai Restaurant Chapter, EMMANUEL CAYNO, ALEX

(PLAC) Local 460 Sukhothai Restaurant Chapter, EMMANUEL CAYNO, ALEX
MARTINEZ, BILLY BACUS, HERMIE RAZ, JOSE LANORIAS, LITO ARCE, LINO
SALUBRE, CESAR SANGREO, ROLANDO FABREGAS, JIMMY BALAN, JOVEN
LUALHATI, ANTONIO ENEBRAD, JOSE NEIL ARCILLA, REY ARSENAL, ROEL
ESANCHA, EDGAR EUGENIO, ALBERT AGBUYA, ROLANDO PUGONG, ARNEL
SALVADOR, RICKY DEL PRADO, CLAUDIO PANALIGAN, BERNIE DEL MUNDO,
JOHN BATHAN, ROBERTO ECO, JOVEN TALIDONG, LENY LUCENTE, ANALIZA
CABLAY, RIGOBERTO TUBAON and MERLY NAZ,
Respondents.
Promu
lgated:
July
17, 2006
x-- -- ---- ----- ----- ---- ---- ---- ----- ---- -x
DECISION
AUSTRIA-MARTINEZ, J.:
Before this Court is a petition for certiorari under Rule 45 questioning the
Decision[1] dated August 8, 2001 promulgated by the Court of Appeals (CA)
in CA-G.R. SP No. 63864 which affirmed in toto the Decision dated November
29, 2000 of the National Labor Relations Commission (NLRC); and the CA
Resolution[2] dated October 18, 2001 which denied the petitioner’s Motion
for Reconsideration.
This case originated from a complaint for illegal strike filed with the NLRC by
This case originated from a complaint for illegal strike filed with the NLRC by
the petitioner[3] against private respondents due to an alleged “wildcat strike”
and other concerted action staged in the company premises on June 24, 25 and
26, 1999.
The undisputed facts are as follows:
Sometime in March 1998, the majority of the employees of the petitioner

organized themselves into a union which affiliated
with the Philippine Labor Alliance Council (PLAC), and was
designated as PLAC Local 460 Sukhothai Restaurant Chapter (Union).[4]
On December 3, 1998, private respondent Union filed a Notice of Strike with

the National Conciliation and Mediation Board (NCMB) on the ground of unfair
labor practice, and particularly, acts of harassment, fault-finding, and union
busting through coercion and interference with union affairs. On December 10,
1998, in a conciliation conference, the representatives of the petitioner agreed
and guaranteed that there will be no termination of the services of private
respondents during the pendency of the case, with the reservation of the
management prerogative to issue memos to erring employees for the infraction,
or violation of company policies. On the following day, or on December 11, 1998,
a Strike Vote was conducted and supervised by NCMB personnel, and the results
of the vote were submitted to the NCMB on December 21, 1998.
On January 21, 1999, the petitioner and the Union entered into a Submission
Agreement, thereby agreeing to submit the issue of unfair labor practice –
the subject matter of the foregoing Notice of Strike and the Strike Vote – for
voluntary arbitration with a view to prevent the strike.
On March 24, 1999, during the pendency of the voluntary arbitration

proceedings, the petitioner, through its president, Ernesto Garcia, dismissed
Eugene Lucente, a union member, due to an alleged petty quarrel with a co-
employee in February 1999. In view of this termination, private respondent
Union filed with the NLRC a complaint for illegal dismissal.
In the morning of June 24, 1999, private respondent Jose Lanorias, a union
member, was relieved from his post, and his employment as cook,
terminated. Subsequently, respondent Billy Bacus, the union vice-president,
conferred with Ernesto Garcia and protested Lanorias’s dismissal. Shortly
thereafter, respondents staged a “wildcat strike.”
On June 25, 1999, a Notice of Strike was re-filed by the private respondents

On June 25, 1999, a Notice of Strike was re-filed by the private respondents
and the protest, according to the respondents, was converted into a “sit-
down strike.” On the next day, or on June 26, 1999, the same was
transformed into an “actual strike.”
On June 29, 1999, the petitioner filed a complaint for illegal strike with the
NLRC against private respondents, seeking to declare the strike illegal, and to
declare respondents, who participated in the commission of illegal acts, to
have lost their employment status. Having arrived at no amicable
settlement, the parties submitted their position papers, together with
supporting documents, affidavits of witnesses, and photographs, in
compliance with the orders of the Labor Arbiter. On October 12, 1999, the
Labor Arbiter rendered a Decision the dispositive portion of which reads:
WHEREFORE, premises considered, respondents are hereby declared to have staged an
illegal strike, and the employment of union officers and all individual respondents are
deemed validly terminated in accordance with law.
Finally, all individual respondents are hereby directed to immediately remove their picket
lines and all physical obstructions that impede ingress and egress to petitioner’s premises.
SO ORDERED.[5]
The principal question before the Labor Arbiter was whether the private
respondents staged an illegal strike. Ruling in the affirmative, the Labor Arbiter
held that the Notice of Strike dated December 3, 1998 as well as the Strike Vote
of December 11, 1998 referred to a prior dispute submitted for voluntary
arbitration and, hence, they cannot apply to the strike staged about six months
later, which commenced on June 24, 1999 and ended on June 26, 1999; that, for
these reasons, the Union failed to comply with the mandatory requisites for a
lawful strike; that the issuance of memos by the petitioner to instill discipline on
erring employees is a lawful exercise of management prerogative and do not
amount to acts of unfair labor practice; that, instead of resorting to a strike,
private respondents should have availed of the proper legal remedies such as the
filing of complaints for illegal suspension or illegal dismissal with the NLRC; that,
the root causes of the controversy are the petition for certification election and
petition for cancellation of union registration which were then pending before the
Department of Labor as well as the issue on unfair labor practice then pending
before the voluntary arbitrator, and, hence, the parties should have awaited the
resolution of the cases in the proper fora; and that even if private respondents
complied with all the requisites of a valid strike, the strike is still illegal due to the
commission of prohibited acts, including the obstruction of free ingress and
egress of the premises, intimidation, and threat inflicted upon non-striking
employees.

employees.
Private respondents appealed to the NLRC which, on November 29, 2000,
promulgated its Decision the dispositive portion of which states:
WHEREFORE, the appeal is hereby granted. Accordingly, the Decision dated October 12, 1999 in
the above entitled case is hereby vacated and set-aside. Consequently, the complaint of illegal
strike is hereby dismissed for lack of merit.
All striking workers are hereby ordered to return to work immediately and Sukhothai Restaurant
to accept them back to their former or equivalent positions. If the same is no longer possible,
Sukhothai Restaurant is ordered to pay them separation pay equivalent to one month salary for
every year of service reckoned from their initial date of employment up to the present.
SO ORDERED.[6]
In overruling the Labor Arbiter, the NLRC held that the petitioner is guilty of
union busting; that the petitioner violated the Submission Agreement dated
December 10, 1998 in that no termination shall be effected during the voluntary
arbitration proceedings and, hence, the strike was justified; that the Notice of
Strike and Strike Vote dated December 3, 1998 and December 11, 1998,
respectively, are applicable to the strike of June 24, 25, and 26, 1999 since the
same issues of unfair labor practice were involved and that unfair labor practices
are continuing offenses; that even if the foregoing Notice of Strike and Strike Vote
were not applicable, the Union may take action immediately since the petitioner
is guilty of union busting; and that the re-filing of a Notice of Strike on June 25,
1999 cured the defect of non-compliance with the mandatory requirements.
After the NLRC denied the Motion for Reconsideration, the petitioner
appealed to the CA and raised the following issues:
WHETHER OR NOT THE STRIKE STAGED BY THE
PRIVATE RESPONDENTS IS LEGAL; and
II. WHETHER OR NOT THE PRIVATE RESPONDENTS WHO PARTICIPATED IN THE STRIKE AND
COMMITTED ILLEGAL ACTS WERE PROPERLY AND VALIDLY DECLARED TO HAVE LOST THEIR
EMPLOYMENT STATUS. [7]
As stated above, the CA denied the petition and affirmed the

NLRC. Petitioner is now before this Court, raising the following grounds:
I. THE COURT OF APPEALS GRAVELY ERRED AND DECIDED THE ISSUES IN THE INSTANT CASE IN A
MANNER CONTRARY TO ESTABLISHED LAW AND JURISPRUDENCE BY RULING THAT THE WILDCAT STRIKE
OF JUNE 24, 1999 IS VALID AND LEGAL DESPITE CLEAR AND INCONTROVERTIBLE EVIDENCE THAT:
A. PRIVATE RESPONDENTS FAILED TO COMPLY WITH THE REQUISITES FOR A VALID STRIKE
AS PRESCRIBED BY THE PERTINENT PROVISIONS OF THE LABOR CODE;
THERE WERE NO STRIKEABLE ISSUES; AND

THERE WERE NO STRIKEABLE ISSUES; AND
PRIVATE RESPONDENTS COMMITTED ILLEGAL AND PROHIBITED ACTS DURING THE STRIKE.
II. THE COURT OF APPEALS GRAVELY ERRED BY FAILING TO ADDRESS THE OTHER ISSUES RAISED
BY THE PETITIONER IN ITS PETITION FOR CERTIORARI WHICH FAILURE AMOUNTED TO A DENIAL
OF ITS RIGHT TO DUE PROCESS OF LAW. [8]
The petition is meritorious.

The questions before this Court are whether the strike staged by the private
respondents is illegal; and whether private respondents are deemed to have lost
their employment status by participating in the commission of illegal acts during
the strike.
Respondents insist that the filing of the Notice of Strike on December 3, 1998, the
Strike Vote of December 11, 1998, the submission of the results of the vote to the
NCMB on December 21, 1998, and their observation of the 15-day cooling-off
period in case of unfair labor practice as well as the seven-day reporting period of
the results of the strike vote, all satisfy the mandatory requirements under Article
263[9] of the Labor Code and are applicable to the June 1999 strike. In support of
this theory, respondents invoke Article 263(f) in that the decision to strike is valid
for the duration of the dispute based on substantially the same grounds
considered when the strike vote was taken, thus, there is no need to repeat the
process. Furthermore, according to the respondents, even assuming for the sake
of argument that the Notice of Strike and Strike Vote in December 1998 cannot
be made to apply to the concerted actions in June 1999, these requirements may
nonetheless be dispensed with since the petitioner is guilty of union busting and,
hence, the Union can take action immediately.
The undisputed fact, however, is that at the time the strike was staged in
June 1999, voluntary arbitration between the parties was ongoing by virtue of the
January 21, 1999 Submission Agreement. The issue to be resolved under those
proceedings pertained to the very same issues stated in the Notice of Strike of
December 3, 1998: the commission of unfair labor practices, such as acts of
harassment, fault-finding, and union busting through coercion and interference
with union affairs.
Article 264 of the Labor Code provides:
Art. 264. Prohibited activities. –
xxx x
No strike or lockout shall be declared after assumption of jurisdiction by the President or the
Secretary 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 (emphasis supplied)
This Court has held that strikes staged in violation of agreements providing
for arbitration are illegal, since these agreements must be strictly adhered to
and respected if their ends are to be achieved.[10] The rationale of the
prohibition under Article 264 is that once jurisdiction over the labor dispute
has been properly acquired by competent authority, that jurisdiction should
not be interfered with by the application of the coercive processes of a
strike.[11] Indeed it is among the chief policies of the State to promote and
emphasize the primacy of free collective bargaining and negotiations,
including voluntary arbitration, mediation, and conciliation, as modes of
settling labor, or industrial disputes.[12] In Alliance of Government Workers
v. Minister of Labor,[13] Chief Justice Fernando declared that the principle
behind labor unionism in private industry is that industrial peace cannot be
secured through compulsion by law. Relations between private employers
and their employees rest on an essentially voluntary basis, subject to the
minimum requirements of wage laws and other labor and welfare
legislation.[14]
The alleged dismissals of Lucente and respondent Lanorias, both union
members, which allegedly triggered the wildcat strike, are not sufficient
grounds to justify the radical recourse on the part of the private
respondents. The questions that surround their dismissal, as private
respondents so affirm, are connected to the alleged breach of the
“guarantee” by the petitioner not to dismiss its employees during the
pendency of the arbitration case, the very questions which they also link to
the other incidents of unfair labor practices allegedly committed by the
petitioner—these matters should have been raised and resolved in the
voluntary arbitration proceedings that were commenced precisely to address
them. On the other hand, if private respondents believed that the
disciplinary measures had nothing to do with the issues under arbitration,
then they should have availed of the appropriate remedies under the Labor
Code, such as the institution of cases of illegal dismissal[15] or, by agreement
of the parties, the submission of the cases to the grievance machinery of the
CBA, if one is available, so that they may be subjected to separate voluntary
arbitration proceedings,[16] or simply seek to terminate the pending
voluntary arbitration case and complete the mandatory procedure for a
lawful strike. Private respondents should have availed themselves of any of
these alternative remedies instead of resorting to a drastic and unlawful
measure, specifically, the holding a wildcat strike.[17] And because of the
fact that the Union was fully aware that the arbitration proceedings were
pending, good faith cannot be invoked as a defense.[18]

pending, good faith cannot be invoked as a defense.[18]
For failing to exhaust all steps in the arbitration proceedings by virtue of the
Submission Agreement, in view of the proscription under Article 264 of the Labor
Code, and the prevailing state policy as well as its underlying rationale, this Court
declares that the strike staged by the private respondents is illegal.[19]
With respect to respondents’ averment that assuming arguendo that the

Notice of Strike and Strike Vote in December 1998 cannot be made to apply to
the strike in June 1999, the requirements for
a valid strike may nonetheless be dispensed
with in case of union busting,[20] the Court finds it unnecessary to discuss the
question at length, especially in view of the foregoing declaration that the strike is
illegal, as well as the considerations of established doctrine: the language of the
law leaves no room for doubt that the cooling-off period and the seven-day strike
ban after the strike-vote report were intended to be mandatory,[21] and in case
of union busting where the existence of the union is threatened, it is only the 15-
day cooling-off period that may be dispensed with.
Article 263(f) in part states: “In every case, the union or the employer shall
furnish the Department the results of the voting at least seven days before
the intended strike or lockout, subject to the cooling-off period herein
provided.” This provision should be read with Section 3, Rule XXII, Book V of
the Rules Implementing the Labor Code, then applicable at the time of the
dispute, the relevant provisions of which state:
However, in case of unfair labor practice involving the dismissal from employment of any
union officer duly elected in accordance with the union constitution and by-laws which
may constitute union-busting where the existence of the union is threatened, the fifteen-
day cooling-off period shall not apply and the union may take action immediately after the
strike vote is conducted and the results thereof submitted to the appropriate regional
branch of the Board. (emphasis supplied)
The NCMB Primer on Strike, Picketing, and Lockout (January 31, 1992)
provide the same wording. The foregoing provision of the implementing rules
should also be compared to the provisions of the Labor Code under Article 263(c):
(c) x x x However, in case of dismissal from employment of union officers duly

elected in accordance with the union constitution and by-laws, which may constitute
union busting where the existence of the union is threatened, the 15-day cooling-off
period shall not apply and the union may take action immediately.
The implementing rules clarify Article 263(c) in that the union may strike
“immediately” provided that the strike vote is conducted, the results thereof

“immediately” provided that the strike vote is conducted, the results thereof
submitted “in every case” at least seven days before the intended strike or
lockout. In sum, in case of alleged union busting, the three remaining
requirements – notice, strike vote, and seven-day report period – cannot be
dispensed with.[22]
What is more, the strike had been attended by the widespread commission
of prohibited acts. Well-settled is the rule that even if the strike were to be
declared valid because its objective or purpose is lawful, the strike may still
be declared invalid where the means employed are illegal.[23] Among such
limits are the prohibited activities under Article 264 of the Labor Code,
particularly paragraph (e), which states that no person engaged in picketing
shall:
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 following acts have been held to be prohibited activities: where the strikers
shouted slanderous and scurrilous words against the owners of the vessels;[24]
where the strikers used unnecessary and obscene language[25] or epithets to
prevent other laborers to go to work,[26] and circulated libelous statements
against the employer which show actual malice;[27] where the protestors used
abusive and threatening language towards the patrons of a place of business or
against co-employees, going beyond the mere attempt to persuade customers to
withdraw their patronage;[28] where the strikers formed a human cordon and
blocked all the ways and approaches to the launches and vessels of the vicinity of
the workplace[29] and perpetrated acts of violence and coercion to prevent work
from being performed;[30] and where the strikers shook their fists and
threatened non-striking employees with bodily harm if they persisted to proceed
to the workplace.[31] Permissible activities of the picketing workers do
not include obstruction of access of customers.[32]
The evidence in the record clearly and extensively shows that the individual
respondents engaged in illegal acts during the strike, such as the intimidation and
harassment of a considerable number of customers to turn them away and
discourage them from patronizing the business of the petitioner;[33] waving their
arms and shouting at the passersby, “Huwag kayong pumasok sa Sukhothai!”[34]
and “Nilagyan na namin ng lason ang pagkain d’yan!”[35] as well as numerous
other statements made to discredit the reputation of the establishment;[36]
preventing the entry of customers;[37] angry and unruly behavior calculated to
cause commotion[38] which affected neighboring establishments within the
mall;[39] openly cursing and shouting at the president in front of customers[40]
and using loud and abusive language, such as “Putang ina niyong lahat!”, toward
the rest of the management[41] as well as their co-workers who refused to go on
strike;[42] physically preventing non-strikers from entering the premises,[43] as
strike;[42] physically preventing non-strikers from entering the premises,[43] as
well as deliberately blocking their movements inside the restaurant,[44] at times
by sharply bumping into them[45] or through indecent physical contact;[46]
openly threatening non-strikers with bodily harm, such as “Pag hindi sila
pumayag, upakan mo!”;[47] and shouting at the security guard “Granada!” which
caused panic among the customers and prompted security to report a possible
death threat to management and the security agency.[48]
In the determination of the liabilities of the individual respondents, the
applicable provision is Article 264(a) of the Labor Code:
Art. 264. Prohibited Activities – (a) x x x
x xx x
x x x x Any union officer who knowingly participates in an illegal strike and any worker or union
officer who knowingly participates in the commission of illegal acts during 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.
xxx x
In Samahang Manggagawa sa Sulpicio Lines, Inc.-NAFLU v. Sulpicio Lines,

Inc.[49] this Court explained that the effects of such illegal strikes, outlined in
Article 264, make a distinction between workers and union officers who
participate therein: an ordinary striking worker cannot be terminated for
mere participation in an illegal strike. There must be proof that he or she
committed illegal acts during a strike. A union officer, on the other hand,
may be terminated from work when he knowingly participates in an illegal
strike, and like other workers, when he commits an illegal act during a
strike.[50] In all cases, the striker must be identified. But proof beyond
reasonable doubt is not required. Substantial evidence available under the
attendant circumstances, which may justify the imposition of the penalty of
dismissal, may suffice.[51] Liability for prohibited acts is to be determined
on an individual basis:
Rank in Illegal Acts
Private Respondent
Responden Union
t
Emmanuel President
Cayno Know ingly participating in an illegal strike; shouting at the security guard “Granada!” which caused
panic among the customers;[52] Intimidating, harassing, preventing, and discouraging customers
from entering the restaurant;[53] publicly denouncing the reputation of the establishment;[54]
openly threatening non-strikers w ith bodily harm;[55]
Billy Bacus Vice President Know ingly participating in an illegal strike; Intimidating, harassing, preventing, and discouraging
customers from entering the restaurant;[56] use of abusive language tow ards management or non-
strikers;[57] deliberately blocking the movements of management or non-strikers inside the

strikers;[57] deliberately blocking the movements of management or non-strikers inside the
restaurant;[58]
Analiza Secretary
Cablay Know ingly participating in an illegal strike; Intimidating, harassing, preventing, and discouraging
customers from entering the restaurant;[59]
Jose Neil Treasurer

Knowingly participating in an illegal strike; Intimidating, harassing, prev enting, and discouraging customers f rom
Arcilla
entering the restaurant;[60] publicly denouncing the reputation of the establishment;[61] coercing non-strikers to
strike;[62] Cursing and use of abusiv e language towards management, non-strikers, or customers;[63]
Roel Auditor
Esancha Know ingly participating in an illegal strike; intimidating, harassing, preventing, and discouraging
customers from entering the restaurant;[64]
Claudio Board Member

Panaligan Know ingly participating in an illegal strike; use of abusive language tow ards management, non-
strikers, or customers;[65] intimidating, harassing, preventing, and discouraging customers from
entering the restaurant;[66] deliberately blocking the movements of management or non-strikers
inside the restaurant;[67]
Rey Arsenal Member

Intimidating, harassing, preventing, and discouraging customers from entering the restaurant;[68]
Alex Member
Martinez Intimidating, harassing, preventing, and discouraging customers from entering the restaurant;[69]
Hermie Raz Member

Cursing and use of abusive language tow ards management, non-strikers, or customers;[70]
deliberately blocking the movements of management or non-strikers inside the restaurant;[71]
intimidating, harassing, preventing, and discouraging customers from entering the restaurant;[72]
Jose Member
Lanorias Intimidating, harassing, preventing, and discouraging customers from entering the restaurant;[73]
Lito Arce Member

Id.[74]
Cesar Member
Sangreo Id.[75]
Rolando Member
Fabregas Id.[76]
Jimmy Member Id.;[77] deliberately blocking mov ements of non-strikers inside the restaurant by sharply bumping into them[78] or
Balan through indecent phy sical contact; [79] cursing and use of abusiv e language towards management, non-strikers,
or customers;[80]
Joven Member
Lualhati Intimidating, harassing, preventing, and discouraging customers from entering the restaurant;[81]
Antonio Member
Enebrad Id.[82]
Edgar Member
Eugenio Id.;[83] cursing and use of abusive language tow ards management, non-strikers, or customers;[84]
Albert Member
Agbuya Intimidating, harassing, preventing, and discouraging customers from entering the restaurant;[85]
Arnel Member
Salvador Id.[86]
Member Id.[87]
Ricky Del

Member Id.[87]
Ricky Del
Prado
Bernie Del Member

Mundo Id.[88]
Roberto Member
Eco Id.[89]
Joven Member
Talidong Id.[90]
Leny Member
Lucente Id.;[91] threatening non-strikers w ith bodily harm;[92]
Rigoberto Member
Tubaon Intimidating, harassing, preventing, and discouraging customers from entering the restaurant;[93]
cursing and use of abusive language tow ards management, non-strikers, or customers;[94]
Merly Naz Member

Intimidating, harassing, preventing, and discouraging customers from entering the restaurant;[95]
cursing and use of abusive language tow ards management, non-strikers, or customers;[96]
Lino Member
Salubre Preventing and discouraging customers from entering the restaurant;[97]
Rolando Member
Pugong Preventing and discouraging customers from entering the restaurant;[98]
John Member
Bathan Intimidating, harassing, preventing, and discouraging customers from entering the restaurant;[99]
Thus, the Labor Arbiter is correct in ruling that the employment of all individual
private respondents are deemed validly terminated.
WHEREFORE, the petition is granted. The Decision and Resolution of the

Court of Appeals together with the Decision dated November 29, 2000 of the
National Labor Relations Commission are REVERSED and SET ASIDE. The
Decision of the Labor Arbiter dated October 12, 1999 is REINSTATED. The
Court finds the strike illegal and, as a consequence thereto, the union officers
who participated in the illegal strike and in the commission of illegal acts,
namely, Emmanuel Cayno, Billy Bacus, Analiza Cablay, Jose Neil Arcilla, Roel
Esancha, and Claudio Panaligan, as well as the union members who
participated in the commission of illegal acts during the strike, namely, Rey
Arsenal, Alex Martinez, Hermie Raz, Jose Lanorias, Lito Arce, Cesar Sangreo,
Rolando Fabregas, Jimmy Balan, Joven Lualhati, Antonio Enebrad, Edgar
Eugenio, Albert Agbuya, Arnel Salvador, Ricky Del Prado, Bernie Del Mundo,
Roberto Eco, Joven Talidong, Leny Lucente, Rigoberto Tubaon, Merly Naz,
Lino Salubre, Rolando Pugong, and John Bathan, all private respondents, are
hereby declared to have lost their employment status.

SO ORDERED.
MA. ALICIA AUSTRIA-MARTINEZ

Associate Justice
WE CONCUR:
Chief Justice
Chairperson
CONSUELO YNARES-SANTIAGO ROMEO J. CALLEJO, SR.

MINITA V. CHICO-NAZARIO
Associate Justice
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that
the conclusions in the above Decision were reached in consultation before the
case was assigned to the writer of the opinion of the Court’s Division.
Chief Justice
[1] Penned by Associate Justice Eliezer R. De Los Santos, with Associate Justices Godardo A. Jacinto

(now retired) and Bernardo P. Abesamis (now retired), concurring.
[2] Id.
[3] The name of the petitioner as a party-in-interest should read “Rosemich, Inc.” which is the legal entity
that owns and manages the Sukhothai restaurants at the SM Megamall Bldg. A and at the Ayala Center (Glorietta
3) branches. See rollo, pp. 240, 243, 245, 247. The caption may also read “Rosemich, Inc., doing business under
the name and style Sukhothai Cuisine and Restaurant.”
[4] At the time of the suit, the Union membership included the employees of both the SM Mega
Mall (Mandaluyong) and Glorietta III (Ayala Center, Makati City) branches of the petitioner.
[5] Rollo, pp. 87-88.
[6] Id.at 100-101.
[7] CA rollo, p. 16.
[8] Rollo, p. 30.
[9] Labor Code, Art. 263. Strikes, picketing and lockouts. - (a) x x x x
xx x x
(c) In cases of bargaining deadlocks, the duly certified or recognized bargaining agent may file a
notice of strike or the employer may file a notice of lockout with the Department at least thirty (30) days
before the intended date thereof. In cases of unfair labor practice, the period of notice shall be fifteen
(15) days and in the absence of a duly certified or recognized bargaining agent, the notice of strike may
be filed by any legitimate labor organization in behalf of its members. However, in case of dismissal from
employment of union officers duly elected in accordance with the union constitution and by-laws, which
may constitute union busting where the existence of the union is threatened, the 15-day cooling-off
period shall not apply and the union may take action immediately.
xx x x
(f) A decision to declare a strike must be approved by a majority of the total union membership in
the bargaining unit concerned, obtained by secret ballot in meetings or referenda called for that
purpose. A decision to declare a lockout must be approved by a majority of the board of directors of the
corporation or association or of the partners in a partnership, obtained by secret ballot in a meeting
called for that purpose. The decision shall be valid for the duration of the dispute based on substantially
the same grounds considered when the strike or lockout vote was taken. The Department may at its own
initiative or upon the request of any affected party, supervise the conduct of the secret balloting. In
every case, the union or the employer shall furnish the Department the results of the voting at least
seven days before the intended strike or lockout, subject to the cooling-off period herein provided.
(emphasis supplied)
[10] San Miguel Corp. v. National Labor Relations Commission, 451 Phil. 514, 527 (2003); Insurefco
Paper Pulp & Project Workers’ Union v. Insular Sugar Refining Corp., 95 Phil. 761, 768 (1954).
[11] Telefunken Semiconductors Employees Union v. Court of Appeals, 401 Phil. 776, 795 (2000);
Zamboanga Wood Products, Inc. v. National Labor Relations Commission, G.R. No. 82088, October 13,
1989, 178 SCRA 482, 491.
[12] The Labor Code of the Philippines, P.D. No. 442, as amended, Art. 211 (1974).
[13] 209 Phil. 1 (1983).
[14] Id.at 15. See Social Security System Employees Association (SSSEA) v. Court of Appeals, G.R. No. 85279,
July 28, 1989, 175 SCRA 686, 697 (reiterating the foregoing labor-relations policy). A dispute pending in voluntary
arbitration (or compulsory arbitration) cannot be the subject of a strike or lockout notice. 2 C.A. Azucena, The
Labor Code With Comments and Cases 377 (1999), interpreting The Labor Code of the Philippines, P.D. No. 442, as
amended, Art. 264 (1974).
[15] See The Labor Code of the Philippines, P.D. No. 442, as amended, Art. 217(a)(2) (1974). See
generally National Union of Workers in Hotels, Restaurants and Allied Industries (NUWHRAIN) -
Peninsula Manila Chapter v. National Labor Relations Commission, 350 Phil. 641, 651 (1998).
[16] Labor Code, Articles 260 and 262 provide:
Article 260. Grievance Machinery and Voluntary Arbitration. – The parties to a Collective

terms and conditions. They shall establish a machinery for the adjustment and resolution of grievances
arising from the interpretation or implementation of their Collective Bargaining Agreement and those
arising from the interpretation or enforcement of company personnel policies.
xx xx
For this purpose, parties to a Collective Bargaining Agreement shall name and designate in
advance a Voluntary Arbitrator or panel of Voluntary Arbitrators, or include in the agreement a
procedure for the selection of such Voluntary Arbitrator or panel of Voluntary Arbitrators, preferably
from the listing of qualified Voluntary Arbitrators duly accredited by the Board. In case the parties fail to
select a Voluntary Arbitrator or panel of Voluntary Arbitrators, the Board shall designate the Voluntary
Arbitrator or panel of Voluntary Arbitrators, as may be necessary, pursuant to the selection procedure
agreed upon in the Collective Bargaining Agreement, which shall act with the same force and effect as if
the Arbitrator or panel of Arbitrators has been selected by the parties as described above.
Article 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.
See National Union of Workers in Hotels, Restaurants and Allied Industries (NUWHRAIN) -
Peninsula Manila Chapter v. National Labor Relations Commission, supra note 15.
[17] National Union of Workers in Hotels, Restaurants and Allied Industries (NUWHRAIN) - Peninsula
Manila Chapter v. National Labor Relations Commission, supra note 15, at 652.
[18] First City Interlink Transportation Co., Inc.. v. Sec. Confesor, 338 Phil. 635, 644 (1997) (holding that the
union cannot invoke good faith when conciliation meetings were ongoing). A mere claim of good faith would not
justify the holding of a strike under the aforesaid exception as, in addition thereto, the circumstances must have
warranted such belief. It is therefore, not enough that the union believed that the employer committed acts of
unfair labor practice when the circumstances clearly negate even a prima facie showing to sustain such belief.
National Union of Workers in Hotels, Restaurants and Allied Industries (NUWHRAIN) - Peninsula Manila Chapter v.
National Labor Relations Commission, supra note 15, at 650; Tiu v. National Labor Relations Commission, 343 Phil.
478, 486-487 (1997).
[19] San Miguel Corp. v. National Labor Relations Commission, supra note 10, at 527; San Miguel
Corp. v. National Labor Relations Commission, 363 Phil. 377, 384 (1999).
[20] The Labor Code, Article 263(c), provides in part: “x x x However, in case of dismissal from employment of
union officers duly elected in accordance with the union constitution and by-laws, which may constitute union
busting where the existence of the union is threatened, the 15-day cooling-off period shall not apply and the union
may take action immediately.”
[21] Samahang Manggagawa sa Sulpicio Lines, Inc.-NAFLU v. Sulpicio Lines, Inc., G.R. No. 140992, March 25,
2004, 426 SCRA 319, 325; Gold City Integrated Port Service, Inc. v. National Labor Relations Commission , 315 Phil.
698, 709 (1995); Union of Filipro Employees v. Nestlé Philippines, Inc., G.R. Nos. 88710-13, December 19, 1990, 192
SCRA 396, 411-412; National Federation of Sugar Workers (NFSW) v. Ovejera, 199 Phil. 537, 550 (1982). The claim
of good faith is not a valid excuse to dispense with the procedural steps for a lawful strike. Grand Boulevard Hotel,
Inc. v. Genuine Labor Organization of Workers in Hotel, Restaurant and Allied Industries (GLOWHRAIN), 454 Phil.
463, 490 (2003).
[22] See 2 C.A. Azucena, The Labor Code With Comments and Cases, pp. 421-422 (1999).
[23] Association of Independent Unions in the Philippines (AIUP) v. National Labor Relations
Commission, 364 Phil. 697, 707 (1999).
[24] United Seamen’s Union of the Philippines v. Davao Shipowners Association, G.R. Nos. L-18778 &
L-18779, August 31, 1967, 20 SCRA 1226, 1240.
[25] Cromwell Commercial Employees and Laborers Union (PTUC) v. Court of Industrial Relations,
G.R. No. L-19778, September 30, 1964, 12 SCRA 124, 132.
[26] Liberal Labor Union v. Philippine Can Co., 91 Phil. 72, 78 (1952).
[27] Linn v. United Plan Guard Workers, 15 L.Ed 2d 582.
[28] 31 Am. Jur. § 245, p. 954; 116 A.L.R. 477, 505; 32 A.L.R. 756; 27 A.L.R. 375; cited in 2 C.A.
Azucena, The Labor Code With Comments and Cases p.500 (1999).
Commission, supra note 23, at 706-707; United Seamen’s Union of the Philippines v. Davao Shipowners
Association, supra note 24, at 1236.

Association, supra note 24, at 1236.
[30] Id.
[31] Id.; The following likewise have been found to be illegal acts: where strikers hijacked the employer’s bus
and barricaded the terminal by means of five buses which had also been hijacked; the hijacking of 26 more buses
which resulted in injuries to some employees and panic to the commuters; the destruction of company property;
and the use of molotov bombs thrown into the work compound, First City Interlink Transportation Co., Inc. v. Sec.
Confesor, supra note 18, at 645; where non-strikers were mauled and suffered physical injuries inflicted by the
strikers, United Seamen’s Union of the Philippines v. Davao Shipowners Association, supra note 24, at 1237; Shell
Oil Workers Union v. Shell Company of the Philippines, Ltd., 148-A Phil. 229, 247; the breaking of the truck side and
windows, and throwing of empty bottles at non-strikers, Philippine Marine Officers’ Guild v. Compania Maritima,
131 Phil. 218, 232 (1968); where the strikers resorted to terrorism to prevent non-strikers from working, Liberal
Labor Union v. Philippine Can Co.,supra note 26, at 78; where acts of sabotage were committed against property,
National Labor Union, Inc. v. Court of Industrial Relations, 70 Phil. 300; and where the strikers committed acts of
violence by hurling stones which smashed glass windows of the building of the company and headlights of the car,
Cromwell Commercial Employees and Laborers Union (PTUC) v. Court of Industrial Relations, supra note 25, at 132.
Moreover, authorities are of the view that where the picketing is so conducted as to amount to a nuisance, the
picketing is unlawful. The following have been deemed acts of nuisance: where the obstruction to the free use of
property so as substantially to interfere with the comfortable enjoyment of life or property; where the picketing
constitutes an unlawful obstruction to the free passage or use, in the customary manner, of a street, 31 Am. Jur. §
248, p. 955, cited in 2 C.A. Azucena, The Labor Code With Comments and Cases p. 499 (1999); where there is an
obstruction of access of customers, since pickets may not aggressively interfere with the right of peaceful ingress
and egress to and from the employer’s shop; where the entrance to the place of business is obstructed by
protesters parading around in a circle or lying on the sidewalk, 31 Am. Jur. § 249, p. 955, cited in 2 C.A. Azucena,
The Labor Code With Comments and Cases p. 499 (1999); where vandalism and acts of a less terroristic nature are
carried out to cause physical discomfort to the employer’s customers, 48-A Am. Jur. 2d 2059, pp. 427-28, cited in 2
C.A. Azucena, The Labor Code With Comments and Cases p. 499 (1999); and where words or acts are calculated
and intended to cause an ordinary person to fear an injury to his person, business, or property; where there is
display of force without actual use thereof may be intimidation, id. Authorities are also of the view that the
following means used to carry on a picketing or strike were illegal: where the strikers conspired to injure the
business by inducing willing patrons and would-be patrons to withdraw or withhold patronage by assembling at or
near the entrance of the restaurant during all business hours and continuously announcing in a loud voice, audible
for a great distance, that the restaurant was unfair to the labor union; by disparaging the restaurant, charging that
the prices were higher and the food worse than in any other restaurant; and by attacking the character of those
who did patronize, saying that their mental caliber and moral fiber fell below the average. Truax v. Corrigan, 257
U.S. 312 (1921), cited in 2 C.A. Azucena, The Labor Code With Comments and Cases pp. 500-501 (1999). But minor
disorders where rising passions resulting in the exchange of hot words in the picket line do not impede or diminish
the right to strike. Insular Life Assurance Co., Ltd. Employees Association-NATU v. The Insular Life Assurance Co.,
Ltd., 147 Phil. 194, 220-221 (1971); Republic Steel Co. v. National Labor Relations Board 107 F. 2d 472, cited in
Mathews, Labor Relations and the Law 378; 2 C.A. Azucena, The Labor Code With Comments and Cases p. 449
(1999).
[32] C.A. Azucena, Everyone’s Labor Code 268 (2001) (interpreting Art. 264(e) of the Labor Code).
[33] Affidavit of Ernest A. Briza dated July 8, 1999, rollo, pp. 236-237; Affidavit of Ernesto J. Garcia
dated July 15, 1999, id. at 240-242; Affidavit of Marissa C. Ileto dated July 15, 1999, id. at 243-244;
Affidavit of Ruben T. Tabonares, Jr. dated July 15, 1999, id. at 252; Affidavit of Leolito S. Adim dated July
21, 1999, id. at 253; Affidavit of Julius M. Dela Cruz dated September 20, 1999, id. at 258; Affidavit of
Rianna de Belen dated September 20, 1999, id. at 261-262.
[34] Affidavit of Ernest A. Briza, supra; Affidavit of Ernesto J. Garcia, supra; Affidavit of Ruben T.
Tabonares, Jr., supra; Affidavit of Julius M. Dela Cruz, supra.
[35] Affidavit of Rico G. Calixijan, supra.
[36] Affidavit of Rianna de Belen, supra.
[37] Affidavit of Ma. Teresa Dela Cruz dated July 15, 1999; Rollo, p. 239.
[38] Affidavit of Ruben T. Tabonares, Jr., supra; Affidavit of Leolito S. Adim, supra; Affidavit of
Rianna de Belen, supra.
[40] Affidavit of Ma. Teresa Dela Cruz, supra; Affidavit of Ernesto J. Garcia, supra.
[41] Affidavit of Rosario V. Garcia dated July 15, 1999; rollo, p. 249; Affidavit of Ruben T. Tabonares,
Jr., supra; Affidavit of Teresa Ileto-Severino dated September 20, 1999, rollo, p. 259; Affidavit of Julius
M. Dela Cruz, supra.

M. Dela Cruz, supra.
[42] Affidavit of Joanna Lisa A. Morata dated July 15, 1999, rollo, p. 245; Affidavit of Ruben T.
Tabonares, Jr., supra; Affidavit of Julius M. Dela Cruz, supra; Affidavit of Rianna de Belen, supra.
[43] Affidavit of Rosario V. Garcia, supra.
[44] Affidavit of Joanna Lisa A. Morata, supra; Affidavit of Julius M. Dela Cruz, supra.
[45] Affidavit of Lucille Entong dated September 20, 1999, rollo, p. 257; Affidavit of Julius M. Dela
Cruz, supra.
[46] Affidavit of Lucille Entong, supra; Affidavit of Julius M. Dela Cruz, supra.
[47] Affidavit of Dante Versola dated July 15, 1999, rollo, p. 254; Affidavit of Rico G. Calixijan, supra;
Affidavit of Lucille Entong, supra.
[48] Affidavit of Erwin B. Gonzaga dated September 20, 1999, rollo, p. 264.
[49] Supra note 21; Telefunken Semiconductors Employees Union-FFW v. Secretary of Labor and
Employment, 347 Phil. 447, 454-455 (1997); Gold City Integrated Port Service, Inc. v. National Labor
Relations Commission, supra note 21, at 709-710.
[50] Samahang Manggagawa sa Sulpicio Lines, Inc.-NAFLU v. Sulpicio Lines, Inc., supra note 21, at
328; Union officers are duty bound to guide their members to respect the law. If instead of doing so,
the officers urge the members to violate the law and defy the duly constituted authorities; their
dismissal from the service is a just penalty or sanction for their unlawful acts. The officers' responsibility
is greater than that of the members. Association of Independent Unions in the Philippines (AIUP) v.
National Labor Relations Commission, supra note 23, at 708; Continental Cement Labor Union v.
Continental Cement Corporation, G.R. No. 51544, August 30, 1990, 189 SCRA 134, 141; First City Interlink
Transportation Co., Inc. v. Sec. Confesor, supra note 18, at 644; Lapanday Workers Union v. National
Labor Relations Commission, G.R. Nos. 95494-97, September 7, 1995, 248 SCRA 95, 106.
Commission, supra note 23, at 709.
[52] Affidavit of Erwin B. Gonzaga, supra.
[53] Affidavit of Ernest A. Briza, supra; Affidavit of Ernesto J. Garcia, supra; Affidavit of Teresa Ileto-
Severino, supra.
[55] Id.
[56] Affidavit of Teresa Ileto-Severino, supra.
[57] Affidavit of Ma. Teresa Dela Cruz, supra.
[58] Affidavit of Joanna Lisa A. Morata, supra; Affidavit of Rosario V. Garcia, supra.
[59] Affidavit of Ernest A. Briza, supra; Affidavit of Ernesto J. Garcia, supra; Affidavit of Marissa C.
Ileto dated July 15, 1999, rollo, pp. 243-244; Affidavit of Teresa Ileto-Severino, supra.
Severino, supra.
[62] Affidavit of Dante Versola, supra.
[63] Id.
[65] Affidavit of Joanna Lisa A. Morata, supra; Affidavit of Teresa Ileto-Severino, supra.
[67] Affidavit of Joanna Lisa A. Morata, supra.
Severino, supra.
[70] Affidavit of Ma. Teresa Dela Cruz, supra; Affidavit of Ernesto J. Garcia, supra; Affidavit of
Joanna Lisa A. Morata, supra; Affidavit of Rosario V. Garcia, supra; Affidavit of Lucille Entong, supra;
Affidavit of Teresa Ileto-Severino, supra; Affidavit of Rianna de Belen, supra.
[71] Affidavit of Joanna Lisa A. Morata, supra.
[73] Id.
[74] Id.

Severino, supra.
[77] Affidavit of Ernesto J. Garcia, supra; Affidavit of Joanna Lisa A. Morata, supra; Affidavit of
Teresa Ileto-Severino, supra.
[82] Id.
[83] Affidavit of Ernesto J. Garcia, supra; Affidavit of Teresa Ileto-Severino, supra.
[84] Affidavit of Lucille Entong, supra; Affidavit of Teresa Ileto-Severino, supra; Affidavit of Rianna
de Belen, supra.
[85] Affidavit of Ernesto J. Garcia, supra; Affidavit of Joanna Lisa A. Morata, supra; Affidavit of
Teresa Ileto-Severino, supra.
[86] Affidavit of Teresa Ileto-Severino, supra; Affidavit of Ernesto J. Garcia, supra.
[88] Id.
[90] Affidavit of Teresa Ileto-Severino, supra; Affidavit of Ernest A. Briza, supra; Affidavit of Ernesto
J. Garcia, supra.
[92] Affidavit of Dante Versola, supra.
[94] Affidavit of Lucille Entong, supra.
[95] Affidavit of Ernest A. Briza, supra.
Affidavit of Marissa C. Ileto, supra; Affidavit of Teresa Ileto-Severino, supra.
[96] Affidavit of Lucille Entong, supra.
[97] Affidavit of Ernesto J. Garcia, supra.
[98] Id.
Pasted from <http://sc.judiciary.gov.ph/jurisprudence/2006/july2006/G.R.%20No.%20150437.htm>

Toyota Motors Philippines Corp Workers Assn vs. NLRC (2007)
12:10 PM

SUPREME COURT
Manila
SECOND DIVISION
G.R. Nos. 158786 &158789
Present:
QUISUMBING, J., Chairperson,

CARPIO,
CARPIO MORALES,
TINGA, and
VELASCO, JR., JJ.
TOYOTA MOTOR PHILS. CORP. WORKERS ASSOCIATION (TMPCWA), ED CUBELO,

EDWIN ALARANA, ALEX ALEJO, ERWIN ALFONSO, MELVIN APOSTOL, DANIEL
AROLLADO, DOMINADOR ARRIOLA, LESTER ATUN, ROLANDO BALUYOT,
RODERICK BAYANI, ABEL BERCES, BENNY BERING, MELCHOR BLANCO, JERRY
BOLOCON, ELMER BULAN, NELSON CABAHUG, JESSIE CABATAY, MARCELO
CABEZAS, ROQUE CANDELARIO, JR., LORENZO CARAQUEO, DENNIS CARINGAL,
GIENELL CASABA, CHRISTOPHER CATAPUSAN, RICO CATRAL, JULIUS COMETA,
JAY ANTONIO CORAL, REYNALDO CUEVAS, BENIGNO DAVID, JR., JOEY DE
GUZMAN, LEONARDO DE LEON, ROGELIO DELOS SANTOS, JOSELITO DE
OCAMPO, FRANK MANUEL DIA, ANTONIO DIMAYUGA, ARMANDO ERCILLO,
DELMAR ESPADILLA, DENNIS ESPELOA, JASON FAJILAGUTAN, JOHN FAJURA,
MELENCIO FRANCO, DEXTER FULGAR, EDUARDO GADO, ERWIN GALANG, ROBIN
GARCES, ARIEL GARCIA, RONALD GASPI, ANGELO GAVARRA, REYNALDO GOJAR,
EDGAR HILANGA, EUGENE JAY HONDRADA, ALEJANDRO IMPERIAL, FERDINAND
JAEN, JOEY
JAVILLONAR, BASILIO LAQUI, ALBERTO LOMBOY, JUDE JONOBELL LOZADA,
JOHNNY LUCIDO, ROMMEL MACALINDONG, NIXON MADRAZO, ROGELIO
MAGISTRADO, JR., PHILIP JOHN MAGNAYE, ALLAN JOHN MALABANAN,
ROLANDO MALALUAN, JR., PAULINO MALEON, MANUEL MANALO, JR.,
JONAMAR MANAOG, JOVITO MANECLANG, BAYANI MANGUIL, JR., CARLITO
MARASIGAN, ROMMEL MARIANO, BOBIT MENDOZA, ERICSON MONTERO,
MARLAW MONTERO, EDWIN NICANOR, RODERICK NIERVES, LOLITO NUNEZ,
FELIMON ORTIZ, EDWIN PECAYO, ERWIN PENA, JOWALD PENAMANTE, JORGE

FELIMON ORTIZ, EDWIN PECAYO, ERWIN PENA, JOWALD PENAMANTE, JORGE
POLUTAN, EDDIE RAMOS, ROLANDO REYES, PHILIP ROXAS, DAVID SALLAN, JR.,
BERNARDO SALVADOR, BALDWIN SAN PABLO, JEFFREY SANGALANG, BERNABE
SAQUILABON, ALEX SIERRA, ROMUALDO SIMBORIO, EDWIN TABLIZO,
PETRONIO TACLAN, JR., RODEL TOLENTINO, ROMMEL TOLENTINO, GRANT
ROBERT TORAL, FEDERICO TORRES, JR., EMANNUEL TULIO, NESTOR UMITEN,
JR., APOLLO VIOLETA, SR., DOMINADOR ZAMORA, JR., ROMMEL ARCETA,
ANTONIO BORSIGUE, EMILIO COMPLETO, RANDY CONSIGNADO, BASILIO DELA
CRUZ, ALEXANDER ESTEVA, NIKKO FRANCO, RODEL GAMIT, ROBERTO
GONZALES, PHILIP JALEA, JOEY LLANERA, GERONIMO LOPEZ, RUEL MANEGO,
EDWIN MANZANILLA, KENNETH NATIVIDAD, LARRY ORMILLA, CORNELIO
PLATON, PAUL ARTHUR SALES, ALEJANDRO SAMPANG, LAURO SULIT, ROLANDO
TOMAS, JOSE ROMMEL TRAZONA, MICHAEL TEDDY YANGYON, MAXIMINO
CRUZ, VIRGILIO COLANDOG, ROMMEL DIGMA, JOSELITO HUGO, and RICKY
CHAVEZ, Petitioners,
- versus -
G.R. Nos. 158798-99
Promulgated:
October 19, 2007
NATIONAL LABOR RELATIONS COMMISSION, (NLRC-2ND DIVISION), HON.

COMMISSIONERS: VICTORINO CALAYCAY, ANGELITA GACUTAN, and RAUL
AQUINO, TOYOTA MOTOR PHILIPPINES CORPORATION, TAKESHI FUKUDA, and
DAVID GO, Respondents,
x-----------------------------------------------x
TOYOTA MOTOR PHILIPPINES CORPORATION,
Petitioner,
- versus -

TOYOTA MOTOR PHILIPPINES CORP. WORKERS ASSOCIATION (TMPCWA),
Respondent.
x-----------------------------------------------------------------------------------------x
DEC I S IO N
VELASCO, JR., J.:

The Case
In the instant petition under Rule 45 subject of G.R. Nos. 158786 and 158789,
Toyota Motor Philippines Corporation Workers Association (Union) and its
dismissed officers and members seek to set aside the February 27, 2003
Decision[1] of the Court of Appeals (CA) in CA-G.R. SP Nos. 67100 and 67561,
which affirmed the August 9, 2001 Decision[2] and September 14, 2001
Resolution[3] of the National Labor Relations Commission (NLRC), declaring
illegal the strikes staged by the Union and upholding the dismissal of the 227
Union officers and members.
On the other hand, in the related cases docketed as G.R. Nos. 158798-99,
Toyota Motor Philippines Corporation (Toyota) prays for the recall of the award of
severance compensation to the 227 dismissed employees, which was granted
under the June 20, 2003 CA Resolution[4] in CA-G.R. SP Nos. 67100 and 67561.
In view of the fact that the parties are petitioner/s and respondent/s and
vice-versa in the four (4) interrelated cases, they will be referred to as simply the
Union and Toyota hereafter.
The Facts
The Union is a legitimate labor organization duly registered with the

Department of Labor and Employment (DOLE) and is the sole and exclusive
bargaining agent of all Toyota rank and file employees.[5]
Toyota, on the other hand, is a domestic corporation engaged in the

assembly and sale of vehicles and parts.[6] It is a Board of Investments (BOI)
participant in the Car Development Program and the Commercial Vehicle
Development Program. It is likewise a BOI-preferred non-pioneer export
trader of automotive parts and is under the “Special Economic Zone Act of
1995.” It is one of the largest motor vehicle manufacturers in the country
employing around 1,400 workers for its plants in Bicutan and Sta. Rosa,
Laguna. It is claimed that its assets amount to PhP 5.525 billion, with net
sales of PhP 14.646 billion and provisions for income tax of PhP 120.9
sales of PhP 14.646 billion and provisions for income tax of PhP 120.9
million.
On February 14, 1999, the Union filed a petition for certification election
among the Toyota rank and file employees with the National Conciliation and
Mediation Board (NCMB), which was docketed as Case No. NCR-OD-
M-9902-001. Med-Arbiter Ma. Zosima C. Lameyra denied the petition, but, on
appeal, the DOLE Secretary granted the Union’s prayer, and, through the June 25,
1999 Order, directed the immediate holding of the certification election.[7]
After Toyota’s plea for reconsideration was denied, the certification election
was conducted. Med-Arbiter Lameyra’s May 12, 2000 Order certified the Union
as the sole and exclusive bargaining agent of all the Toyota rank and file
employees. Toyota challenged said Order via an appeal to the DOLE Secretary.[8]
In the meantime, the Union submitted its Collective Bargaining Agreement

(CBA) proposals to Toyota, but the latter refused to negotiate in view of its
pending appeal. Consequently, the Union filed a notice of strike on January 16,
2001 with the NCMB, docketed as NCMB-NCR-NS-01-011-01, based on Toyota’s
refusal to bargain. On February 5, 2001, the NCMB-NCR converted the notice of
strike into a preventive mediation case on the ground that the issue of whether or
not the Union is the exclusive bargaining agent of all Toyota rank and file
employees was still unresolved by the DOLE Secretary.
In connection with Toyota’s appeal, Toyota and the Union were required to
attend a hearing on February 21, 2001 before the Bureau of Labor Relations (BLR)
in relation to the exclusion of the votes of alleged supervisory employees from
the votes cast during the certification election. The February 21, 2001 hearing was
cancelled and reset to February 22, 2001. On February 21, 2001, 135 Union
officers and members failed to render the required overtime work, and instead
marched to and staged a picket in front of the BLR office in Intramuros,
Manila.[9] The Union, in a letter of the same date, also requested that its
members be allowed to be absent on February 22, 2001 to attend the hearing and
instead work on their next scheduled rest day. This request however was denied
by Toyota.
Despite denial of the Union’s request, more than 200 employees staged
mass actions on February 22 and 23, 2001 in front of the BLR and the DOLE
offices, to protest the partisan and anti-union stance of Toyota. Due to the
deliberate absence of a considerable number of employees on February 22 to 23,
2001, Toyota experienced acute lack of manpower in its manufacturing and
production lines, and was unable to meet its production goals resulting in huge

losses of PhP 53,849,991.
Soon thereafter, on February 27, 2001, Toyota sent individual letters to

some 360 employees requiring them to explain within 24 hours why they should
not be dismissed for their obstinate defiance of the company’s directive to render
overtime work on February 21, 2001, for their failure to report for work on
February 22 and 23, 2001, and for their participation in the concerted actions
which severely disrupted and paralyzed the plant’s operations.[10] These letters
specifically cited Section D, paragraph 6 of the Company’s Code of Conduct, to
wit:
Inciting or participating in riots, disorders, alleged strikes, or concerted actions detrimental

to *Toyota’s+ interest.
1st offense – dismissal.[11]
Meanwhile, a February 27, 2001 Manifesto was circulated by the Union

which urged its members to participate in a strike/picket and to abandon their
posts, the pertinent portion of which reads, as follows:
YANIG sa kanyang komportableng upuan ang management ng TOYOTA. And dating takot,
kimi, at mahiyaing manggagawa ay walang takot na nagmartsa at nagprotesta laban sa
desperadong pagtatangkang baguhin ang desisyon ng DOLE na pabor sa UNYON. Sa tatlong
araw na protesta, mahigit sa tatlong daang manggagawa ang lumahok.
xxx x
HANDA na tayong lumabas anumang oras kung patuloy na ipagkakait ng management

ang CBA. Oo maari tayong masaktan sa welga. Oo, maari tayong magutom sa piketlayn.
Subalit may pagkakaiba ba ito sa unti-unting pagpatay sa atin sa loob ng 12 taong
makabaling likod ng pagtatrabaho? Ilang taon na lang ay magkakabutas na ang ating mga
baga sa mga alipato at usok ng welding. Ilang taon na lang ay marupok na ang ating mga
buto sa kabubuhat. Kung dumating na ang panahong ito at wala pa tayong CBA, paano na?
Hahayaan ba nating ang kumpanya lang ang makinabang sa yamang likha ng higit sa isang
dekadang pagpapagal natin?
HUWAG BIBITIW SA NASIMULANG TAGUMPAY!

PAIGTINGIN ANG PAKIKIBAKA PARA SA ISANG MAKATARUNGANG CBA!
HIGIT PANG PATATAGIN ANG PAGKAKAISA NG MGA MANGGAGAWA SA TOYOTA![12] (Emphasis
supplied.)
On the next day, the Union filed with the NCMB another notice of strike
docketed as NCMB-NCR-NS-02-061-01 for union busting amounting to unfair
labor practice.
On March 1, 2001, the Union nonetheless submitted an explanation in
compliance with the February 27, 2001 notices sent by Toyota to the erring
employees. The Union members explained that their refusal to work on their
employees. The Union members explained that their refusal to work on their
scheduled work time for two consecutive days was simply an exercise of their
constitutional right to peaceably assemble and to petition the government
for redress of grievances. It further argued that the demonstrations staged
by the employees on February 22 and 23, 2001 could not be classified as an
illegal strike or picket, and that Toyota had already condoned the alleged acts
when it accepted back the subject employees.[13]
Consequently, on March 2 and 5, 2001, Toyota issued two (2) memoranda

to the concerned employees to clarify whether or not they are adopting the
March 1, 2001 Union’s explanation as their own. The employees were also
required to attend an investigative interview,[14] but they refused to do so.
On March 16, 2001, Toyota terminated the employment of 227

employees[15] for participation in concerted actions in violation of its Code of
Conduct and for misconduct under Article 282 of the Labor Code. The notice of
termination reads:
After a careful evaluation of the evidence on hand, and a thorough assessment of your
explanation, TMP has concluded that there are overwhelming reasons to terminate your
services based on Article 282 of the Labor Code and TMP’s Code of Conduct.
Your repeated absences without permission on February 22 to 23, 2001 to participate in a

concerted action against TMP constitute abandonment of work and/or very serious
misconduct under Article 282 of the Labor Code.
The degree of your offense is aggravated by the following circumstances:
You expressed to management that you will adopt the union’s letter dated March 1, 2001, as your
own explanation to the charges contained in the Due Process Form dated February 27, 2001. It is
evident from such explanation that you did not come to work because you deliberately
participated together with other Team Members in a plan to engage in concerted actions
detrimental to TMP’s interest. As a result of your participation in the widespread abandonment of
work by Team Members from February 22 to 23, 2001, TMP suffered substantial damage.
It is significant that the absences you incurred in order to attend the clarificatory hearing
conducted by the Bureau of Labor Relations were unnecessary because the union was amply
represented in the said hearings by its counsel and certain members who sought and were
granted leave for the purpose. Your reason for being absent is, therefore, not acceptable;
and
Your participation in the organized work boycott by Team Members on February 22 and 23 led to
work disruptions that prevented the Company from meeting its production targets, resulting [in]
foregone sales of more than eighty (80) vehicles, mostly new-model Revos, valued at more than
Fifty Million Pesos (50,000,000.00).
The foregoing is also a violation of TMP’s Code of Conduct (Section D, Paragraph 6) to wit:
“Inciting or participating in riots, disorders, illegal strikes or concerted actions detrimental

to TMP’s interest.”

to TMP’s interest.”
Based on the above, TMP Management is left with no other recourse but to terminate your
employment effective upon your receipt thereof.
[Sgd.]
JOSE MARIA ALIGADA
Deputy Division Manager[16]
In reaction to the dismissal of its union members and officers, the Union
went on strike on March 17, 2001. Subsequently, from March 28, 2001 to
April 12, 2001, the Union intensified its strike by barricading the gates of
Toyota’s Bicutan and Sta. Rosa plants. The strikers prevented workers who
reported for work from entering the plants. In his Affidavit, Mr. Eduardo
Nicolas III, Security Department Head, stated that:
3. On March 17, 2001, members of the Toyota Motor Philippines Corporation Workers
Association (TMPCWA), in response to the dismissal of some two hundred twenty seven
(227) leaders and members of TMPCWA and without observing the requirements mandated
by the Labor Code, refused to report for work and picketed TMPC premises from 8:00 a.m.
to 5:00 p.m. The strikers badmouthed people coming in and hurled invectives such as
“bakeru” at Japanese officers of the company. The strikers likewise pounded the officers’
vehicle as they tried to enter the premises of the company.
4. On March 28, 2001, the strikers intensified their picketing and barricaded the gates
of TMPC’s Bicutan and Sta. Rosa plants, thus, blocking the free ingress/egress to and from
the premises. Shuttle buses and cars containing TMPC employees, suppliers, dealers,
customers and other people having business with the company, were prevented by the
strikers from entering the plants.
5. As a standard operating procedure, I instructed my men to take photographs and

video footages of those who participated in the strike. Seen on video footages taken on
various dates actively participating in the strike were union officers Emilio C. Completo,
Alexander Esteva, Joey Javellonar and Lorenzo Caraqueo.
6. Based on the pictures, among those identified to have participated in the March 28,
2001 strike were Grant Robert Toral, John Posadas, Alex Sierra, Allan John Malabanan, Abel
Bersos, Ernesto Bonavente, Ariel Garcia, Pablito Adaya, Feliciano Mercado, Charlie Oliveria,
Philip Roxas, June Lamberte, Manjolito Puno, Baldwin San Pablo, Joseph Naguit, Federico
Torres, Larry Gerola, Roderick Bayani, Allan Oclarino, Reynaldo Cuevas, Jorge Polutan,
Arman Ercillo, Jimmy Hembra, Albert Mariquit, Ramil Gecale, Jimmy Palisoc, Normandy
Castalone, Joey Llanera, Greg Castro, Felicisimo Escrimadora, Rodolfo Bay, Ramon Clemente,
Dante Baclino, Allan Palomares, Arturo Murillo and Robert Gonzales. Attached hereto as
Annexes “1” to “18” are the pictures taken on March 28, 2001 at the Bicutan and Sta. Rosa
plants.
7. From March 29 to 31, 2001, the strikers continued to barricade the entrances to
TMPC’s two (2) plants. Once again, the strikers hurled nasty remarks and prevented
employees aboard shuttle buses from entering the plants. Among the strikers were
Christopher Saldivar, Basilio Laqui, Sabas Bernabise, Federico Torres, Freddie Olit, Josel
Agosto, Arthur Parilla, Richard Calalang, Ariel Garcia, Edgar Hilaga, Charlie Oliveria,
Ferdinand Jaen, Wilfredo Tagle, Alejandro Imperial, Manjolito Puno, Delmar Espadilla,
Domingo Javier, Apollo Violeta and Elvis Tabinao.[17]

Domingo Javier, Apollo Violeta and Elvis Tabinao.[17]
On March 29, 2001, Toyota filed a petition for injunction with a prayer for
the issuance of a temporary restraining order (TRO) with the NLRC, which was
docketed as NLRC NCR Case No. INJ-0001054-01. It sought free ingress to and
egress from its Bicutan and Sta. Rosa manufacturing plants. Acting on said
petition, the NLRC, on April 5, 2001, issued a TRO against the Union, ordering its
leaders and members as well as its sympathizers to remove their barricades and
all forms of obstruction to ensure free ingress to and egress from the company’s
premises. In addition, the NLRC rejected the Union’s motion to dismiss based on
lack of jurisdiction.[18]
Meanwhile, Toyota filed a petition to declare the strike illegal with the NLRC
arbitration branch, which was docketed as NLRC NCR (South) Case No.
30-04-01775-01, and prayed that the erring Union officers, directors, and
members be dismissed.[19]
On April 10, 2001, the DOLE Secretary assumed jurisdiction over the labor
dispute and issued an Order[20] certifying the labor dispute to the NLRC. In said
Order, the DOLE Secretary directed all striking workers to return to work at their
regular shifts by April 16, 2001. On the other hand, it ordered Toyota to accept
the returning employees under the same terms and conditions obtaining prior to
the strike or at its option, put them under payroll reinstatement. The parties
were also enjoined from committing acts that may worsen the situation.
The Union ended the strike on April 12, 2001. The union members and
officers tried to return to work on April 16, 2001 but were told that Toyota opted
for payroll-reinstatement authorized by the Order of the DOLE Secretary.
In the meantime, the Union filed a motion for reconsideration of the DOLE
Secretary’s April 10, 2001 certification Order, which, however, was denied by the
DOLE Secretary in her May 25, 2001 Resolution. Consequently, a petition for
certiorari was filed before the CA, which was docketed as CA-G.R. SP No. 64998.
In the intervening time, the NLRC, in compliance with the April 10, 2001
Order of the DOLE Secretary, docketed the case as Certified Case No. 000203-01.
Meanwhile, on May 23, 2001, at around 12:00 nn., despite the issuance of
the DOLE Secretary’s certification Order, several payroll-reinstated members of
the Union staged a protest rally in front of Toyota’s Bicutan Plant bearing placards
and streamers in defiance of the April 10, 2001 Order.

and streamers in defiance of the April 10, 2001 Order.
Then, on May 28, 2001, around forty-four (44) Union members staged
another protest action in front of the Bicutan Plant. At the same time, some
twenty-nine (29) payroll-reinstated employees picketed in front of the Santa
Rosa Plant’s main entrance, and were later joined by other Union members.
On June 5, 2001, notwithstanding the certification Order, the Union filed

another notice of strike, which was docketed as NCMB-NCR-NS-06-150-01. On
June 18, 2001, the DOLE Secretary directed the second notice of strike to be
subsumed in the April 10, 2001 certification Order.
In the meantime, the NLRC, in Certified Case No. 000203-01, ordered both
parties to submit their respective position papers on June 8, 2001. The union,
however, requested for abeyance of the proceedings considering that there is a
pending petition for certiorari with the CA assailing the validity of the DOLE
Secretary’s Assumption of Jurisdiction Order.
Thereafter, on June 19, 2001, the NLRC issued an Order, reiterating its
previous order for both parties to submit their respective position papers on or
before June 2, 2001. The same Order also denied the Union’s verbal motion to
defer hearing on the certified cases.
On June 27, 2001, the Union filed a Motion for Reconsideration of the NLRC’s
June 19, 2001 Order, praying for the deferment of the submission of position
papers until its petition for certiorari is resolved by the CA.
On June 29, 2001, only Toyota submitted its position paper. On July 11,
2001, the NLRC again ordered the Union to submit its position paper by July
19, 2001, with a warning that upon failure for it to do so, the case shall be
considered submitted for decision.
Meanwhile, on July 17, 2001, the CA dismissed the Union’s petition for
certiorari in CA-G.R. SP No. 64998, assailing the DOLE Secretary’s April 10,
2001 Order.
Notwithstanding repeated orders to file its position paper, the Union still
failed to submit its position paper on July 19, 2001. Consequently, the NLRC
issued an Order directing the Union to submit its position paper on the scheduled
August 3, 2001 hearing; otherwise, the case shall be deemed submitted for
resolution based on the evidence on record.
During the August 3, 2001 hearing, the Union, despite several

During the August 3, 2001 hearing, the Union, despite several
accommodations, still failed to submit its position paper. Later that day, the
Union claimed it filed its position paper by registered mail.
Subsequently, the NLRC, in its August 9, 2001 Decision, declared the strikes
staged by the Union on February 21 to 23, 2001 and May 23 and 28, 2001 as
illegal. The decretal portion reads:
WHEREFORE, premises considered, it is hereby ordered:
(1) Declaring the strikes staged by the Union to be illegal.
Declared [sic] that the dismissal of the 227 who participated in the illegal strike on February 21-23,
2001 is legal.
(3) However, the Company is ordered to pay the 227 Union members, who participated in the
illegal strike severance compensation in an amount equivalent to one month salary for every year
of service, as an alternative relief to continued employment.
(4) Declared [sic] that the following Union officers and directors to have forfeited their
employment status for having led the illegal strikes on February 21-23, 2001 and May 23 and 28,
2001: Ed Cubelo, Maximino Cruz, Jr., Ricky Chavez, Joselito Hugo, Virgilio Colandog, Rommel
Digma, Federico Torres, Emilio Completo, Alexander Esteva, Joey Javellonar, Lorenzo Caraqueo,
Roderick Nieres, Antonio Borsigue, Bayani Manguil, Jr., and Mayo Mata.[21]
SO ORDERED.[22]
The NLRC considered the mass actions staged on February 21 to 23, 2001
illegal as the Union failed to comply with the procedural requirements of a valid
strike under Art. 263 of the Labor Code.
After the DOLE Secretary assumed jurisdiction over the Toyota dispute on
April 10, 2001, the Union again staged strikes on May 23 and 28, 2001. The NLRC
found the strikes illegal as they violated Art. 264 of the Labor Code which
proscribes any strike or lockout after jurisdiction is assumed over the dispute by
the President or the DOLE Secretary.
The NLRC held that both parties must have maintained the status quo after
the DOLE Secretary issued the assumption/certification Order, and ruled that
the Union did not respect the DOLE Secretary’s directive.
Accordingly, both Toyota and the Union filed Motions for Reconsideration, which the NLRC denied in its
September 14, 2001 Resolution.[23] Consequently, both parties questioned the August 9, 2001
Decision[24] and September 14, 2001 Resolution of the NLRC in separate petitions for certiorari filed

Decision[24] and September 14, 2001 Resolution of the NLRC in separate petitions for certiorari filed
with the CA, which were docketed as CA-G.R. SP Nos. 67100 and 67561, respectively. The CA then
consolidated the petitions.
In its February 27, 2003 Decision,[25] the CA ruled that the Union’s petition is defective in form for its
failure to append a proper verification and certificate of non-forum shopping, given that, out of the 227
petitioners, only 159 signed the verification and certificate of non-forum shopping. Despite the flaw, the
CA proceeded to resolve the petitions on the merits and affirmed the assailed NLRC Decision and
Resolution with a modification, however, of deleting the award of severance compensation to the
dismissed Union members.
In justifying the recall of the severance compensation, the CA considered the participation in illegal
strikes as serious misconduct. It defined serious misconduct as a transgression of some established and
definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful
intent and not mere error in judgment. It cited Panay Electric Company, Inc. v. NLRC,[26] where we
revoked the grant of separation benefits to employees who lawfully participated in an illegal strike
based on Art. 264 of the Labor Code, which states that “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.”[27]
However, in its June 20, 2003 Resolution,[28] the CA modified its February 27, 2003 Decision by
reinstating severance compensation to the dismissed employees based on social justice.
The Issues
Petitioner Union now comes to this Court and raises the following issues for our consideration:
Whether the mere participation of ordinary employees in an illegal strike is enough

reason to warrant their dismissal.
Whether the Union officers and members’ act of holding the protest rallies in front of the
BLR office and the Office of the Secretary of Labor and Employment on February 22 and
23, 2001 should be held as illegal strikes. In relation hereto, whether the protests
committed on May 23 and 28, 2001, should be held as illegal strikes. Lastly, whether the
Union violated the Assumption of Jurisdiction Order issued by the Secretary of Labor and
Employment.
Whether the dismissal of 227 Union officers and members constitutes unfair labor
practice.
Whether the CA erred in affirming the Decision of the NLRC which excluded the Union’s
Position Paper which the Union filed by mail. In the same vein, whether the Union’s right
to due process was violated when the NLRC excluded their Position Paper.
Whether the CA erred in dismissing the Union’s Petition for Certiorari.
Toyota, on the other hand, presents this sole issue for our determination:
Whether the Court of Appeals erred in issuing its Resolution dated June 20, 2003, partially
modifying its Decision dated February 27, 2003, and awarding severance compensation to
the dismissed Union members.

In sum, two main issues are brought to the fore:
(1) Whether the mass actions committed by the Union on different occasions are illegal strikes; and
(2) Whether separation pay should be awarded to the Union members who participated in the illegal
strikes.
The Union contends that the NLRC violated its right to due process when it disregarded its position
paper in deciding Toyota’s petition to declare the strike illegal.
We rule otherwise.
It is entirely the Union’s fault that its position paper was not considered by the NLRC. Records
readily reveal that the NLRC was even too generous in affording due process to the Union. It issued no
less than three (3) orders for the parties to submit its position papers, which the Union ignored until the
last minute. No sufficient justification was offered why the Union belatedly filed its position paper. In
Datu Eduardo Ampo v. The Hon. Court of Appeals, it was explained that a party cannot complain of
deprivation of due process if he was afforded an opportunity to participate in the proceedings but failed
to do so. If he does not avail himself of the chance to be heard, then it is deemed waived or forfeited
without violating the constitutional guarantee.[29] Thus, there was no violation of the Union’s right to
due process on the part of the NLRC.
On a procedural aspect, the Union faults the CA for treating its petition as an unsigned pleading
and posits that the verification signed by 159 out of the 227 petitioners has already substantially
complied with and satisfied the requirements under Secs. 4 and 5 of Rule 7 of the Rules of Court.
The Union’s proposition is partly correct.
Sec. 4 of Rule 7 of the Rules of Court states:
Sec. 4. Verification.—Except when otherwise specifically required by law or rule,

pleadings need not be under oath, verified or accompanied by affidavit.
A pleading is verified by an affidavit that the affiant has read the pleading and that
the allegations therein are true and correct of his personal knowledge or based on
authentic records.
A pleading required to be verified which contains a verification based on

“information and belief” or upon “knowledge, information and belief,” or lacks a proper
verification, shall be treated as an unsigned pleading.
The verification requirement is significant, as it is intended to secure an assurance that the

allegations in the pleading are true and correct and not the product of the imagination or a matter of
speculation.[30] This requirement is simply a condition affecting the form of pleadings, and
noncompliance with the requirement does not necessarily render it fatally defective. Indeed, verification
is only a formal and not a jurisdictional requirement.[31]

is only a formal and not a jurisdictional requirement.[31]
In this case, the problem is not the absence but the adequacy of the Union’s verification, since only
159 out of the 227 petitioners executed the verification. Undeniably, the petition meets the
requirement on the verification with respect to the 159 petitioners who executed the verification,
attesting that they have sufficient knowledge of the truth and correctness of the allegations of the
petition. However, their signatures cannot be considered as verification of the petition by the other 68
named petitioners unless the latter gave written authorization to the 159 petitioners to sign the
verification on their behalf. Thus, in Loquias v. Office of the Ombudsman, we ruled that the petition
satisfies the formal requirements only with regard to the petitioner who signed the petition but not his
co-petitioner who did not sign nor authorize the other petitioner to sign it on his behalf.[32] The
proper ruling in this situation is to consider the petition as compliant with the formal requirements with
respect to the parties who signed it and, therefore, can be given due course only with regard to
them. The other petitioners who did not sign the verification and certificate against forum shopping
cannot be recognized as petitioners have no legal standing before the Court. The petition should be
dismissed outright with respect to the non-conforming petitioners.
In the case at bench, however, the CA, in the exercise of sound discretion, did not strictly apply the
ruling in Loquias and instead proceeded to decide the case on the merits.
The alleged protest rallies in front of the offices of BLR and DOLE Secretary and at the Toyota plants
constituted illegal strikes
When is a strike illegal?
Noted authority on labor law, Ludwig Teller, lists six (6) categories of an illegal strike, viz:
(1) [when it] is contrary to a specific prohibition of law, such as strike by employees
performing governmental functions; or
(2) [when it] violates a specific requirement of law[, such as Article 263 of the Labor
Code on the requisites of a valid strike]; or
(3) [when it] is declared for an unlawful purpose, such as inducing the employer to
commit an unfair labor practice against non-union employees; or
(4) [when it] employs unlawful means in the pursuit of its objective, such as a
widespread terrorism of non-strikers [for example, prohibited acts under Art. 264(e) of
the Labor Code]; or
(5) [when it] is declared in violation of an existing injunction[, such as injunction,

prohibition, or order issued by the DOLE Secretary and the NLRC under Art. 263 of the
Labor Code]; or
(6) [when it] is contrary to an existing agreement, such as a no-strike clause or

conclusive arbitration clause.[33]
Petitioner Union contends that the protests or rallies conducted on February 21 and 23, 2001 are not
within the ambit of strikes as defined in the Labor Code, since they were legitimate exercises of their
right to peaceably assemble and petition the government for redress of grievances. Mainly relying on
the doctrine laid down in the case of Philippine Blooming Mills Employees Organization v. Philippine

Blooming Mills Co., Inc.,[34] it argues that the protest was not directed at Toyota but towards the
Government (DOLE and BLR). It explains that the protest is not a strike as contemplated in the Labor
Code. The Union points out that in Philippine Blooming Mills Employees Organization, the mass action
staged in Malacañang to petition the Chief Executive against the abusive behavior of some police
officers was a proper exercise of the employees’ right to speak out and to peaceably gather and ask
government for redress of their grievances.
The Union’s position fails to convince us.
While the facts in Philippine Blooming Mills Employees Organization are similar in some respects to that
of the present case, the Union fails to realize one major difference: there was no labor dispute in
Philippine Blooming Mills Employees Organization. In the present case, there was an on-going labor
dispute arising from Toyota’s refusal to recognize and negotiate with the Union, which was the subject
of the notice of strike filed by the Union on January 16, 2001. Thus, the Union’s reliance on Phililippine
Blooming Mills Employees Organization is misplaced, as it cannot be considered a precedent to the case
at bar.
A strike means any temporary stoppage of work by the concerted action of employees as a result of an
industrial or labor dispute. A labor dispute, in turn, includes any controversy or matter concerning terms
or conditions of employment or the association or representation of persons in negotiating, fixing,
maintaining, changing, or arranging the terms and conditions of employment, regardless of whether the
disputants stand in the proximate relation of the employer and the employee.[35]
In Bangalisan v. Court of Appeals, it was explained that “*t+he fact that the conventional term
‘strike’ was not used by the striking employees to describe their common course of action is
inconsequential, since the substance of the situation and not its appearance, will be deemed
controlling.”[36] The term “strike” has been elucidated to encompass not only concerted work
stoppages, but also slowdowns, mass leaves, sit-downs, attempts to damage, destroy, or sabotage plant
equipment and facilities, and similar activities.[37]
Applying pertinent legal provisions and jurisprudence, we rule that the protest actions undertaken
by the Union officials and members on February 21 to 23, 2001 are not valid and proper exercises of
their right to assemble and ask government for redress of their complaints, but are illegal strikes in
breach of the Labor Code. The Union’s position is weakened by the lack of permit from the City of
Manila to hold “rallies.” Shrouded as demonstrations, they were in reality temporary stoppages of work
perpetrated through the concerted action of the employees who deliberately failed to report for work
on the convenient excuse that they will hold a rally at the BLR and DOLE offices in Intramuros, Manila,
on February 21 to 23, 2001. The purported reason for these protest actions was to safeguard their
rights against any abuse which the med-arbiter may commit against their cause. However, the Union
failed to advance convincing proof that the med-arbiter was biased against them. The acts of the med-
arbiter in the performance of his duties are presumed regular. Sans ample evidence to the contrary, the
Union was unable to justify the February 2001 mass actions. What comes to the fore is that the decision
not to work for two days was designed and calculated to cripple the manufacturing arm of Toyota. It
becomes obvious that the real and ultimate goal of the Union is to coerce Toyota to finally acknowledge
the Union as the sole bargaining agent of the company. This is not a legal and valid exercise of the right
of assembly and to demand redress of grievance.
We sustain the CA’s affirmance of the NLRC’s finding that the protest rallies staged on February 21 to 23,
2001 were actually illegal strikes. The illegality of the Union’s mass actions was succinctly elaborated by
the labor tribunal, thus:
We have stated in our questioned decision that such mass actions staged before the
Bureau of Labor Relations on February 21-23, 2001 by the union officers and members fall
squarely within the definition of a strike (Article 212 (o), Labor Code). These concerted

squarely within the definition of a strike (Article 212 (o), Labor Code). These concerted
actions resulted in the temporary stoppage of work causing the latter substantial losses.
Thus, without the requirements for a valid strike having been complied with, we were
constrained to consider the strike staged on such dates as illegal and all employees who
participated in the concerted actions to have consequently lost their employment status.
If we are going to stamp a color of legality on the two (2) [day-] walk out/strike of
respondents without filing a notice of strike, in effect we are giving license to all the
unions in the country to paralyze the operations of their companies/employers every
time they wish to hold a demonstration in front of any government agency. While we
recognize the right of every person or a group to peaceably assemble and petition the
government for redress of grievances, the exercise of such right is governed by existing
laws, rules and regulations.
Although the respondent union admittedly made earnest representations with the
company to hold a mass protest before the BLR, together with their officers and
members, the denial of the request by the management should have been heeded and
ended their insistence to hold the planned mass demonstration. Verily, the violation of
the company rule cannot be dismissed as mere absences of two days as being suggested
by the union *are but+ concerted actions detrimental to Petitioner Toyota’s
interest.[38] (Emphasis supplied.)
It is obvious that the February 21 to 23, 2001 concerted actions were undertaken without satisfying the
prerequisites for a valid strike under Art. 263 of the Labor Code. The Union failed to comply with the
following requirements: (1) a notice of strike filed with the DOLE 30 days before the intended date of
strike, or 15 days in case of unfair labor practice;[39] (2) strike vote approved by a majority of the total
union membership in the bargaining unit concerned obtained by secret ballot in a meeting called for
that purpose; and (3) notice given to the DOLE of the results of the voting at least seven days before the
intended strike. These requirements are mandatory and the failure of a union to comply with them
renders the strike illegal.[40] The evident intention of the law in requiring the strike notice and the
strike-vote report is to reasonably regulate the right to strike, which is essential to the attainment of
legitimate policy objectives embodied in the law.[41] As they failed to conform to the law, the strikes
on February 21, 22, and 23, 2001 were illegal.
Moreover, the aforementioned February 2001 strikes are in blatant violation of Sec. D, par. 6 of Toyota’s
Code of Conduct which prohibits “inciting or participating in riots, disorders, alleged strikes or concerted
actions detrimental to *Toyota’s+ interest.” The penalty for the offense is dismissal. The Union and its
members are bound by the company rules, and the February 2001 mass actions and deliberate refusal
to render regular and overtime work on said days violated these rules. In sum, the February 2001 strikes
and walk-outs were illegal as these were in violation of specific requirements of the Labor Code and a
company rule against illegal strikes or concerted actions.
With respect to the strikes committed from March 17 to April 12, 2001, those were initially legal as the
legal requirements were met. However, on March 28 to April 12, 2001, the Union barricaded the gates
of the Bicutan and Sta. Rosa plants and blocked the free ingress to and egress from the company
premises. Toyota employees, customers, and other people having business with the company were
intimidated and were refused entry to the plants. As earlier explained, these strikes were illegal
because unlawful means were employed. The acts of the Union officers and members are in palpable
violation of Art. 264(e), which proscribes acts of violence, coercion, or intimidation, or which obstruct
the free ingress to and egress from the company premises. Undeniably, the strikes from March 28 to
April 12, 2001 were illegal.

Petitioner Union also posits that strikes were not committed on May 23 and 28, 2001. The Union asserts
that the rallies held on May 23 and 28, 2001 could not be considered strikes, as the participants were
the dismissed employees who were on payroll reinstatement. It concludes that there was no work
stoppage.
This contention has no basis.

It is clear that once the DOLE Secretary assumes jurisdiction over the labor dispute and certifies the case
for compulsory arbitration with the NLRC, the parties have to revert to the status quo ante (the state of
things as it was before). The intended normalcy of operations is apparent from the fallo of the April 10,
2001 Order of then DOLE Secretary Patricia A. Sto. Tomas, which reads:
WHEREFORE, PREMISES CONSIDERED, this Office hereby CERTIFIES the labor dispute at
Toyota Motors Philippines Corporation to the [NLRC] pursuant to Article 263 (g) of the
Labor Code, as amended. This Certification covers the current labor cases filed in relation
with the Toyota strike, particularly, the Petition for Injunction filed with the National
Labor Relations Commission entitled Toyota Motor Philippines Corporation vs. Toyota
Motor Philippines Corporation Workers Association (TMPCWA), Ed Cubelo, et al., NLRC
Injunction Case No. 3401054-01; Toyota Motor Philippines Corporation vs. Toyota Motor
Philippines Corporation Workers Association, et al., NLRC NCR Case No. 3004-01775-01,
and such other labor cases that the parties may file relating to the strike and its effects
while this Certification is in effect.
As provided under Article 2634(g) of the Labor Code, all striking workers are directed to
return to work at their regular shifts by April 16, 2001; the Company is in turn directed to
accept them back to work under the same terms and conditions obtaining prior to the
work stoppage, subject to the option of the company to merely reinstate a worker or
workers in the payroll in light of the negative emotions that the strike has generated and
the need to prevent the further deterioration of the relationship between the company
and its workers.
Further, the parties are hereby ordered to cease and desist from committing any act
that might lead to the worsening of an already deteriorated situation .[42] (Emphasis
supplied.)
It is explicit from this directive that the Union and its members shall refrain from engaging in any activity
that might exacerbate the tense labor situation in Toyota, which certainly includes concerted actions.
This was not heeded by the Union and the individual respondents who staged illegal concerted actions
on May 23 and 28, 2001 in contravention of the Order of the DOLE Secretary that no acts should be
undertaken by them to aggravate the “already deteriorated situation.”
While it may be conceded that there was no work disruption in the two Toyota plants, the fact still
remains that the Union and its members picketed and performed concerted actions in front of the
Company premises. This is a patent violation of the assumption of jurisdiction and certification Order of
the DOLE Secretary, which ordered the parties “to cease and desist from committing any act that might
lead to the worsening of an already deteriorated situation.” While there are no work stoppages, the
pickets and concerted actions outside the plants have a demoralizing and even chilling effect on the
workers inside the plants and can be considered as veiled threats of possible trouble to the workers
when they go out of the company premises after work and of impending disruption of operations to
company officials and even to customers in the days to come. The pictures presented by Toyota
undoubtedly show that the company officials and employees are being intimidated and threatened by

undoubtedly show that the company officials and employees are being intimidated and threatened by
the strikers. In short, the Union, by its mass actions, has inflamed an already volatile situation, which
was explicitly proscribed by the DOLE Secretary’s Order. We do not find any compelling reason to
reverse the NLRC findings that the pickets on May 23 and 28, 2001 were unlawful strikes.
From the foregoing discussion, we rule that the February 21 to 23, 2001 concerted actions, the March
17 to April 12, 2001 strikes, and the May 23 and 28, 2001 mass actions were illegal strikes.
Union officers are liable for unlawful strikes or illegal acts during a strike
Art. 264 (a) of the Labor Code provides:
ART. 264. PROHIBITED ACTIVITIES

(a) xxx
Any worker whose employment has been terminated as a consequence of an

unlawful lockout shall be entitled to reinstatement with full backwages. 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.
Art. 264(a) sanctions the dismissal of a union officer who knowingly participates in an illegal strike or
who knowingly participates in the commission of illegal acts during a lawful strike.
It is clear that the responsibility of union officials is greater than that of the members. They are tasked
with the duty to lead and guide the membership in decision making on union activities in accordance
with the law, government rules and regulations, and established labor practices. The leaders are
expected to recommend actions that are arrived at with circumspection and contemplation, and always
keep paramount the best interests of the members and union within the bounds of law. If the
implementation of an illegal strike is recommended, then they would mislead and deceive the
membership and the supreme penalty of dismissal is appropriate. On the other hand, if the strike is
legal at the beginning and the officials commit illegal acts during the duration of the strike, then they
cannot evade personal and individual liability for said acts.
The Union officials were in clear breach of Art. 264(a) when they knowingly participated in the illegal
strikes held from February 21 to 23, 2001, from March 17 to April 12, 2001, and on May 23 and 28,
2001. We uphold the findings of fact of the NLRC on the involvement of said union officials in the
unlawful concerted actions as affirmed by the CA, thus:
As regards to the Union officers and directors, there is overwhelming justification

to declare their termination from service. Having instigated the Union members to stage
and carry out all illegal strikes from February 21-23, 2001, and May 23 and 28, 2001, the
following Union officers are hereby terminated for cause pursuant to Article 264(a) of the
Labor Code: Ed Cubelo, Maximino Cruz, Jr., Ricky Chavez, Joselito Hugo, Virgilio Colandog,
Rommel Digma, Federico Torres, Emilio Completo, Alexander Esteva, Joey Javellonar,
Lorenzo Caraqueo, Roderick Nieres, Antonio Borsigue, Bayani Manguil, Jr., and Mayo
Mata.[43]

The rule is well entrenched in this jurisdiction that factual findings of the labor tribunal, when affirmed
by the appellate court, are generally accorded great respect, even finality.[44]
Likewise, we are not duty-bound to delve into the accuracy of the factual findings of the NLRC in the
absence of clear showing that these were arbitrary and bereft of any rational basis.[45] In the case at
bench, the Union failed to convince us that the NLRC findings that the Union officials instigated, led, and
knowingly participated in the series of illegal strikes are not reinforced by substantial evidence. Verily,
said findings have to be maintained and upheld. We reiterate, as a reminder to labor leaders, the rule
that “*u+nion officers are duty bound to guide their members to respect the law.”[46] Contrarily, if the
“officers urge the members to violate the law and defy the duly constituted authorities, their dismissal
from the service is a just penalty or sanction for their unlawful acts.”[47]
Member’s liability depends on participation in illegal acts
Art. 264(a) of the Labor Code provides that a member is liable when he knowingly participates in
an illegal act “during a strike.” While the provision is silent on whether the strike is legal or illegal, we
find that the same is irrelevant. As long as the members commit illegal acts, in a legal or illegal strike,
then they can be terminated.[48] However, when union members merely participate in an illegal strike
without committing any illegal act, are they liable?
This was squarely answered in Gold City Integrated Port Service, Inc. v. NLRC,[49] where it was held
that an ordinary striking worker cannot be terminated for mere participation in an illegal strike. This
was an affirmation of the rulings in Bacus v. Ople[50] and Progressive Workers Union v. Aguas,[51]
where it was held that though the strike is illegal, the ordinary member who merely participates in the
strike should not be meted loss of employment on the considerations of compassion and good faith and
in view of the security of tenure provisions under the Constitution. In Esso Philippines, Inc. v. Malayang
Manggagawa sa Esso (MME), it was explained that a member is not responsible for the union’s illegal
strike even if he voted for the holding of a strike which became illegal.[52]
Noted labor law expert, Professor Cesario A. Azucena, Jr., traced the history relating to the liability of a
union member in an illegal strike, starting with the “rule of vicarious liability,” thus:
Under [the rule of vicarious liability], mere membership in a labor union serves as basis of
liability for acts of individuals, or for a labor activity, done on behalf of the union. The
union member is made liable on the theory that all the members are engaged in a general
conspiracy, and the unlawful acts of the particular members are viewed as necessary
incidents of the conspiracy. It has been said that in the absence of statute providing
otherwise, the rule of vicarious liability applies.
Even the Industrial Peace Act, however, which was in effect from 1953 to 1974, did not
adopt the vicarious liability concept. It expressly provided that:
No officer or member of any association or organization, and no association or
organization participating or interested in a labor dispute shall be held responsible
or liable for the unlawful acts of individual officers, members, or agents, except
upon proof of actual participation in, or actual authorization of, such acts or of
ratifying of such acts after actual knowledge thereof.
Replacing the Industrial Peace Act, the Labor Code has not adopted the vicarious liability
rule.[53]

Thus, the rule on vicarious liability of a union member was abandoned and it is only when a striking
worker “knowingly participates in the commission of illegal acts during a strike” that he will be penalized
with dismissal.
Now, what are considered “illegal acts” under Art. 264(a)?
No precise meaning was given to the phrase “illegal acts.” It may encompass a number of acts that
violate existing labor or criminal laws, such as the following:
(1) Violation of Art. 264(e) of the Labor Code which provides that “*n+o 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”;
(2) Commission of crimes and other unlawful acts in carrying out the strike;[54] and
(3) Violation of any order, prohibition, or injunction issued by the DOLE Secretary or NLRC in
connection with the assumption of jurisdiction/certification Order under Art. 263(g) of the Labor Code.
As earlier explained, this enumeration is not exclusive and it may cover other breaches of existing laws.
In the cases at bench, the individual respondents participated in several mass actions, viz:
(1) The rallies held at the DOLE and BLR offices on February 21, 22, and 23, 2001;
(2) The strikes held on March 17 to April 12, 2001; and
(3) The rallies and picketing on May 23 and 28, 2001 in front of the Toyota Bicutan and Sta. Rosa
plants.
Did they commit illegal acts during the illegal strikes on February 21 to 23, 2001, from March 17 to April
12, 2001, and on May 23 and 28, 2001?
The answer is in the affirmative.
As we have ruled that the strikes by the Union on the three different occasions were illegal, we now
proceed to determine the individual liabilities of the affected union members for acts committed during
these forbidden concerted actions.
Our ruling in Association of Independent Unions in the Philippines v. NLRC lays down the rule on the
liability of the union members:
Decisive on the matter is the pertinent provisions of Article 264 (a) of the Labor Code that:
“*x x x+ any worker *x x x+ who knowingly participates in the commission of illegal acts
during a strike may be declared to have lost his employment status. *x x x+” It can be
gleaned unerringly from the aforecited provision of law in point, however, that an
ordinary striking employee can not 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[s] must be identified. But proof
beyond reasonable doubt is not required. Substantial evidence available under the
circumstances, which may justify the imposition of the penalty of dismissal, may suffice.

circumstances, which may justify the imposition of the penalty of dismissal, may suffice.
In the landmark case of Ang Tibay vs. CIR, the court ruled “Not only must there be some
evidence to support a finding or conclusion, but the evidence must be ‘substantial.’
Substantial evidence is more than a mere scintilla. It means such relevant evidence that
a reasonable mind might accept as sufficient to support a conclusion.”[55] (Emphasis
supplied.)
Thus, it is necessary for the company to adduce proof on the participation of the striking employee in
the commission of illegal acts during the strikes.
After a scrutiny of the records, we find that the 227 employees indeed joined the February 21, 22, and
23, 2001 rallies and refused to render overtime work or report for work. These rallies, as we earlier
ruled, are in reality illegal strikes, as the procedural requirements for strikes under Art. 263 were not
complied with. Worse, said strikes were in violation of the company rule prohibiting acts “in citing or
participating in riots, disorders, alleged strikes or concerted action detrimental to Toyota’s interest.”
With respect to the February 21, 22, and 23, 2001 concerted actions, Toyota submitted the list of
employees who did not render overtime work on February 21, 2001 and who did not report for work on
February 22 and 23, 2001 as shown by Annex “I” of Toyota’s Position Paper in NLRC Certified Case No.
000203-01 entitled In Re: Labor Dispute at Toyota Motor Philippines Corp. The employees who
participated in the illegal concerted actions were as follows:
1. Aclan, Eugenio; 2. Agosto, Joel; 3. Agot, Rodelio; 4. Alarana, Edwin; 5. Alejo, Alex; 6.
Alfonso, Erwin; 7. Apolinario, Dennis; 8. Apostol, Melvin; 9. Arceta, Romel; 10. Arellano,
Ruel; 11. Ariate, Abraham; 12. Arollado, Daniel; 13. Arriola, Dominador; 14. Atun, Lester;
15. Bala, Rizalino; 16. Baluyut, Rolando; 17. Banzuela, Tirso Jr.; 18. Bayani, Roderick; 19.
Benabise, Sabas Jr.; 20. Berces, Abel; 21. Bering, Benny; 22. Birondo, Alberto; 23. Blanco,
Melchor; 24. Bolanos, Dexter; 25. Bolocon, Jerry; 26. Borebor, Rurel; 27. Borromeo,
Jubert; 28. Borsigue, Antonio; 29. Bulan, Elmer; 30. Busano, Freddie; 31. Bustillo, Ernesto
Jr.; 32. Caalim, Alexander; 33. Cabahug, Nelson; 34. Cabatay, Jessie; 35. Cabezas, Marcelo;
36. Calalang, Richard; 37. Candelario, Roque Jr.; 38. Capate, Leo Nelson; 39. Carandang,
Resty; 40. Caraqueo, Lorenzo; 41. Caringal, Dennis; 42. Casaba, Gienell; 43. Catapusan,
Christopher; 44. Catral, Rico; 45. Cecilio, Felipe; 46. Cinense, Joey; 47. Cometa, Julius; 48.
Completo, Emilio; 49. Consignado, Randy; 50. Coral, Jay Antonio; 51. Correa, Claudio Jr.;
52. Cuevas, Reynaldo; 53. Dacalcap, Albert; 54. Dakay, Ryan; 55. Dalanon, Herbert; 56.
Dalisay, Rene; 57. David, Benigno Jr.; 58. De Guzman, Joey; 59. Dela Cruz, Basilio; 60. Dela
Cruz, Ferdinand; 61. Dela Torre, Heremo; 62. De Leon, Leonardo; 63. Delos Santos,
Rogelio; 64. De Ocampo, Joselito; 65. De Silva, Leodegario; 66. Del Mundo, Alex; 67. Del
Rio, Rey; 68. Dela Ysla, Alex; 69. Dia, Frank Manuel; 70. Dimayuga, Antonio; 71. Dingcong,
Jessiah; 72. Dumalag, Jasper; 73. Duyag, Aldrin; 74. Ercillo, Armando; 75. Espadilla,
Delmar; 76. Espejo, Lionel; 77. Espeloa, Dennis; 78. Esteva, Alexander; 79. Estole,
Francisco; 80. Fajardo, George; 81. Fajilagutan, Jason; 82. Fajura, John; 83. Franco,
Melencio; 84. Franco, Nikko; 85. Fulgar, Dexter; 86. Fulo, Dante; 87. Gado, Eduardo; 88.
Galang, Erwin; 89. Gamit, Rodel; 90. Garces, Robin; 91. Garcia, Ariel; 92. Gaspi, Ronald; 93.
Gavarra, Angelo; 94. Gerola, Genaro Jr.; 95. Gerola, Larry; 96. Gohilde, Michael; 97. Gojar,
Regino; 98. Gojar, Reynaldo; 99. Gonzales, Roberto; 100. Gutierrez, Bernabe; 101. Hilaga,
Edgar; 102. Hilanga, Melchor; 103. Hondrada, Eugene Jay; 104. Imperial, Alejandro; 105.
Jaen, Ferdinand; 106. Jalea, Philip; 107. Javillonar, Joey; 108. Julve, Frederick; 109. Lalisan,
Victorio; 110. Landicho, Danny; 111. Laqui, Basilio; 112. Lavide, Edgar; 113. Lazaro,
Orlando; 114. Legaspi, Noel; 115. Lising, Reynaldo Jr.; 116. Llanera, Joey; 117. Lomboy,
Alberto; 118. Lopez, Geronimo; 119. Lozada, Jude Jonobell; 120. Lucido, Johny; 121.

Alberto; 118. Lopez, Geronimo; 119. Lozada, Jude Jonobell; 120. Lucido, Johny; 121.
Macalindong, Rommel; 122. Madrazo, Nixon; 123. Magbalita, Valentin; 124. Magistrado,
Rogelio Jr.; 125. Magnaye, Philip John; 126. Malabanan, Allan John; 127. Malabrigo,
Angelito; 128. Malaluan, Rolando Jr.; 129. Malate, Leoncio Jr.; 130. Maleon, Paulino; 131.
Manaig, Roger; 132. Manalang, Joseph Patrick; 133. Manalo, Manuel Jr.; 134. Manaog,
Jonamar; 135. Manaog, Melchor; 136. Mandolado, Melvin; 137. Maneclang, Jovito; 138.
Manego, Ruel; 139. Manguil, Bayani Jr.; 140. Manigbas, June; 141. Manjares, Alfred; 142.
Manzanilla, Edwin; 143. Marasigan, Carlito; 144. Marcial, Nilo; 145. Mariano, Rommel;
146. Mata, Mayo; 147. Mendoza, Bobit; 148. Mendoza, Roberto; 149. Milan, Joseph; 150.
Miranda, Eduardo; 151. Miranda, Luis; 152. Montero, Ericson; 153. Montero, Marlaw;
154. Montes, Ruel; 155. Morales, Dennis; 156. Natividad, Kenneth; 157. Nava, Ronaldo;
158. Nevalga, Alexander; 159. Nicanor, Edwin; 160. Nierves, Roderick; 161. Nunez, Alex;
162. Nunez, Lolito; 163. Obe, Victor; 164. Oclarino, Alfonso; 165. Ojenal, Leo; 166. Olit,
Freddie; 167. Oliver, Rex; 168. Oliveria, Charlie; 169. Operana, Danny; 170. Oriana, Allan;
171. Ormilla, Larry; 172. Ortiz, Felimon; 173. Paniterce, Alvin; 174. Parallag, Gerald; 175.
Pecayo, Edwin; 176. Pena, Erwin; 177. Penamante, Jowald; 178. Piamonte, Melvin; 179.
Piamonte, Rogelio; 180. Platon, Cornelio; 181. Polutan, Jorge; 182. Posada, John; 183.
Puno, Manjolito; 184. Ramos, Eddie; 185. Reyes, Rolando; 186. Roxas, Philip; 187. Sales,
Paul Arthur; 188. Sallan, David Jr.; 189. Salvador, Bernardo; 190. Sampang, Alejandro; 191.
San Pablo, Baldwin; 192. Sangalang, Jeffrey; 193. Santiago, Eric; 194. Santos, Raymond;
195. Sapin, Al Jose; 196. Saquilabon, Bernabe; 197. Serrano, Ariel; 198. Sierra, Alex; 199.
Simborio, Romualdo; 200. Sulit, Lauro; 201. Tabirao, Elvisanto; 202. Tablizo, Edwin; 203.
Taclan, Petronio; 204. Tagala, Rommel; 205. Tagle, Wilfredo Jr.; 206. Tecson Alexander;
207. Templo, Christopher; 208. Tenorio, Roderick; 209. Tolentino, Rodel; 210. Tolentino,
Rommel; 211. Tolentino, Romulo Jr.; 212. Tomas, Rolando; 213. Topaz, Arturo Sr.; 214.
Toral, Grant Robert; 215. Torres, Dennis; 216. Torres, Federico; 217. Trazona, Jose
Rommel; 218. Tulio, Emmanuel; 219. Umiten, Nestor Jr.; 220. Vargas, Joseph; 221.
Vergara, Allan; 222. Vergara, Esdwin; 223. Violeta, Apollo Sr.; 224. Vistal, Alex; 225.
Yangyon, Michael Teddy; 226. Zaldevar, Christopher; and 227. Zamora, Dominador Jr.
Toyota’s Position Paper containing the list of striking workers was attested to as true and correct under
oath by Mr. Jose Ma. Aligada, First Vice President of the Group Administration Division of Toyota. Mr.
Emerito Dumaraos, Assistant Department Manager of the Production Department of Toyota, likewise
submitted a June 29, 2001 Affidavit[56] confirming the low attendance of employees on February 21,
22, and 23, 2001, which resulted from the intentional absences of the aforelisted striking workers. The
Union, on the other hand, did not refute Toyota’s categorical assertions on the participation of said
workers in the mass actions and their deliberate refusal to perform their assigned work on February 21,
22, and 23, 2001. More importantly, it did not deny the fact of absence of the employees on those days
from the Toyota manufacturing plants and their deliberate refusal to render work. Their admission that
they participated in the February 21 to 23, 2001 mass actions necessarily means they were absent from
their work on those days.
Anent the March 28 to April 12, 2001 strikes, evidence is ample to show commission of illegal acts like
acts of coercion or intimidation and obstructing free ingress to or egress from the company premises.
Mr. Eduardo Nicolas III, Toyota’s Security Chief, attested in his affidavit that the strikers “badmouthed
people coming in and shouted invectives such as bakeru at Japanese officers of the company.” The
strikers even pounded the vehicles of Toyota officials. More importantly, they prevented the ingress of
Toyota employees, customers, suppliers, and other persons who wanted to transact business with the
company. These were patent violations of Art. 264(e) of the Labor Code, and may even constitute
crimes under the Revised Penal Code such as threats or coercion among others.

crimes under the Revised Penal Code such as threats or coercion among others.
On March 28, 2001, the following have committed illegal acts––blocking the ingress to or egress from
the two (2) Toyota plants and preventing the ingress of Toyota employees on board the company
shuttle––at the Bicutan and Sta. Rosa Plants, viz:
1. Grant Robert Toral; 2. John Posadas; 3. Alex Sierra; 4. Allan John Malabanan; 5. Abel
Berces; 6. Ariel Garcia; 7. Charlie Oliveria; 8. Manjolito Puno; 9. Baldwin San Pablo; 10.
Federico Torres; 11. Larry Gerola; 12. Roderick Bayani; 13. Allan Oclarino; 14. Reynaldo
Cuevas; 15. George Polutan; 16. Arman Ercillo; 17. Joey Llanera; and 18. Roberto Gonzales
Photographs were submitted by Toyota marked as Annexes “1” through “18” of its Position Paper,
vividly showing the participation of the aforelisted employees in illegal acts.[57]
To further aggravate the situation, a number of union members committed illegal acts (blocking the
ingress to and egress from the plant) during the strike staged on March 29, 2001 at the Toyota plant in
Bicutan, to wit:
1. Basilio Laqui; 2. Sabas Benabise; 3. Federico Torres; 4. Freddie Olit; and 5. Joel Agosto
Pictures marked as Annexes “21” to “22” of Toyota’s Position Paper reveal the illegal acts committed by
the aforelisted workers.[58]
On the next day, March 30, 2001, several employees again committed illegal acts (blocking ingress to
and egress from the plant) during the strike at the Bicutan plant, to wit:
1. Ariel Garcia; 2. Edgar Hilaga; 3. Charlie Oliveria; 4. Ferdinand Jaen; 5. Wilfredo Tagle; 6.
Alejandro Imperial; 7. Manjolito Puno; 8. Delmar Espadilla; 9. Apollo Violeta; and 10. Elvis
Tabirao
Pictures marked as Annexes “25” to “26” and “28” of Toyota’s Position Paper show the participation of
these workers in unlawful acts.[59]
On April 5, 2001, seven (7) Toyota employees were identified to have committed illegal acts (blocking
ingress to and egress from the plant) during the strike held at the Bicutan plant, to wit:
1. Raymund Santos; 2. Elvis Tabirao; 3. Joseph Vargas; 4. Bernardo Salvador; 5. Antonio

Dimayuga; 6. Rurel Borebor; and 7. Alberto Lomboy
The participations of the strikers in illegal acts are manifest in the pictures marked as Annexes “32” and
“33” of Toyota’s Position Paper.[60]
On April 6, 2001, only Rogelio Piamonte was identified to have committed illegal acts (blocking ingress
to and egress from the Toyota plant) during the strike at the Toyota Santa Rosa plant.[61] Then, on
April 9, 2001, Alvin Paniterce, Dennis Apolinario, and Eduardo Miranda[62] were identified to have
committed illegal acts (blocking ingress to and egress from the Toyota plant) during the strike at the
Toyota Santa Rosa plant and were validly dismissed by Toyota.

Lastly, the strikers, though on payroll reinstatement, staged protest rallies on May 23, 2001 and May 28,
2001 in front of the Bicutan and Sta. Rosa plants. These workers’ acts in joining and participating in the
May 23 and 28, 2001 rallies or pickets were patent violations of the April 10, 2001 assumption of
jurisdiction/certification Order issued by the DOLE Secretary, which proscribed the commission of acts
that might lead to the “worsening of an already deteriorated situation.” Art. 263(g) is clear that strikers
who violate the assumption/certification Order may suffer dismissal from work. This was the situation
in the May 23 and 28, 2001 pickets and concerted actions, with the following employees who
committed illegal acts:
a. Strikers who joined the illegal pickets on May 23, 2001 were (1) Dennis Apolinario; (2) Abel Berces;
(3) Benny Bering; (4) Dexter Bolaños; (5) Freddie Busano; (6) Ernesto Bustillo, Jr.; (7) Randy Consignado;
(8) Herbert Dalanon; (9) Leodegario De Silva; (10) Alexander Esteva; (11) Jason Fajilagutan; (12) Nikko
Franco; (13) Genaro Gerola, Jr.; (14) Michael Gohilde; (15) Rogelio Magistrado; (16) Rolando Malaluan,
Jr.; (17) Leoncio Malate, Jr.; (18) Edwin Manzanilla; (19) Nila Marcial; (20) Roderick Nierves; (21) Larry
Ormilla; (22) Filemon Ortiz; (23) Cornelio Platon; (24) Alejandro Sampang; (25) Eric Santiago; (26)
Romualdo Simborio; (27) Lauro Sulit; and (28) Rommel Tagala.
Pictures show the illegal acts (participation in pickets/strikes despite the issuance of a return-to-work
order) committed by the aforelisted strikers.[63]
b. Strikers who participated in the May 28, 2001 were (1) Joel Agosto; (2) Alex Alejo; (3) Erwin
Alfonso; (4) Dennis Apolinario; (5) Melvin Apostol; (6) Rommel Arceta; (7) Lester Atun; (8) Abel Berces;
(9) Benny Bering; (10) Dexter Bolanos; (11) Marcelo Cabezas; (12) Nelson Leo Capate; (13) Lorenzo
Caraqueo; (14) Christopher Catapusan; (15) Ricky Chavez; (16) Virgilio Colandog; (17) Claudio Correa;
(18) Ed Cubelo; (19) Reynaldo Cuevas; (20) Rene Dalisay; (21) Benigno David, Jr.; (22) Alex Del Mundo;
(23) Basilio Dela Cruz; (24) Roel Digma; (25) Aldrin Duyag; (26) Armando Ercillo; (27) Delmar Espadilla;
(28) Alexander Esteva; (29) Nikko Franco; (30) Dexter Fulgar; (31) Dante Fulo; (32) Eduardo Gado; (33)
Michael Gohilde; (34) Eugene Jay Hondrada II; (35) Joey Javillonar; (36) Basilio Laqui; (37) Alberto
Lomboy; (38) Geronimo Lopez; (39) Rommel Macalindog; (40) Nixon Madrazo; (41) Valentin Magbalita;
(42) Allan Jon Malabanan; (43) Jonamar Manaog; (44) Bayani Manguil; (45) June Manigbas; (46) Alfred
Manjares; (47) Edwin Manzanilla; (48) Mayo Mata; (49) Leo Ojenal; (50) Allan Oriana; (51) Rogelio
Piamonte; (52) George Polutan; (53) Eric Santiago; (54) Bernabe Saquilabon; (55) Alex Sierra; (56)
Romualdo Simborio; (57) Lauro Sulit; (58) Elvisanto Tabirao; (59) Edwin Tablizo; (60) Emmanuel Tulio;
(61) Nestor Umiten; (62) Joseph Vargas; (63) Edwin Vergara; and (64) Michael Teddy Yangyon.
Toyota presented photographs which show said employees conducting mass pickets and concerted
actions.[64]
Anent the grant of severance compensation to legally dismissed union members, Toyota assails the turn-
around by the CA in granting separation pay in its June 20, 2003 Resolution after initially denying it in its
February 27, 2003 Decision. The company asseverates that based on the CA finding that the illegal acts
of said union members constitute gross misconduct, not to mention the huge losses it suffered, then the
grant of separation pay was not proper.
The general rule is that when just causes for terminating the services of an employee under Art. 282 of
the Labor Code exist, the employee is not entitled to separation pay. The apparent reason behind the
forfeiture of the right to termination pay is that lawbreakers should not benefit from their illegal
acts. The dismissed employee, however, is entitled to “whatever rights, benefits and privileges *s/he+
may have under the applicable individual or collective bargaining agreement with the employer or
voluntary employer policy or practice”[65] or under the Labor Code and other existing laws. This
means that the employee, despite the dismissal for a valid cause, retains the right to receive from the
employer benefits provided by law, like accrued service incentive leaves. With respect to benefits
granted by the CBA provisions and voluntary management policy or practice, the entitlement of the

granted by the CBA provisions and voluntary management policy or practice, the entitlement of the
dismissed employees to the benefits depends on the stipulations of the CBA or the company rules and
policies.
As in any rule, there are exceptions. One exception where separation pay is given even though an
employee is validly dismissed is when the court finds justification in applying the principle of social
justice well entrenched in the 1987 Constitution. In Phil. Long Distance Telephone Co. (PLDT) v. NLRC,
the Court elucidated why social justice can validate the grant of separation pay, thus:
The reason is that our Constitution is replete with positive commands for the promotion
of social justice, and particularly the protection of the rights of the workers. The
enhancement of their welfare is one of the primary concerns of the present charter. In
fact, instead of confining itself to the general commitment to the cause of labor in Article
II on the Declaration of Principles of State Policies, the new Constitution contains a
separate article devoted to the promotion of social justice and human rights with a
separate sub-topic for labor. Article XIII expressly recognizes the vital role of labor, hand
in hand with management, in the advancement of the national economy and the welfare
of the people in general. The categorical mandates in the Constitution for the
improvement of the lot of the workers are more than sufficient basis to justify the award
of separation pay in proper cases even if the dismissal be for cause.[66]
In the same case, the Court laid down the rule that severance compensation shall be allowed only when
the cause of the dismissal is other than serious misconduct or that which reflects adversely on the
employee’s moral character. The Court succinctly discussed the propriety of the grant of separation pay
in this wise:
We hold that henceforth separation pay shall be allowed as a measure of social justice
only in those instances where the employee is validly dismissed for causes other than
serious misconduct or those reflecting on his moral character. Where the reason for the
valid dismissal is, for example, habitual intoxication or an offense involving moral
turpitude, like theft or illicit sexual relations with a fellow worker, the employer may not
be required to give the dismissed employee separation pay, or financial assistance, or
whatever other name it is called, on the ground of social justice.
A contrary rule would, as the petitioner correctly argues, have the effect, of rewarding
rather than punishing the erring employee for his offense. And we do not agree that the
punishment is his dismissal only and that the separation pay has nothing to do with the
wrong he has committed. Of course it has. Indeed, if the employee who steals from the
company is granted separation pay even as he is validly dismissed, it is not unlikely that he
will commit a similar offense in his next employment because he thinks he can expect a
like leniency if he is again found out. This kind of misplaced compassion is not going to do
labor in general any good as it will encourage the infiltration of its ranks by those who do
not deserve the protection and concern of the Constitution.
The policy of social justice is not intended to countenance wrongdoing simply because it is
committed by the underprivileged. At best it may mitigate the penalty but it certainly will
not condone the offense. Compassion for the poor is an imperative of every humane
society but only when the recipient is not a rascal claiming an undeserved privilege. Social
justice cannot be permitted to be refuge of scoundrels any more than can equity be an
impediment to the punishment of the guilty. Those who invoke social justice may do so
impediment to the punishment of the guilty. Those who invoke social justice may do so
only if their hands are clean and their motives blameless and not simply because they
happen to be poor. This great policy of our Constitution is not meant for the protection of
those who have proved they are not worthy of it, like the workers who have tainted the
cause of labor with the blemishes of their own character.[67]
Explicit in PLDT are two exceptions when the NLRC or the courts should not grant separation pay based
on social justiceserious misconduct (which is the first ground for dismissal under Art. 282) or acts that
reflect on the moral character of the employee. What is unclear is whether the ruling likewise precludes
the grant of separation pay when the employee is validly terminated from work on grounds laid down in
Art. 282 of the Labor Code other than serious misconduct.
A recall of recent cases decided bearing on the issue reveals that when the termination is legally
justified on any of the grounds under Art. 282, separation pay was not allowed. In Ha Yuan Restaurant
v. NLRC,[68] we deleted the award of separation pay to an employee who, while unprovoked, hit her
co-worker’s face, causing injuries, which then resulted in a series of fights and scuffles between
them. We viewed her act as serious misconduct which did not warrant the award of separation pay. In
House of Sara Lee v. Rey,[69] this Court deleted the award of separation pay to a branch supervisor
who regularly, without authorization, extended the payment deadlines of the company’s sales
agents. Since the cause for the supervisor’s dismissal involved her integrity (which can be considered as
breach of trust), she was not worthy of compassion as to deserve separation pay based on her length of
service. In Gustilo v. Wyeth Phils., Inc.,[70] this Court found no exceptional circumstance to warrant
the grant of financial assistance to an employee who repeatedly violated the company’s disciplinary
rules and regulations and whose employment was thus terminated for gross and habitual neglect of his
duties. In the doctrinal case of San Miguel v. Lao,[71] this Court reversed and set aside the ruling of the
CA granting retirement benefits or separation pay to an employee who was dismissed for willful breach
of trust and confidence by causing the delivery of raw materials, which are needed for its glass
production plant, to its competitor. While a review of the case reports does not reveal a case involving a
termination by reason of the commission of a crime against the employer or his/her family which dealt
with the issue of separation pay, it would be adding insult to injury if the employer would still be
compelled to shell out money to the offender after the harm done.
In all of the foregoing situations, the Court declined to grant termination pay because the causes for
dismissal recognized under Art. 282 of the Labor Code were serious or grave in nature and attended by
willful or wrongful intent or they reflected adversely on the moral character of the employees. We
therefore find that in addition to serious misconduct, in dismissals based on other grounds under Art.
282 like willful disobedience, gross and habitual neglect of duty, fraud or willful breach of trust, and
commission of a crime against the employer or his family, separation pay should not be conceded to the
dismissed employee.
In analogous causes for termination like inefficiency, drug use, and others, the NLRC or the courts may
opt to grant separation pay anchored on social justice in consideration of the length of service of the
employee, the amount involved, whether the act is the first offense, the performance of the employee
and the like, using the guideposts enunciated in PLDT on the propriety of the award of separation pay.
In the case at bench, are the 227 striking employees entitled to separation pay?
In the instant case, the CA concluded that the illegal strikes committed by the Union members
constituted serious misconduct.[72]
The CA ratiocinated in this manner:

Neither can social justice justify the award to them of severance compensation or any
other form of financial assistance. x x x
xxx x
Considering that the dismissal of the employees was due to their participation in the
illegal strikes as well as violation of the Code of Conduct of the company, the same
constitutes serious misconduct. A serious misconduct is a transgression of some
established and definite rule of action, a forbidden act, a dereliction of duty, willful in
character, and implies wrongful intent and not mere error in judgment. In fact, in Panay
Electric Company, Inc. v. NLRC, the Supreme Court nullified the grant of separation
benefits to employees who unlawfully participated in an illegal strike in light of Article
264, Title VIII, Book V of the Labor Code, that, “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.”
The constitutional guarantee on social justice is not intended only for the poor but for
the rich as well. It is a policy of fairness to both labor and management.[73] (Emphasis
supplied.)
In disposing of the Union’s plea for reconsideration of its February 27, 2003 Decision, the CA however
performed a volte-face by reinstating the award of separation pay.
The CA’s grant of separation pay is an erroneous departure from our ruling in Phil. Long Distance
Telephone Co. v. NLRC that serious misconduct forecloses the award of separation pay. Secondly, the
advertence to the alleged honest belief on the part of the 227 employees that Toyota committed a
breach of the duty to bargain collectively and an abuse of valid exercise of management prerogative has
not been substantiated by the evidence extant on record. There can be no good faith in intentionally
incurring absences in a collective fashion from work on February 22 and 23, 2001 just to attend the
DOLE hearings. The Union’s strategy was plainly to cripple the operations and bring Toyota to its knees
by inflicting substantial financial damage to the latter to compel union recognition. The Union officials
and members are supposed to know through common sense that huge losses would befall the company
by the abandonment of their regular work. It was not disputed that Toyota lost more than PhP 50
million because of the willful desertion of company operations in February 2001 by the dismissed union
members. In addition, further damage was experienced by Toyota when the Union again resorted to
illegal strikes from March 28 to April 12, 2001, when the gates of Toyota were blocked and barricaded,
and the company officials, employees, and customers were intimidated and harassed. Moreover, they
were fully aware of the company rule on prohibition against concerted action inimical to the interests of
the company and hence, their resort to mass actions on several occasions in clear violation of the
company regulation cannot be excused nor justified. Lastly, they blatantly violated the
assumption/certification Order of the DOLE Secretary, exhibiting their lack of obeisance to the rule of
law. These acts indeed constituted serious misconduct.
A painstaking review of case law renders obtuse the Union’s claim for separation pay. In a slew of cases,
this Court refrained from awarding separation pay or financial assistance to union officers and members
who were separated from service due to their participation in or commission of illegal acts during
strikes. In the recent case of Pilipino Telephone Corporation v. Pilipino Telephone Employees Association
(PILTEA),[74] this Court upheld the dismissal of union officers who participated and openly defied the
return-to-work order issued by the DOLE Secretary. No separation pay or financial assistance was

return-to-work order issued by the DOLE Secretary. No separation pay or financial assistance was
granted. In Sukhothai Cuisine and Restaurant v. Court of Appeals,[75] this Court declared that the
union officers who participated in and the union members who committed illegal acts during the illegal
strike have lost their employment status. In this case, the strike was held illegal because it violated
agreements providing for arbitration. Again, there was no award of separation pay nor financial
assistance. In Philippine Diamond Hotel and Resort, Inc. v. Manila Diamond Hotel Employees Union,[76]
the strike was declared illegal because the means employed was illegal. We upheld the validity of
dismissing union members who committed illegal acts during the strike, but again, without awarding
separation pay or financial assistance to the erring employees. In Samahang Manggagawa sa Sulpicio
Lines, Inc. v. Sulpicio Lines,[77] this Court upheld the dismissal of union officers who participated in an
illegal strike sans any award of separation pay. Earlier, in Grand Boulevard Hotel v. Genuine Labor
Organization of Workers in Hotel, Restaurant and Allied Industries,[78] we affirmed the dismissal of the
Union’s officers who participated in an illegal strike without awarding separation pay, despite the NLRC’s
declaration urging the company to give financial assistance to the dismissed employees.[79] In
Interphil Laboratories Union-FFW, et al. v. Interphil Laboratories, Inc.,[80] this Court affirmed the
dismissal of the union officers who led the concerted action in refusing to render overtime work and
causing “work slowdowns.” However, no separation pay or financial assistance was allowed. In CCBPI
Postmix Workers Union v. NLRC,[81] this Court affirmed the dismissal of union officers who
participated in the strike and the union members who committed illegal acts while on strike, without
awarding them separation pay or financial assistance. In 1996, in Allied Banking Corporation v.
NLRC,[82] this Court affirmed the dismissal of Union officers and members, who staged a strike despite
the DOLE Secretary’s issuance of a return to work order but did not award separation pay. In the earlier
but more relevant case of Chua v. NLRC,[83] this Court deleted the NLRC’s award of separation benefits
to an employee who participated in an unlawful and violent strike, which strike resulted in multiple
deaths and extensive property damage. In Chua, we viewed the infractions committed by the union
officers and members as a serious misconduct which resulted in the deletion of the award of separation
pay in conformance to the ruling in PLDT. Based on existing jurisprudence, the award of separation pay
to the Union officials and members in the instant petitions cannot be sustained.
One last point to consider—it is high time that employer and employee cease to view each other as
adversaries and instead recognize that theirs is a symbiotic relationship, wherein they must rely on each
other to ensure the success of the business. When they consider only their own self-interests, and when
they act only with their own benefit in mind, both parties suffer from short-sightedness, failing to realize
that they both have a stake in the business. The employer wants the business to succeed, considering
the investment that has been made. The employee in turn, also wants the business to succeed, as
continued employment means a living, and the chance to better one’s lot in life. It is clear then that
they both have the same goal, even if the benefit that results may be greater for one party than the
other. If this becomes a source of conflict, there are various, more amicable means of settling disputes
and of balancing interests that do not add fuel to the fire, and instead open avenues for understanding
and cooperation between the employer and the employee. Even though strikes and lockouts have been
recognized as effective bargaining tools, it is an antiquated notion that they are truly beneficial, as they
only provide short-term solutions by forcing concessions from one party; but staging such strikes would
damage the working relationship between employers and employees, thus endangering the business
that they both want to succeed. The more progressive and truly effective means of dispute resolution
lies in mediation, conciliation, and arbitration, which do not increase tension but instead provide relief
from them. In the end, an atmosphere of trust and understanding has much more to offer a business
relationship than the traditional enmity that has long divided the employer and the employee.
WHEREFORE, the petitions in G.R. Nos. 158786 and 158789 are DENIED while those in G.R. Nos.
158798-99 are GRANTED.
The June 20, 2003 CA Resolution in CA-G.R. SP Nos. 67100 and 67561 restoring the grant of severance
compensation is ANNULLED and SET ASIDE.

compensation is ANNULLED and SET ASIDE.
The February 27, 2003 CA Decision in CA-G.R. SP Nos. 67100 and 67561, which affirmed the August 9,
2001 Decision of the NLRC but deleted the grant of severance compensation, is REINSTATEDand
AFFIRMED.
No costs.
SO ORDERED.
PRESBITERO J. VELASCO, JR.

Associate Justice
WE CONCUR:
Associate Justice
Chairperson
ANTONIO T. CARPIO CONCHITA CARPIO MORALES

Associate
Justice Associate Justice
DANTE O. TINGA
Associate Justice
ATTE STATION
Court’s Division.
Associate Justice
Associate Justice
Chairperson
CER T I F I C AT I O N
Chairperson’s Attestation, I certify that the conclusions in the above Decision had
been reached in consultation before the case was assigned to the writer of the
opinion of the Court’s Division.
REYNATO S. PUNO
Chief Justice
[1] Rollo (G.R. Nos. 158786 & 158789), pp. 74-94. The Decision was penned by Associate Justice
Josefina Guevara-Salonga and concurred in by Associate Justices Marina L. Buzon and Danilo B.
Pine.
[2] Id. at 101-123. The per curiam Decision was signed by Presiding Commissioner Raul T. Aquino
and Commissioners Victoriano R. Calaycay and Angelita A. Gacutan.
[3] Id. at 124-135. The Resolution was penned by Commissioner Victoriano R. Calaycay and
concurred in by Presiding Commissioner Raul T. Aquino and Commissioner Angelita A. Gacutan.
[4] Rollo (G.R. Nos. 158798-99), pp. 41-44.
[5] Rollo (G.R. Nos. 158786 and 158789), p. 18.
[6] Id. at 19.
[7] Supra note 1, at 75.
[8] Id. at 75-76.
[9] Rollo (G.R. Nos. 158798-99), pp. 154 & 190.
[12] Rollo (G.R. Nos. 158798-99), pp. 308-309; NLRC Records, Volume II, Toyota’s Position Paper,
Annex “L.”
[13] Id. at 312-313.
[15] Id. at 107-112; rollo (G.R. Nos. 158798-99), pp. 330-333. The 227 dismissed employees were the
following:
1. Aclan, Eugenio; 2. Agosto, Joel; 3. Agot, Rodelio; 4. Alarana, Edwin; 5. Alejo, Alex; 6. Alfonso, Erwin;
7. Apolinario, Dennis; 8. Apostol, Melvin; 9. Arceta, Romel; 10. Arellano, Ruel; 11. Ariate, Abraham;
12. Arollado, Daniel; 13. Arriola, Dominador; 14. Atun, Lester; 15. Bala, Rizalino; 16. Baluyut, Rolando;
17. Banzuela, Tirso Jr.; 18. Bayani, Roderick; 19. Benabise, Sabas Jr.; 20. Berces, Abel; 21. Bering,
Benny; 22. Birondo, Alberto; 23. Blanco, Melchor; 24. Bolanos, Dexter; 25. Bolocon, Jerry; 26.
Borebor, Rurel; 27. Borromeo, Jubert; 28. Borsigue, Antonio; 29. Bulan, Elmer; 30. Busano, Freddie;
31. Bustillo, Ernesto Jr.; 32. Caalim, Alexander; 33. Cabahug, Nelson; 34. Cabatay, Jessie; 35. Cabezas,
Marcelo; 36. Calalang, Richard; 37. Candelario, Roque Jr.; 38. Capate, Leo Nelson; 39. Carandang,
Resty; 40. Caraqueo, Lorenzo; 41. Caringal, Dennis; 42. Casaba, Gienell; 43. Catapusan, Christopher;
44. Catral, Rico; 45. Cecilio, Felipe; 46. Cinense, Joey; 47. Cometa, Julius; 48. Completo, Emilio; 49.

44. Catral, Rico; 45. Cecilio, Felipe; 46. Cinense, Joey; 47. Cometa, Julius; 48. Completo, Emilio; 49.
Consignado, Randy; 50. Coral, Jay Antonio; 51. Correa, Claudio Jr.; 52. Cuevas, Reynaldo; 53.
Dacalcap, Albert; 54. Dakay, Ryan; 55. Dalanon, Herbert; 56. Dalisay, Rene; 57. David, Benigno Jr.; 58.
De Guzman, Joey; 59. Dela Cruz, Basilio; 60. Dela Cruz, Ferdinand; 61. Dela Torre, Heremo; 62. De
Leon, Leonardo; 63. Delos Santos, Rogelio; 64. De Ocampo, Joselito; 65. De Silva, Leodegario; 66. Del
Mundo, Alex; 67. Del Rio, Rey; 68. Dela Ysla, Alex; 69. Dia, Frank Manuel; 70. Dimayuga, Antonio; 71.
Dingcong, Jessiah; 72. Dumalag, Jasper; 73. Duyag, Aldrin; 74. Ercillo, Armando; 75. Espadilla, Delmar;
76. Espejo, Lionel; 77. Espeloa, Dennis; 78. Esteva, Alexander; 79. Estole, Francisco; 80. Fajardo,
George; 81. Fajilagutan, Jason; 82. Fajura, John; 83. Franco, Melencio; 84. Franco, Nikko; 85. Fulgar,
Dexter; 86. Fulo, Dante; 87. Gado, Eduardo; 88. Galang, Erwin; 89. Gamit, Rodel; 90. Garces, Robin;
91. Garcia, Ariel; 92. Gaspi, Ronald; 93. Gavarra, Angelo; 94. Gerola, Genaro Jr.; 95. Gerola, Larry; 96.
Gohilde, Michael; 97. Gojar, Regino; 98. Gojar, Reynaldo; 99. Gonzales, Roberto; 100. Gutierrez,
Bernabe; 101. Hilaga, Edgar; 102. Hilanga, Melchor; 103. Hondrada, Eugene Jay; 104. Imperial,
Alejandro; 105. Jaen, Ferdinand; 106. Jalea, Philip; 107. Javillonar, Joey; 108. Julve, Frederick; 109.
Lalisan, Victorio; 110. Landicho, Danny; 111. Laqui, Basilio; 112. Lavide, Edgar; 113. Lazaro, Orlando;
114. Legaspi, Noel; 115. Lising, Reynaldo Jr.; 116. Llanera, Joey; 117. Lomboy, Alberto; 118. Lopez,
Geronimo; 119. Lozada, Jude Jonobell; 120. Lucido, Johny; 121. Macalindong, Rommel; 122. Madrazo,
Nixon; 123. Magbalita, Valentin; 124. Magistrado, Rogelio Jr.; 125. Magnaye, Philip John; 126.
Malabanan, Allan John; 127. Malabrigo, Angelito; 128. Malaluan, Rolando Jr.; 129. Malate, Leoncio
Jr.; 130. Maleon, Paulino; 131. Manaig, Roger; 132. Manalang, Joseph Patrick; 133. Manalo, Manuel
Jr.; 134. Manaog, Jonamar; 135. Manaog, Melchor; 136. Mandolado, Melvin; 137. Maneclang, Jovito;
138. Manego, Ruel; 139. Manguil, Bayani Jr.; 140. Manigbas, June; 141. Manjares, Alfred; 142.
Manzanilla, Edwin; 143. Marasigan, Carlito; 144. Marcial, Nilo; 145. Mariano, Rommel; 146. Mata,
Mayo; 147. Mendoza, Bobit; 148. Mendoza, Roberto; 149. Milan, Joseph; 150. Miranda, Eduardo;
151. Miranda, Luis; 152. Montero, Ericson; 153. Montero, Marlaw; 154. Montes, Ruel; 155. Morales,
Dennis; 156. Natividad, Kenneth; 157. Nava, Ronaldo; 158. Nevalga, Alexander; 159. Nicanor, Edwin;
160. Nierves, Roderick; 161. Nunez, Alex; 162. Nunez, Lolito; 163. Obe, Victor; 164. Oclarino, Alfonso;
165. Ojenal, Leo; 166. Olit, Freddie; 167. Oliver, Rex; 168. Oliveria, Charlie; 169. Operana, Danny; 170.
Oriana, Allan; 171. Ormilla, Larry; 172. Ortiz, Felimon; 173. Paniterce, Alvin; 174. Parallag, Gerald;
175. Pecayo, Edwin; 176. Pena, Erwin; 177. Penamante, Jowald; 178. Piamonte, Melvin; 179.
Piamonte, Rogelio; 180. Platon, Cornelio; 181. Polutan, Jorge; 182. Posada, John; 183. Puno,
Manjolito; 184. Ramos, Eddie; 185. Reyes, Rolando; 186. Roxas, Philip; 187. Sales, Paul Arthur; 188.
Sallan, David Jr.; 189. Salvador, Bernardo; 190. Sampang, Alejandro; 191. San Pablo, Baldwin; 192.
Sangalang, Jeffrey; 193. Santiago, Eric; 194. Santos, Raymond; 195. Sapin, Al Jose; 196. Saquilabon,
Bernabe; 197. Serrano, Ariel; 198. Sierra, Alex; 199. Simborio, Romualdo; 200. Sulit, Lauro; 201.
Tabirao, Elvisanto; 202. Tablizo, Edwin; 203. Taclan, Petronio; 204. Tagala, Rommel; 205. Tagle,
Wilfredo Jr.; 206. Tecson Alexander; 207. Templo, Christopher; 208. Tenorio, Roderick; 209.
Tolentino, Rodel; 210. Tolentino, Rommel; 211. Tolentino, Romulo Jr.; 212. Tomas, Rolando; 213.
Topaz, Arturo Sr.; 214. Toral, Grant Robert; 215. Torres, Dennis; 216. Torres, Federico; 217. Trazona,
Jose Rommel; 218. Tulio, Emmanuel; 219. Umiten, Nestor Jr.; 220. Vargas, Joseph; 221. Vergara,
Allan; 222. Vergara, Esdwin; 223. Violeta, Apollo Sr.; 224. Vistal, Alex; 225. Yangyon, Michael Teddy;
226. Zaldevar, Christopher; and 227. Zamora, Dominador Jr.
[16] Rollo (G.R. Nos. 158798-99), p. 334; NLRC Records Certified Case No. 000203-01, Volume II,
Toyota’s Position Paper, Annex “U-1.”
[17] Id. at 335-336; id., Annex “V.”
[19] Id.; NLRC Records Certified Case No. 000203-01, Volume VI, Toyota’s Petition to Declare the
Strike Illegal.
[20] Rollo (G.R. Nos. 158798-99), pp. 371-374.
[21] The parties’ names in boldface were already included in the list containing the 227 dismissed
employees.
[22] Supra note 2, at 122-123.
[23] Supra note 3.
[24] Supra note 2.
[25] Supra note 1.
[26] G.R. No. 102672, October 4, 1995, 248 SCRA 688.
[27] Supra note 1, at 91-92.
[28] Rollo (G.R. Nos. 158786 and 158789), pp. 96-99.

[28] Rollo (G.R. Nos. 158786 and 158789), pp. 96-99.
[29] G.R. No. 169091, February 16, 2006, 482 SCRA 562, 568; citing Villaluz v. Ligon, G.R. No.
143721, August 31, 2005, 468 SCRA 486, 501.
[30] Chua v. Torres, G.R. No. 151900, August 30, 2005, 468 SCRA 358, 365; citing Torres v.
Specialized Packaging Development Corporation, G.R. No. 149634, July 6, 2004, 433 SCRA 455,
463; Bank of the Philippine Islands v. Court of Appeals, 450 Phil. 532, 540 (2003); Shipside
Incorporated v. Court of Appeals, G.R. No. 143377, February 20, 2001, 352 SCRA 334, 346.
[31] Torres v. Specialized Packaging Development Corporation, G.R. No. 149634, July 6, 2004, 433
SCRA 455, 463; citations omitted.
[32] G.R. No. 139396, August 15, 2000, 338 SCRA 62, 68.
[33] II C.A. Azucena, Jr., The Labor Code 528 (6th ed., 2007); citing I Teller, 314-317.
[34] L-31195, June 5, 1973, 51 SCRA 189.
[35] Labor Code, Art. 212. DEFINITIONS.
[36] G.R. No. 124678, July 31, 1997, 276 SCRA 619, 627; citing Board of Education v. New Jersey
Education Association (1968) 53 NJ 29, 247 A2d 867.
[37] Santa Rosa Coca-Cola Plant Employees Union v. Coca-Cola Bottlers Phils., Inc., G.R. Nos.
164302-03, January 24, 2007, 512 SCRA 437, 453-454; citations omitted.
[38] Supra note 3, at 129-130.
[39] The Union does not claim that its January 16, 2001 notice of strike in NCMB-NCR-
NS-01-011-01 should be considered as a strike notice for the February 21 to 23, 2001 mass actions.
[40] Supra note 37, at 456; citing Piñero v. NLRC, G.R. No. 149610, August 20, 2004, 437 SCRA 112.
[41] Stamford Marketing Corp. v. Julian, G.R. No. 145496, February 24, 2004, 423 SCRA 633, 647;
citing Lapanday Workers Union v. National Labor Relations Commission, G.R. Nos. 95494-97,
September 7, 1995, 248 SCRA 95, 104.
[44] Andaya v. NLRC, G.R. No. 157371, July 15, 2005, 463 SCRA 577, 582.
[45] G & M (Phils.), Inc. v. Cruz, G.R. No. 140495, April 15, 2005, 456 SCRA 215, 222-223.
[46] Association of Independent Unions in the Philippines v. NLRC, G.R. No. 120505, March 25,
1999, 305 SCRA 219, 230.
[47] Id.
[48] Chua v. NLRC, G.R. No. 105775, February 8, 1993, 218 SCRA 545.
[49] G.R. No. 123276, July 6, 1995, 245 SCRA 627, 637.
[50] No. L-56856, October 23, 1984, 132 SCRA 690.
[51] G.R. Nos. 59711-12, May 29, 1985, 150 SCRA 429.
[52] No. L-36545, January 26, 1977, 75 SCRA 73, 90.
[54] National Brewery and Allied Industries Labor Union v. San Miguel Brewery, Inc., No. L-
19017, December 27, 1963, 9 SCRA 847.
[55] G.R. No. 120505, March 25, 1999, 305 SCRA 219, 231.
[56] Annex “C” of the Position Paper in NLRC Certified Case No. 000203-01.
[57] Rollo (G.R Nos. 158798-99), pp. 338-348; NLRC Records, Certified Case No. 000203-01,
Volume II, Toyota’s Position Paper, Annexes “1,” “3,” “4,” “5,” “6,” “11,” “14,” “15,” “16,” and “18.”
[58] Id. at 348, 350-351.
[59] Id. at 353-356.
[60] Id. at 358-359.
[61] Id. at 361-362; Annexes “36,” “37,” “38,” and “39.”
[62] Id. at 364-365; Annexes “40,” “41,” “42,” and “43.”
[63] Id. at 500-513; Volume VII, Toyota’s Manifestation, Annexes “A,” “B,” “C,” “D,” “E,” “F,”
“G,” “H,” “I,” “J,” “K,” “L,” “M,” and “N.”
[64] Id. at 521-530 & 535-541; Annexes “V,” “W,” “X,” “Y,” and “Z,” and “AA,” “BB,” “CC,” “DD,”
“HH,” “II,” “JJ,” “KK,” “LL,” “MM,” “NN,” and “OO.”
[65] Labor Code, Rule I of the Rules Implementing Book VI, Sec. 7.
[66] No. L-80609, August 23, 1988, 164 SCRA 671, 680.
[67] Id. at 682-683.

[66] No. L-80609, August 23, 1988, 164 SCRA 671, 680.
[67] Id. at 682-683.
[69] G.R. No. 149013, August 31, 2006, 500 SCRA 419.
[71] G.R. Nos. 143136-37, July 11, 2002, 384 SCRA 504.
[73] Id.
[74] G.R. Nos. 160058 & 160094, June 22, 2007.
[75] G.R. No. 150437, July 17, 2006, 495 SCRA 336.
[76] G.R. No. 158075, June 30, 2006, 494 SCRA 195.
[77] G.R. No. 140992, March 25, 2004, 426 SCRA 319.
[78] G.R. Nos. 153664 and 153665, July 18, 2003, 406 SCRA 668.
[79] Id. at 701. The dispositive portion reads:
WHEREFORE, the respondents’ appeal is hereby dismissed. The complainant Hotel is

however urged, on humanitarian consideration, to pay the respondents a [sic] financial
assistance computed at one month pay for every year of service.
[80] G.R. No. 142824, December 19, 2001, 258 SCRA 724.
[81] G.R. Nos. 114521 and 123491, November 27, 1998, 299 SCRA 410.
[82] G.R. No. 116128, July 12, 1996, 258 SCRA 724.
[83] G.R. No. 105775, February 8, 1993, 218 SCRA 545.
Pasted from <http://sc.judiciary.gov.ph/jurisprudence/2007/october2007/158786_158789.htm>

August 25, 2010 Labor Arbitration Class Notes
6:05 PM
Intro: Hostage taking
On paper
Deadline on September 1
No late submissions
No class on september 8
Chung Fu vs. CA
-in the construction contract between Chung Fu and Roblecor, an arbitration provision provided that all
disputes between them would be submitted to arbitration and the decision of the arbitrator would be
final and executory.
-the arbiter ruled in favor of Roblecor, even allowed payment of several amounts in accordance with
"practice" in the industry (and not with the contract)
-Chung Fu thus appealed
H: Parties may validly stipulate that any dispute be submitted for arbitration, and that the decision of
the arbitrator may be deemed final and executory. However, this is subject to the power of the courts to
review the arbiter's decision based on GADALEJ (and based on exceptions provided by law). Here, there
is GADALEJ because the arbitrator awarded amounts not in accordance with the contract of the parties
SIR: ruling of SC: even if the decision has become final, parties agreed to abide with the decision of the
arbitrator, does not make it exempt from judicial review
In the field of labor relations: Luzon Dev't Bank vs. Garcia: SC said that the position of a voluntary
arbitrator is akin to that of a government instrumentality. In that case, the SC further held and invoke
the doctrine of hierarchy of courts, saying that from then on, a party aggrieved by the decision of a VA
must first go to the CA - and not directly to SC.
Also recall St. Martin Funeral Homes, where the SC invoked the doctrine of hierarchy of courts, saying
that appeals from NLRC decision should first go to the CA before directly proceeding to the SC
-because of this development, you added another layer, in effect prolonging the procedure
-The appeal process in labor cases: up until 1980s, starting w/ NLRC under PD 21
Start: Compulsory arbitration case (before)

1. LA
2. NLRC
3. SOLE
4. OP
5. SC
Groups commented that too long a procedure. No speedy labor justice. SO binago.
1. LA
2. NLRC
3. SC
But with St. Martin Funeral Home
1. LA
2. NLRC
3. CA
4. SC
Same in VA. Since VA = NLRC

1. VA
2. SC
With Luzon Dev't Bank

With Luzon Dev't Bank
1. VA
2. CA
3. SC
In Chung Fu, doctrine declared that the decision of the arbitrator can be brought up to appellate court
on 5 grounds
1. Lack of jurisidction
2. Gadalej
3. No due process
4. Erroneous interpretation of law
5. Violation of substantial justice
So judicial review of arbitrator's decision
Recall Oceanic Bic Case: in this case, a labor dispute arose between management and union. They chose
VA Flerida Romero. Aggrieved party elevated matter to SC. Prevailing party argued that appeal should
not be entertained because of agreement that they would accept the decision of VA. SC held that Court
cannot be deprived of its inherent right to review
Mantrade Case: nung araw, eto ung nag-aassemble ng ford cars. Labor dispute. CBA provided for VA in
case of labor dispute not resolved in grievance level. Same thing with Bic ballpen, this time Dean
Bacungan was the VA.
Bottomline: SC cannot be deprived of its innate right to review cases even if the credentials of the VA is
sterling
Phimco Industries v. Brillantes

-factory makes Matchsticks.
-Union involved held strike, and also asked the SOLE to assume jurisdiction over the case
(NOTE: you have a situation here where the Laborers asked the help of the SOLE, where the usual event
is that the employer asks the SOLE to assume jurisdiction).
-Employer assails the assumption of the SOLE of jurisdiction, as the matchstick industry is not an
industry imbued w/ national interest: SOLE merely based his jurisdiction on "obtaining circumstances"
SAN AGUSTING IMPORTANT BECAUSE THE MANUAL SAYS THAT IF, RIGHT OF THE BAT, THE NOTICE OF
STRIKE IS NOT BASED ON A STRIKEABLE ISSUE, THE NCMB SHOULD ISSUE AN ORDER SAYING THAT THE
NOTICE OF STRIKE IS CONSIDERED NOT FILED AT ALL. THAT PARTICULAR RULE FIGURED PROMINENTLY
IN THE CASE OF SAN AGUSTIN. IN THIS CASE, THE NOTICE OF STRIKE FILED BY THE UNION IS NOT
STRIKEABLE AT ALL. THE COURT RULED AGAINST THE UNION, SAYING THAT TEH NOTICE OF STRIKE WAS
NOT FILED AT ALL.
TOYOTA CASE: SC held that the traditional emnity whcih forever kept labor and management as
adversaries should be stopped. Let's try out the so-called alternative modes of dispute resolution!

Voluntary Arbitration
Wednesday, September 01, 2010
11:18 AM
1. Basis
ARTICLE XIII – SOCIAL JUSTICE AND HUMAN RIGHTS
ARTICLE XIII – LABOR
Section 3. The State shall afford full protection to lab or, local and overseas, organized and unorganized, and
promote full employment and equality of employment opportunities for all.
It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and
peaceful concerted activities, including the right to strike in accordance with law. They shall be entitled to security
of tenure, humane conditions of work, and a living wage. They shall also participate in policy and decision-
making processes affecting their rights and benefits as may be provided by law.
The State shall promote the principle of shared responsibility between workers and employers and the
preferential use of voluntary modes in settling disputes, including conciliation, and shall enforce their mutual
compliance therewith to foster industrial peace.
The State shall regulate the relations between workers and employers, recognizing the right of labor to its just share
in the fruits of production and the right of enterprises to reasonable returns to investments, and to expansion and
growth.
Article 211 (a), Labor Code

BOOK FIVE: LABOR RELATIONS
Title I: POLICY AND DEFINITIONS
Chapter I: POLICY
ARTICLE 211. Declaration of Policy. -
A. It is the policy of the State:
(a) To promote and emphasize the primacy of free collective bargaining and negotiations, including
voluntary arbitration, mediation and conciliation, as modes of settling labor or industrial disputes;
2. Arbitrable issues
ARTICLE 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.
ARTICLE 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.
Title VIII: STRIKES AND LOCKOUTS AND FOREIGN INVOLVEMENT IN TRADE UNION ACTIVITIES
Chapter I: STRIKES AND LOCKOUTS
ARTICLE 263. Strikes, picketing and lockouts. -
(h) Before or at any stage of the compulsory arbitration process, the parties may opt to submit their
dispute to voluntary arbitration.

Voluntary arbitration
Tuesday, September 14, 2010
10:15 AM
Eternit employees and workers union v. De veyra

Maneja v. Nlrc
san jose v nlrc 294 s 336 - 1998
sanyo v canizares 211 s 361 - 1992
vivero v. ca 344 s 268 -2000
ludo v saornido 395 s 451 - 2003
apalisok v radio philippines 403 s 238 - 2003
atlas farms v nlrc 392 s 128 - 2002
mindanao v minsteel workers org 424 s 614 - 2004
union of nestle workers v nestle 391 s 204 -2002
san miguel foods v san miguel corp employees union -ptwgo gr no 168569 - october 5 2007
landtex v ca 529 s 631 - 2007
olvido v ca gr no 141166-67 oct 15 2007
del monte v saldivar 504 phil 192 2006
sanyo phil 211 s 336 - 1998
imperial textile v sampang 219 s 651 - 1993
smc v nlrc 255 s 133 -1996
continental marble v nlrc 161 s 151 1998
Pasted from <http://us.mc556.mail.yahoo.com/mc/welcome?.gx=1&.tm=1284430153&.rand=9vro0e7j9nehr>

Eternit employees and workers union v. De veyra
10:51 AM
This Court has consistently ruled that findings of fact of administrative agencies and quasi-judicial bodies
which have acquired expertise because their jurisdiction is confined to specific matters are generally
accorded not only respect but even finality and are binding upon this Court unless there is a showing of
grave abuse of discretion, or where it is clearly shown that they were arrived at arbitrarily or in
disregard of the evidence on record.
We have also emphasized the rule that decisions of voluntary arbitrators are final and unappealable
except when there is want of jurisdiction, grave abuse of discretion, violation of due process, denial of
substantial justice, or erroneous interpretation of the law.
FACTS
-petition for certiorari under R654: annulment of the order of the voluntary arbitrator
-Petitioner: Labor union
-ER: Corporation engaged in the manufacture of asbestos cement products
-Dispute: Some CBA provisions were not followed by the Corporation
-so Union filed complaint w/ Ministry of Labor
-case was certified for VA
-Issues submitted for resolution:
• Privilege of buying second class sheets
• Overtime work on Saturday
• Cash value of unused vacation and sick leave
• Right of 23 reinstated employees to vacation and sick leave
• Right of the same to 13th month pay
• Right of the same to P2 adjustment pay
-VA (1st award): rendered an award granting claims of union except for overtime and adjustment pay
(dated March 16)
-union filed Motion to re-open case w/ re issue no. 2 (dated April 11)
-VA granted, allowed petitioner to present its evidence on overtime work
-VA (2nd Award, dated January 1979): affirmed earlier decision
-Union filed R65 petition: GADALEJ because they were required to present evidence on overtime work
when company already admitted that it had in fact overpaid petitioner's claim for overtime work (the
members of the union actually worked on 22 Saturdays - as proven by the time cards plus a joint
affidavit by 150 employees
-Arbitrator argued that the time cards are defective:
• There should be 3,300 time cards (22 Saturdays for 150 employees) and not 589
• That there were 589 timecards allegedly rescued before they were to be burned
• Time cards were picked up at random
• Inspected one of the timecards, showed that the employees did not work on 22 Saturdays and so
the joint affidavits contained falsity
WON GADALEJ on part of arbitrator? NO

The voluntary arbitrator had plenary jurisdiction and authority to interpret the agreement to arbitrate
and to determine the scope of his own authority subject to the certiorari jurisdiction of the court
-includes not merely the determination of the question of whether or not the claim is to be granted but
also, in the affirmative case, the amount thereof (Sime Darby Pilipinas v. Magsalin)
-the decision of the voluntary arbitrator chosen by the parties is final, executory and not appealable.
This is true especially when the parties have stipulated to that effect in their submission agreement as in
the present case
-purpose of arbitration: preserve industrial peace and avoid unnecessary litigation between the parties

-purpose of arbitration: preserve industrial peace and avoid unnecessary litigation between the parties
-on claim that the union should not be compelled to present evidence: basic rule in evidence that each
party must prove that he is entitled to the same.
-records show that after the issuance of the award by the VA, the union on its own initiative moved to
reopen the case and manifested that it will present newly discovered evidence. NOW that it was allowed
to odo so, it cannot alleged that they have no legal obligation to show evidence
-No arbitrariness on part of arbitrator because proceedings considered in totality. Computation of
salaries, allowances and even OT are factual questions submitted before VA. Court had no authority to
evaluate the sufficiency of evidence before a labor officer. Given highest respect

Maneja v. Nlrc
12:34 PM
Union failure to object to

employee’s termination or
retirement does not place dispute
within VA jurisdiction.
G.R. No. 124013 June 5, 1998
ROSARIO MANEJA, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and MANILA MIDTOWN HOTEL,
respondents.
MARTINEZ, J.:
Assailed in this petition for certiorari under Rule 65 of the Revised Rules of Court are the
Resolution 1 dated June 3, 1994 of the respondent National Labor Relations Commission in
NLRC NCR-00-10-05297-90, entitled "Rosario Maneja, Complainant, vs. Manila Midtown Hotel,
Respondent," which dismissed the illegal dismissal case filed by petitioner against private
respondent company for lack of jurisdiction of the Labor Arbiter over the case; and its
Resolution 2 dated October 20, 1995 denying petitioner's motion for reconsideration.
Petitioner Rosario Maneja worked with private respondent Manila Midtown Hotel beginning
January, 1985 as a telephone operator. She was a member of the National Union of Workers in
Hotels, Restaurants and Allied Industries (NUWHRAIN) with an existing Collective Bargaining
Agreement (CBA) with private respondent.
In the afternoon of February 13, 1990, a fellow telephone operator, Rowena Loleng received a
Request for Long Distance Call (RLDC) form and a deposit of P500.00 from a page boy of the
hotel for a call by a Japanese guest named Hirota Ieda. The call was unanswered. The P500.00
deposit was forwarded to the cashier. In the evening, Ieda again made an RLDC and the page
boy collected another P500.00 which was also given to the operator Loleng. The second call
was also unanswered. Loleng passed on the RLDC to petitioner for follow-up. Petitioner
monitored the call.
On February 15, 1990, a hotel cashier inquired about the P1,000.00 deposit made by Ieda. After
a search, Loleng found the first deposit of P500.00 inserted in the guest folio while the second
deposit was eventually discovered inside the folder for cancelled calls with deposit and official
receipts.
When petitioner saw that the second RLDC form was not time-stamped, she immediately placed
it inside the machine which stamped the date "February 15, 1990." Realizing that the RLDC was
filed 2 days earlier, she wrote and changed the date to February 13, 1990. Loleng then
delivered the RLDC and the money to the cashier. The second deposit of P500.00 by Ieda was
later returned to him.
On March 7, 1990, the chief telephone operator issued a memorandum 3 to petitioner and
Loleng directing the two to explain the February 15 incident. Petitioner and Loleng thereafter
submitted their written explanation. 4
On March 20, 1990, a written report 5 was submitted by the chief telephone operator, with the
recommendation that the offenses committed by the operators concerned covered violations of
the Offenses Subject to Disciplinary Actions (OSDA): (1) OSDA 2.01: forging, falsifying official
document(s), and (2) OSDA 1.11: culpable carelessness — negligence or failure to follow

document(s), and (2) OSDA 1.11: culpable carelessness — negligence or failure to follow
specific instruction(s) or established procedure(s).
On March 23, 1990, petitioner was served a notice of dismissal 6 effective April 1, 1990. -
Petitioner refused to sign the notice and wrote therein "under protest."
Meanwhile, a criminal case 7 for Falsification of Private Documents and Qualified Theft was filed
before the Office of the City Prosecutor of Manila by private respondent againts Loleng and
petitioner. However, the resolution recommending the filing of a case for estafa was reversed by
2nd Asst. City Prosecutor Virgilio M. Patag.
On October 2, 1990, petitioner filed a complaint for illegal dismissal against private respondent
before the Labor Arbiter. The complaint was later amended to include a claim for unpaid wages,
unpaid vacation leave conversion and moral damages.
Position papers were filed by the parties. Thereafter, the motion to set the case for hearing filed
by private respondent was granted by the Labor Arbiter and trial on the merits ensued.
LA:(So decided that she was indeed illegally dismissed, but LA said he had no jurisdiction because it involved company policy, B UT NEVERTHELESS
assumed jurisdiction since they are conferred EOJ over termination disputes)
In his decision 8 dated May 29, 1992, Labor Arbiter Oswald Lorenzo found that the petitioner
was illegally dismiised. However, in the decision, the Labor Arbiter stated that:
Preliminary, we hereby state that on the face of the instant complaint, it is one that revolves on the
matter of the implementation and interpretation of existing company policies, which per the last
par. of Art. 217 of the Labor Code, as amended, is one within the jurisdictional ambit of the
grievance procedure under the CBA and thereafter, if unresolved, one proper for voluntary
arbitration. This observation is re-entrenched by the fact, that complainant claims she is a
member of NUWRAIN with an existing CBA with respondent hotel.
On this score alone, this case should have dismissed outright. 9
Despite the aforequoted preliminary statement, the Labor Arbiter still assumed jurisdiction "since
Labor Arbiters under Article 217 of the same Labor Code, are conferred original and exclusive
jurisdiction of all termination case(sic.)." The dispositive portion of the decision states that:
WHEREFORE, premises considered, judgment is hereby renrdered as follows:
(1) Declaring complainant's dismissal by respondent hotel as illegally effected;
(2) Ordering respondent to immediately reinstate complainant to her previous position without loss of
seniority rights;
(3) Ordering further respondent to pay complainant the full backwages due her, which is computed as
follows:
3/23/90 - 10/31/90 = 7.26/mos.

P2.540 x 7.26/mos. P18,440.40
11/1/90 - 1/7/91 = 2.23/mos.
P3,224.16 x 2.23/mos. 7,189.87
1/8/91 - 4/29/92 = 15.7/mos.
P3,589.16 x 15.7/mos. 56,349.89
P81,980.08
(4) Moreover, respondent is ordered to pay the 13th month pay due the complainant in the amount of
P6,831.67 including moral and exemplary damages of P15,000.00 and P10,000.00 respectively, as well
as attorney's fees equivalent to ten (10) percent of the total award herein in the amount of P11,381.17;
(5) Finally, all other claims are hereby dismissed for lack of merit.
SO ORDERED.
Private respondent appealed the decision to the respondent commission on the ground inter alia
that the Laber Arbiter erred in "assuming jurisdiction over the illegal dismissal case after finding
that the case falls within the jurisdictional ambit of the grievance procedure under the CBA, and
if unresolved, proper for voluntary arbitration." 10 An Opposition 11 was filed by petitioner.
NLRC: ifo company: LA had no jurisdiction

In the assailed Resolution 12 dated June 3, 1994, respondent NLRC dismissed the illegal
dismissal case for lack of Jurisdiction of the Labor Arbiter because the same should have
instead been subjected to voluntary arbitration.
Petitioner's motion for reconsideration 13 was denied by respondent NLRC for lack of merit.
In this petition for certiorari, petitioner ascribes to respondent NLRC grave abuse of discretion
in —

in —
1. Ruling that the Labor Arbiter was without jurisdiction over the illegal dismissal case;
2. Not ruling that private respondent is estopped by laches from questioning the jurisdiction of the illegal
dismissal case;
3. Reversing the decision of the Labor Arbiter based on a technicality notwithstanding the merits of the
case.'
Petitioner contents that Article 217(a)(2) and (c) relied upon by respondent NLRC in divesting
the labor arbiter of jurisdiction over the illegal dismissal case, should be read in conjunction with
Article 261 14 of the Labor Code. It is the view of petitioner that termination cases arising from
the interpretation or enforcement policies pertaining to violations of Offenses Subject to
Disciplinary Actions (OSDA), are under the jurisdiction of the voluntary arbitrator only if these
are unresolved in the plant-level grievance machinery. Petitioner insists that her termination is
not an unresolved grievance as there has been no grievance meeting between the NUWHRAIN
union and the management. The reason for this, petitioner adds, is that it has been a company
practice that termination cases are not anymore referred to the grievance machinery but directly
to the labor arbiter.
In its comment, private respondent argues that the Labor Arbiter should have dismissed the
illegal dismissal case outright after finding that it is within the jurisdictional ambit of the
grievance procedure. Moreover, private respondent states that the issue of jurisdiction may be
raised at any time and at any stage of the proceedings even on appeal, and is not in estoppel by
laches as contended by the petitioner.
For its part, public respondent, through the Office of the Solicitor General, cited the ruling of this
Court in Sanyo Philippines Workers Union- PSSLU vs. Cañizares 15 in dismissing the case for
lack of jurisdiction of the Labor Arbiter.
The legal issue in this case is whether or not the Labor Arbiter has jurisdiction over the
illegal dismissal case.
The respondent Commission, in holding that the Labor Arbiter lacks jurisdiction to hear the
illegal dismissal case, cited as basis therefor Article 217 of the Labor Code, as amended by
Republic Act No. 6715. It said:
White it is conceded that under Article 217(a), Labor Arbiters shall have original and exclusive jurisdiction
over cases involving "termination disputes," the Supreme Court, in a fairy recent case ruled:
The procedure introduced in RA 6715 of referring certain grievances originally and exclusively to the
grievance machinery, and when not settled at this level, to a panel of voluntary arbitrators outlined in
CBAs does not only include grievances arising from the interpretation or implementation of the CBA but
applies as well to those arising from the implementation of company personnel policies. No other body
shall take cognizance of these cases. . . . (Sanyo vs. Cañizares, 211 SCRA 361,
372) 16
We Find that the respondent Commission has erroneously interpreted the aforequoted portion
of our ruling in the case of Sanyo, as divesting the Labor Arbiter of jurisdiction in a termination
dispute.
Art. 217 of the Labor Code gives us the clue as to the jurisdiction of the Labor Arbiter, to wit:
Art. 217. Jurisdiction of Labor Arbiters and the Commission. a) Except as otherwise provided under this
Code the Labor Arbiters shall have original and exclusive jurisdiction to hear and decided 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:
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;
strikes and lockouts;
6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other
claims, arising from employer-employee relations, including those of persons in domestic or household
service, involving an amount exceeding five thousand pesos (P5,000.00) regardless of whether
accompanied with a claim for reinstatement.
b) The commission shall have exclusive appellate jurisdiction over all cases decided by Labor Arbiters.

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 personel policies shall be disposed of by the
Labor Arbiter by referring the same to the grievance machinery and voluntary arbitration as may be
provided in said agreements.
As can be seen from the aforequoted Article, termination cases fall under the original and
exclusive jurisdiction of the Labor Arbiter. It should be noted, however, that in the
opening there appears the phrase: "Except as otherwise provided under this Code . . . ."
It is paragraph (c) of the same Article which respondent Commission has erroneously
interpreted as giving the voluntary arbitrator jurisdiction over the illegal dismissal case.
However, Article 217 (c) should be read in conjunction with Article 261 of the Labor Code
which grants to voluntary arbitrators original and exclusive jurisdiction to hear and
decide all unresolved grievances arising from the interpretation or implementation of the
collective bargaining agreement and those arising from the interpretation or enforcement
of company personel policies. Note the phrase "unresolved grievances." In the case at
bar, the termination of petitioner is not an unresolved grievance.
The stance of the Solicitor General in the Sanyo case is totally the reverse of its posture in the
case at bar. In Sanyo, the Solicitor General was of the view that a distinction should be made
between a case involving "interpretation or implementation of Collective Bargaining Agreement"
or interpretation or "enforcement" of company personel policies, on the one hand and a case
involving termination, on the other hand. It argued that the dismissal of the private respondents
does not involve an "interpretation or implementation" of a Collective Bargaining Agreement or
"interpretation or enforcement" of company personel policies but involves "termination." The
Solicitor General further said that where the dispute is just in the interpretation, implementation
or enforcement stage, it may be referred to the grievance machinery set up the Collective
Bargaining Agreement or by voluntary arbitration. Where there was already actual
termination, i.e., violation of rights, it is already cognizable by the Labor Arbiter. 17 We
fully agree with the theory of the Solicitor General in the Sanyo case, which is radically apposite
to its position in this case.
Moreover, the dismissal of petitioner does not fall within the phrase "grievance arising from the
interpretation or implementation of collective bargaining agreement and those arising from the
interpretation or enforcement of company personel policies," the jurisdiction of which pertains to
the grievance machinery or thereafter, to a voluntary arbitrator or panel of voluntary arbitrators.
It is to be stressed that under Article 260 of the Labor Code, which explains the function of the
grievance machinery and voluntary arbitrator. "(T)he parties to a Collective Bargaining
Agreement shall include therein provisions that will ensure the mutual observance of its terms
and conditions. They shall establish a machinery for the adjustment and resolution of
grievances arising from the interpretation or implementation of their Collective Bargaining
Agreement and those arising from the interpretation or enforcement of company personel
policies." Article 260 further provides that the parties to a CBA shall name or designate their
respective representative to the grievance machinery and if the grievance is unsettled in that
level, it shall automatically be refered to the voluntary arbitrators designated in advance by the
parties to a CBA of the union and the company. It can thus be deduced that only disputes
involving the union and the company shall be referred to the grievance machinery or voluntary
arbitrators. 18
In the case at bar, the union does not come into the picture, not having objected or voiced any
dissent to the dismissal of the herein petitioner. The reason for this, according to petitioner is
that "the practice in said Hotel in cases of termination is that the latter cases are not referred
anymore to the grievance committee;" and that "the terminated employee who wishes to
question the legality of his termination usually goes to the Labor Arbiter for arbitration, whether
the termination arose from the interpretation or enforcement of the company personnel policies
or otherwise." 19
As we ruled in Sanyo, "Since there has been an actual termination, the matter falls within the
jurisdiction of the labor Arbiter." The aforequoted doctrine is applicable foursquare in petitioner's
case. The dismissal of the petitioner does not call for the interpretation or enforcement of
company personnel policies but is a termination dispute which comes under the jurisdiction of
the Labor Arbiter.
It should be explained that "company personel policies" are guiding priciples stated in broad,
long-range terms that express the philosophy or beliefs of an organization's top authority

long-range terms that express the philosophy or beliefs of an organization's top authority
regarding personnel matters. They deal with matters affecting efficiency and well-being of
employees and include, among others, the procedure in the administration of wages, benefits,
promotions, transfer and other personnel movements which are usually not spelled out in the
collective agreement. The usual source of grievances, however, are the rules and regulations
governing disciplinary actions. 20
The case of Pantranco North Express, Inc. vs. NLRC 21 sheds further light on the issue of
jurisdiction where the Court cited the Sanyo case and quoted the decision of therein Labor
Arbiter Olairez in this manner:
In our honest opinion we have jurisdiction over the complaint on the following grounds:
First, this is a complaint of illegal dismissal of which original and exclusive jurisdiction under Article 217
has been conferred to the labor Arbiters. The interpretation of the CBA or enforcement of the company
policy is only corollary to the complaint of illegal dismissal. Otherwise, an employee who was on AWOL,
or who committed offenses contrary to the personnel policies(sic) can no longer file a case of illegal
discharge is premised on the interpretation or enforcement of the company policies( sic).
Second. Respondent voluntarily submitted tha case to the jurisdiction of this labor tribunal. It adduced
arguments to the legality of its act, whether such act may be retirement and/or dismissal, and prayed for
reliefs on the merits of the case. A litigant cannot pray for reliefs on the merits and at the same time
attacks(sic) the jurisdiction of the tribunal. A person cannot have one's cake and eat it too. . . . .
As to the second ground, petitioner correctly points out that respondent NLRC should have
ruled that private respondent is estopped by laches in questioning the jurisdiction of the Labor
Arbiter.
Clearly, estoppel lies. The issue of jurisdiction was mooted by herein private respondent's active
participation in the proceedings below. In Marquez vs. Secretary of Labor, 22 the Court said:
. . . . The active participation of the against whom the action was brought, coupled with his failure to
object to the jurisdiction of the court or quasi -judicial body where the action is pending, is tantamount to
an invocation of that jurisdiction and a willingness to abide the resolution of the case and will bar said
party from later on impugning the court or body's jurisdiction.
In the assailed Resolution, 23 respondent NLRC cited La Naval Drug Corporation vs. Court of
Appeals 24 in holding that private respondent is not in estopel. Thus,
The operation of the principle of estoppel on the question of jurisdiction seemingly depends upon whether
the lower court actually had jurisdiction or not. If it had no jurisdiction, but the case was tried and decided
upon the theory that it had jurisdiction, the parties are not barred, on appeal, from assailing such
jurisdiction, for the same "must exist as a matter of law, and may not be conferred by consent of the
parties or by estoppel" (5 C.J.S., 861-863). However, if the lower court had jurisdiction, and the case was
heard and decided upon a given theory, such, for instance, as that the court had no jurisdiction, the party
who induced it to adopt such theory will not be permitted, on appeal, to assume an inconsistent
position — that the lower court had jurisdiction. Here, the principle of estoppel applies . The rule that
jurisdiction is conferred by law, and does not depend upon the will of the parties, has no bearing thereon.
(Emphasis ours)
Again, the respondent NLRC has erroneously interpreted our ruling in the La Naval case. Under
the said ruling, estoppel lies in this case. Private respondent is stopped from questioning the
jurisdiction of the Labor Arbiter before the respondent NLRC having actively participated in the
proceedings before the former. At no time before or during the trial on the merits did private
respondent assail the jurisdiction of the Labor Arbiter. Private respondent took the cue only from
the preliminary statement in the decision of the Labor Arbiter, which was a mere obiter, and
raised the issue of jurisdiction before the Commission. It was then too late. Estoppel had set in.
Turning now to the merits of the case, We uphold the ruling of the Labor Arbiter that petitioner
was illegally dismissed.
The requisites of a valid dismissal are (1) the dismissal must be for any of the causes expressed
in the Article 282 of the Labor Code, 25 and (2) the employee must be given an opportunity to be
heard and to defend himself. 26 The substantive and procedural laws must be strictly complied
with before a worker can be dismissed from his employment because what is at stake is not
only the employee's position but his livelihood. 27
Petitioner's dismissal was grounded on culpade carelessness, negligence and failure to

follow specific instruction(s) or established procedure(s) under OSDA 1.11; and, having
forged or falsified official document(s) under OSDA 2.01.
Private respondent blames petitioner for failure to follow established procedure in the hotel on a
guest's request for long distance calls. Petitioner, however, explained that the usual or
established procedures are not followed by the operators and hotel employees when
circumstances warrant. For instance, the RLDC forms and the deposits are brought by the

circumstances warrant. For instance, the RLDC forms and the deposits are brought by the
page boy directly to the operators instead of the cashiers if the latter are busy and cannot attend
to the same. Furthermore, she avers that the telephone operators are not concious of the serial
numbers in the RLDCs and at times, the used RLDCs are recycled. Even the page boys do not
actually check the serial numbers of all RLDCs in one batch, except for the first and the last.
On the charge of taking of the money by petitioner, it is to be noted that the second P500.00
deposit made by the Japanese guest Ieda was later discovered to be inserted in the
folder for cancelled calls with deposit and official receipts. Thus, there exists no basis for
personal appropriation by the petitioner of the money involved.
Another reason is the alleged tampering of RLDC No. 862406. 28 While petitioner and her co-
operator Loleng admitted that they indeed altered the date appearing therein from
February 15, 1990 to February 13, the same was purposely made to reflect the true date
of the transaction without any malice whatsoever on their part.
As pointed out by Labor Arbiter Oswald b. Lorenzo, thus:

The specifics of the grounds relied by respondent hotel's dismissal of complainant are those stated in
Annex "F" of the latter's POSITION PAPER, which is the Notice of Dismissal, notably:
1. OSDA 2.01 — Forging, falsifying official documents(s)
2. OSDA 1.11 — Culpable negligence or failure to follow specific instruction(s) or established
procedure(s)
On this score, we are persuated by the complainant's arguments that under OSDA 1.11, infractions of this
sort is not without qualifications, which is, that the alleged culpable carelessness, negligence or failure to
follow instruction(s) or established procedure(s), RESULTING IN LOSS OR DAMAGE TO COMPANY
PROPERTY. From the facts obtaining in this case, there is no quantum of proof whatsoever, except the
general allegations in respondent's POSITION PAPER and other pleadings that loss or damage to
company property resulted from the charged infraction. To our mind, this is where labor tribunals should
come in and help correct interpretation of company policies which in the enforcement thereof wreaks
havoc to the constitutional guarantee of security of tenure. Apparently, the exercise of little flexibility by
complainant and co-employees which is predicated on good faith should not be taken against them and
more particularly against the complainant herein. In this case, to sustain the generalized charge of
respondent hotel under OSDA 1.11 would unduly be sanctioning the imposition of too harsh a penalty —
which is dismissal.
In the same tenor, the respondent's charge under OSDA 1.11 on the alleged falsification of private
document is also with a qualification, in that the alleged act of falsification must have been done "IN
SUCH A WAY AS TO MISLEAD THE USER(S) THEREOF." Again, based on the facts of the complained
act, there appeared no one to have been misled on the change of date from RLDC #862406 FROM 15
TO 13 February 1990.
As a matter of fact, we are in agreement with the jurisprudence cited by VIRGILIO M. PATAG, the 2 nd
Asst. City Prosecutor of the City of Manila, who exculpated complainant MANEJA from the charges of
falsification of private documents and qualified theft under IS No. 90 -11083 and marked Annex. "H" of
complainant's POSITION PAPER, when he ruled that an altercation which makes the document speak
the truth cannot be the foundation of a criminal action. As to the charge of qualified theft, we too are of the
finding, like the city prosecutor above-mentioned that there was no evidence on the part of MANEJA to
have unlawfully taken the P500.00 either from the hotel or from guest IEDA on 13 February 1990 and
moreover, we too, find no evidence that complainant MANEJA had intention to profit thereby nor had
misappropriated the P500.00 in question. 29
Given the factual circumstances of the case, we cannot deduce dishonesty from the act and
omission of petitioner. Our norms of social justice demand that we credit employees with the
presumption of good faith in the performance of their duties, 30 especially petitioner who has
served private respondent since 1985 up to 1990 without any tinge of dishonesty and was even
named "Model Employee" for the month of April, 1989. 31
Petitioner has been charged with a very serious offense — dishonesty. This can irreparably
wreck her life as an employee for no employer will take to its bosom a dishonest employee.
Dismissal is the supreme penalty that can be meted to an employee and its imposition cannot
be justified where the evidence is ambivalent. 32 It must, therefore, be based on a clear and not
on an ambiguous or ambivalent ground. Any ambiguity or ambivalence on the ground relied
upon by an employer in terminating the services of an employee denies the latter his full right to
contest its legality. Fairness cannot countenance such ambiguity or ambivalence. 33
An employer can terminate the services of an employee only for valid and just causes which
must be supported by clear and convincing evidence. The employer has the burden of proving
that the dismissal was indeed for a valid and just cause. 34 Failure to do so result in a finding
that the dismissal was

that the dismissal was
unjustified. 35
Finding that there was no just cause for dismissal of petitioner, we now determine if the
rudiments of due process have duly accorded to her.
Well-settled is the dictum that the twin requirements of notice and hearing constitute the
essential elements of due process in the dismissal of employees. It is a cardinal rule in our
jurisdiction that the employer must furnish the employee with two written notice before the
termination of employment can be effected: (a) the first apprises the employee of the particular
acts or omissions for which his dismissal is sought; and, (b) the second informs the employee of
the employer's decision to dismiss him. The requirement of a hearing, on the other hand, is
complied with as long as there was an opportunity to be heard, and not necessarily that an
actual hearing was conducted. 36
In the case at bar, petitioner and her co-operator Loleng were issued a memorandum on
March 7, 1990. On March 11, 1990, they submitted their written explanation thereto. On March
20, 1990, a written report was made with a recommendation that the offences committed by
them were covered by OSDA 1.11 and 2.01. Thereafter, on March 23, 1990, petitioner was
served with a notice of dismissal for said violations effective April 1, 1990.
An examination of the record reveals that no hearing was ever conducted by private
respondent before petitioner was dismissed. While it may be true that petitioner
submitted a written explanation, no hearing was actually conducted before her
employment was terminated. She was not accorded the opportunity to fully defend
herself.
Consultations or conferences may not be a substitute for the actual holding of a hearing. Every
opportunity and assistance must be accorded to the employee by the management to enable
hom to prepare adequately for his defense, including legal representation. 37 Considering that
petitioner denied having allegedly taken the second P500.00 deposit of the Japanese guest
which was eventually found; and, having made the alteration of the date on the second RLDC
merely to reflect the true date of the transaction, these circumstances should have at least
warranted a separate hearing to enable petitioner to fully ventilate her side. Absent such
hearing, petitioner's right to due process was clearly violated. 38
It bears stressing that a worker's employment is properly in the constitutional sense. He cannot
be deprived of his work without due process of law. Substantive due process mandates that an
employee can only be dismissed based on just or authorized causes. Procedural due process
requires further that he can only be dismissed after he has been given an opportunity to be
heard. The import of due process necessitates the compliance of these two aspects.
Accordingly, we hold that the labor arbiter did not err in awarding full backwages in view of this
finding that petitioner was dismissed without just cause and without due process.
We ruled in the case of Bustamante vs. NLRC 39 that the amount of backwages to be awarded
to an illegally dismissed employee must be computed from the time he was dismissed to the
time he is actually reinstated, without deducting the earnings he derived elsewhere pending the
resolution of the case.
Petitioner is likewise entitled to the thirteenth-month pay. Presidential Decree No.851, as
amended by Memorandum Order No. 28, provides that employees are entitled to the thirteenth-
month pay benefit regardless of their designation and irrespective of the method by which their
wages are paid. 40
The award of moral and exemplary damages to petitioner is also warranted where there is lack
of due process in effecting the dismissal.
Where the termination of the services of an employee is attended by fraud or bad faith on the
part of the employer, as when the latter knowingly made false allegations of a supposed valid
cause when none existed, moral and exemplary damages may be awarded in favor of the
former. 41
The anti-social and oppressive abuse of its right to investigate and dismiss its employees
constitute a violation of Article 1701 of the New Civil Code which prohibits acts of oppression by
either capital or labor against the other, and Article 21 on human relations. The grant of moral
damages to the employees by reason of such conduct on the part of the company is sanctioned
by Article 2219, No. 10 of the Civil Code, which allows recovery of such damages in actions
reffered to in Article 21. 42
The award of attorney's fees amounting to ten percent (10%) of the total award by the labor
arbiter is justified under Article 111 of the Labor Code.
WHEREFORE, premises considered, the petition is GRANTED and the assailed resolutions of
the respondent National Labor Relations Commission dated June 3, 1994 and October 20, 1995
are hereby REVERSED AND SET ASIDE. The decision dated May 29, 1992 of the Labor

are hereby REVERSED AND SET ASIDE. The decision dated May 29, 1992 of the Labor
Arbiter is therefore REINSTATED.
SO ORDERED.
Regalado, Puno and Martinez, JJ., concur.
Melo, J., is on leave.
Footnotes
1 Penned by Presiding Commissioner Bartolome S. Carale and concurred in by Commissioner Vicente
S.E. Veloso and Commissioner Alberto R.Quimpo (on leave). First Division.
2 Ibid
3 Annex "D" of Respondent's Memorandum; Rollo, p. 105.
4 Annex "E" of Complainant's Position Paper; Rollo, p. 59; Annex "E" of Respondent's Memorandum;
Rollo, p. 106.
5 Annex "F" of Respondent's Memorandum: Rollo, pp. 107-108.
6 Annex "F" of Complainant's Position Paper; Rollo, p. 60.
7 Entitled "Manila Midtown Hotel, Complainant, vs. Rowena Loleng y Sanares, et al., Respondents."
8 Annex "I" of Petition; Rollo, pp.133-144.
9 Rollo, p. 136.
10 Annex "J" of Petition; Rollo, pp. 145-155.
11 Annex "K" of Petition; Rollo, pp. 157-164.
12 See note 1; Annex "A" of Petition; Rollo, pp. 28-32.
13 Annex "B" of Petition; Rollo, pp. 33-39.
14 Article. 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 of the Collective Bargaining Agreement and
those arising from the interpretation or enforcement of company personnel policies referred to in the
preceding article.
15 211 SCRA 361 [1992].
16 Resolution of respondent commission dated June 3, 1994; Rollo, pp. 28-32.
17 Sanyo, supra.
18 Ibid.
19 Petition, Rollo, p. 15.
20 San Miguel Corp. vs. National Labor Relations, G.R. No. 108001, March 15, 1996, 255 SCRA 133,
140; citing C.A. Azucena, The Labor Code With Comments And Cases, Vol. II, 1993 ed., p. 272.
21 G.R. No. 95940, July 24, 1996, 259 SCRA 161, 167-168.
22 171 SCRA 337, 346; cited in Stolt -Nielsen Marine Services (phils.), Inc. vs. NLRC, G.R. No. 105396,
November 19, 1996, 264 SCRA 307, 319.
23 Annex "C" of Petition; Rollo, pp. 41-42.
24 236 SCRA 78.
25 Article 282 of the Labor Code provides:
Art. 282. Termination by employer. — An employer may terminate an employment for any of the following
cause:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or
representative in connection with his work;
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized
representative;
(d) Commission of a crime or offence by the employee against the person of his employer or any
immediate member of his family or duly authorized representative, and
(e) Other causes analogous to the foregoing.
26 Midas Touch Food Corp. vs. NLRC, G.R. No. 111639, July 29, 1996, 259 SCRA 652, 657; citing
Mapalo vs. NLRC, 233 SCRA 266; Pizza Hut/Progressive Development Corp. vs. NLRC, G.R. No.
117059, January 29, 1996, 252 SCRA 531, 535 citing Mapalo vs. NLRC, supra.
27 Midas Touch Food Corp. vs. NLRC, supra., 657.
28 Annex "C" of Private Respondent's Position Paper, Rollo, p. 90.
29 Decision of Labor Arbiter; Rollo, pp. 140-141.
30 Pizza Hut/Progressive Development Corp. vs. NLRC, supra., 539.
31 Rollo, pp. 91-92.
32 Pizza Hut/Progressive Development Corp. vs. NLRC, supra., 540.
33 Pantranco North Express, Inc. vs. NLRC, G.R. No. 114333, January 24, 1996, 252 SCRA 237,
243-244.
34 Philippine Long Distance Telephone Company vs. NLRC, et al., G.R. No. 99030, July 31, 1997.
35 Uy vs. National Labor Relations Commission, G.R. No. 117983, September 6, 1996, 261 SCRA 505,
512; citing Labor Code, Article 277(b); Golden Donuts, Inc. vs. National Labor Ralations Commission,
230 SCRA 153 [1994]; Reyes & Lim Co., Inc. vs. National Labor Relations Commission, 201 SCRA 772,
775 [1991].
36 Pono vs. NLRC, et al., G.R. No. 118860, July 17, 1997.
37 Ibid.
38 Ibid.

38 Ibid.
39 G.R. No. 111651, November 28, 1996, cited in the case of Philippines Long Distance Telephone
Company vs. NLRC, et. al., G.R. No. 99030, July 13, 1997; Mabeza vs. NLRC, Hotel Supreme, et. al.,
G.R. No. 118506, April 18, 1997.
40 Jackson Building Condominium Corporation vs. National Labor Relations Commission, G.R. No.
111515, July 14, 1995, 246 SCRA 329, 333.
41 Lirag Textile Mills, Inc. vs. Court of Appeals, et. al., 63 SCRA 374, 385, April 14, 1975.
42 Philippine Refining Co., Inc. vs. Garcia, 18 SCRA 107, September 27, 1966.

q=cache:lUtirY77W44J:www.lawphil.net/judjuris/juri1998/jun1998/gr_124013_1998.html+Maneja+vs.+Nlrc&cd=1

PAL v. NLRC (1997)
12:53 PM
Violations of collective bargaining agreements were no longer deemed unfair labor practices - except
those gross in character i. e. flagrant and malicious refusal to comply with the economic provisions
thereof - and were considered mere grievances resolvable through the appropriate grievance
machinery, or voluntary arbitration provided in the CBA.
SECOND DIVISION
[G.R. No. 117038. September 25, 1997]
PHILIPPINE AIRLINES, INC., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, AVELINO
MICABALO and PROSPERO ENRIQUEZ, respondents.
DE C I S I O N
PUNO, J.:
This special civil action for certiorari seeks the reversal of the June 23, 1993 Resolution [1] of public
respondent National Labor Relations Commission (NLRC), through its Fifth Division, and its subsequent
Resolution dated June 27, 1994 in NLRC CA No. M-000291 affirming the complaint for illegal dismissal of
private respondents Avelino Micabalo and Prospero Enriquez.
The facts show that private respondent Avelino Micabalo was hired on March 16, 1979 as ticket freight
clerk while private respondent Prospero Enriquez was hired as load control clerk on August 11, 1975 by
petitioner Philippine Airlines, Inc. (PAL). They were assigned at the Davao Station of PAL. The two were
union officials. Micabalo was a member of the board of directors of the Philippine Airlines Employees
Association (PALEA) from October 1986 to February 1990 while Enriquez served as its chief steward.[2]
Petitioner conducted an audit check of its Davao Station. It discovered that some employees at its
ticketing office procured for themselves the money paid by the passengers for their tickets and then
charged the same to their or their co-employees' credit cards. To cover-up the change in the mode of
payment, the audit coupon and the flight coupon of the tickets were made to carry different entries, i.e.,
"Cash/Charge" or simply "Charge" in the audit coupon, and "Cash" or no entry in the flight coupon. [3]
These irregularities were unearthed when a reconciliation of the flight coupon and audit coupon of the
tickets were made at the head office of PAL in Makati City and the same revealed different entries in the
"Form of Payment" box. In the flight coupon, the box is either empty or carries the notation "Cash". In
the audit coupon, the mode of payment reflected is either "Cash/Charge" or "Charge" only.[4]
On June 2, 1989, Micabalo was investigated by a committee for using his credit card to pay for four (4)
plane tickets of various passengers. On June 18, 1989, he was administratively charged for fraud under
Section 2, Article VIII and for falsification of company documents under Section 3, Article VIII of
petitioner's Code of Discipline. The committee found him to have charged to his VISA credit card the
payment for some plane tickets in spite of the cash payment made by the passengers. He allegedly
falsified the entries in the flight coupon to conceal the irregularity. [5] The schedule of ticket sales on
charge basis[6] was presented, to wit:
FORM OF PAYMENT
Date Ticket No. Audit Coupon Flight Coupon Amount
1/01/89 79-4205019844 Chg/Ebc Cash P1,255
3/26/89 79-4205177135 Chg/Ebc Cash 2,510
5/11/89 79-4205283011 -do- - 2,510
5/11/89 79-4205019810 -do- - 1,255
5/11/89 79-4205283012 -do- - 2,133.50
5/11/89 79-4205283013 -do- - 2,133.50
Micabalo was placed under preventive suspension pending his administrative investigation. On June
30, 1989, he filed his answer to the charges against him as follows:
"The undersigned issued the tickets subject of the charge upon the request of a close friend and the
passengers themselves [proposed] that the supposed payment of the said tickets be charged to his Visa
Card due to the non-availability of their funds. There was nothing for the undersigned to pocket
because there was no cash payment made by the passengers. The allegation in the charge that the
undersigned pocketed the cash payment made is belied by the affidavits of the passengers concerned,
hereto attached as Annexes 'A', 'B', 'C', 'D', 'E' and 'F' to form part of this answer.
"The provision of Sec. 2, Art. VIII of the Code of Discipline provides:
‘Any employee who makes false or fraudulent claim against the Company, or knowingly initiates or takes
part in any action intended to defraud the company or to obtain a payment, benefit or gain from the
company to which he is not entitled; or knowingly honors a forged signature for his own benefit or that
of another person; or gives due course or approval to a document knowing it to be false or erroneous
shall suffer the penalty of dismissal.'
"Nothing in the provision was violated. The undersigned did not initiate the transaction. It was
requested by the passengers. It was not intended to defraud the company. On the contrary, it was for
the company to generate funds. Without the undersigned charging the amount of the tickets to his Visa
Card, the passengers would not have pursued (sic) their Flight as they had no money during that time to
purchase the tickets within the ticketing limits. The move of the undersigned was merely to render
public service by having a considerate heart. A public service that extended even beyond the limits to
the end that even his personal fund is sacrificed.
"Respectively, the provision of Sec. 5, Art. VIII of the Code of Discipline provides:
'Any employee who, for personal gain or for the benefit of another, shall falsify, conceal or fabricate
company documents or records or enters false information on any official company document to the
prejudice of the company shall suffer the penalty of dismissal.'
"The undersigned repleads all his answer aforestated by way of reference and likewise respectfully avers
that nothing in the provision was violated. An affidavit is hereto attached as Annex "K" hereof to form
part of this answer. There is a discrepancy between the entries in the form of payment box of the Audit
coupon and that of the Flight coupon because the undersigned corrected the entry in the audit coupon
to speak the truth. A correction in a document for the document to speak the truth is not falsification
(U.S. v. Mateo, 25 Phil 324; Ariola v. Republic, 103 Phil 730). The entry in the Flight coupon which is
"cash" was erroneous and was corrected in the audit coupon as "charged" which is the truth. The same
is true to the other tickets where no entry was made in the Flight coupon. The alleged alteration which

is true to the other tickets where no entry was made in the Flight coupon. The alleged alteration which
was made to speak the truth was not intended to prejudice the company because it can never be
so. On the contrary, it was for the protection of the company. It was not intended to conceal an
irregularity, rather it was intended to reveal an irregularity inadvertently committed. For if the
passengers would refund their tickets in the event they decide to forego their travel, the same could be
possible only after reference is made of their Flight coupon with the audit coupon where the truth was
entered. And granting arguendo that should no reference be done and the company would refund the
passengers the purchase amount of the said tickets, still no damage is done to the company because the
said amount was already paid by the undersigned to the company through the Bank right at the time of
the transaction with the use of his Visa Card. If at all, it is the undersigned who would suffer damages
because there is a possibility that those passengers might not pay him. Under the circumstances, the
correction/alteration done by the undersigned brought him no personal gain but put him in a financial
risk and at a loss, all because of public service and the company's protection. " [7]
On July 5, 1989, a second administrative charge [8] was filed against Micabalo for similar irregularities
committed on different occasions as follows:
FORM OF PAYMENT
Date Ticket No. Amount Audit Coupon Flight Coupon
2/03/89 79-4205022435 P2,510 Chg./EBC - do -
2/11/89 79-4205093539 1,255 Chg./EBC - do -
2/01/89 79-4205021912 2,510 Chg./143001 Cash
On August 4, 1989, Micabalo submitted his written explanation. He denied his participation in the sale
of the tickets and alleged that he has liquidated the amounts due from him on the foregoing
transactions.[9]
On August 16, 1989, a third administrative charge [10] was filed against Micabalo as follows:
"A. FRAUD AGAINST THE COMPANY (Sec. 2, Art. VIII of the Code of Discipline) and FALSIFICATION OF
COMPANY DOCUMENTS (Sec. 5, Art. VIII of the Code of Discipline) committed as follows:
-That sometime on 11 September 1988, you inlieued (sic) MCO 079-4020295400 (charge) to
079-42044385753 with routing CEB/OZC in favor of McDugall/E. Ms. with additional cash of
P17.00, hence, "CASH/CHG" was reflected in the auditors coupon of the inlieued (sic) ticket. The
flight coupon of the said ticket, however, carried the form of payment "CASH" only and was
refunded on the same day it was inlieued (sic).
-That sometime on 20 May 1989, you inlieued (sic) ticket 079-2404134743 (charge) to
079-4205285564 with routing DVO/MNL/DVO in favor of BAAC/ABNER Mr. with the form of
payment in the audit coupon as "CHARGE"; the flight coupon of the said ticket, however, carried
the form of payment as "CASH" which was refunded on 10 June 1989.
-That sometime on 21 June 1988 you issued ticket 079-4402588493 with routing DVO/MNL/DVO
in favor of REYES/ALFREDO Mr. The form of payment reflected in the audit coupon was
"CASH/CHARGE UCCF#0196336"; however, the form of payment in the flight coupon was "CASH"
only which was refunded on 25 June 1988.
-That sometime on 23 May 1988, you inlieued (sic) MCO #079-4010688132 (charge) to
079-4101840738 with routing DVO/CGY in favor of CARANDANG/A Mr. with form of payment
"CASH" which was eventually refunded by you on 31 May 1988.
"1. B. FRAUD AGAINST THE COMPANY
-That sometime on 28 May 1989, you conspired with TFC Eliseo Villarino, Jr. by using the latter's
credit card in payment for a PAL ticket in the amount of P1,255.00 knowing fully well that the said
card was in the "Hot Card" list. Said accountability remains outstanding to date in spite of
repeated demands to settle the same.
-That sometime on 11 May 1989, in conspiracy with TFC Jose Blones, Jr., you allowed the use of
your credit card in payment for PAL tickets in the total amount of P8,032.00 knowing fully well
that your card was included in the "Hot Card" list. Said accountability remains outstanding to date
in spite of repeated demands to settle the same."
On October 7, 1989, an answer was filed by Micabalo reiterating the defenses in his original answer. On
November 27, 1989, he was served with a notice of dismissal dated October 21, 1989, [11] the pertinent
portion of which reads as follows:
"On 10 and 11 October 1989, clarificatory hearings were conducted in DVO wherein you were
represented by your counsels, Attys. Nestor M. Ledesma, Victor D. Sederiosa, PALEA President George
Pulido and PALEA lawyer, Atty. Emmanuel Noel Cruz, to clarify certain issues relevant to the adjudication
of your respective cases. Your inability to appear and submit additional evidence compelled the
committee to resolve your case based on the evidence on record. On 17 October 1989, the Committee
on Investigation submitted a report finding you GUILTY OF FALSIFICATION OF COMPANY DOCUMENTS
and VIOLATION OF PROCEDURE as charged and recommended the penalty of DISMISSAL for cause from
the company."
On the other hand, private respondent Enriquez was investigated on June 28, 1989 for ticket anomalies
in his station. On July 9, 1989, he was placed under preventive suspension by the company as formal
charges were made against him for violation of Section 2, Article VIII and Section 5, Article VIII of the
Code of Discipline[12] as follows:
"A. FRAUD AGAINST THE COMPANY AND UNBECOMING CONDUCT (Sec. 2, Art. VIII of the Code of
Discipline) committed as follows:
That sometime on 11 May 1989, you solicited from a certain LINO T. ESTERA the use of the cash
payment for the tickets of MR. JAMES BUENAVENTURA (ticket No. 0792405044041), MR. PIO
CACAM (ticket No. 0792405044634), MR. R. MADIGAN (ticket No. 079-2404044638), and instead,
charged the payments of the said tickets against your credit card no. 49216110 and 29644012,
which cash was used by you in negotiating a live band in CEB to perform in one of the night spots
in Davao City. Such arrangement is unbecoming of a PAL employee; besides, (sic) the fact that the
company suffered damages by way of its inability to make use of the immediate cash as well as
the 2.5% discount rate for the use of the VISA card.
"B. FRAUD AGAINST THE COMPANY (Par. 2, Art. VIII of the Code of Discipline) and FALSIFICATION OF
COMPANY DOCUMENTS (Sec. 5, Art. VIII of the Code of Discipline) committed as follows:
That sometime on 02 May 1989, you issued ticket no. 0794205097499 (CHARGE) in the name of
IDOROT/SALOME with routing DVC/MSL using the VISA card of LCD Elias Gamorot, appropriating
to yourself the cash payment made by the passenger. Said ticket was inlieued (sic) by you to

to yourself the cash payment made by the passenger. Said ticket was inlieued (sic) by you to
079-4102 369 908 (DVC/CEB) in conjunction with 0794102369909 (CEB/DVC) with the form of
payment "L/CASH". Ticket nos. 0794102369908 and 909 were inlieued (sic) back to
0794205096647 DVO/MNL with form of payment "E/CASH" and refunded by you on 08 March
1989.
That sometime on 24 January 1989, you issued ticket no. 079-4205020147 (CHARGE) in the name
of IDOROT/SALOME VS with routing DVC/MNL using the VISA card no. 4921, 6110, 2471, 7011 of
LCD Elias Gamorot, appropriating for yourself the cash payment made by the passenger. Said
ticket was inlieued (sic) by you to 0794205094408 (DVO/MNL) with form of payment
"L/CHY". Ticket no. 0794205094408 was again inlieued (sic) by you to 0794205095848
(DVO/MNL) with form of payment "E/CASH" and refunded by you on 25 February 1989."
On August 3, 1989, Enriquez executed his Counter Affidavit[13] to controvert the charges against him. He
Facts:
explained as follows:
-Micabalo and Enriquez were union members.
"As to the second charge, against (sic) take exception to the same. Actually it was a case of pure
Micabalo was hired as ticket freight clerk while
accommodation for a friend wherein the latter intended to borrow from me certain amount of money
Enriquez was a load control clerk. Both were
to buy plane ticket. Since undersigned had no cash at that time as he was also economically depressed,
assigned at the Davao Stationof PAL
and in order to help somebody with a problem, I resorted to the use of the credit card of my co-
-PAL conducted an audit check of its Davao Station
employees. Unfortunately, the plane ticket was not used due to the change of schedule in both
occasions and the same were returned or reimbursed, and the money were paid to the company nor I and found that some of its employees procured
profited from such transactions (sic). Attached hereto to support my defense is the Affidavit of Salome for themselves teh money paid by the passengers
Idorot duly subscribed and sworn to. for their tickets and then charged the said tickets
"That while it might be true there was some sort of falsification, the same was done in good faith with to their or their co-employees' credit cards.
-how they covered it up: the audit coupon and the
no intention at all to cause damage to anybody. In fact, the company had lost nothing as it collected the
flight coupon of the tickets were made to carry
whole amount from the bank. The change of entry in the ticket from charge to cash was made only to
different entries, i.e., "Cash/Charge" or simply
facilitate the return of the money to the card holder, never to cause damage to any person or
"Charge" in the audit coupon, and "Cash" or no
company."
On August 16, 1989, a second administrative charge was filed against Enriquez for anomalous activities entry in the flight coupon.
-how discovered: 80The flight coupon and audit
on ticket refunds. Again, it was discovered that entries in enumerated flight and/or audit ticket stubs
coupon of the tickets revealed different entries in
contained variations in the mode of payment from "Charge" to "Cash". On September 25, 1989, he
the "Form of Payment" box. In the flight coupon,
submitted his answer acknowledging the ticket sales to one Elsa Haloy allegedly for humanitarian
the box is either empty or carries the notation
reasons. He was dismissed on November 18, 1989. [14]
"Cash". In the audit coupon, the mode of payment
In addition to private respondents, petitioner PAL charged and dismissed five (5) other employees for reflected is either "Cash/Charge" or "Charge"
the same irregularities. They were Bernardo Fernandez, Jr., Carlos Coruña, Eustaquio Gallardo, Eliseo only.
Villarino, Jr. and Jose Blones, Jr. [15] Except for Blones, the four (4) employees joined Micabalo and -Micabalo was investigated and was found to have
Enriquez in filing a complaint for illegal dismissal and unfair labor practice against PAL before the used his VISA credit card to pay for 4 plane tickets
Regional Arbitration Branch of the NLRC in Davao City on January 8, 1990. On March 2, 1990, Labor of various passengers. He was administratively
Arbiter Antonio M. Villanueva issued an Order terminating the cases of Fernandez, Coruña and Gallardo charged for violation of PAL's Code of
after PAL agreed to consider them resigned without benefits. PAL further agreed to desist from filing Discipline.Micabalo was placed under preventive
any criminal case against them. A similar order was issued by the Labor Arbiter on March 27, 1990 with suspension
respect to the case of Villarino. Thus, only Micabalo and Enriquez pursued their complaint.[16] -Micabalo alleged that he was just paying at the
request of the said passengers and that he did not
In their Position Paper, Micabalo and Enriquez claimed that they were dismissed due to their union pocket any cash payment because there weren't
activities. Micabalo alleged that the charges against him were brought about by his membership in the any. Further, he did not intend to defraud the
PALEA Board of Directors and the January 21, 1989 PALEA strike which he led. In addition, he averred company and was merely rendering public service
that Mr. James Hannen, then PAL Director for Mindanao, harbored a grudge against him for the so he contests the application to him of Section 5
grievance suits he filed which were later on amicably settled. He charged that he was not promoted by Article 8 of the Code of Discipline
Mr. Hannen for the flimsy reason that he had an expired load controller's certificate. Lastly, he stressed -on falsification charges: he changed the entry in
that there was no prohibition against employees using their credit cards. Enriquez similarly asserted the audit coupon to speak the truth
that the charges against him were due to his union activities as Chief Steward of PALEA and his active -Micabalo was charged with the same charges of
participation in the PALEA strike. He alleged that after the strike, Mr. Hannen personally monitored fraud and falsification for 2 more times
their movements. Petitioner PAL, on the other hand, maintained that private respondents were -he was later on served with notice of dismissal
dismissed for just and valid causes pursuant to its Code of Discipline. [17] -The same situation was found with Enriquez, and
Labor Arbiter Antonio M. Villanueva ruled that private respondents were illegally dismissed. He made the same made the similar defense that he was
the following findings: just using his credit card to accommodate a friend.
xx x He was also dismissed
"Although herein-respondents alleged that herein- complainants were dismissed for just cause, i.e., the -PAL also dismissed 5 other employees
latter were found guilty of Falsification of Company documents and Violation of Procedures, facts of the -4 employees joined Micabalo and Enriquez for
case will show that there was really an intent on the part of herein-respondents to terminate the filing illegal dismissal cases against PAL before
services of herein-complainants. Regional Arbitration branch of NLRC
"Herein-respondents never questioned the loyalty, honesty and dedication of herein-complainants to - for all the employees (except Micabalo and
their work as well as to the company in which they are working. It is clear that herein-complainants Enriquez), PAL agreed to consider them resigned
were subjected to investigation based on several administrative charges filed against them as a result of w/o benefits and to desist from filing any criminal
the audit findings made by respondent company, but said investigation is not without a cloud of case against them
partiality and harassment. -so Micabalo and Enriquez alleged that the
"Said administrative charges were the offshoot of several grievance suits filed by herein-complainants as charges against them were brought because of
well as the latter's actively participating (sic) in the strike of January 21, 1989 wherein herein- their membership in the union: filed before LA
complainants were active participants. ULP and illegal termination cases
"It is highly suspicious that herein-respondents would file a series of administrative charges only against LA: ifo Ees - they were illegally dismissed
those who instituted grievance suits against them and those who actively participated in the -the investigation conducted by the ER were the
aforementioned strike if not for an ulterior motive. offshoot of several grievance suits filed by PAL as
"If the company would conduct any audit, then said audit must be done to all employees and that all of well as the Ees active participation in the strike
them who may be found to have committed any violation must be correspondingly prosecuted. In the held in 1989 (which LA found to be highly
instant case, only those who were at odds with herein-respondents were made respondents to a series suspicious)
of administrative cases. -no damage shown to have been caused to PAL
"Herein-respondents failed to show that all employees found violating the PAL Code of Discipline were -Ees should be reinstated
correspondingly charged. Furthermore, it failed to show any damage done to the company nor was NLRC: affirmed
there a showing that payment made thru credit cards or the `charge' mode of payment was now
prohibited by the company if by the same it will suffer any damages. (sic) WON NLRC GADALEJ? YES
"Well taken is the fact that both complainants have worked with the respondent company for over ten
(10) years and both have never been previously charged. If at all they were found guilty, then they

should have been considered as first offenders; hence in this case, dismissal is not warranted." [18]
He ordered their reinstatement without loss of seniority rights and awarded one year backwages plus
10% of the total monetary award as attorney's fees. He dismissed, however, the claims for unfair labor
practice, moral and exemplary damages and litigation expenses for lack of merit. [19] On appeal, public
respondent NLRC affirmed in toto the Labor Arbiter's decision and denied PAL's motion for
reconsideration in a Resolution dated June 27, 1994.
Hence, this petition where PAL raises the sole issue of whether or not public respondent NLRC
committed grave abuse of discretion amounting to excess of or want of jurisdiction when it affirmed the
Labor Arbiter's decision that private respondents were illegally dismissed.
We find merit in the petition.
In its Manifestation and Motion filed before this Court, the Solicitor General agreed with petitioner PAL
that private respondents were dismissed for cause. The Solicitor General stated that the Labor Arbiter
and the NLRC grossly misappreciated the facts of the case. Filing its own Comment, public respondent
NLRC claims that it is not for this tribunal to re-examine the truth or falsehood of the facts in the instant
case as factual issues are not fit subject for certiorari. In the same vein, private respondents contend
that findings of facts of administrative agencies are accorded not only respect but even finality when
supported by substantial evidence.
It is correct to postulate that administrative findings of fact are accorded great respect, and even finality
when supported by substantial evidence. Nevertheless, when it can be shown that administrative
bodies grossly misappreciated evidence of such nature as to compel a contrary conclusion, this Court
has not hesitated to reverse their factual findings. Factual findings of administrative agencies are not
infallible and will be set aside when they fail the test of arbitrariness. [20] In the instant case, we find
cogent reasons, as presented by the petitioner and the Solicitor General, not to affirm the factual
findings of the public respondent NLRC.
Firstly, we do not agree with the finding that the charges against private respondents were the off-shoot
of several grievance suits filed by them against PAL and their active participation in the January 21, 1989
PALEA strike. To support this finding, public respondent cited Micabalo's opposition to the alleged
iniquitous promotion system followed by Mr. Hannen under their Collective Bargaining Agreement
(CBA). He alleged that he filed two (2) grievance cases to challenge Mr. Hannen's promotions. In one
case, Mr. Hannen promoted a Davao personnel at his sole discretion. In the second case, Micabalo
himself was denied promotion due to his expired load controller's certificate. Public respondent also
cited private respondents' participation in the 1989 PALEA strike which allegedly strained their
relationship with petitioner.[21]
We hold that these circumstances do not constitute substantial evidence to support the conclusion that
private respondents were illegally dismissed due to their union activites. Substantial evidence is that
amount of relevant evidence which a reasonable mind might accept as adequate to justify a
conclusion.[22] At the very most, all that the evidence shows is that private respondents actively
participated in a prior strike and had protested certain promotions made by management. It is not
logical nor fair to deduce from these facts that they were the primary cause for the dismissal of the
private respondents. The strike happened in 1989 and truth to tell, the strike was declared illegal by this
Court in G.R. No. 88210, January 23, 1991. The grievance cases that were supposed to have incurred the
ire of management are limited to two cases and again the evidence is scant to prove that PAL was wrong
and malicious in its action. Petitioner PAL, on the other hand, presented concrete evidence of repeated
wrong doings by private respondents. The different entries in the box for the mode of payment for the
tickets purchased found in the audit coupon and the flight coupon clearly showed the falsifications
committed by private respondents. Indeed, the private respondents admitted these falsifications.
Micabalo cannot pull a hat trick by alleging "the discrepancy between the entries in the audit coupon
and flight coupon of the subject tickets was not intended to conceal an irregularity, rather it was
intended to reveal an irregularity inadvertently committed." Enriquez was more candid. He conceded
that "while it might be true that there was some sort of falsification, the same was done in good faith
with no intention at all to cause damage to anybody. x x x The change of entry in the ticket from charge
to cash was made only to facilitate the return of the money to the card holder, never to cause damage
to any person or the company." It was only after these irregularities were discovered and only after
proper investigation were the private respondents dismissed from service. Without these irregularities,
private respondents were not charged by petitioner. We note that the records do not show that before
the case at bar, private respondents have complained that they are the subject of harassment by PAL for
their union activities.
Secondly, public respondent NLRC found that petitioner filed charges only against those who instituted
grievance suits. The audit conducted by petitioner was likewise assailed as limited to those who were at
odds with petitioner. We cannot uphold these findings for they are belied by the evidence on
record. As stressed by the Solicitor General, petitioner indiscriminately conducts company-wide audit
on all its ticket sales involving any or all personnel, and those found to have committed infractions were
correspondingly charged for their misdeeds. To be sure, the evidence shows that other erring
employees, namely, Bernardo Fernandez, Jr., Carlos Coruña, Eustaquio Gallardo, Eliseo Villarino, Jr. and
Jose Blones, Jr., were investigated and charged with fraud for similar ticketing anomalies. Private
respondents have not presented any proof that employees who committed similar infractions were
dissimilarly treated. In fine, private respondents have not shown that they have been selectively
prosecuted by the petitioner for their union activities.
Thirdly, the public respondent held that petitioner failed to prove the damage it sustained. It also ruled
that there is no showing that payment through credit cards or the "charge" mode of payment is
prohibited. Petitioner's damage cannot be gainsaid. Petitioner has claimed and the claim has not been
disputed that the use of credit cards when passengers are willing to pay in cash deprived the company
of the immediate use of cash payments. Petitioner also had to pay for service fees when credit cards are
used, thus resulting in income diminution.
On the basis of the foregoing disquisition, we hold that public respondent NLRC acted with grave abuse
of discretion in rendering the assailed Resolution as the same is not supported by substantial
evidence. As correctly observed by the Solicitor General, public respondent NLRC and the Labor Arbiter
committed grave abuse of discretion when they gave more credence to the illogical suppositions and
inferences proffered by private respondents and disregarded the established evidence that they
committed falsification and diverted the cash payments made by the passengers through the use of
credit cards for their personal gain and satisfaction. Private respondents cannot hide behind the mantle

credit cards for their personal gain and satisfaction. Private respondents cannot hide behind the mantle
of unionism for the mantle has never been conceived to shield criminal acts of union officials
perpetrated to pursue personal gains.
We now come to the appropriateness of the penalty of dismissal imposed on private respondents by
petitioner. Section 2, Article VIII of the Code of Discipline of petitioner provides:
"Any employee who makes a false or fraudulent claim against the Company; or knowingly initiates or
takes part in any action intended to defraud the Company or to obtain a payment, benefit, or gain from
the Company to which he is not entitled, or knowingly honors a forged signature for his own benefit or
that of another person; or gives due course or approval to a document knowing it to be false or
erroneous shall suffer the penalty to dismissal." [emphasis supplied]
and Section 5, Article VIII, viz:
"Any employee who, for personal gain or for the benefit of another, shall falsify, conceal, or fabricate
company documents or records or enters false information on any official company document to the
prejudice of the Company shall suffer the penalty of dismissal." [emphasis supplied]
Undoubtedly, the offenses committed by the private respondents involve fraud and falsification. These
are serious offenses and private respondents cannot be heard to complain that they were unaware that
dismissal awaits any employee who transgresses petitioner's rules on fraud and falsification. In the case
at bar, private respondents repeatedly breached these rules over a period of time. Theirs is not just a
single misdeed. While the law regards the employee with compassion, an employer cannot be
compelled to continue with the employment of a person who admittedly is guilty of breach of trust
towards his employer and whose continuance in the service of the latter is patently inimical to its
interest. Well said, the law, in protecting the rights of the employees, authorizes neither oppression
nor self-destruction of the employer.[23]
IN VIEW WHEREOF, the petition for certiorari is GRANTED and the June 23, 1993 Resolution of public
respondent National Labor Relations Commission as well as its Resolution dated June 27, 1994 in NLRC
CA No. M-000291 is REVERSED and SET ASIDE. Private respondents' complaint for illegal dismissal
before the Labor Arbiter is dismissed. No pronouncement as to cost.
SO ORDERED.
Regalado, (Chairman), and Torres, Jr., JJ., concur.
Mendoza, J., no part. On official leave.
[1] Penned by Commissioner Oscar N. Abella and concurred in by Commissioner Leon G. Gonzaga, Jr. and
Presiding Commissioner Musib M. Buat.
[2] Rollo, pp. 66, 150, 157
[3] The procedure on how plane tickets are issued by PAL is as follows: A ticket booklet consists of the
audit coupon as the first page followed by the flight coupon/s [the number of which depends upon the
number of flight legs the passenger will take]. The last page is the passenger coupon. The coupons in a
passenger ticket are supposed to always contain identical entries, as the entries in the audit coupon are
automatically reproduced in the succeeding coupons. When the passenger ticket is generated, the audit
coupon is detached by the issuing clerk from the ticket before it is given to the passenger. The audit
coupon is then sent to PAL's Accounting Department at its main office in Makati City. The ticket given to
the passenger only carries the flight coupon/s and passenger coupon. (Rollo, p. 158)
[4] Rollo, p. 158.
[5] Rollo, pp. 66.
[6] Id.
[7] Rollo, pp. 67-69.
[8] Rollo, p. 69.
[9] Rollo, p. 70.
[10] Rollo, pp. 70-72.
[11] Rollo, p.72.
[12] Rollo, pp. 73-74.
[13] Rollo, pp. 74-75.
[14] Rollo, pp. 75-76.
[15] Rollo, p. 160.
[16] Labor Arbiter’s Decision, pp. 1-2; Rollo, pp. 34-35.
[17] Id., pp. 2-3; Id., pp. 35-36.
[18] Id., pp. 6-8; Id., pp. 39-41.
[19] Id., p. 8-9; Id., pp. 41-42.
[20] Zarate, Jr.,v. Hon. Norma C, Olegario, et. al., G.R. No. 90655, October 7, 1996.
[21] Supra note 17.
[22] Rule 133, Section 5 of the Revised Rules of court.
[23] Itogon-Suyoc Mines, Inc. v. NLRC, et.al., G.R. No. L-54280, September 30, 1982.
Pasted from <http://sc.judiciary.gov.ph/jurisprudence/1997/sep1997/117038.htm>

san jose v nlrc 294 s 336 - 1998
12:38 PM
*on jurisdiction over money claims (LA v

VA)
Original and exclusive jurisdiction of
Labor Arbiters for money claims limited
only to those arising from statutes and
contracts other than a CBA. VAs may
also exercise jurisdiction over Art. 217
disputes, as long as parties agree (Art.
262).
Supreme Court need not remand
case to VA, especially if case has
dragged on for 8 years.
In construing the above provisions, we held in
San Jose vs. NLRC, that the jurisdiction of the
Labor Arbiter and the Voluntary Arbitrator or Panel
of Voluntary Arbitrators over the cases
enumerated in the Labor Code, Articles 217, 261
and 262, can possibly include money claims in one
form or another.
G.R. No. 121227 August 17, 1998

VICENTE SAN JOSE, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and OCEAN TERMINAL SERVICES, INC.,
respondent.
PURISIMA, J.:
Before the Court is a Petition for Certiorari seeking to annul a Decision of the National Labor Relations
Commission dated April 20, 1995 in NLRC-NCR-CA-No. 00671-94 which reversed, on jurisdictional
ground, a Decision of the Labor Arbiter dated January 19, 1994 in NLRC -NCR Case No. 00-03-02101-93
a case for a money claim — underpayment of retirement benefit. Records do not show that petitioner
presented a Motion for Reconsideration of subject Decision of the National Labor Relations Commission,
which motion is, generally required before the filing of Petition for Certiorari.
While the rule prescribing the requisite motion for reconsideration is not absolute and recognizes some
exceptions, there is no showing that the case at bar constitutes an exception. Nevertheless, we gave
due course to the petition to enable the Court to reiterate and clarify the jurisdictional boundaries between
Labor Arbiters and Voluntary Arbitrator or Panel of Voluntary Arbitrators over money claims, and to render
substantial and speedy justice to subject aged stevedore retiree who first presented his claim for
retirement benefit in April 1991, or seven years ago.
Labor law practitioners and all lawyers, for that matter, should be fully conversant with the requirements
for the institution of certiorari proceedings under Rule 65 of the Revised Rules of Court. For instance, it is
necessary that a Motion for Reconsideration of the Decision of the National Labor Relations Commission
must first be resorted to. The ruling in Corazon Jamer v. National Labor Relations Commission , G.R. No.
112630, September 5, 1997, comes to the fore and should be well understood and observed. An ordinary
allegation — ". . . and there is no appeal, nor any plain, speedy, and adequate remedy in the ordinary
course of law" (Rule 65, Sec. 1, Revised Rules of Court) is not a foolproof substitute for a Motion for
Reconsideration, absence of which can be fatal to a Petition for Certiorari. Petitioner cannot and should
not rely on the liberality of the Court simply because he is a working man.
In the Jamer case, this court said:

. . . This premature action of petitioners constitutes a fatal infirmity as ruled in a long line of decisions, most recently is the case of Building
Care Corporation v. National Labor Relations Commission —
The filing of such motion is intended to afford public respondent an opportunity to correct any actual or fancied error attri buted to it by way of
a re-examination of the legal and factual aspects of the case. Petitioner's inaction or negligence under the circumstances is tant amount to a
deprivation of the right and opportunity of the respondent commission to cleanse itself of an error unwittingly committed or to vindicate itself
of an act unfairly imputed. . . .
Likewise, a motion for reconsideration is an adequate remedy; hence certiorari proceedings, as in this case, will not prosper.
As stated in the Decision of the Labor Arbiter in NLRC-NCR-Cas e No. 00-03-0201-93, dated January 19,
1994, the facts of this case are undisputed. The Labor Arbiter reported, thus:
Complainant, in his position paper (Record, pages 11 to 14) states that he was hired sometime in July 1980 as a stevedore con tinuously until
he was advised in April 1991 to retire from service considering that he already reached 65 years old ( sic); that accordingly, he did apply for
retirement and was paid P3,156.39 for retirement pay . . . ( Rollo, pp. 15, 26-27, 58-59).
Decision of the Labor Arbiter in NLRC-NCR-

Decision of the Labor Arbiter in NLRC-NCR-
Case No. 00-03-02101-93, January 9, 1994
(Rollo, pp. 15017, at pp. 16 -17).
The Labor Arbiter decided the case solely on the merits of the complaint. Nowhere in the Decision is
made mention of or reference to the issue of jurisdiction of the Labor Arbiter ( Rollo, pp. 15-17). But the
issue of jurisdiction is the bedrock of the Petition because, as earlier intimated, the Decision of the
National Labor Relations Commission, hereinbelow quoted, reversed the Labor Arbiter's Decision on the
issue of jurisdiction. Reads subject Decision of the Labor Arbiter:
Respondents, in their Reply to complainant's position paper, allege (Record, pages 18 to 21) that complainant's latest basic salary was
P120.34 per day; that he only worked on rotation basis and not seven days a week due to numerous stevedores who can not all b e given
assignments at the same time; that all stevedores only for paid every time they were assigned or actually performed stevedori ng; that the
computation used in arriving at the amount of P3,156.30 was the same computation applied to the other stevedores; that the us e of divisor
303 is not applicable because complainant performed stevedoring job only on call, so while he was connected with the company for the past
11 years, he did not actually render 11 years of service; that the burden of proving that complainant's latest salary was P20 0.00 rests upon
him; that he already voluntarily signed a waiver of quitclaim; that if indeed respondent took advantage of his illiteracy int o signing his
quitclaim, he would have immediately filed this complaint but nay, for it took him two (2) years to do so.
The issue therefore is whether or not complainant is entitled to the claimed differential of separation pay.
We find for the complainant. He is entitled to differential.
We cannot sustain a computation of length of service based on the ECC contribution records. Likewise, the allegation that com plainant
rendered service for only five days a month for the past 11 years is statistically improbable, aside from the fact that the b est evidence thereof
are complainant's daily time records which respondent are ( sic) duty bound to keep and make available anytime in case of this.
The late filing has no bearing. The prescription period is three years. It is suffice ( sic) that the filing falls within the period.
Whether or not complainant worked on rotation basis is a burden which lies upon the employer. The presumption is that the nor mal working
period is eight (8) hours a day and six (6) days a week, or 26 days a month, unless proven otherwise.
Also, the burden of proving the amount of salaries paid to employees rests upon the employer not on the employee. It can be e asily proven
by payrolls, vouchers, etc. which the employers are likewise duty bound to keep and present. There being non, we have to sust ain
complainant's assertion that his latest salary rate was P200 a day or P5,200 a month. Therefore, his retrenchment pay differe ntial is
P25,443.70 broken down as follows:
P200 x 26 days = P5,200 x 11 years
2
= (P2,600 x 11 years) - P3,156.30
= P28,600 - P3,156.30
= P25,443.70
The Decision of the National Labor Relations
Commission in NLRC-NCR-CA No. 06701-94
April 20, 1995 (Rollo, pp. 18 -21).
The National Labor Relations Commission reversed on jurisdictional ground the aforesaid Decision of the
Labor Arbiter; ruling, as follows:
. . . His claim for separation pay differential is based on the Collective Bargaining Agreement (CBA) between his union and t he respondent
company, the pertinent portion of which reads:
. . . ANY UNION member shall be compulsory retired ( sic) by the company upon reaching the age of sixty (60) years, unless otherwise
extended by the company for justifiable reason. He shall be paid his retirement pay equivalent to one -half (1/2) month salary for every year of
service, a fraction of at least six months being considered as one (1) whole year.
. . . The company agrees that in case of casual employees and/or workers who work on rotation basis the criterion for determi ning their
retirement pay shall be 303 rotation calls or work days as equivalent to one (1) year and shall be paid their retirement pay equivalent to one
half (1/2) month for every year of service.
xxx xxx xxx
Since the instant case arises from interpretation or implementation of a collective bargaining agreement, the Labor Arbiter s hould have
dismissed it for lack of jurisdiction in accordance with Article 217 (c) of the Labor Code, which reads : (Emphasis supplied)
Art. 217. Jurisdiction of Labor Arbiter and the Commission.
xxx xxx xxx
(c) Cases arising from the interpretation or implementation of collective bargaining agreement and those arising from the int erpretation or
enforcement of company procedure/policies shall be disposed of by the Labor Arbiter by referring the same to the grievance ma chinery and
voluntary arbitrator as may be provided in said agreements.
Petitioner contends that: F: EE was hired since 1980 but was notified
I. THE PUBLIC RESPONDENT NLRC GRAVELY ABUSED ITS DISCRETION IN GIVING DUE COURSE TO THE APPEAL DESPITE THE
FACT 4 (SIC) THAT IT WAS FILED OUT OF TIME AND THERE IS NO SHOWING THAT A SURETY BOND WAS POSTED. that he should retire because he reached 65.
II. THE PUBLIC RESPONDENT NLRC GRAVELY ABUSED ITS DISCRETION IN SETTING ASIDE THE DECISION OF . . . DATED 19
JANUARY 1994 AND DISMISSING THE CASE ON THE GROUND OF LACK OF JURISDICTION WHEN THE ISSUE DOES NOT INVOLVE
He did apply for retirement and was paid
ANY PROVISION OF THE COLLECTIVE BARGAINING AGREEMENT. ( Rollo, pp. 7-8) P3,156,39
The Manifestation and Motion (In Lieu of Comment) sent in on December 6, 1995 by the Office of the -EE filed for differential on separation pay
Solicitor General support the second issue, re: jurisdiction raised by the Petitioner (Rollo, pp. 26-33, at pp.
-ER alleged that the basic sallary of EE was
38-32).
Labor Arbiter Decision P120.34 per day
Labor Arbiters should exert all efforts to cite statutory provisions and/or judicial decision to buttress their -that he worked on rotation basis, not
dispositions. An Arbiter cannot rely on simplistic statements, generalizations, and assumptions. These are 7 days a week
not substitutes for reasoned judgment. Had the Labor Arbiter exerted more research efforts, support for -only paid every time they were
the Decision could have been found in pertinent provisions of the Labor Code, its implementing Rules,
and germane decisions of the Supreme Court. As this Court said in Juan Saballa, at al. v. NLRC, G.R. assigned or actually performed
No. 102472-84, August 22, 1996: stevedoring
. . . This Court has previously held that judges and arbiters should draw up their decisions and resolutions with due care, a nd make certain -computation for arriving at P3,156.30
that they truly and accurately reflect their conclusions and their final dispositions. A decision should faithfully comply wi th Section 14, Article
VIII of the Constitution which provides that no decision shall be rendered by any court without expressing therein clearly an d distinctly the was same computation for other
facts of the case and the law on which it is based. If such decision had to be completely overturned or set aside, upon the m odified decision, stevedores
such resolution or decision should likewise state the factual and legal foundation relied upon. The reason for this is obviou s: aside from being
required by the Constitution, the court should be able to justify such a sudden change of course; it must be able to convinci ngly explain the -that he did not actually render 11
taking back of its solemn conclusions and pronouncements in the earlier decision. The same thing goes for the findings of fac t made by the
NLRC, as it is a settled rule that such findings are entitled to great respect and even finality when supported by substantia l evidence; years of service
otherwise, they shall be struck down for being whimsical and capricious and arrived at with grave abuse of discretion. It is a requirement of -burden of proving that his latest salary
due process and fair play that the parties to a litigation be informed of how it was decided, with an explanation of the fact ual and legal
reasons that led to the conclusions of the court. A decision that does not clearly and distinctly state the facts and the law on which it is based is P200 is on him
leaves the parties in the dark as to how it was reached and is especially prejudicial to the losing party, who is unable to p inpoint the possible LA: for EE
errors of the court for review by a higher tribunal. . . .
This is not an admonition but rather, advice and a critique to stress that both have obligations to the -cannot sustain a computation of length
Courts and students of the law. Decisions of the Labor Arbiters, the National Labor Relations of service based on the ECC contribution
Commission, and the Supreme Court serve not only to adjudicate disputes, but also as an educational records.
tool to practitioners, executives, labor leaders and law students. They all have a keen interest in methods -allegation that complainant rendered
of analysis and the reasoning processes employed in labor dispute adjudication and resolution. In fact, service for only five days a month for the
decisions rise or fall on the basis of the analysis and reasoning processes of decision makers or past 11 years is statistically
adjudicators.
improbable, aside from the fact that the
On the issues raised by the Petitioner, we rule:
1. Timeliness of Appeal
best evidence thereof are complainant's
And Filing of Appeal Bond daily time records which ER are duty
The Court rules that the appeal of the respondent corporation was interposed within the reglementary bound to keep and make available
period, in accordance with the Rules of the National Labor Relations Commission, and an appeal bond anytime in case of this.
was duly posted. We adopt the following Comment dated August 14, 1996, submitted by the National -on late filing: The prescription period is
Labor Relations Commission, to wit: three years. It is suffice (sic) that the filing
. . . While it is true that private respondent company received a copy of the decision dated January 19, 1994 of the Labor Ar biter . . . and filed
its appeal on February 14, 1994, it is undisputed that the tenth day within which to file an appeal fell on a Saturday, the l ast day to perfect an
falls within the period.
appeal shall be the next working day. -on WON rotation basis: burden which
Thus, the amendments to the New Rules of Procedure of the NLRC, Resolution No. 11 -01-91 which took effect on January 14, 1992, lies upon the employer.
provides in part:
xxx xxx xxx ...presumption is that the normal working
1. Rule VI, Sections 1 and 6 are hereby amended to read as follows:
Sec. 1. Period of Appeal — Decisions, awards or orders of the Labor Arbiter . . . shall be final and executory unless appealed to the
period is eight (8) hours a day and six (6)
Commission by any or both parties within ten (10) calendar days from receipt of such decisions, awards or orders of the Labor Arbiter . . . . . . days a week, or 26 days a month, unless
If the 10th day . . . falls on a Saturday, Sunday or a Holiday, the last day to perfect the decision shall be the next workin g day. (Emphasis proven otherwise.
supplied)
Hence, it is crystal clear that the appeal was filed within the prescriptive period to perfect an appeal. Likewise, the petit ioner's contention that -Also, the burden of proving the amount
private respondent did not post the required surety bond, deserves scant consideration, for the simple reason that a surety b ond was issued of salaries paid to employees rests upon
by BF General Insurance Company, Inc., in the amount of P25,443.70 ( Rollo, pp. 63-64).
the employer not on the employee.

by BF General Insurance Company, Inc., in the amount of P25,443.70 ( Rollo, pp. 63-64).
2. Jurisdictional Issue
the employer not on the employee.
The jurisdiction of Labor Arbiters and Voluntary Arbitrator or Panel of Voluntary Arbitrators is clearly NLRC: reversed LA on jurisdictional ground
defined and specifically delineated in the Labor Code. The pertinent provisions of the Labor Code, read: -case arises from the interpretation of the
A. Jurisdiction of Labor Arbiters CBA (separation pay diffential based on the
Art. 217. Jurisdiction of Labor Arbiter and the Commission. — (a) Except as otherwise provided under this Code the Labor Arbiter 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 CBA. Since interpretation of CBA, LA should
decision without extension, even in the absence of stenographic notes, the following cases involving all workers, whether agr icultural or non-
agricultural: refer it to the grievance machinery and VA)
3. If accompanied with a claim for reinstatement, those cases that workers may file involving wages, rates of pay, hours of w ork and other WON the appeal was timely? YES
terms and conditions of employment; -here, the last day (10th day) for filing the
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 lo ckouts; and, appeal fell on a Saturday
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 -based on NLRC Res. No. 11-01-91, parties
(P5,000) regardless of whether accompanied with a claim for reinstatement. had 10 days to appeal. If the 10th day fell on
xxx xxx xxx
(c) Cases arising from the interpretation or implementation of collective bargaining agreement and those arising from the int erpretation or a
enforcement of company procedure/policies shall be disposed of by the Labor Arbiter by referring the same to the grievance ma chinery and • Saturday
voluntary arbitrator so maybe provided in said agreement.
B. Jurisdiction of Voluntary Arbitrator or Panel of Voluntary Arbitrators • Sunday
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 o r implementation of • Holiday
the Collective Bargaining Agreement and those arising from the interpretation or enforcement of company personnel policies re ferred to in -last day to perfect the decision shall
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 agree ment. For be the next working day
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, WON the LA had jurisdiction over the
grievances or matters under the exclusive and original jurisdiction of the Voluntary Arbitrator or panel of Voluntary Arbitra tors and shall
immediately dispose and refer the same to the Grievance Machinery or Voluntary Arbitration provided in the Collective Bargain ing dispute as to the differential? NO
Agreement. LA had no jurisdiction to hear and decide San
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. Jose's money claim of underpayment of
retirement benefits since the controversy
The aforecited provisions of law cannot be read in isolation or separately. They must be read as a whole arose from the interpretation or
and each Article of the Code reconciled one with the other. An analysis of the provisions of Articles 217,
261, and 262 indicates, that:
implementation of a provision of the CBA
1. The jurisdiction of the Labor Arbiter and Voluntary Arbitrator or Panel of Voluntary Arbitrators over the -VA had jurisdiction
cases enumerated in Articles 217, 261 and 262, can possibly include money claims in one form or -read A217, Art 261 & 262 as a whole
another. 1. The jurisdiction of the Labor Arbiter and
2. The cases where the Labor Arbiters have original and exclusive jurisdiction are enumerated in Article Voluntary Arbitrator or Panel of Voluntary
217, and that of the Voluntary Arbitrator or Panel of Voluntary Arbitrators in Article 261. Arbitrators over the cases enumerated in
3. The original and exclusive jurisdiction of Labor Arbiters is qualified by an exception as indicated in the Articles 217, 261 and 262, can possibly
introductory sentence of Article 217 (a), to wit: include money claims in one form or
Art. 217. Jurisdiction of Labor Arbiters . . . (a) Except as otherwise provided under this Code the Labor Arbiter shall have original and another.
exclusive jurisdiction to hear and decide . . . the following cases involving all workers. . . .
2. The cases where the Labor Arbiters have
The phrase "Except as otherwise provided under this Code" refers to the following exceptions:
A. Art. 217. Jurisdiction of Labor Arbiters . . . original and exclusive jurisdiction are
xxx xxx xxx enumerated in Article 217, and that of the
(c) Cases arising from the interpretation or implementation of collective bargaining agreement and those arising from the int erpretation or Voluntary Arbitrator or Panel of Voluntary
enforcement of company procedure/policies shall be disposed of by the Labor Arbiter by referring the same to the grievance ma chinery and
voluntary arbitrator as may be provided in said agreement.
Arbitrators in Article 261.
B. Art. 262. Jurisdiction over other labor disputes. — The Voluntary Arbitrator or panel of Voluntary Arbitrators, upon agreement of the 3. The original and exclusive jurisdiction of
parties, shall also hear and decide all other labor disputes including unfair labor practices and bargaining deadlocks. Labor Arbiters is qualified by an exception as
indicated in the introductory sentence of
Parenthetically, the original and exclusive jurisdiction of the Labor Arbiter under Article 217 (c), for money Article 217 (a), to wit:
claims is limited only to those arising from statutes or contracts other than a Collective Bargaining Art. 217. Jurisdiction of Labor Arbiters . . . (a) Except as
Agreement. The Voluntary Arbitrator or Panel of Voluntary Arbitrators will have original and exclusive otherwise provided under this Code the Labor Arbiter shall
have original and exclusive jurisdiction to hear and
jurisdiction over money claims "arising from the interpretation or implementation of the Collective decide . . . the following cases involving all workers. . . .
Bargaining Agreement and, those arising from the interpretation or enforcement of company personnel A. Art. 217. Jurisdiction of Labor Arbiters . . .
policies", under Article 261. xxx xxx xxx
(c) Cases arising from the interpretation or implementation of
collective bargaining agreement and those arising from the
4. The jurisdiction of Voluntary Arbitrator or Panel of Voluntary Arbitrators is provided for in Arts. 261 and interpretation or enforcement of company procedure/policies
262 of the Labor Code as indicated above. shall be disposed of by the Labor Arbiter by referring the
same to the grievance machinery and voluntary arbitrator as
may be provided in said agreement.
B. Art. 262. Jurisdiction over other labor disputes. — The
1. A close reading of Article 261 indicates that the original and exclusive jurisdiction of Voluntary Voluntary Arbitrator or panel of Voluntary Arbitrators, upon
agreement of the parties, shall also hear and decide all other
Arbitrator or Panel of Voluntary Arbitrators is limited only to: labor disputes including unfair labor practices and bargaining
. . . unresolved grievances arising from the interpretation or implementation of the Collective Bargaining Agreement and thos e arising from deadlocks.
the interpretation or enforcement of company personnel policies . . . Accordingly, violations of a collective bargaining agre ement, except
those which are gross in character, shall no longer be treated as unfair labor practice and shall be resolved as grievances u nder the SO
Collective Bargaining Agreement. . . . . LA (217(c)): EOJ for money claims is limited
2. Voluntary Arbitrators or Panel of Voluntary Arbitrators, however, can exercise jurisdiction over any and only to those arising from statutes or
all disputes between an employer and a union and/or individual worker as provided for in Article 262. contracts other than a Collective
Art. 262. Jurisdiction over other labor disputes. — The voluntary arbitrator or panel of voluntary arbitrators, upon agreement of the parties, Bargaining Agreement.
shall also hear and decide all other labor disputes including unfair labor practices and bargaining deadlocks.
VA: EOJ over money claims "arising from the
interpretation or implementation of the
It must be emphasized that the jurisdiction of the Voluntary Arbitrator or Panel of Voluntary Arbitrators
Collective Bargaining Agreement and, those
under Article 262 must be voluntarily conferred upon by both labor and management. The labor disputes
arising from the interpretation or enforcement
referred to in the same Article 262 can include all those disputes mentioned in Article 217 over which the
of company personnel policies", under Article
Labor Arbiter has original and exclusive jurisdiction.
261.
As shown in the above contextual and wholistic analysis of Articles 217, 261, and 262 of the Labor Code, SO VA's jurisdiction...
the National Labor Relations Commission correctly ruled that the Labor Arbiter had no jurisdiction to hear • Unresolved grievances from the
and decide petitioner's money -claim-underpayment of retirement benefits, as the controversy between the interpretation or implementation of
parties involved an issue "arising from the interpretation or implementation" of a provision of the collective the CBA
bargaining agreement. The Voluntary Arbitrator or Panel of Voluntary Arbitrators has original and
• Unresolved grievances arising from the
exclusive jurisdiction over the controversy under Article 261 of the Labor Code, and not the Labor Arbiter.
interpretation or enforcement of
3. Merits of the Case company personnel policies
The Court will not remand the case to the Voluntary Arbitrator or Panel of Voluntary Arbitrators for • Other labor disputes, as agreed upon
hearing. This case has dragged on far too long — eight (8) years. Any further delay would be a denial of by the parties
speedy justice to an aged retired stevedore. There is further the possibility that any Decision by the
Voluntary Arbitrator or Panel of Voluntary Arbitrators will be appealed to the Court of Appeals, and finally
to this Court. Hence, the Court will rule on the merits of the case. *BUT THE COURT WOULD NOT REMAND THE
We adopt as our own the retirement benefit computation formula of the Labor Arbiter, and the reasons CASE, AS IT DRAGGED FAR TOO LONG - 8
therefor as stated in the decision abovequoted. YEARS. ANY FURTHER DELAY WOULD BE A
The simple statement of the Labor Arbiter that "we cannot sustain a computation of length of service DENIAL OF SPEEDY JUSTICE
based on ECC contribution records", was not amply explained by the Labor Arbiter; however, there is
-SO ADOPT FORMULA BY LABOR ARBITER!
legal and factual basis for the same. It is unrealistic to expect a lowly stevedore to know what reports his
It is unrealistic to expect a lowly stevedore to
employer submits to the Employee's Compensation Commission under Book IV, Health, Safety and
know what reports his employer submits to

Welfare Benefits, Title II, Employees Compensation and State Insurance Fund, of the Labor Code, simply know what reports his employer submits to
because the insurance fund is solely funded by the employer and the rate of employer's contribution the Employee's Compensation Commission
varies according to time and actuarial computations. (See Articles 183 -184; Labor Code). The worker has under Book IV, Health, Safety and Welfare
Benefits, Title II, Employees Compensation
no ready access to this employer's record. In fact, it is farthest from his mind to inquire into the amount of
and State Insurance Fund, of the Labor
employer's contribution, much less whether the employer remits the contributions. The worker is at all
Code, simply because the insurance fund is
times entitled to benefits upon the occurrence of the defined contingency even when the employer fails to
solely funded by the employer and the rate of
remit the contributions. (See Article 196 (b), Labor Code).
employer's contribution varies according to
All employers are likewise required to keep an employment record of all their employees, namely:
time and actuarial computations. (See
payrolls; and time records. (See Book III, Rule X, specifically Secs. 6, 7, 8, 1 and 12, Omnibus Rules —
Articles 183-184; Labor Code). The worker
Implementing the Labor Code).
has no ready access to this employer's
The respondent-employer was afforded the opportunity to show proof of the petitioner's length of service
record. In fact, it is farthest from his mind to
and pay records. In both instances, the respondent -employer failed. By its own folly, it must therefore
inquire into the amount of employer's
suffer the consequences of such failure. (South Motorists Enterprises v. Tosoc, 181 SCRA 386, [1990])
contribution, much less whether the employer
From the very beginning — by the provision of the retirement provision of the Collective Bargaining
remits the contributions. The worker is at all
Agreement, i.e., the length of service as requirement for retirement, and salary as a basis for benefit
times entitled to benefits upon the occurrence
computation — the employer was forewarned of the need for accurate record keeping. This is precisely
of the defined contingency even when the
the basis of retirement, and the computation of benefits based on years of service and monthly wage.
employer fails to remit the contributions. (See
To recapitulate; the Court hereby rules —
Article 196 (b), Labor Code).
1. That the National Labor Relations Commission correctly ruled that the Labor Arbiter had no jurisdiction
over the case, because the case involved an issue "arising from the interpretation or implementation" of a
Collective Bargaining Agreement;
2. That the appeal to the National Labor Relations Commission was filed within the reglementary period
and that the appeal bond was filed; and
3. That we adopt the computation formula for the retirement benefits by the Labor Arbiter, and the basis
thereof, The respondent must therefore pay the petitioner the additional amount of Twenty -Five Thousand
Four Hundred Forty-Three and Seventy Centavos P25,443.70) Pesos.
In view of the long delay in the disposition of the case, this decision is immediately executory.
SO ORDERED.
Narvasa, C.J., Romero and Kapunan, JJ., concur.
Pasted from <http://www.lawphil.net/judjuris/juri1998/aug1998/gr_121227_1998.html >

sanyo v canizares 211 s 361 - 1992
12:52 PM
Union security clause enforcement

not within VA jurisdiction, as
union is not a party to
controversy.
Failure to establish a grievance
machinery not an excuse to avoid VA
jurisdiction. (Department Order No.
40-03 has a default grievance
procedure.)
The Law phil Proj ect - Arellano Law Foundation
G.R. No. 101619 July 8, 1992
SANYO PHIL. WORKERS UNION-PSSLU ET AL. v s. POTENCIANO S. CANIZARES ET AL.

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 101619 July 8, 1992

SANYO PHILIPPINES WORKERS UNION-PSSLU LOCAL CHAPTER NO. 109 AND/OR
ANTONIO DIAZ, PSSLU NATIONAL PRESIDENT, petitioners,
vs.
HON. POTENCIANO S. CANIZARES, in his capacity as Labor Arbiter, BERNARDO YAP,
RENATO BAYBON, SALVADOR SOLIBEL, ALLAN MISTERIO, EDGARDO TANGKAY,
LEONARDO DIONISIO, ARNEL SALVO, REYNALDO RICOHERMOSO, BENITO VALENCIA,
GERARDO LASALA AND ALEXANDER ATANASIO, respondents.
MEDIALDEA, J.:
This petition seeks to nullify: 1) the order of respondent Labor Arbiter Potenciano Cañizares
dated August 6, 1991 deferring the resolution of the motion to dismiss the complaint of
private respondents filed by petitioner Sanyo Philippines Workers Union-PSSLU Local Chapter
No. 109 (PSSLU, for brevity) on the ground that the labor arbiter had no jurisdiction over
said complaint and 2) the order of the same respondent clarifying its previous order and ruling
that it had jurisdiction over the case.
The facts of the case are as follows:
PSSLU had an existing CBA with Sanyo Philippines Inc. (Sanyo, for short) effective July 1, 1989
to June 30, 1994. The same CBA contained a union security clause which provided:
Sec. 2. All members of the union covered by this agreement must retain their membership in good
standing in the union as condition of his/her continued employment with the company. The union shall
have the right to demand from the company the dismissal of the members of the union by reason of their
voluntary resignation from membership or willful refusal to pay the Union Dues or by reasons of their
having formed, organized, joined, affiliated, supported and/or aided directly or indirectly another labor
organization, and the union thus hereby guarantees and holds the company free and harmless from any
liability whatsoever that may arise consequent to the implementation of the provision of this article. (pp.
5-6, Rollo)
In a letter dated February 7, 1990, PSSLU, through its national president, informed the
management of Sanyo that the following employees were notified that their membership
with PSSLU were cancelled for anti-union, activities, economic sabotage, threats,
coercion and intimidation, disloyalty and for joining another union: Benito Valencia,
Bernardo Yap, Arnel Salvo, Renato Baybon, Eduardo Porlaje, Salvador Solibel, Conrado Sarol,
Angelito Manzano, Allan Misterio, Reynaldo Ricohermoso, Mario Ensay and Froilan Plamenco.
The same letter informed Sanyo that the same employees refused to submit themselves to the
union's grievance investigation committee (p. 53, Rollo). It appears that many of these
employees were not members of PSSLU but of another union, KAMAO.
On February 14, 1990, some officers of KAMAO, which included Yap, Salvo, Baybon, Solibel,
Valencia, Misterio and Ricohermoso, executed a pledged of cooperation with PSSLU
promising cooperation with the latter union and among others, respecting, accepting and
honoring the CBA between Sanyo and specifically:
1. That we shall remain officers and members of KAMAO until we finally decide to rejoin Sanyo Phil.

1. That we shall remain officers and members of KAMAO until we finally decide to rejoin Sanyo Phil.
Workers Union-PSSLU;
2. That henceforth, we support and cooperate with the duly elected union officers of Sanyo Phil. Workers
Union-PSSLU in any and all its activities and programs to insure industrial peace and harmony;
3. That we collectively accept, honor, and respect the Collective Bargaining Agreement entered into
between Sanyo Phil. Inc. and Sanyo Phil. Workers Union-PSSLU dated February 7, 1990;
4 That we collectively promise not to engage in any activities inside company premises contrary to law,
the CBA and existing policies;
5 That we are willing to pay our individual agency fee in accordance with the provision of the Labor Code,
as amended;
6 That we collectively promise not to violate this pledge of cooperation. (p. 55, Rollo)
On March 4, 1991, PSSLU through its national and local presidents, wrote another letter to
Sanyo recommending the dismissal of the following non-union workers: Bernardo Yap,
Arnel Salvo, Renato Baybon, Reynaldo Ricohermoso, Salvador Solibel, Benito Valencia, and
Allan Misterio, allegedly because: 1) they were engaged and were still engaging in anti-
union activities; 2) they willfully violated the pledge of cooperation with PSSLU which
they signed and executed on February 14, 1990; and 3) they threatened and were still
threatening with bodily harm and even death the officers of the union (pp. 37-38, Rollo).
Also recommended for dismissal were the following union members who allegedly joined,
supported and sympathized with a minority union, KAMAO: Gerardo Lasala, Legardo Tangkay,
Alexander Atanacio, and Leonardo Dionisio.
The last part of the said letter provided:

The dismissal of the above-named union members is without prejudice to receive (sic) their
termination pay if management decide (sic) to grant them benefits in accordance with law. The
union hereby holds the company free and harmless from any liability that may arise consequent to the
implementation by the company of our recommendations for the dismissal of the above-mentioned
workers.
It is however suggested that the Grievance Machinery be convened pursuant to Section 3, Article
XV of the Collective Bargaining Agreement (CBA) before their actual dismissal from the company.
(p. 38, Rollo)
Pursuant to the above letter of the union, the company sent a memorandum to the same
workers advising them that:
As per the attached letter from the local union President SPWU and the federation President, PSSLU,
requesting management to put the herein mentioned employees on preventive suspension, effective
immediately, preliminary to their subsequent dismissal, please be informed that the following employees
are under preventive suspension effective March 13, 1991 to wit:
1. Bernardo Yap
2. Renato Baybon
3. Salvador Solibel
4. Allan Misterio
5. Edgardo Tangkay
6. Leonardo Dionisio
7. Arnel Salvo
8. Reynaldo Ricohermoso
9. Benito Valencia
10. Gerardo Lasala
11. Alexander Atanacio
The above listed employees shall not be allowed within company premises without the permission of
management.
As per request of the union's letter to management, should the listed employees fail to appeal the
decision of the union for dismissal, then effective March 23, 1991, said listed employees shall be
considered dismissed from the company. (p 39, Rollo)
The company received no information on whether or not said employees appealed to PSSLU.
Hence, it considered them dismissed as of March 23, 1991 (p. 40, Rollo).
On May 20, 1991, the dismissed employees filed a complaint (pp. 32-35, Rollo) with the NLRC
for illegal dismissal. Named respondent were PSSLU and Sanyo.
On June 20, 1991, PSSLU filed a motion to dismiss the complaint alleging that the Labor
Arbiter was without jurisdiction over the case, relying on Article 217 (c) of P.D. 442, as
amended by Section 9 of Republic Act No. 6715 which provides that cases arising from the
interpretation or implementation of the collective bargaining agreements shall be
disposed of by the labor arbiter by referring the same to the grievance machinery and
voluntary arbitration.
The complainants opposed the motion to dismiss complaint on these grounds: 1) the series of
conferences before the National Conciliation and Mediation Board had been terminated; 2) the
NLRC Labor Arbiter had jurisdiction over the case which was a termination dispute pursuant to
Article 217 (2) of the Labor Code; and 3) there was nothing in the CBA which needs
interpretation or implementation (pp. 44-46, Rollo).
On August 7, 1991, the respondent Labor Arbiter issued the first questioned order. It held that:
xxx xxx xxx
While there are seemingly contradictory provisions in the aforecited article of the Labor Code, the better
interpretation will be to give effect to both, and termination dispute being clearly spelled as falling
under the jurisdiction of the Labor Arbiter, the same shall be respected. The jurisdiction of the
grievance machinery and voluntary arbitration shall cover other controversies.
However, the resolution of the instant issue shall be suspended until both parties have fully presented
their respective positions and the said issue shall be included in the final determination of the above-

their respective positions and the said issue shall be included in the final determination of the above-
captioned case.
WHEREFORE, the instant Motions to Dismiss are hereby held pending.
Consequently, the parties are hereby directed to submit their position papers and supporting documents
pursuant to Section 2, Rule VII of the Rules of the Commission on or before the hearing on the merit of
this case scheduled on August 29, 1991 at 11:00 a.m. (p. 23, Rollo)
On August 27, 1991, PSSLU filed another motion to resolve motion to dismiss complaint
with a prayer that the Labor Arbiter resolve the issue of jurisdiction.
On September 4, 1991, the respondent Labor Arbiter issued the second questioned order which
held that it was assuming jurisdiction over the complaint of private respondents, in effect,
holding that it had jurisdiction over the case.
On September 19, 1991, PSSLU filed this petition alleging that public respondent Labor Arbiter
cannot assume jurisdiction over the complaint of public respondents because it had no
jurisdiction over the dispute subject of said complaint. It is their submission that under Article
217 (c) of the Labor Code, in relation to Article 261 thereof, as well as Policy Instruction No. 6 of
the Secretary of Labor, respondent Arbiter has no jurisdiction and authority to take cognizance
of the complaint brought by private respondents which involves the implementation of the
union security clause of the CBA. The function of the Labor Arbiter under the same law and
rule is to refer this case to the grievance machinery and voluntary arbitration.
In its comment, private respondents argue that Article 217(a) 2 and 4 of the Labor Code is
explicit, to wit:
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 . . . the following cases involving all workers, . . . :
xxx xxx xxx
2) Termination disputes,
xxx xxx xxx
4) Claims for actual, moral, exemplary and other forms of damages arising from the employer-employee
relations.
The private respondents also claimed that insofar as Salvo, Baybon, Ricohermoso, Solibel,
Valencia, Misterio and Lasala were concerned, they joined another union, KAMAO during the
freedom period which commenced on May 1, 1989 up to June 30, 1989 or before the effectivity
of the July 1, 1989 CBA. Hence, they are not covered by the provisions of the CBA between
Sanyo and PSSLU. Private respondents Tangkay, Atanacio and Dionisio admit that in
September 1989, they resigned from KAMAO and rejoined PSSLU (pp.
66(a)-68, Rollo).
For its part, public respondent, through the Office of the Solicitor General, is of the view that a
distinction should be made between a case involving "interpretation or implementation
of collective bargaining agreement or "interpretation" or "enforcement" of company
personnel policies, on the one hand and a case involving termination, on the other hand.
It argued that the case at bar does not involve an "interpretation or implementation" of a
collective bargaining agreement or "interpretation or enforcement" of company policies but
involves a "termination." Where the dispute is just in the interpretation, implementation or
enforcement stage, it may be referred to the grievance machinery set up in the CBA or by
voluntary arbitration. Where there was already actual termination, i.e., violation of rights, it is
already cognizable by the Labor Arbiter.
Article 217 of the Labor Code defines the jurisdiction of the Labor Arbiter.
Art. 217. Jurisdiction of Labor Arbiters and the Commission. a) Except as otherwise provided under this
Code the Labor Arbiters shall have original and exclusive jurisdiction to hear and decide within thirty (30)
calendar days after the submission of the case by the parties for decision without extension even in the
absence of stenographic notes, the following cases involving all workers, whether agricultural or non-
agricultural:
4. Claims for actual, moral, exemplary and other forms of damages arising from the employer-employee
relations;
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.
It is clear from the above article that termination cases fall under the jurisdiction of the
Labor Arbiter. It should be noted however that said article at the outset excepted from the said
provision cases otherwise provided for in other provisions of the same Code, thus the phrase
"Except as otherwise provided under this Code . . . ." Under paragraph (c) of the same article, it
is expressly provided that "cases arising from the interpretation or implementation of collective
bargaining agreements and those arising from the interpretation and enforcement of company

bargaining agreements and those arising from the interpretation and 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. Summary: Sanyo entered into CBA with
union, with Union security clause which
entitles the Union to ask for the dismissal of
It was provided in the CBA executed between PSSLU and Sanyo that a member's employees who are not in good standing
voluntary resignation from membership, willful refusal to pay union dues and his/her anymore with the union. The union availed
forming, organizing, joining, supporting, affiliating or aiding directly or indirectly another of the said clause, asked Sanyo to dismiss
some of the employees who did anti-union
labor union shall be a cause for it to demand his/her dismissal from the company. The activities. The employees now contest their
demand for the dismissal and the actual dismissal by the company on any of these grounds is dismissal from work, bringing the same w/
an enforcement of the union security clause in the CBA. This act is authorized by law provided LA. MTD filed by Sanyo but LA sustained
that enforcement should not be characterized by arbitrariness (Manila Mandarin Employee assumption of jurisdiction. Court held that
the LA correctly assumed jurisdiction
Union v. NLRC, G.R. No. 76989, 29 Sept. 1987, 154 SCRA 368) and always with due process because the case does not involve the union.
(Tropical Hut Employees Union v. Tropical Food Market, Inc., L-43495-99, Jan. 20, 1990). The grievance procedure mandated by law is
only between the union and the company
The reference to a Grievance Machinery and Voluntary Arbitrators for the adjustment or but here, since the latter two are in the same
sides, the dispute is between the employees
resolution of grievances arising from the interpretation or implementation of their CBA and the ER. SO under LA jurisdiction.
and those arising from the interpretation or enforcement of company personnel policies
is mandatory. The law grants to voluntary arbitrators original and exclusive jurisdiction to hear Facts:
and decide all unresolved grievances arising from the interpretation or implementation of the -Sanyo Phil. Entered CBA w/ PSSLU
containing a union security clause which is as
Collective Bargaining Agreement and those arising from the interpretation or enforcement of follows:
company personnel policies (Art. 261, Labor Code). Sec. 2. All members of the union covered by
this agreement must retain their
In its order of September 4, 1991, respondent Labor Arbiter explained its decision to assume membership in good standing in the union as
condition of his/her continued employment
jurisdiction over the complaint, thus: with the company. The union shall have the
The movants failed to show (1) the provisions of the CBA to be implemented, and (2) the grievance right to demand from the company the
machinery and voluntary arbitrator already formed and properly named. What self-respecting judge would dismissal of the members of the union by
refer a case from his responsibility to a shadow? To whom really and specifically shall the case be reason of their voluntary resignation from
indorsed or referred? In brief, they could have shown the (1) existence of the grievance machinery and membership or willful refusal to pay the
(2) its being effective. Union Dues or by reasons of their having
formed, organized, joined, affiliated,
Furthermore, the aforecited law merely directs the "referral" cases. It does not expressly confer supported and/or aided directly or indirectly
jurisdiction on the grievance machinery or voluntary arbitration panel, created or to be created. Article 260 another labor organization, and the union
of the Labor Code describes the formation of the grievance and voluntary arbitration. All this of course thus hereby guarantees and holds the
shall be on voluntary basis. Is there another meaning of voluntary arbitration? (The herein complainant company free and harmless from any liability
have strongly opposed the motion to dismiss. Would they go willingly to the grievance machinery and whatsoever that may arise consequent to the
voluntary arbitration which are installed by their opponents if directed to do so?) (p. 26, Rollo) implementation of the provision of this
article
-Union informed Sanyo that some
The failure of the parties to the CBA to establish the grievance machinery and its employees were not members of PSSLU
unavailability is not an excuse for the Labor Arbiter to assume jurisdiction over disputes anymore for anti-union activities, economic
arising from the implementation and enforcement of a provision in the CBA. In the sabotage, threats etc. (these were members
of another union, KAMAO)
existing CBA between PSSLU and Sanyo, the procedure and mechanics of its -initially KAMAO and PSSLU had an
establishment had been clearly laid out as follows: agreement but since some of the employees
ARTICLE XV — GRIEVANCE MACHINERY still did not follow the said agreement, the
Sec. 1. Whenever any controversy should arise between the company and the union as to the Union notified Sanyo that the employees be
interpretation or application of the provision of this agreement, or whenever any difference shall exist dismissed and so Sanyo did. The company
between said parties relative to the terms and conditions of employment, an earnest effort shall be made recommended that the said employees
appeal to PSSLU or else they would be
to settle such controversy in substantially the following manner: deemed dismissed (initially preventively
First step. (Thru Grievance) The dispute shall initially be resolved by conference between the suspended). Termination finalized when no
management to be represented by the Management's authorized representatives on the one hand, and appeal to PSSLU heard
the Union to be represented by a committee composed of the local union president and one of the local -Ees filed COMPLAINT FOR ILLEGAL
union officer appointed by the local union president, on the other hand within three days from date of DISMISSAL W/ NLRC
concurrence of grievance action. In the absence of the local union president, he (shall) appoint another -Sanyo and PSSLU filed MTD: LA had no
local union officer to take over in his behalf. Where a controversy personally affects an employee, he shall jurisdiction over the case because it involved
the interpretation and implementation of
not be allowed to be a member of the committee represented by the union. the CBA
Second step. (Thru Arbitrator mutually chosen) Should such dispute remain unsettled after twenty (20) -MTD deferred resolution twice (and LA
days from the first conference or after such period as the parties may agree upon in specified cases, it assumed jurisdiction) so the petitioners filed
shall be referred to an arbitrator chosen by the consent of the company and the union. In the event of R65 Certiorari
failure to agree on the choice of voluntary arbitrator, the National Conciliation and Mediation Board,
Department of Labor and Employment shall be requested to choose an Arbitrator in accordance with WON the case is w/n the jurisdiction of the
voluntary arbitration procedures. LA? YES
-ON CLAIM THAT THIS CASE INVOLVED THE
Sec. 2. The voluntary Arbitrator shall have thirty (30) days to decide the issue presented to him and his IMPLEMENTATION OF THE UNION SECURITY
decision shall be final, binding and executory upon the parties. He shall have no authority to add or CLAUSE: Art 217 (a) interpreted in
subtract from and alter any provision of this agreement. The expenses of voluntary arbitration including connection with (c) which provides that in
the fee of the arbitrator shall be shared equally by the company and the union. In the event the arbitrator cases arising from the ...implementation of
chosen either by the mutual agreement of the company and the union by (the) way of voluntary arbitration the CBA ...shall be disposed of by the LA by
or by the National Conciliation and Mediation Board (NCMB) failed to assume his position, died, become referring the same to the grievance
disabled or any other manner failed to function and or reach a decision, the company and the union shall machinery and voluntary arbitration as may
be provided in the CBA
by mutual agreement choose another arbitrator; in the event of failure to agree on the choice of a new -the grounds for dismissal based on violation
voluntary arbitrator, the matter shall again be referred back to the NCMB who shall be requested again to of union security clause is provided n the
choose a new arbitrator as above provided. Any grievance not elevated or processed as above provided CBA
within the stipulated period shall be deemed settled and terminated. -but here, no grievance machinery available.
Sec. 3. It is hereby agreed that decisions of the union relative to their members, for implementation by the BUT IT IS NOT AN EXCUSE FOR THE LA TO
COMPANY, should be resolved for review thru the Grievance Machinery; and management be invited to ASSUME JURISDICTION OVER DISPUTES
ARISING FROM THE IMPLEMENTATION AND
participate in the Grievance procedure to be undertaken by the union relative to (the) case of the union
ENFORCEMENT OF CBA PROVISIONS
against members. (pp. 134-135, Rollo) -All that needs to be done to set the
machinery into motion is to call for the
All that needs to be done to set the machinery into motion is to call for the convening convening thereof. If the parties to the CBA
thereof. If the parties to the CBA had not designated their representatives yet, they had not designated their representatives
yet, they should be ordered to do so.
should be ordered to do so. *SO YES IT IS A CASE INVOLVING THE
IMPLEMENTATION AND INTERPRETATION OF
The procedure introduced in RA 6715 of referring certain grievances originally and exclusively CBA PROVISION BUT IT IS NOT A GRIEVANCE
to the grievance machinery and when not settled at this level, to a panel of voluntary arbitrators ARISING FROM THE IMPLEMENTATION AND
INTERPRETATION OF CBA PROVISION...only
outlined in CBA's does not only include grievances arising from the interpretation or disputes involving the union and the
implementation of the CBA but applies as well to those arising from the implementation of company shall be referred to the grievance

company shall be referred to the grievance
company personnel policies. No other body shall take cognizance of these cases. The last machinery or voluntary arbitrators.
paragraph of Article 261 enjoins other bodies from assuming jurisdiction thereof: -HERE: both the union and the company
are united or have come to an agreement
The commission, its Regional Offices and the Regional Directors of the Department of Labor and regarding the dismissal of private
Employment shall not entertain disputes, grievances or matters under the exclusive and original respondents. No grievance between them
jurisdiction of the Voluntary Arbitrator or panel of voluntary arbitrators and shall immediately dispose and exists which could be brought to a
refer the same to the grievance machinery or voluntary arbitration provided in the Collective Bargaining grievance machinery.
Agreement.
In the instant case, however, We hold that the Labor Arbiter and not the Grievance
Machinery provided for in the CBA has the jurisdiction to hear and decide the complaints
of the private respondents. While it appears that the dismissal of the private respondents
was made upon the recommendation of PSSLU pursuant to the union security clause
provided in the CBA, We are of the opinion that these facts do not come within the
phrase "grievances arising from the interpretation or implementation of (their) Collective
Bargaining Agreement and those arising from the interpretation or enforcement of
company personnel policies," the jurisdiction of which pertains to the Grievance
Machinery or thereafter, to a voluntary arbitrator or panel of voluntary arbitrators. Article
260 of the Labor Code on grievance machinery and voluntary arbitrator states that "(t)he parties
to a Collective Bargaining Agreement shall include therein provisions that will ensure the mutual
observance of its terms and conditions. They shall establish a machinery for the adjustment and
resolution of grievances arising from the interpretation or implementation of their Collective
Bargaining Agreement and those arising from the interpretation or enforcement of company
personnel policies." It is further provided in said article that the parties to a CBA shall name or
designate their respective representatives to the grievance machinery and if the grievance is not
settled in that level, it shall automatically be referred to voluntary arbitrators (or panel of
voluntary arbitrators) designated in advance by the parties. It need not be mentioned that the
parties to a CBA are the union and the company. Hence, only disputes involving the union
and the company shall be referred to the grievance machinery or voluntary arbitrators.
In the instant case, both the union and the company are united or have come to an
agreement regarding the dismissal of private respondents. No grievance between them
exists which could be brought to a grievance machinery. The problem or dispute in the
present case is between the union and the company on the one hand and some union and non-
union members who were dismissed, on the other hand. The dispute has to be settled before an
impartial body. The grievance machinery with members designated by the union and the
company cannot be expected to be impartial against the dismissed employees. Due process
demands that the dismissed workers grievances be ventilated before an impartial body. Since
there has already been an actual termination, the matter falls within the jurisdiction of the Labor
Arbiter.
ACCORDINGLY, the petition is DISMISSED. Public respondent Labor Arbiter is directed to
resolve the complaints of private respondents immediately.
SO ORDERED.
Cruz, Griño-Aquino and Bellosillo, JJ., concur.
Pasted from <http://lawphil.net/judjuris/juri1992/jul1992/gr_101619_1992.html>

vivero v. ca 344 s 268 -2000
12:51 PM
-illegal termination disputes may be included under

the jurisdiction of the VA, provided that it is
expressly agreed upon by both parties
(ER argues that the dispute (re: illegal termination)
should be under the jurisdiciton of the VA)
Submission of “all disputes” to VA not enough,
termination disputes must be specified. Also,
grievance procedure provisions must be
mandatory.
Termination dispute not within ambit of Policy
Instruction No. 56, as it no longer involves
implementation or enforcement of company
personnel policies. Besides, P.I. 56 was belatedly
raised.
Viviero v. Court of appeals (2000)
Private respondents attempt to justify the conferment of jurisdiction over the case on the Voluntary Arbitrator on the ground that
the issue involves the proper interpretation and implementation of the Grievance Procedure found in the CBA.
They point out that when petitioner sought the assistance of his Union to avail of the grievance machinery, he in effect submitted
himself to the procedure set forth in the CBA regarding submission of unresolved grievances to a Voluntary Arbitrator.
Held: The argument is untenable. The case is primarily a termination dispute.
 It is clear from the claim/assistance request form submitted by petitioner to AMOSUP that he was challenging the legality of his
dismissal for lack of cause and lack of due process.
 The issue of whether there was proper interpretation and implementation of the CBA provisions comes into play only because
the grievance procedure provided for in the CBA was not observed after he sought his Union’s assistance in contesting his
termination.
 Thus, the question to be resolved necessarily springs from the primary issue of whether there was a valid termination;
without this, then there would be no reason to invoke the need to interpret and implement the CBA provisions properly.
In San Miguel Corp. v. National Labor Relations Commission this Court held that the phrase "all other labor disputes" may include
termination disputes provided that the agreement between the Union and the Company states "in unequivocal language that [the
parties] conform to the submission of termination disputes and unfair labor practices to voluntary arbitration."
 Ergo, it is not sufficient to merely say that parties to the CBA agree on the principle that "all disputes" should first be submitted to
a Voluntary Arbitrator. There is a need for an express stipulation in the CBA that illegal termination disputes should be resolved by a
Voluntary Arbitrator or Panel of Voluntary Arbitrators, since the same fall within a special class of disputes that are generally
within the exclusive original jurisdiction of Labor Arbiters by express provision of law.
 Absent such express stipulation, the phrase "all disputes" should be construed as limited to the areas of conflict traditionally
within the jurisdiction of Voluntary Arbitrators, i.e., disputes relating to contract-interpretation, contract-implementation, or
interpretation or enforcement of company personnel policies. Illegal termination disputes - not falling within any of these
categories - should then be considered as a special area of interest governed by a specific provision of law.
SECOND DIVISION
[G.R. No. 138938. October 24, 2000]
CELESTINO VIVIERO, petitioner, vs. COURT OF APPEALS, HAMMONIA MARINE SERVICES, and HANSEATIC SHIPPING CO., LTD.
respondents.
DE C I S I O N
BELLOSILLO, J.:
CELESTINO VIVERO, in this petition for review, seeks the reversal of the Decision of the Court of Appeals of 26 May 1999
setting aside the Decision of the National Labor Relations Commission of 28 May 1998 as well as its Resolution of 23 July
1998 denying his motion for its reconsideration, and reinstating the decision of the Labor Arbiter of 21 January 1997.
Petitioner Vivero, a licensed seaman, is a member of the Associated Marine Officers and Seamen's Union of the
Philippines (AMOSUP). The Collective Bargaining Agreement entered into by AMOSUP and private respondents provides,
among others -
ARTICLE XII
GRIEVANCE PROCEDURE
xxx x
Sec. 3. A dispute or grievance arising in connection with the terms and provisions of this Agreement shall be adjusted in accordance
with the following procedure:
1. Any seaman who feels that he has been unjustly treated or even subjected to an unfair consideration shall endeavor to have said
grievance adjusted by the designated representative of the unlicensed department abroad the vessel in the following manner:
A. Presentation of the complaint to his immediate superior.
B. Appeal to the head of the department in which the seaman involved shall be employed.
C. Appeal directly to the Master.
Sec. 4. If the grievance cannnot be resolved under the provision of Section 3, the decision of the Master shall govern at sea x x x x in
foreign ports and until the vessel arrives at a port where the Master shall refer such dispute to either the COMPANY or the UNION in
order to resolve such dispute. It is understood, however, if the dispute could not be resolved then both parties shall avail of the
grievance procedure.
Sec. 5. In furtherance of the foregoing principle, there is hereby created a GRIEVANCE COMMITTEE to be composed of two
COMPANY REPRESENTATIVES to be designated by the COMPANY and two LABOR REPRESENTATIVES to be designated by the UNION.
Sec. 6. Any grievance, dispute or misunderstanding concerning any ruling, practice, wages or working conditions in the COMPANY,
or any breach of the Employment Contract, or any dispute arising from the meaning or the application of the provision of this
Agreement or a claim of violation thereof or any complaint that any such crewmembers may have against the COMPANY, as well as
complaint which the COMPANY may have against such crewmembers shall be brought to the attention of the GRIEVANCE
COMMITTEE before either party takes any action, legal or otherwise.
Sec. 7. The COMMITTEE shall resolve any dispute within seven (7) days from and after the same is submitted to it for resolution and
if the same cannot be settled by the COMMITTEE or if the COMMITTEE fails to act on the dispute within the 7-day period herein
provided, the same shall be referred to a VOLUNTARY ARBITRATION COMMITTEE.
An "impartial arbitrator" will be appointed by mutual choice and consent of the UNION and the COMPANY who shall hear and
decide the dispute or issue presented to him and his decision shall be final and unappealable x x x x[1]

decide the dispute or issue presented to him and his decision shall be final and unappealable x x x x[1]
As found by the Labor Arbiter -

Complainant was hired by respondent as Chief Officer of the vessel "M.V. Sunny Prince" on 10 June 1994 under the terms and
conditions, to wit:
Duration of Contract - - - - 10 months
Basic Monthly Salary - - - - US $1,100.00
Hours of Work - - - - 44 hrs./week
Overtime - - - - 495 lump O.T.
Vacation leave with pay - - - - US $220.00/mo.
On grounds of very poor performance and conduct, refusal to perform his job, refusal to report to the Captain or the vessel’s
Engineers or cooperate with other ship officers about the problem in cleaning the cargo holds or of the shipping pump and his
dismal relations with the Captain of the vessel, complainant was repatriated on 15 July 1994.
On 01 August 1994, complainant filed a complaint for illegal dismissal at Associated Marine Officers’ and Seaman’s Union of the
Philippines (AMOSUP) of which complainant was a member. Pursuant to Article XII of the Collective Bargaining Agreement,
grievance proceedings were conducted; however, parties failed to reach and settle the dispute amicably, thus, on 28 November
1994, complainant filed [a] complaint with the Philippine Overseas Employment Administration (POEA). [2]
The law in force at the time petitioner filed his Complaint with the POEA was EO No. 247.[3]
While the case was pending before the POEA, private respondents filed a Motion to Dismiss on the ground that the POEA
had no jurisdiction over the case considering petitioner Vivero's failure to refer it to a Voluntary Arbitration Committee in
accordance with the CBA between the parties. Upon the enactment of RA 8042, the Migrant Workers and Overseas
Filipinos Act of 1995, the case was transferred to the Adjudication Branch of the National Labor Relations Commission.
LA: On 21 January 1997 Labor Arbiter Jovencio Ll. Mayor Jr., on the basis of the pleadings and documents available on
record, rendered a decision dismissing the Complaint for want of jurisdiction.[4] According to the Labor Arbiter, since
the CBA of the parties provided for the referral to a Voluntary Arbitration Committee should the Grievance Committee
fail to settle the dispute, and considering the mandate of Art. 261 of the Labor Code on the original and exclusive
jurisdiction of Voluntary Arbitrators, the Labor Arbiter clearly had no jurisdiction over the case.[5]
NLRC: Petitioner (complainant before the Labor Arbiter) appealed the dismissal of his petition to the NLRC. On 28 May
1998 the NLRC set aside the decision of the Labor Arbiter on the ground that the record was clear that petitioner had
exhausted his remedy by submitting his case to the Grievance Committee of AMOSUP. Considering however that he
could not obtain any settlement he had to ventilate his case before the proper forum, i.e., the Philippine Overseas
Employment Administration.[6] The NLRC further held that the contested portion in the CBA providing for the
intercession of a Voluntary Arbitrator was not binding upon petitioner since both petitioner and private respondents
had to agree voluntarily to submit the case before a Voluntary Arbitrator or Panel of Voluntary Arbitrators. This would
entail expenses as the Voluntary Arbitrator chosen by the parties had to be paid. Inasmuch however as petitioner chose
to file his Complaint originally with POEA, then the Labor Arbiter to whom the case was transferred would have to take
cognizance of the case.[7]
The NLRC then remanded the case to the Labor Arbiter for further proceedings. On 3 July 1998 respondents filed a
Motion for Reconsideration which was denied by the NLRC on 23 July 1998.
CA: Thus, private respondents raised the case to the Court of Appeals contending that the provision in the CBA requiring
a dispute which remained unresolved by the Grievance Committee to be referred to a Voluntary Arbitration
Committee, was mandatory in character in view of the CBA between the parties. They stressed that "since it is a policy
of the state to promote voluntary arbitration as a mode of settling labor disputes, it is clear that the public respondent
gravely abused its discretion in taking cognizance of a case which was still within the mantle of the Voluntary Arbitration
Commitee’s jurisdiction."[8]
On the other hand, petitioner argued -

(A)s strongly suggested by its very title, referral of cases of this nature to the Voluntary Arbitration Committee is voluntary in nature.
Otherwise, the committee would not have been called Voluntary Arbitration Committee but rather, a Compulsory Arbitration
Committee. Moreover, if the referral of cases of similar nature to the Voluntary Arbitration Committee would be deemed
mandatory by virtue of the provisions in the CBA, the [NLRC] would then be effectively deprived of its jurisdiction to try, hear and
decide termination disputes, as provided for under Article 217 of the Labor Code. Lastly, [respondents] ought to be deemed to have
waived their right to question the procedure followed by [petitioner], considering that they have already filed their Position Paper
before belatedly filing a Motion to Dismiss x x x x [9]
CA: But the Court of Appeals ruled in favor of private respondents. It held that the CBA "is the law between the parties
and compliance therewith is mandated by the express policy of the law."[10] Hence, petitioner should have followed the
provision in the CBA requiring the submission of the dispute to the Voluntary Arbitration Committee once the
Grievance Committee failed to settle the controversy.[11] According to the Court of Appeals, the parties did not have the
choice to "volunteer" to refer the dispute to the Voluntary Arbitrator or a Panel of Arbitrators when there was already an
agreement requiring them to do so. "Voluntary Arbitration" means that it is binding because of a prior agreement or
contract, while "Compulsory Arbitration" is when the law declares the dispute subject to arbitration, regardless of the
consent or desire of the parties.[12]
The Court of Appeals further held that the Labor Code itself enumerates the original and exclusive jurisdiction of the
Voluntary Arbitrator or Panel of Voluntary Arbitrators, and prohibits the NLRC and the Regional Directors of the
Department of Labor and Employment (DOLE) from entertaining cases falling under the same.[13] Thus, the fact that
private respondents filed their Position Paper first before filing their Motion to Dismiss was immaterial and did not
operate to confer jurisdiction upon the Labor Arbiter, following the well-settled rule that jurisdiction is determined by
law and not by consent or agreement of the parties or by estoppel.[14]
Finally, the appellate court ruled that a case falling under the jurisdiction of the Labor Arbiter as provided under Art. 217
of the Labor Code may be lodged instead with a Voluntary Arbitrator because the law prefers, or gives primacy, to
voluntary arbitration instead of compulsory arbitration.[15] Consequently, the contention that the NLRC would be
deprived of its jurisdiction to try, hear and decide termination disputes under Art. 217 of the Labor Code, should the
instant dispute be referred to the Voluntary Arbitration Committee, is clearly bereft of merit.[16] Besides, the Voluntary
Arbitrator, whether acting solely or in a panel, enjoys in law the status of a quasi-judicial agency independent of, and
apart from, the NLRC since his decisions are not appealable to the latter.[17]
Celestino Vivero, in his petition for review assailing the Decision of the Court of Appeals, alleges that the appellate court
committed grave abuse of discretion in holding that a Voluntary Arbitrator or Panel of Voluntary Arbitrators, and not the
Adjudication Branch of the NLRC, has jurisdiction over his complaint for illegal dismissal. He claims that his complaint for
illegal dismissal was undeniably a termination dispute and did not, in any way, involve an "interpretation or
implementation of collective bargaining agreement" or "interpretation" or "enforcement" of company personnel policies.
Thus, it should fall within the original and exclusive jurisdiction of the NLRC and its Labor Arbiter, and not with a
Voluntary Arbitrator, in accordance with Art. 217 of the Labor Code.

Voluntary Arbitrator, in accordance with Art. 217 of the Labor Code.
Private respondents, on the other hand, allege that the case is clearly one "involving the proper interpretation and
implementation of the Grievance Procedure found in the Collective Bargaining Agreement (CBA) between the parties"[18]
because of petitioner’s allegation in his claim/assistance request form submitted to the Union, to wit:
NATURE OF COMPLAINT
3. Illegal Dismissal - Reason: (1) That in this case it was the master of M.V. SUNNY PRINCE Capt. Andersen who created the trouble
with physical injury and stating false allegation; (2) That there was no proper procedure of grievance; (3) No proper notice of
dismissal.
Is there a Notice of dismissal? _x_ Yes or ____ No
What date? 11 July 1994
Is there a Grievance Procedure observed? ____ Yes or _x_ No[19]
Private respondents further allege that the fact that petitioner sought the assistance of his Union evidently shows that he
himself was convinced that his Complaint was within the ambit of the jurisdiction of the grievance machinery and
subsequently by a Panel of Voluntary Arbitrators as provided for in their CBA, and as explicitly mandated by Art. 261 of
the Labor Code.[20]
Thus, the issue is whether the NLRC is deprived of jurisdiction over illegal dismissal cases whenever a CBA provides for
grievance machinery and voluntary arbitration proceedings. Or, phrased in another way, does the dismissal of an
employee constitute a "grievance between the parties," as defined under the provisions of the CBA, and consequently,
within the exclusive original jurisdiction of the Voluntary Arbitrators, thereby rendering the NLRC without jurisdiction
to decide the case?
On the original and exclusive jurisdiction of Labor Arbiters, Art. 217 of the Labor Code provides -
Art. 217. Jurisdiction of Labor Arbiters and the Commission. - (a) Except as otherwise provided under this Code, the Labor Arbiters
shall have original and exclusive jurisdiction to hear and decide within thirty (30) calendar days after the submission of the case by
the parties for decision without extension, even in the absence of stenographic notes, the following cases involving all workers,
whether agricultural or non-agricultural: (1) Unfair labor practice cases; (2) Termination disputes; (3) If accompanied with a claim for
reinstatement, those cases that workers may file involving 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.
(c) Cases arising from the interpretation 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 (emphasis supplied).
However, any or all of these cases may, by agreement of the parties, be submitted to a Voluntary Arbitrator or Panel of
Voluntary Arbitrators for adjudication. Articles 261 and 262 of the Labor Code provide -
Art. 261. Jurisdiction of Voluntary Arbitrators or Panel of Voluntary Arbitrators. - The Voluntary Arbitrator or panel of Voluntary
Summary: Vivero was terminated from his job as a seaman.
Arbitrators shall have original and exclusive jurisdiction to hear and decide all unresolved grievances arising from the interpretation
He filed a complaint for illegal dismissal with his Union and
or implementation of the Collective Bargaining Agreement and those arising from the interpretation or enforcement of company
undergone grievance proceedings but nothing happened so
personnel policies referred to in the immediately preceding article. Accordingly, violations of a Collective Bargaining Agreement,
he just filed a complaint w/ POEA. ER filed MTD, saying he
except those which are gross in character, shall no longer be treated as unfair labor practice and shall be resolved as grievances
should have undergone VA. Upon enactment of Migrant
under the Collective Bargaining Agreement. For purposes of this article, gross violations of Collective Bargaining Agreement shall
Workers and Overseas Filipinos Act of 1995, his case was
mean flagrant and/or malicious refusal to comply with the economic provisions of such agreement.
transferred to NLRC. LA ifo EE. NLRC ruled ifo EE, remanded
The Commission, its Regional Offices and the Regional Directors of the Department of Labor and Employment shall not entertain
case to LA but ER appealed the decision to CA, which ruled in
disputes, grievances or matters under the exclusive and original jurisdiction of the Voluntary Arbitrator or panel of Voluntary
its favor. SC held that the ER cannot invoke the CBA and the
Arbitrators and shall immediately dispose and refer the same to the Grievance Machinery or Voluntary Arbitration provided in the
jurisdiction to VA since it did not follow the grievance
Collective Bargaining Agreement.
procedure itself. And the CBA itself provided an option to the
EE to choose WON to undergo grievance procedure or to go
Art. 262. Jurisdiction Over Other Labor Disputes. - The Voluntary Arbitrator or panel of Voluntary Arbitrators, upon agreement of the
directly to LA, which he did. The implementation and
parties, shall also hear and decide all other labor disputes including unfair labor practices and bargaining deadlocks (emphasis
interpretation of the CBA was just a subissue, but this is the
supplied).
main issue is the illegal termination. If the parties wanted to
submit all disputes to VA, illegal termination should be
Private respondents attempt to justify the conferment of jurisdiction over the case on the Voluntary Arbitrator on the expressly stated as one of the issues.
ground that the issue involves the proper interpretation and implementation of the Grievance Procedure found in the
CBA. They point out that when petitioner sought the assistance of his Union to avail of the grievance machinery, he in Facts:
effect submitted himself to the procedure set forth in the CBA regarding submission of unresolved grievances to a -Vivero was hired as Chief Officer of MV Sunny Prince but was
Voluntary Arbitrator. terminated (repatriated) after a month due to allegedly very
poor performance and conduct, refusal to perform his job,
The argument is untenable. The case is primarily a termination dispute. It is clear from the claim/assistance request form etc.
submitted by petitioner to AMOSUP that he was challenging the legality of his dismissal for lack of cause and lack of due -so Vivero filed a complaint with his Union for illegal
dismissal, and pursuant to the CBA, grievance proceedings
process. The issue of whether there was proper interpretation and implementation of the CBA provisions comes into play
were conducted. However, parties failed to reach and settle
only because the grievance procedure provided for in the CBA was not observed after he sought his Union’s assistance in
the dispute amicably so vivero went to POEA (Since the law
contesting his termination. Thus, the question to be resolved necessarily springs from the primary issue of whether there then applicable in 1994 was EO No. 247)
was a valid termination; without this, then there would be no reason to invoke the need to interpret and implement the -ER filed MTD (no jurisdiction over the case, VA Committee
CBA provisions properly. should be resorted to in accordance w/ CBA) - NOTE
In San Miguel Corp. v. National Labor Relations Commission[21] this Court held that the phrase "all other labor disputes" HOWEVER THAT THEY ALREADY FILED THEIR POSITION
may include termination disputes provided that the agreement between the Union and the Company states "in PAPERS BEFORE FILING MTD (SO IN FACT THEY ARE
unequivocal language that [the parties] conform to the submission of termination disputes and unfair labor practices to ESTOPPED)
voluntary arbitration."[22] Ergo, it is not sufficient to merely say that parties to the CBA agree on the principle that "all ...RA 8042 was enacted so the case was transferred to LA
disputes" should first be submitted to a Voluntary Arbitrator. There is a need for an express stipulation in the CBA that LA: dismissed complaint: CBA should be followed so go to VA
illegal termination disputes should be resolved by a Voluntary Arbitrator or Panel of Voluntary Arbitrators, since the Committee, then if unresolved, VA
NLRC: Vivero had exhausted his remedy by submitting to the
same fall within a special class of disputes that are generally within the exclusive original jurisdiction of Labor Arbiters by
Grievance Committee of the Union. Considering that he
express provision of law. Absent such express stipulation, the phrase "all disputes" should be construed as limited to the
could not obtain any settlement, he was correct in resorting
areas of conflict traditionally within the jurisdiction of Voluntary Arbitrators, i.e., disputes relating to contract- to POEA, and now to LA. So remand case to LA
interpretation, contract-implementation, or interpretation or enforcement of company personnel policies. Illegal -ER appealed to CA
termination disputes - not falling within any of these categories - should then be considered as a special area of interest CA: CBA providing grievance proceeding should be followed.
governed by a specific provision of law. It is the law between the parties.
• Parties had no choice but to submit to VAC because it is
In this case, however, while the parties did agree to make termination disputes the proper subject of voluntary provided in the CBA (VA: contract; LA: law)
arbitration, such submission remains discretionary upon the parties. A perusal of the CBA provisions shows that Sec. 6, • LC provides that VA has exclusive jurisdiction over
Art. XII (Grievance Procedure) of the CBA is the general agreement of the parties to refer grievances, disputes or disputes in CBA
misunderstandings to a grievance committee, and henceforth, to a voluntary arbitration committee. The requirement of • Law prefers VA over LA
specificity is fulfilled by Art. XVII (Job Security) where the parties agreed -
WON the dismissal of an EE constitute a "grievance between
Sec. 1. Promotion, demotion, suspension, dismissal or disciplinary action of the seaman shall be left to the discretion of the Master,
the parties" as defined under the provisions of the CBA, and
upon consultation with the Company and notification to the Union. This notwithstanding, any and all disciplinary action taken on
consequently, w/n the EOJ of the VA? NO
board the vessel shall be provided for in Appendix “B” of this Agreement x x x x [23]
-A217 provides jurisdiction of LA
Sec. 4. x x x x Transfer, lay-off or discipline of seamen for incompetence, inefficiency, neglect of work, bad behavior, perpetration of

board the vessel shall be provided for in Appendix “B” of this Agreement x x x x [23]
-A217 provides jurisdiction of LA
Sec. 4. x x x x Transfer, lay-off or discipline of seamen for incompetence, inefficiency, neglect of work, bad behavior, perpetration of
-but any or all of these cases may, by agreement of the
crime, drunkenness, insubordination, desertion, violation of x x x regulations of any port touched by the Company’s vessel/s and
parties, be submitted to a VA for adjudication (Art 262)
other just and proper causes shall be at Master’s discretion x x x in the high seas or foreign ports. The Master shall refer the
HERE: The case is primarily a termination dispute. It is clear
case/dispute upon reaching port and if not satisfactorily settled, the case/dispute may be referred to the grievance machinery or
from the claim/assistance request form submitted by
procedure hereinafter provided (emphasis supplied).[24]
petitioner to AMOSUP that he was challenging the legality of
his dismissal for lack of cause and lack of due process. The
The use of the word "may" shows the intention of the parties to reserve the right to submit the illegal termination issue of whether there was proper interpretation and
dispute to the jurisdiction of the Labor Arbiter, rather than to a Voluntary Arbitrator. Petitioner validly exercised his implementation of the CBA provisions comes into play only
option to submit his case to a Labor Arbiter when he filed his Complaint before the proper government agency. because the grievance procedure provided for in the CBA
was not observed after he sought his Union’s assistance in
Private respondents invoke Navarro III v. Damasco[25] wherein the Court held that "it is the policy of the state to promote contesting his termination. Thus, the question to be resolved
voluntary arbitration as a mode of settling disputes."[26] It should be noted, however, that in Navarro III all the parties necessarily springs from the primary issue of whether there
voluntarily submitted to the jurisdiction of the Voluntary Arbitrator when they filed their respective position papers and was a valid termination; without this, then there would be no
submitted documentary evidence before him. Furthermore, they manifested during the initial conference that they were reason to invoke the need to interpret and implement the
not questioning the authority of the Voluntary Arbitrator.[27] In the case at bar, the dispute was never brought to a CBA provisions properly.
-here, it is not sufficient that the parties agreed in the CBA to
Voluntary Arbitrator for resolution; in fact, petitioner precisely requested the Court to recognize the jurisdiction of the
submit all disputes to VA. THERE IS A NEED FOR AN EXPRESS
Labor Arbiter over the case. The Court had held in San Miguel Corp. v. NLRC[28] that neither officials nor tribunals can
STIPULATION IN THE CBA THAT ALL ILLEGAL TERMINATION
assume jurisdiction in the absence of an express legal conferment. In the same manner, petitioner cannot arrogate into DISPUTES SHOULD BE RESOLVED BY A VA.
the powers of Voluntary Arbitrators the original and exclusive jurisdiction of Labor Arbiters over unfair labor practices, -further, the CBA makes it the discretion of the parties to
termination disputes, and claims for damages, in the absence of an express agreement between the parties in order for submit to VA (with MAY used in the CBA provision)
Art. 262 of the Labor Code to apply in the case at bar. In other words, the Court of Appeals is correct in holding that -on poicy of the state to promote VA: in this case, the dispute
Voluntary Arbitration is mandatory in character if there is a specific agreement between the parties to that effect. It must was never brought to a VA for resolution and the EE
be stressed however that, in the case at bar, the use of the word "may" shows the intention of the parties to reserve the recognized the jurisdiction of the LA (as opposed to Navarro
right of recourse to Labor Arbiters. III v. Damasco where the parties submitted documentary
evidence before the VA and did not question the authority of
The CBA clarifies the proper procedure to be followed in situations where the parties expressly stipulate to submit the VA - which probably was later questioned by one of the
parties)
termination disputes to the jurisdiction of a Voluntary Arbitrator or Panel of Voluntary Arbitrators. For when the parties
-VA is mandatory i character IF THERE IS A SPECIFIC
have validly agreed on a procedure for resolving grievances and to submit a dispute to voluntary arbitration then that AGREEMENT BETWEEN THE PARTIES TO THAT EFFECT but
procedure should be strictly observed. Non-compliance therewith cannot be excused, as petitioner suggests, by the fact since here, there is none (only permissive w/ the word
that he is not well-versed with the "fine prints" of the CBA. It was his responsibility to find out, through his Union, what "may"), LA has jurisdiction over the termination dispute
the provisions of the CBA were and how they could affect his rights. As provided in Art. 241, par. (p), of the Labor Code - -on Policy Instruction No. 56 ( "Clarifying the Jurisdiction
(p) It shall be the duty of any labor organization and its officers to inform its members on the provisions of its constitution and by- Between Voluntary Arbitrators and Labor Arbiters Over
laws, collective bargaining agreement, the prevailing labor relations system and all their rights and obligations under existing labor
Termination Cases and Providing Guidelines for the
laws.
Referral of Said Cases Originally Filed with the NLRC to
In fact, any violation of the rights and conditions of union membership is a "ground for cancellation of union registration the NCMB"): the instant case is a termination dispute
or expulsion of officer from office, whichever is appropriate. At least thirty percent (30%) of all the members of a union falling under the EOJ of the LA, and does not specifically
or any member or members especially concerned may report such violation to the Bureau [of Labor Relations] x x x x"[29] involve the application, implementation or enforcement
It may be observed that under Policy Instruction No. 56 of the Secretary of Labor, dated 6 April 1993, "Clarifying the of company personnel policies contemplated in Policy
Jurisdiction Between Voluntary Arbitrators and Labor Arbiters Over Termination Cases and Providing Guidelines for the Instruction No. 56.
Referral of Said Cases Originally Filed with the NLRC to the NCMB," termination cases arising in or resulting from the -the Union should have informed Vivero of his option to
interpretation and implementation of collective bargaining agreements and interpretation and enforcement of company appeal the case before VA; ER should have invoked early
personnel policies which were initially processed at the various steps of the plant-level Grievance Procedures under the on Policy Instruction No. 56 (so estopped)
parties' collective bargaining agreements fall within the original and exclusive jurisdiction of the voluntary arbitrator
pursuant to Art. 217 (c) and Art. 261 of the Labor Code; and, if filed before the Labor Arbiter, these cases shall be
dismissed by the Labor Arbiter for lack of jurisdiction and referred to the concerned NCMB Regional Branch for
appropriate action towards an expeditious selection by the parties of a Voluntary Arbitrator or Panel of Arbitrators based
on the procedures agreed upon in the CBA.
As earlier stated, the instant case is a termination dispute falling under the original and exclusive jurisdiction of the Labor
Arbiter, and does not specifically involve the application, implementation or enforcement of company personnel policies
contemplated in Policy Instruction No. 56. Consequently, Policy Instruction No. 56 does not apply in the case at bar. In
any case, private respondents never invoked the application of Policy Instruction No. 56 in their Position Papers, neither
did they raise the question in their Motion to Dismiss which they filed nine (9) months after the filing of their Position
Papers. At this late stage of the proceedings, it would not serve the ends of justice if this case is referred back to a
Voluntary Arbitrator considering that both the AMOSUP and private respondents have submitted to the jurisdiction of
the Labor Arbiter by filing their respective Position Papers and ignoring the grievance procedure set forth in their CBA.
After the grievance proceedings have failed to bring about a resolution, AMOSUP, as agent of petitioner, should have
informed him of his option to settle the case through voluntary arbitration. Private respondents, on their part, should
have timely invoked the provision of their CBA requiring the referral of their unresolved disputes to a Voluntary
Arbitrator once it became apparent that the grievance machinery failed to resolve it prior to the filing of the case before
the proper tribunal. The private respondents should not have waited for nine (9) months from the filing of their Position
Paper with the POEA before it moved to dismiss the case purportedly for lack of jurisdiction. As it is, private respondents
are deemed to have waived their right to question the procedure followed by petitioner, assuming that they have the
right to do so. Under their CBA, both Union and respondent companies are responsible for selecting an impartial
arbitrator or for convening an arbitration committee;[30] yet, it is apparent that neither made a move towards this end.
Consequently, petitioner should not be deprived of his legitimate recourse because of the refusal of both Union and
respondent companies to follow the grievance procedure.
WHEREFORE, the Decision of the Court of Appeals is SET ASIDE and the case is remanded to the Labor Arbiter to dispose
of the case with dispatch until terminated considering the undue delay already incurred.
SO ORDERED.
Mendoza, Quisumbing, Buena, and De Leon, Jr., JJ., concur.
[1] Rollo, pp. 34-35.

[2] Id., pp. 49-50.
[3] Sec. 3, par. (d), of EO No. 247, the "Reorganization Act of the Philippine Overseas Employment Administration" (24 July 1987)
provides -
Sec. 3. Powers and Functions. - x x x x (d) Exercise original and exclusive jurisdiction to hear and decide all claims arising out of an
employee-employer relationship or by virtue of any law or contract involving Filipino workers for overseas employment including
the disciplinary cases; and all pre-employment cases which are administrative in character involving or arising out of violation of
requirement laws, rules and regulations including money claims arising therefrom, or violation of the conditions for issuance of
license or authority to recruit workers x x x x
[4] Id., p. 53.
[5] Rollo, p. 66
[6] Id., p. 60.
[7] Id., p. 61.
[8] Rollo, p. 66.
[9] Rollo, p. 67.
[10] E. Razon, Inc. v. Secretary of Labor and Employment, G.R. No. 85867, 13 May 1993. 222 SCRA 1, 8.
[11] Rollo, p. 69.
[12] Id., p. 70, citing II Azucena, THE LABOR CODE WITH COMMENTS AND CASES 277 (1993).

[11] Rollo, p. 69.
[12] Id., p. 70, citing II Azucena, THE LABOR CODE WITH COMMENTS AND CASES 277 (1993).
[13] Id., p. 70.
[14] Tolentino v. Court of Appeals, G.R. No. 123445, 6 October 1997, 280 SCRA 226, 234.
[15] Labor Code, Art. 211, par. (a) provides that: “It is the policy of the State to promote and emphasize the primacy of free collective
bargaining and negotiations, including voluntary arbitration, mediation and conciliation, as modes of settling labor or industrial
disputes.”
[16] Rollo, p. 70.
[17] Id., p. 70; see Luzon Development Bank v. Association of Luzon Development Bank Employees, G.R. No. 120319, 6 October 1995,
249 SCRA 162, 168-69, citing Labor Code, Art. 262-A, in relation to Labor Code, Art. 217 (b) and (c), as amended by RA 6715, Sec. 9.
[18] Id., p. 74.
[19] Id., p. 23.
[20] Id., p. 74.
[21] G.R. No. 108001, 15 March 1996, 255 SCRA 133.
[22] Id., p. 137.
[23] The aforesaid Appendix B provides for a Table of Offenses and Maximum Penalties, where the offense of insubordination, which
includes “any acts of disobedience to lawful orders of a superior officer” is punished with the maximum penalty of dismissal; Rollo,
p. 46.
[24] Rollo, pp. 36-37.
[25] G.R. No. 101875, 14 July 1995, 246 SCRA 260.
[26] Id., p. 264, citing Manguiat, MECHANISMS OF VOLUNTARY ARBITRATION IN LABOR DISPUTES, pp. 2-6 (1978)
[27] See Note 25, p. 264.
[28] See Note 20, pp. 143-44.
[29] Labor Code, Art. 241 (p).
[30] Rollo, p. 35.
Pasted from <http://sc.judiciary.gov.ph/jurisprudence/2000/oct2000/138938.htm>

ludo v saornido 395 s 451 - 2003
12:56 PM
The issue submitted for resolution of the

VA was the date of regularization of the
employees. But the VA also made an
award of the amount of benefits to the
employee - which is assailed by the ER.
Court held that VA also has jurisdiction
to make awards
VA has plenary jurisdiction and
authority to interpret the agreement to
arbitrate and determine the scope of
his/her authority (eg. amount of
performance bonus, payment of
regularization benefits).
Petitioner contends that the appellate court
gravely erred when it upheld the award of benefits
which were beyond the terms of submission
agreement. Petitioner asserts that the arbitrator
must confine its adjudication to those issues
submitted by the parties for arbitration, which in
this case is the sole issue of the date of
regularization of the workers. Hence, the award of
benefits by the arbitrator was done in excess of
jurisdiction.
On the matter of the benefits, respondents
argue that the arbitrator is empowered to award
the assailed benefits because notwithstanding the
sole issue of the date of regularization, standard
companion issues on reliefs and remedies are
deemed incorporated. Otherwise, the whole
arbitration process would be rendered purely
academic and the law creating it inutile.
The jurisdiction of Voluntary Arbitrator or
Panel of Voluntary Arbitrators and Labor Arbiters is
clearly defined and specifically delineated in the
Labor Code. The pertinent provisions of the Labor
Code, read:
Art. 217. Jurisdiction of Labor Arbiters and
the Commission. --- (a) Except as otherwise
provided under this Code the Labor Arbiters
shall have original and exclusive jurisdiction to
hear and decide, within thirty (30) calendar
days after the submission of the case by the
parties for decision without extension, even in
the absence of stenographic notes, the
following cases involving all workers, whether
agricultural or non-agricultural:
1. Unfair labor practice cases:
3. If accompanied with a claim for
reinstatement, those cases that
workers may file involving wage, rates
of pay, hours of work and other terms
and conditions of employment;
4. Claims for actual, moral, exemplary
and other forms of damages arising
from the employer-employee relations;
xxx
Art. 261. Jurisdiction of Voluntary Arbitrators

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
Art. 262. Jurisdiction over other labor
disputes. — The Voluntary Arbitrator or panel
of Voluntary Arbitrators, upon agreement of
the parties, shall also hear and decide all
other labor disputes including unfair labor
practices and bargaining deadlocks.”
In construing the above provisions, we held in
San Jose vs. NLRC, that the jurisdiction of the
Labor Arbiter and the Voluntary Arbitrator or Panel
of Voluntary Arbitrators over the cases
enumerated in the Labor Code, Articles 217, 261
and 262, can possibly include money claims in one
form or another.
Comparatively, in Reformist Union of R.B. Liner,
Inc. vs. NLRC, compulsory arbitration has been
defined both as “the process of settlement of labor
disputes by a government agency which has the
authority to investigate and to make an award
which is binding on all the parties, and as a mode
of arbitration where the parties are compelled to
accept the resolution of their dispute through
arbitration by a third party .”
While a voluntary arbitrator is not part of the
governmental unit or labor department’s
personnel, said arbitrator renders arbitration
services provided for under labor laws. Generally,
the arbitrator is expected to decide only those
questions expressly delineated by the submission
agreement.
 Nevertheless, the arbitrator can assume
that he has the necessary power to make
a final settlement since arbitration is the
final resort for the adjudication of
disputes.
 In one case, the SC stressed that “xxx the
Voluntary Arbitrator had plenary
jurisdiction and authority to interpret the
agreement to arbitrate and to determine
the scope of his own authority subject
only, in a proper case, to the certiorari
jurisdiction of this Court. The Arbitrator,
as already indicated, viewed his authority
as embracing not merely the
determination of the abstract question of

whether or not a performance bonus was
to be granted but also, in the affirmative
case, the amount thereof.
By the same token, the issue of regularization
should be viewed as two-tiered issue. While the
submission agreement mentioned only the
determination of the date or regularization, law
and jurisprudence give the voluntary arbitrator
enough leeway of authority as well as adequate
prerogative to accomplish the reason for which the
law on voluntary arbitration was created – speedy
labor justice. It bears stressing that the
underlying reason why this case arose is to settle,
once and for all, the ultimate question of whether
respondent employees are entitled to higher
benefits. To require them to file another action for
payment of such benefits would certainly
undermine labor proceedings and contravene the
constitutional mandate providing full protection to
labor.

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 140960 January 20, 2003
LUDO & LUYM CORPORATION, petitioner,
vs.
FERDINAND SAORNIDO as voluntary arbitrator and LUDO EMPLOYEES UNION (LEU) representing 214
of its officers and members, respondents.
QUISUMBING, J.:
This petition for review on certiorari seeks to annul and set aside the decision 1 of the Court of Appeals
promulgated on July 6, 1999 and its Order denying petitioner’s motion for reconsideration in CA -G.R. SP
No. 44341.
The relevant facts as substantially recited by the Court of Appeals in its decision are as follows:
Petitioner LUDO & LUYM CORPORATION (LUDO for brevity) is a domestic corporation engaged in the
manufacture of coconut oil, corn starch, glucose and related products. It operates a manufacturing
plant located at Tupas Street, Cebu City and a wharf where raw materials and finished products are
shipped out.
In the course of its business operations, LUDO engaged the arrastre services of Cresencio Lu Arrastre
Services (CLAS) for the loading and unloading of its finished products at the wharf. Accordingly, several
arrastre workers were deployed by CLAS to perform the services needed by LUDO.
These arrastre workers were subsequently hired, on different dates, as regular rank -and-file employees
of LUDO every time the latter needed additional manpower services. Said employees thereafter joined
respondent union, the LUDO Employees Union (LEU), which acted as the exclusive bargaining agent of
the rank-and-file employees.
On April 13, 1992, respondent union entered into a collective bargaining agreement with LUDO which
provides certain benefits to the employees, the amount of which vary according to the length of service
rendered by the availing employee.
Thereafter, the union requested LUDO to include in its members’ period of service the time during
which they rendered arrastre services to LUDO through the CLAS so that they could get higher
benefits. LUDO failed to act on the request. Thus, the matter was submitted for voluntary arbitration.
The parties accordingly executed a submission agreement raising the sole issue of the date of
regularization of the workers for resolution by the Voluntary Arbitrator.
VA: In its decision dated April 18, 1997, the Voluntary Arbitrator ruled that: (1) the respondent
employees were engaged in activities necessary and desirable to the business of petitioner, and (2) CLAS
is a labor-only contractor of petitioner. 2 It disposed of the case thus:
WHEREFORE, in view of the foregoing, this Voluntary Arbitrator finds the claims of the complainants
meritorious and so hold that:
a. the 214 complainants, as listed in the Annex A, shall be considered regular employees of the
respondents six (6) months from the first day of service at CLAS ;
b. the said complainants, being entitled to the CBA benefits during the regular employment, are
awarded a) sick leave, b) vacation leave & c) annual wage and salary increases during such period in the
amount of FIVE MILLION SEVEN HUNDRED SEVEN THOUSAND TWO HUNDRED SIXTY ONE PESOS AND
SIXTY ONE CENTAVOS (P5,707,261.61) as computed in "Annex A";
c. the respondents shall pay attorney’s fees of ten (10) percent of the total award;
d. an interest of twelve (12) percent per annum or one (1) percent per month shall be imposed to the

award from the date of promulgation until fully paid if only to speed up the payment of these long over
due CBA benefits deprived of the complaining workers.
Accordingly, all separation and/or retirement benefits shall be construed from the date of regularization
aforementioned subject only to the appropriate government laws and other social legislation.
SO ORDERED. 3
In due time, LUDO filed a motion for reconsideration, which was denied. On appeal, the Court of
Appeals affirmed in toto the decision of the Voluntary Arbitrator, thus:
WHEREFORE, finding no reversible error committed by respondent voluntary arbitrator, the instant
petition is hereby DISMISSED.
SO ORDERED.4
Hence this petition. Before us, petitioner raises the following issues:
I
WHETHER OR NOT BENEFITS CONSISTING OF SALARY INCREASES, VACATION LEAVE AND SICK LEAVE
BENEFITS FOR THE YEARS 1977 TO 1987 ARE ALREADY BARRED BY PRESCRIPTION WHEN PRIVATE
RESPONDENTS FILED THEIR CASE IN JANUARY 1995;
II
WHETHER OR NOT A VOLUNTARY ARBITRATOR CAN AWARD BENEFITS NOT CLAIMED IN THE
SUBMISSION AGREEMENT. 5
Petitioner contends that the appellate court gravely erred when it upheld the award of benefits which
were beyond the terms of submission agreement. Petitioner asserts that the arbitrator must confine its
adjudication to those issues submitted by the parties for arbitration, which in this case is the sole issue
of the date of regularization of the workers. Hence, the award of benefits by the arbitrator was done in
excess of jurisdiction.6
Respondents, for their part, aver that the three -year prescriptive period is reckoned only from the time
the obligor declares his refusal to comply with his obligation in clear and unequivocal terms. In this case,
respondents maintain that LUDO merely promised to review the company records in response to
respondents’ demand for adjustment in the date of their regularization without making a categorical
statement of refusal. 7 On the matter of the benefits, respondents argue that the arbitrator is
empowered to award the assailed benefits because notwithstanding the sole issue of the date of
regularization, standard companion issues on reliefs and remedies are deemed incorporated.
Otherwise, the whole arbitration process would be rendered purely academic and the law creating it
inutile.8
The jurisdiction of Voluntary Arbitrator or Panel of Voluntary Arbitrators and Labor Arbiters is clearly
defined and specifically delineated in the Labor Code. The pertinent provisions of the Labor Code, read:
Art. 217. Jurisdiction of Labor Arbiters and the Commission . --- (a) Except as otherwise provided under
this Code the Labor Arbiters shall have original and exclusive jurisdiction to hear and decide, within
thirty (30) calendar days after the submission of the case by the parties for decision without extension,
even in the absence of stenographic notes, the following cases involving all workers, whether
1. Unfair labor practice cases:
3. If accompanied with a claim for reinstatement, those cases that workers may file involving wage,
4. Claims for actual, moral, exemplary and other forms of damages arising from the employer -employee
relations;
xxx
Art. 261. Jurisdiction of Voluntary Arbitrators or panel of Voluntary Arbitrators . — The Voluntary
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 Summary: Ludo hired as regular employees
purposes of this article, gross violations of Collective Bargaining Agreement shall mean flagrant and/or arrastre workers from CLAS. Now these workers
malicious refusal to comply with the economic provisions of such agreement. joined Ludo's labor union and are now claiming
benefits enjoyed by union members. They went
The Commission, its Regional Offices and the Regional Directors of the Department of Labor and to VA, submitted only as the issue to be resolved
Employment shall not entertain disputes, grievances or matters under the exclusive and original the date of regularization of the employees but
the VA awarded benefits (determined amount to
jurisdiction of the Voluntary Arbitrator or panel of Voluntary Arbitrators and shall immediately dispose be received by the parties). Court held that VA
and refer the same to the Grievance Machinery or Voluntary Arbitration provided in the Collective has plenary jurisdiction to make awards in the
Bargaining Agreement. interest of speedy justice.
Art. 262. Jurisdiction over other labor disputes. — The Voluntary Arbitrator or panel of Voluntary Facts:
Arbitrators, upon agreement of the parties, shall also hear and decide all other labor disputes including -LUDO engaged services of Cresencio Lu Arrastre
unfair labor practices and bargaining deadlocks." Services (CLAS) for the loading and unloading of
its products.
-these arrastre workers were eventually made
In construing the above provisions, we held in San Jose vs. NLRC, 9 that the jurisdiction of the Labor (on different days) as regular employees of LUDO
and joined the Lude Employees Union who
Arbiter and the Voluntary Arbitrator or Panel of Voluntary Arbitrators over the cases enumerated in received benefits under the CBA (benefits
the Labor Code, Articles 217, 261 and 262, can possibly include money claims in one form or another .10 depended on length of service)
-Union requested Ludo to include the arrastre
workers to be included among those who are
Comparatively, in Reformist Union of R.B. Liner, Inc. vs. NLRC ,11 compulsory arbitration has been receiving benefits but since LUDO did not, they
defined both as "the process of settlement of labor disputes by a government agency which has the agreed to submit themselves to VA
-submission agreement: date of regularizaion

authority to investigate and to make an award which is binding on all the parties, and as a mode of -submission agreement: date of regularizaion
VA:
arbitration where the parties are compelled to accept the resolution of their dispute through • Employees were engaged in activities
arbitration by a third party (emphasis supplied)." 12 While a voluntary arbitrator is not part of the necessary and desirable to the business
governmental unit or labor department’s personnel, said arbitrator renders arbitration services provided of Ludo
• CLAS is a labor-oly contractor
for under labor laws. • Employees are considered regular
employees of CLAS 6 months from first
day of service at CLAS
Generally, the arbitrator is expected to decide only those questions expressly delineated by the • They are entitled to CBA benefits and
submission agreement. Nevertheless, the arbitrator can assume that he has the necessary power to Attorney's fees
make a final settlement since arbitration is the final resort for the adjudication of disputes. 13 The -Ludo filed MR. Denied. So Instant petition for
R65 Certiorari
succinct reasoning enunciated by the CA in support of its holding, that the Voluntary Arbitrator in a
labor controversy has jurisdiction to render the questioned arbitral awards, deserves our concurrence, WON GADALEJ when VA awarded benefits
thus: beyond the submission agreement? NO
-jurisdiction of VA and LA may include money
In general, the arbitrator is expected to decide those questions expressly stated and limited in the claims in one form or another (San Jose v. NLRC)
submission agreement. However, since arbitration is the final resort for the adjudication of disputes, -Compulsory arbitration: "the process of
settlement of labor disputes by a government
the arbitrator can assume that he has the power to make a final settlement. Thus, assuming that the agency which has the authority to investigate and
submission empowers the arbitrator to decide whether an employee was discharged for just cause, to make an award which is binding on all the
the arbitrator in this instance can reasonable assume that his powers extended beyond giving a yes - parties, and as a mode of arbitration where the
parties are compelled to accept the resolution of
or-no answer and included the power to reinstate him with or without back pay. their dispute through arbitration by a third party
In one case, the Supreme Court stressed that "xxx the Voluntary Arbitrator had plenary jurisdiction and -In general, the arbitrator is expected to decide
those questions expressly stated and limited in
authority to interpret the agreement to arbitrate and to determine the scope of his own authority the submission agreement. However, since
subject only, in a proper case, to the certiorari jurisdiction of this Court. The Arbitrator, as already arbitration is the final resort for the adjudication
indicated, viewed his authority as embracing not merely the determination of the abstract question of of disputes, the arbitrator can assume that he has
the power to make a final settlement. Thus,
whether or not a performance bonus was to be granted but also, in the affirmative case, the amount assuming that the submission empowers the
thereof. arbitrator to decide whether an employee was
discharged for just cause, the arbitrator in this
instance can reasonable assume that his powers
By the same token, the issue of regularization should be viewed as two -tiered issue. While the extended beyond giving a yes-or-no answer and
submission agreement mentioned only the determination of the date or regularization, law and included the power to reinstate him with or
without back pay.
jurisprudence give the voluntary arbitrator enough leeway of authority as well as adequate -While the submission agreement mentioned
prerogative to accomplish the reason for which the law on voluntary arbitration was created – speedy only the determination of the date or
labor justice. It bears stressing that the underlying reason why this case arose is to settle, once and for regularization, law and jurisprudence give the
voluntary arbitrator enough leeway of authority
all, the ultimate question of whether respondent employees are entitled to higher benefits. To require as well as adequate prerogative to accomplish
them to file another action for payment of such benefits would certainly undermine labor proceedings the reason for which the law on voluntary
and contravene the constitutional mandate providing full protection to labor. 14 arbitration was created – speedy labor justice.
-WON Money claim is barred by prescription: NO.
In accordance with the findings of the VA who
As regards petitioner’s contention that the money claim in this case is barred by prescription, we hold had received evidence of the parties first hand.
that this contention is without merit. So is petitioner’s stance that the benefits claimed by the
respondents, i.e., sick leave, vacation leave and 13th -month pay, had already prescribed, considering
the three-year period for the institution of monetary claims. 15 Such determination is a question of fact
which must be ascertained based on the evidence, both oral and documentary, presented by the parties
before the Voluntary Arbitrator. In this case, the Voluntary Arbitrator found that prescription has not as
yet set in to bar the respondents’ claims for the monetary benefits awarded to them. Basic is the rule
that findings of fact of administrative and quasi -judicial bodies, which have acquired expertise
because their jurisdiction is confined to specific matters, are generally accorded not only great respect
but even finality. 16 Here, the Voluntary Arbitrator received the evidence of the parties first -hand. No
compelling reason has been shown for us to diverge from the findings of the Voluntary Arbitrator,
especially since the appellate court affirmed his findings, that it took some time for respondent
employees to ventilate their claims because of the repeated assurances made by the petitioner that it
would review the company records and determine therefrom the validity of the claims, without
expressing a categorical denial of their claims. As elucidated by the Voluntary Arbitrator:
The respondents had raised prescription as defense. The controlling law, as ruled by the High Court, is:
"The cause of action accrues until the party obligated refuses xxx to comply with his duty. Being warded
off by promises, the workers not having decided to assert [their] right[s], [their] causes of action had not
accrued…" (Citation omitted.)
Since the parties had continued their negotiations even after the matter was raised before the
Grievance Procedure and the voluntary arbitration, the respondents had not refused to comply with
their duty. They just wanted the complainants to present some proofs. The complainant’s cause of
action had not therefore accrued yet. Besides, in the earlier voluntary arbitration case aforementioned
involving exactly the same issue and employees similarly situated as the complainants’, the same
defense was raised and dismissed by Honorable Thelma Jordan, Voluntary Arbitrator.
In fact, the respondents’ promised to correct their length of service and grant them the back CBA
benefits if the complainants can prove they are entitled rendered the former in estoppel, barring them
from raising the defense of laches or prescription. To hold otherwise amounts to rewarding the
respondents for their duplicitous representation and abet them in a dishonest scheme against their
workers. 17
Indeed, as the Court of Appeals concluded, under the equitable principle of estoppel, it will be the
height of injustice if we will brush aside the employees’ claims on a mere technicality, especially when it
is petitioner’s own action that prevented them from interposing the claims within the prescribed period.
WHEREFORE, the petition is denied. The appealed decision of the Court of Appeals in CA -G.R. SP No.
44341 and the resolution denying petitioner’s motion for reconsideration, are AFFIRMED. Costs against
petitioner.
SO ORDERED.
Bellosillo, (Chairman), Mendoza, Austria -Martinez and Callejo, Sr., JJ., concur.
Footnotes

Footnotes
1 Rollo, pp. 29-34. Penned by Associate Justice Angelina Sandoval Gutierrez, former Associate Justice of
the CA.
2 Id. at 60-61.
3 Id. at 63.
4 Id. at 33.
5 Id. at 10-11.
6 Id. at 16.
7
Id. at 97-98.
8
Id. at 99-101.
9 294 SCRA 336 (1998).
10
Supra note 9 at 348.
11
266 SCRA 713 (1997).
12
Supra note 11, at 723.
13
Rollo, pp. 31-32 citing C.A. Azucena, The Labor Code, With Comments and Cases , 1993 Ed., p. 283 and
Sime Darby Pilipinas, Inc. vs. Magsalin , G.R. No. 90426, 180 SCRA 177, 183 (1989).
14
Ibid.
15
Labor Code, ART. 291. Money claims. – All money claims arising from employer-employee relation
accruing during the effectivity of this Code shall be filed within three (3) years from the time that cause
of action accrues; otherwise they shall be forever barred.
xxx
16 Conti vs. NLRC, G.R. No. 119253, 271 SCRA 114, 122 (1997).
17 Rollo, pp. 61-62.

apalisok v radio philippines 403 s 238 - 2003
12:56 PM
Even if employee initially waives

grievance procedure, change of
heart in favor of VA still proper.
G.R. No. 138094 May 29, 2003
MARILOU GUANZON APALISOK vs. RPN RADIO STATION DYKC, ET AL.

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 138094 May 29, 2003
MARILOU GUANZON APALISOK, petitioner,
vs.
RADIO PHILIPPINES NETWORK RADIO STATION DYKC and STATION MANAGER GEORGE SUAZO,
respondents.
CARPIO MORALES, J.:
Before this Court is a petition for review on certiorari under Rule 45 assailing the Court of Appeals
Decision1 of October 30, 1998 and Resolution 2 of February 26, 1999.
On May 15, 1995, Marilou Gaunzon Apalisok (petitioner), then Production Chief of Radio Philippines
Network (RPN) Station DYKC, received a Memorandum3 from Branches Operations Manager Gilito
Datoc asking her to submit a written explanation why no disciplinary action should be taken against her
for performance of acts hostile to RPN, and arrogant, disrespectful and defiant behavior towards her
superior Station Manager George Suazo.
Complying, petitioner submitted on May 16, 1995 her Answer 4 to the memorandum.
On May 31, 1995, petitioner received another memorandum from the Administrative Manager of RPN,
informing her of the termination of her services effective the close of regular office hours of June 15,
1995.
Summary: Apalisok was dismissed from RPN after
By letter of June 5, 1995, petitioner informed RPN, by letter of June 5, 1995, of her decision to waive her being issued a memo for her to explain the admin
right to resolve her case through the grievance machinery of RPN as provided for in the Collective charges against her and then afterwards just
Bargaining Agreement (CBA) and to lodge her case before the proper government forum . She informed of her dismissal. She waived resort to
the grievance procedure and filed case with NLRC
thereafter filed a complaint against RPN DYKC and Suazo (respondents) for illegal dismissal before the but undergone VA, to which the parties submitted
National Labor Relations Commission, Regional Arbitration Branch of Region 7 which referred it to the a Submission Agreement. VA ruled ifo Apalisok so
National Conciliation and Mediation Board. RPN appealed to CA. CA held that VA had no
jurisdiction because waiver of grievance
machinery is waiver to resort to VA since the
By Submission Agreement5 dated June 20, 1995 signed by their respective counsels, petitioner and dispute becomes a resolved grievance. Court held
that even if a party waives the grievance
respondents agreed to submit for voluntary arbitration the issue of whether petitioner's dismissal was procedure, if they agree to submit themselves to
valid and to abide by the decision of the voluntary arbitrator . VA it is allowed.
Facts:
In her position paper 6 submitted before the voluntary arbitrator, petitioner prayed that her dismissal be -Apalisok was the Production Chief of RPN when
declared invalid and that she be awarded separation pay, backwages and other benefits granted to her she was issued a Memo to explain her acts hostile
by the Labor Code since reinstatement is no longer feasible due to strained relations. She also prayed to RPN and the arrogant, disprespectful and
defiant behavior towards her superior. She filed
that she be awarded P2,000,000.00 for moral damages and P500,000.00 for exemplary damages. her Answer to the said Memo.
-She was later informed of her termination
-She wrote to RPN that she was waiving the
Respondents on the other hand prayed for the dismissal of the complaint, arguing that the voluntary grievance machinery provided in CBA
arbitrator had no jurisdiction over the case and, assuming that he had, the complaint is dismissible for -she then filed complaint for Illegal dismissal
lack of merit as petitioner was not illegally dismissed. 7 before the NLRC
-NLRC referred case to NCMB
-parties submitted Submission Agreement (issue:
VA: ifo Apalisok WON Apalisok's dismissal was valid; they
On October 18, 1995, the voluntary arbitrator rendered an Award 8 in favor of petitioner, the dispositive promised to abide by the decision of VA)
-VA: dismissal was invalid. Granted Separation pay
portion of which reads: because of strained relations
WHEREFORE, above premises considered, this Voluntary Arbitrator rules that the dismissal of -RPN appealed to SC, but was referred to CA
(Luzon Dev't Bank v. Assoc. Of Luzon Dev't Bank
complainant was invalid. Employees)
However, considering the impracticality of reinstatement because of proven strained relation between -CA: option of Apalisok not to subject the dispute
the parties, respondents, instead shall pay complainant the amount of FOUR HUNDRED ELEVEN to grievance machinery was tantamount to
relinquishing her right to avail of the aid of a VA;
THOUSAND ONE HUNDRED TWENTY SIX PESOS & SEVENTY-SIX CENTAVOS (P411,126.76) itemized as said act converted grievance into a resolved one

said act converted grievance into a resolved one
follows: so VA had no jurisdiction
In summary, the total award is hereunder itemized:
WON VA had jurisdiction even if the EE waived
1. SEPARATION PAY (P14,600.00 divide by 30 days multiplied by 15 days per year of P138,700.9 resort to grievance machinery? YES
-LC provides that VA would have jurisdiction if
service x 19 years) ......................................... 5 parties agree
2. BACKWAGES (P14,600 X 6 months) ............................. P -voluntary arbitration as a mode of settling the
dispute was not forced upon respondents. Both
88,817.00 parties indeed agreed to submit the issue of
validity of the dismissal of petitioner to the
3. MORAL AND EXEMPLARY DAMAGES ........................... P100,000.0 jurisdiction of the voluntary arbitrator by the
0 Submission Agreement duly signed by their
respective counsels.
4. SERVICE INCENTIVE LEAVES (P14,600 divide by 30 days = P486.67 x 5 days = P2,433.35 x P
19 years ....... 46,233.65
5. ATTORNEY'S FEES (10%) ........................... P
37,375.16
All other claims are hereby denied.
SO ORDERED. (Emphasis supplied)
Respondents' motion for reconsideration 9 of the Award having been denied by the voluntary arbitrator
by Order of November 21, 1995, they filed a petition for certiorari before this Court, docketed as G.R.
No. 122841.
By Resolution 10 of December 13, 1995, the Third Division of this Court referred G.R. No. 122841 to the
Court of Appeals, following the case of Luzon Development Bank v. Association of Luzon Development
Bank Employees, et al. 11 holding that decisions or awards of a voluntary arbitrator or panel of arbitrators
in labor cases are reviewable by the Court of Appeals.
CA: The Court of Appeals, finding that the option of petitioner not to subject the dispute to the
grievance machinery provided for in the CBA was tantamount to relinquishing her right to avail of the
aid of a voluntary arbitrator in settling the dispute which "likewise converted an unresolved grievance
into a resolved one," held that the voluntary arbitrator did not have jurisdiction over petitioner's
complaint and accordingly nullified and set aside, by Decision of October 30, 1998, the voluntary
arbitration award.
Petitioner's Motion for Reconsideration12 of the Court of Appeals Decision having been denied by
Resolution13 of February 26, 1999, the present petition was filed which raises the following issues:
1. Whether or not the Voluntary Arbitrator had jurisdiction over petitioner's complaint, and
2. Whether or not respondents are guilty of estoppel. 14
Petitioner, citing Article 262 of the Labor Code of the Philippines, as amended which reads:
ARTICLE 262. JURISDICTION OVER OTHER LABOR DISPUTES. The Voluntary Arbitrator or panel of
Voluntary Arbitrators, upon agreement of the parties, shall hear and decide all other labor disputes
including unfair labor practices and bargaining deadlocks. (Emphasis and italics supplied),
contends that her option not to subject the dispute to the grievance machinery of RPN did not amount
to her relinquishing of her right to avail of voluntary arbitration as a mode of settling it for she and
respondents in fact agreed to have the dispute settled by a voluntary arbitrator when they freely
executed the above-said Submission Agreement. She thus concludes that the voluntary arbitrator has
jurisdiction over the controversy.15
Petitioner contends in any event that even assuming that the voluntary arbitrator had no jurisdiction
over the case, it would not be in keeping with settled jurisprudence to allow a losing party to question
the authority of the voluntary arbitrator after it had freely submitted itself to its authority. 16
The above quoted Article 262 of the Labor Code provides that upon agreement of the parties, the
voluntary arbitrator can hear and decide all other labor disputes.
Contrary to the finding of the Court of Appeals, voluntary arbitration as a mode of settling the dispute
was not forced upon respondents. Both parties indeed agreed to submit the issue of validity of the
dismissal of petitioner to the jurisdiction of the voluntary arbitrator by the Submission Agreement duly
signed by their respective counsels.
As the voluntary arbitrator had jurisdiction over the parties' controversy, discussion of the second issue
is no longer necessary.
WHEREFORE, the Court of Appeals Decision of October 30, 1998 is hereby SET ASIDE and the voluntary
arbitration Award of October 18, 1995 is hereby REINSTATED.
SO ORDERED.
Puno and Panganiban, JJ ., concur.
Sandoval-Gutierrez and Corona, JJ ., on leave.
Footnotes

1
Rollo at 169-180.
2
Id. at 190.
3 Id. at 73.
4
Id. at 74-77.
5
Id. at 24.
6
Id. at 103-117.
7
Id. at 81-98.
8 Id. at 25-31.
9
Id. at 151-152.
10 Id. at 153.
11
G.R. No. 120319, October 6, 1995.
12 Id. at 181-187.
13
Id. at 190.
14 Id. at 13.
15 Id. at 14.
16 Id. at 15.

atlas farms v nlrc 392 s 128 - 2002
12:57 PM
Union failure to object to

employee’s termination or
retirement does not place dispute
within VA jurisdiction.
Where NLRC dismisses case and refers
matter to company grievance procedure,
failure of company to activate grievance
mechanism entitles employee to re-seek
recourse with the NLRC.
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 142244 November 18, 2002
ATLAS FARMS, INC., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION,
JAIME O. DELA PEÑA and MARCIAL I. ABION, respondents.
DE C I S I O N
QUISUMBING, J.:
Petitioner seeks the reversal of the decision 1 dated January 10, 2000 of the Court of Appeals in CA -G.R.
SP No. 52780, dismissing its petition for certiorari against the NLRC, as well as the resolution 2 dated
February 24, 2000, denying its motion for reconsideration.
The antecedent facts of the case, as found by the Court of Appeals, 3 are as follows:
Private respondent Jaime O. dela Peña was employed as a veterinary aide by petitioner in December
1975. He was among several employees terminated in July 1989. On July 8, 1989, he was re -hired by
petitioner and given the additional job of feedmill operator. He was instructed to train selected workers
to operate the feedmill.
On March 13, 1993, 4 Peña was allegedly caught urinating and defecating on company premises not
intended for the purpose. The farm manager of petitioner issued a formal notice directing him to
explain within 24 hours why disciplinary action should not be taken against him for violating company
rules and regulations. Peña refused, however, to receive the formal notice . He never bothered to
explain, either verbally or in writing, according to petitioner. Thus, on March 20, 1993, a notice of
termination with payment of his monetary benefits was sent to him. He duly acknowledged receipt of
his separation pay of P13,918.67.
From the start of his employment on July 8, 1989, until his termination on March 20, 1993, Peña had
worked for seven days a week, including holidays, without overtime, holiday, rest day pay and service
incentive leave. At the time of his dismissal from employment, he was receiving P180 pesos daily wage,
or an average monthly salary of P5,402.
Co-respondent Marcial I. Abion5 was a carpenter/mason and a maintenance man whose employment
by petitioner commenced on October 8, 1990. Allegedly, he caused the clogging of the fishpond
drainage resulting in damages worth several hundred thousand pesos when he improperly disposed of
Summary: Ees were terminated allegedly
the cut grass and other waste materials into the pond’s drainage system. Petitioner sent a written for violation of company personnel
notice to Abion, requiring him to explain what happened, otherwise, disciplinary action would be taken policies, but Ees alleged it was for their
efforts to form a union. No notice proved
against him. He refused to receive the notice and give an explanation, according to petitioner. to have been given to the Ees before they
Consequently, the company terminated his services on October 27, 1992. He acknowledged receipt of a were dismissed. Ees received separation
written notice of dismissal, with his separation pay. pay. Ees filed illegal termination case
before NLRC but was dismissed and was
referred to grievance machinery in CBA.
Like Peña, Abion worked seven days a week, including holidays, without holiday pay, rest day pay, Since nothing happened in grievance
service incentive leave pay and night shift differential pay. When terminated on October 27, 1992, Abion machinery (it was not constituted due to

service incentive leave pay and night shift differential pay. When terminated on October 27, 1992, Abion machinery (it was not constituted due to
ER), refiled illegal termination case. LA
was receiving a monthly salary of P4,500. found there was illegal dismissal (and
primarily, this was illegal dismissal case)
but since Ees accepted separation pay,
Peña and Abion filed separate complaints for illegal dismissal that were later consolidated. Both estopped from claiming. NLRC reversed
claimed that their termination from service was due to petitioner’s suspicion that they were the and CA affirmed. Court held that this is an
leaders in a plan to form a union to compete and replace the existing management-dominated union. illegal dismissal case and interpretation
and implementation of CBA provisions
merely subissues so this is under LA's
LA: On November 9, 1993, the labor arbiter dismissed their complaints on the ground that the grievance jurisdiction. Also ruled that since no effort
machinery in the collective bargaining agreement (CBA) had not yet been exhausted . Private to constitute grievance machinery on part
of ER, Ees cannot be faulted for searching
respondents availed of the grievance process, but later on refiled the case before the NLRC in Region for an impartial forum. Court also found
IV. They alleged "lack of sympathy" on petitioner’s part to engage in conciliation proceedings. illegal dismissal for failure of ER to
substantiate charges against Ees.
Their cases were consolidated in the NLRC. At the initial mandatory conference, petitioner filed a Facts:
motion to dismiss, on the ground of lack of jurisdiction, alleging private respondents themselves -2 employees were dismissed, allegedly
refused to receive the formal notice nor
admitted that they were members of the employees’ union with which petitioner had an existing CBA. explain theirselves to ER, and were
This being the case, according to petitioner, jurisdiction over the case belonged to the grievance terminated:
machinery and thereafter the voluntary arbitrator, as provided in the CBA. • Pena allegedly was caught
urinating and defecating on
company premises not intended
LA 2: In a decision dated January 30, 1996, the labor arbiter dismissed the complaint for lack of merit, for the purpose
• Abion allegedly caused the
finding that the case was one of illegal dismissal and did not involve the interpretation or clogging of the fishpond drainage
implementation of any CBA provision. He stated that Article 217 (c) of the Labor Code 6 was inapplicable due to improper disposal of waste
to the case. Further, the labor arbiter found that although both complainants did not substantiate their -both employees received their separation
pay
claims of illegal dismissal, there was proof that private respondents voluntarily accepted their -they separately filed ILLEGAL DISMISSAL
separation pay and petitioner’s financial assistance . complaints before NLRC, alleging that they
were dismissed because Atlas suspected
them of forming a union which is against
NLRC: Thus, private respondents brought the case to the NLRC, which reversed the labor arbiter’s the company-dominated union
decision. Dissatisfied with the NLRC ruling, petitioner went to the Court of Appeals by way of a petition -LA1: dismissed complaints: grievance
machinery under CBA should be followed
for review on certiorari under Rule 65, seeking reinstatement of the labor arbiter’s decision. -Abion and Pena availed of the grievance
machinery but due to "lack of sympathy"
CA: The appellate court denied the petition and affirmed the NLRC resolution with some modifications, on Atlas' part to engage in conciliation
proceedings, they refiled case w/ NLRC
thus: -Atlas filed MTD for lack of jurisdiction:
WHEREFORE, the petition is DENIED. The resolution in NLRC CA No. 010520 -96 is AFFIRMED with the should have exhausted remedies under
following modifications: CBA - and if not, should have gone to VA
LA2: although he assumed jurisdiction
1) The private respondents can not be reinstated, due to their acceptance of the separation pay offered (primarily a termination case), he
by the petitioner; dismissed the complaint because Ees
allegedly failed to substantiate claims for
2) The private respondents are entitled to their full back wages; and, illegal dismissal, and since they voluntary
3) The amount of the separation pay received by private respondents from petitioner shall not be accepted separation pay
deducted from their full back wages. NLRC: reversed LA
CA: Affirmed NLRC's reversal
Costs against petitioner.
SO ORDERED. 7 WON LA/NLRC had jurisdiction? YES
- Where the dispute is just in the
interpretation, implementation or
Petitioner forthwith filed its motion for reconsideration, which was denied in a resolution dated enforcement stage, it may be referred to
February 24, 2000, which reads: the grievance machinery set up in the
CBA, or brought to voluntary arbitration.
But, where there was already actual
Acting on the Motion for Reconsideration filed by petitioner[s] which drew an opposition from private termination, with alleged violation of the
respondents, the Court resolved to DENY the aforesaid motion for reconsideration, as the issues raised employee’s rights, it is already cognizable
by the labor arbiter.
therein have been passed upon by the Court in its questioned decision and no substantial arguments -even if the Ees resorted to grievance
were presented to warrant its reversal, let alone modification. procedure, Atlas did not show proof that
SO ORDERED. 8 it took steps to convene the grievance
machinery after the labor arbiter first
dismissed the complaints for illegal
In this petition now before us, petitioner alleges that the appellate court erred in: dismissal and directed the parties to avail
of the grievance procedure under Article
I. … DENYING THE PETITION FOR CERTIORARI AND IN EFFECT AFFIRMING THE RULINGS OF THE VII of the existing CBA. Employees could
PUBLIC RESPONDENT NLRC THAT THE PRIVATE RESPONDENTS WERE ILLEGALLY DISMISSED; not now be faulted for attempting to find
II. … RULING THAT THE PRIVATE RESPONDENTS ARE ENTITLED TO SEPARATION PAY AND FULL an impartial forum, after petitioner failed
to listen to them and after the
BACKWAGES; intercession of the labor arbiter proved
III. … RULING THAT PETITIONER IS LIABLE FOR COSTS OF SUIT. 9 futile.
Petitioner contends that the dismissal of private respondents was for a just and valid cause , pursuant to -further, grievance procedure should be
undertaken with the UNION. Since no
the provisions of the company’s rules and regulations. It also alleges lack of jurisdiction on the part of union participation, grievance procedure
the labor arbiter, claiming that the cases should have been resolved through the grievance machinery, would be pointless or prejudicial to the
cause of the employees
and eventually referred to voluntary arbitration, as prescribed in the CBA. -Vivero v. CA: petitioner cannot arrogate
into the powers of Voluntary Arbitrators
For their part, private respondents contend that they were illegally dismissed from employment the original and exclusive jurisdiction of
Labor Arbiters over unfair labor practices,
because management discovered that they intended to form another union, and because they were termination disputes, and claims for
vocal in asserting their rights. In any case, according to private respondents, the petition involves factual damages, in the absence of an express
issues that cannot be properly raised in a petition for review on certiorari under Rule 45 of the Revised agreement between the parties in order
for Article 262 of the Labor Code
Rules of Court. 10 [Jurisdiction over other labor disputes] to
apply in the case at bar."
...
In fine, there are three issues to be resolved: private respondents attempted to justify
1) whether private respondents were legally and validly dismissed; the jurisdiction of the voluntary arbitrator
2) whether the labor arbiter and the NLRC had jurisdiction to decide complaints for illegal dismissal; and over a termination dispute alleging that
the issue involved the interpretation and
3) whether petitioner is liable for costs of the suit. implementation of the grievance

3) whether petitioner is liable for costs of the suit. implementation of the grievance
procedure in the CBA. There, we held that
The first issue primarily involves questions of fact, which can serve as basis for the conclusion that since what was challenged was the
legality of the employee’s dismissal for
private respondents were legally and validly dismissed. The burden of proving that the dismissal of lack of cause and lack of due process, the
private respondents was legal and valid falls upon petitioner. The NLRC found that petitioner failed to case was primarily a termination dispute.
The issue of whether there was proper
substantiate its claim that both private respondents committed certain acts that violated company interpretation and implementation of the
rules and regulations,11 hence we find no factual basis to say that private respondents’ dismissal was CBA provisions came into play only
in order. We see no compelling reason to deviate from the NLRC ruling that their dismissal was illegal, because the grievance procedure in the
CBA was not observed, after he sought
absent a showing that it reached its conclusion arbitrarily. 12 Moreover, factual findings of agencies his union’s assistance. Since the real issue
exercising quasi-judicial functions are accorded not only respect but even finality, aside from the then was whether there was a valid
consideration here that this Court is not a trier of facts. 13 termination, there was no reason to
invoke the need to interpret nor question
an implementation of any CBA provision.
Anent the second issue, Article 217 of the Labor Code provides that labor arbiters have original and -MANEJA v. NLRC: the hotel employee was
dismissed without hearing. We ruled that
exclusive jurisdiction over termination disputes. A possible exception is provided in Article 261 of the her dismissal was unjustified, and her right
Labor Code, which provides that- to due process was violated, absent the
The Voluntary Arbitrator or panel of voluntary arbitrators shall have original and exclusive jurisdiction to twin requirements of notice and hearing.
We also held that the labor arbiter had
hear and decide all unresolved grievances arising from the interpretation or implementation of the original and exclusive jurisdiction over the
Collective Bargaining Agreement and those arising from the interpretation or enforcement of termination case, and that it was error to
company personnel policies referred to in the immediately preceding article. Accordingly, violations of a give the voluntary arbitrator jurisdiction
over the illegal dismissal case.
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. WON Ees were illegally dismissed? YES
-Atlas failed to substantiate their claims
For purposes of this article, gross violations of Collective Bargaining Agreement shall mean flagrant and that Ees committed certain acts violating
or malicious refusal to comply with the economic provisions of such agreement. company rules and regulations; no factual
The Commission, its Regional Offices and the Regional Directors of the Department of Labor and basis for the dismissal
-no evidence that Ees received notices to
Employment shall not entertain disputes, grievances or matters under the exclusive and original show cause
and refer the same to the grievance Machinery or Arbitration provided in the Collective Bargaining WON the costs were properly awarded?
Modified
Agreement.
But as held in Vivero vs. CA,14 "petitioner cannot arrogate into the powers of Voluntary Arbitrators the
original and exclusive jurisdiction of Labor Arbiters over unfair labor practices, termination disputes, and
claims for damages, in the absence of an express agreement between the parties in order for Article 262
of the Labor Code [Jurisdiction over other labor disputes] to apply in the case at bar."
Moreover, per Justice Bellosillo:

It may be observed that under Policy Instruction No. 56 of the Secretary of Labor, dated 6 April 1993,
"Clarifying the Jurisdiction Between Voluntary Arbitrators and Labor Arbiters Over Termination Cases
and Providing Guidelines for the Referral of Said Cases Originally Filed with the NLRC to the NCMB,"
termination cases arising in or resulting from the interpretation and implementation of collective
bargaining agreements and interpretation and enforcement of company personnel policies which
were initially processed at the various steps of the plant-level Grievance Procedures under the parties’
collective bargaining agreements fall within the original and exclusive jurisdiction of the voluntary
arbitrator pursuant to Art. 217 (c) and Art. 261 of the Labor Code; and, if filed before the Labor Arbiter,
these cases shall be dismissed by the Labor Arbiter for lack of jurisdiction and referred to the concerned
NCMB Regional Branch for appropriate action towards and expeditious selection by the parties of a
Voluntary Arbitrator or Panel of Arbitrators based on the procedures agreed upon in the CBA.
As earlier stated, the instant case is a termination dispute falling under the original and exclusive
jurisdiction of the Labor Arbiter, and does not specifically involve the application, implementation or
enforcement of company personnel policies contemplated in Policy Instruction No. 56. Consequently,
Policy Instruction No. 56 does not apply in the case at bar. 15 x x x
Records show, however, that private respondents sought without success to avail of the grievance
procedure in their CBA.16 On this point, petitioner maintains that by so doing, private respondents
recognized that their cases still fell under the grievance machinery. According to petitioner, without
having exhausted said machinery, the private respondents filed their action before the NLRC, in a clear
act of forum-shopping.17 However, it is worth pointing out that private respondents went to the NLRC
only after the labor arbiter dismissed their original complaint for illegal dismissal. Under these
circumstances private respondents had to find another avenue for redress . We agree with the NLRC that
it was petitioner who failed to show proof that it took steps to convene the grievance machinery after
the labor arbiter first dismissed the complaints for illegal dismissal and directed the parties to avail of
the grievance procedure under Article VII of the existing CBA. They could not now be faulted for
attempting to find an impartial forum, after petitioner failed to listen to them and after the
intercession of the labor arbiter proved futile. The NLRC had aptly concluded in part that private
respondents had already exhausted the remedies under the grievance procedure. 18 It erred only in
finding that their cause of action was ripe for arbitration.
In the case of Maneja vs. NLRC,19 we held that the dismissal case does not fall within the phrase
"grievances arising from the interpretation or implementation of the collective bargaining agreement
and those arising from the interpretation or enforcement of company personnel policies." In Maneja,
the hotel employee was dismissed without hearing. We ruled that her dismissal was unjustified, and her
right to due process was violated, absent the twin requirements of notice and hearing. We also held that

the labor arbiter had original and exclusive jurisdiction over the termination case, and that it was
error to give the voluntary arbitrator jurisdiction over the illegal dismissal case.
In Vivero vs. CA,20 private respondents attempted to justify the jurisdiction of the voluntary arbitrator
over a termination dispute alleging that the issue involved the interpretation and implementation of the
grievance procedure in the CBA. There, we held that since what was challenged was the legality of the
employee’s dismissal for lack of cause and lack of due process, the case was primarily a termination
dispute. The issue of whether there was proper interpretation and implementation of the CBA
provisions came into play only because the grievance procedure in the CBA was not observed, after he
sought his union’s assistance. Since the real issue then was whether there was a valid termination,
there was no reason to invoke the need to interpret nor question an implementation of any CBA
provision.
One significant fact in the present petition also needs stressing. Pursuant to Article 260 21 of the Labor
Code, the parties to a CBA shall name or designate their respective representatives to the grievance
machinery and if the grievance is unsettled in that level, it shall automatically be referred to the
voluntary arbitrators designated in advance by the parties to a CBA. Consequently only disputes
involving the union and the company shall be referred to the grievance machinery or voluntary
arbitrators. In these termination cases of private respondents, the union had no participation, it
having failed to object to the dismissal of the employees concerned by the petitioner. It is obvious
that arbitration without the union’s active participation on behalf of the dismissed employees would
be pointless, or even prejudicial to their cause.
Coming to the merits of the petition, the NLRC found that petitioner did not comply with the
requirements of a valid dismissal. For a dismissal to be valid, the employer must show that: (1) the
employee was accorded due process, and (2) the dismissal must be for any of the valid causes provided
for by law. 22 No evidence was shown that private respondents refused, as alleged, to receive the
notices requiring them to show cause why no disciplinary action should be taken against them.
Without proof of notice, private respondents who were subsequently dismissed without hearing were
also deprived of a chance to air their side at the level of the grievance machinery. Given the fact of
dismissal, it can be said that the cases were effectively removed from the jurisdiction of the voluntary
arbitrator, thus placing them within the jurisdiction of the labor arbiter. Where the dispute is just in the
interpretation, implementation or enforcement stage, it may be referred to the grievance machinery
set up in the CBA, or brought to voluntary arbitration. But, where there was already actual
termination, with alleged violation of the employee’s rights, it is already cognizable by the labor
arbiter.23
In sum, we conclude that the labor arbiter and then the NLRC had jurisdiction over the cases involving
private respondents’ dismissal, and no error was committed by the appellate court in upholding their
assumption of jurisdiction.
However, we find that a modification of the monetary awards is in order. As a consequence of their
illegal dismissal, private respondents are entitled to reinstatement to their former positions. But since
reinstatement is no longer feasible because petitioner had already closed its shop, separation pay in
lieu of reinstatement shall be awarded. 24 A terminated employee’s receipt of his separation pay and
other monetary benefits does not preclude reinstatement or full benefits under the law, should
reinstatement be no longer possible. 25 As held in Cariño vs. ACCFA: 26
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 the money. Because out of job, he had to face the harsh necessities
of life. He thus found himself in no position to resist money proffered. His, then, is a case of adherence,
not of choice. One thing sure, however, is that petitioners did not relent their claim. They pressed it.
They are deemed not to have waived their rights. Renuntiato non praesumitur.
Conformably, private respondents are entitled to separation pay equivalent to one month’s salary for
every year of service, in lieu of reinstatement. 27 As regards the award of damages, in order not to
further delay the disposition of this case, we find it necessary to expressly set forth the extent of the
backwages as awarded by the appellate court. Pursuant to R.A. 6715, as amended, private respondents
shall be entitled to full backwages computed from the time of their illegal dismissal up to the date of
promulgation of this decision without qualification, considering that reinstatement is no longer
practicable under the circumstances. 28
Having found private respondents’ dismissal to be illegal, and the labor arbiter and the NLRC duly vested
with jurisdiction to hear and decide their cases, we agree with the appellate court that petitioner should
pay the costs of suit.
WHEREFORE, the petition is DENIED for lack of merit. The decision of the Court of Appeals in CA -G.R. SP
No. 52780 is AFFIRMED with the MODIFICATION that petitioner is ordered to pay private respondents
(a) separation pay, in lieu of their reinstatement, equivalent to one month’s salary for every year of
service, (b) full backwages from the date of their dismissal up to the date of the promulgation of this
decision, together with (c) the costs of suit.

SO ORDERED.
Bellosillo, (Chairman), Mendoza, and Callejo, Sr., JJ., concur.
Austria-Martinez, J., on leave.
Footnotes
1
Rollo, pp. 32-45.
2 Id. at 47.
3
Id. at 33-35.
4 Erroneously stated as March 13, 1995 in NLRC Resolution and CA Decision.
5 Referred also as Marcial L. Abion in NLRC Resolution and CA Decision.
6 ART. 217. Jurisdiction of Labor Arbiters and the Commission. –
xxx
(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.
7
Rollo, pp. 44-45.
8
Id. at 47.
9 Id. at 13.
10
Id. at 9-10.
11
CA Rollo, pp. 101-103.
12 See Sanyo Travel Corporation vs. NLRC, 280 SCRA 129, 139 (1997).
13 Bataan Shipyard and Engineering Corporation vs. NLRC, 269 SCRA 199, 209 -210 (1997); Aurora Land
Projects Corporation vs. NLRC, 266 SCRA 48, 58-59 (1997).

14 344 SCRA 268, 281 (2000). Stress supplied.
15 Id. at 282.
16 CA Rollo, pp. 61-62.
17 Id. at 14.
18 Id at 23.
19
290 SCRA 603, 616 (1998).
20 344 SCRA 268 (2000).
21 ART. 260. Grievance Machinery and Voluntary Arbitration. —The parties to a Collective Bargaining
Agreement shall include therein provisions that will ensure the mutual observance of its terms and
conditions. They shall establish a machinery for the adjustment and resolution of grievances arising from
the interpretation or implementation of their Collective Bargaining Agreement and those arising from
the interpretation or enforcement of company personnel policies. See also Maneja vs. NLRC, supra.
All grievances submitted to the grievance machinery which are not settled within seven (7) calendar
days from the date of its submission shall automatically be referred to voluntary arbitration prescribed
in the Collective Bargaining Agreement.
For this purpose, parties to a Collective Bargaining Agreement shall name and designate in advance a
Voluntary Arbitrator or panel of Voluntary Arbitrators, or include in the agreement a procedure for the
selection of such Voluntary Arbitrator or panel of Voluntary Arbitrators, preferably from the listing of
qualified Voluntary Arbitrators duly accredited by the Board. In case the parties fail to select a Voluntary
Arbitrator or panel of Voluntary Arbitrators, the Board shall designate the Voluntary Arbitrators, as may
be necessary, pursuant to the selection procedure agreed upon in the Collective Bargaining Agreement,
which shall act with the same force and effect as if the Arbitrator or panel of Arbitrators has been
selected by the parties as prescribed.
22
Magcalas vs. NLRC, 269 SCRA 453, 470 (1997); Pepsi -Cola Distributors of the Philippines, Inc. vs. NLRC,
272 SCRA 267, 274-275 (1997).
23
Maneja vs. NLRC, 290 SCRA 603, 616 (1998), citing Sanyo Philippines Workers Union -PSSLU vs.
Cañizares, 211 SCRA 361, 368 (1992).
24
Aurora Land Projects Corp. vs. NLRC, 266 SCRA 48, 66 (1997); De la Cruz vs. NLRC, 268 SCRA 458, 471
(1997); Hinatuan Mining Corporation vs. NLRC, 268 SCRA 622, 626 (1997).
25
See Lopez Sugar Corporation vs. Federation of Free Workers, 189 SCRA 179, 192 (1990), citing AFP
Mutual Benefit Association, Inc. vs. AFP-MBAI-EU, 97 SCRA 715 (1980).
26
18 SCRA 183, 190 (1966).
27 Iriga Telephone Co., Inc. vs. NLRC, 286 SCRA 600, 609 (1998); Kathy-O Enterprises vs. NLRC, 286 SCRA
729, 740 (1998).

28
Mabeza vs. NLRC, 271 SCRA 670, 687 (1997), citing Bustamante vs. NLRC, 265 SCRA 61 (1996).

mindanao v minsteel workers org 424 s 614 - 2004
12:57 PM

G.R. No. 130693 March 4, 2004
MINDANAO STEEL CORPORATION vs. MINSTEEL FREE WORKERS ORGANIZATION (MINFREWO-NFL)

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 130693 March 4, 2004
MINDANAO STEEL CORPORATION, petitioner,
vs.
MINSTEEL FREE WORKERS ORGANIZATION (MINFREWO-NFL) CAGAYAN DE ORO, respondent.
DE C I S I O N
At bar is a petition for review on certiorari un der Rule 45 of the 1997 Rules of Civil Procedure, as
amended, assailing the Decision1 dated May 30, 1997 and Resolution2 dated August 22, 1997 rendered
by the Court of Appeals in CA-G.R. SP No. 40919, entitled "Mindanao Steel Corporation vs. Atty. Marieto
Gallego and Minsteel Free Workers Organization MINFREWO-NFL, Cagayan de Oro City."
The undisputed facts of this case are as follows:

On June 29, 1990, Mindanao Steel Corporation (herein petitioner) and Minsteel Free Workers
Organization MINFREWO-NFL Cagayan de Oro City (herein respondent) executed a collective
bargaining agreement (CBA) providing for an increase of P20.00 in the workers’ daily wage.
Prompted by the December 5, 1990 fuel price increase, the Regional Tripartite Wages and Productivity
Board (RTWPB) of Region X, Northern Mindanao, Cagayan de Oro City, issued Interim Wage Order No.
RX-023. This Interim Wage Order granted to all workers4 an emergency cost of living allowance
(ECOLA)5 for three (3) months or from January 7, 1991 to April 6, 1991.
Petitioner refused to implement the Interim Wage Order, prompting respondent to file with the
National Mediation and Conciliation Board (NCMB) a complaint for payment of ECOLA against the
former. Then the parties, in a Submission Agreement dated April 8, 1991, agreed to submit the case for
VA: After the parties had submitted their position papers and other pleadings, the Voluntary Arbitrator
rendered a Decision dated January 8, 1992 ordering petitioner to pay respondent’s members and other
workers their ECOLA. Petitioner then filed a motion for reconsideration but was denied in an Order
dated January 28, 1992.
Thereafter, petitioner filed with the Court of Appeals a petition for certiorari with prayer for issuance of
a temporary restraining order and/or writ of preliminary injunction.
CA: On May 30, 1997, the Appellate Court promulgated its Decision affirming the Voluntary Arbitrator’s
Decision dated January 8, 1992 and Order dated January 28, 1992. The Court of Appeals ratiocinated as
follows:
"In the case at bench, Interim Wage Order No. RX-02 was issued specifically to grant employees a
temporary allowance pending the approval of the wage increase being petitioned by them due to the
fuel price hike on December 5, 1990.
"The grant of the P20.00 wage increase under the CBA did not have the purpose of granting such
temporary allowance due to the contingency stated in the subject wage order, but was actually
intended as wage increase to be effective January 1, 1991. Thus, as stated by the Supreme Court, it
should be termed as ‘wage increase’, pure and simple, and not part of the emergency allowance.
"Not to be overlooked is the provision under the CBA which was executed between the parties herein,
Section 3, Article VII of which provides that:
‘It is hereby agreed that these salary increases shall be exclusive of any wage that may be provided by
law as a result of economic change.’ (p. 55, rollo)
"There indeed is nothing contrary to law, customs, public order or public policy in a stipulation
subordinating, as does the aforesaid provision in the collective bargaining agreement, contractual wage
increases to those imposed or prescribed by law. They were therefore perfectly free to agree thereon,
and having thus agreed, are bound by such stipulation as constituting the law between them."
(Filipinas Golf and Country Club, Inc. vs. NLRC, 176 SCRA 625)
"The increase provided by the subject wage order, moreover, was not intended to be purely a wage
increase, that may be credited to any wage increase granted by employers because of or in anticipation
of the fuel price hike, but for emergency purposes for only three months.
"The petitioner should, therefore, not be entitled to the creditable benefit provided by the

of the fuel price hike, but for emergency purposes for only three months.
"The petitioner should, therefore, not be entitled to the creditable benefit provided by the
implementing rules and regulations of interim wage order no. RX-02.
"This Court thus finds no grave abuse of discretion amounting to lack of excess of jurisdiction on the part
of the respondent voluntary arbitrator in issuing the questioned decision.
"WHEREFORE, THE INSTANT PETITION IS HEREBY DISMISSED FOR LACK OF MERIT.
"SO ORDERED."
On August 22, 1997, the Court of Appeals issued a Resolution denying petitioner’s motion for
reconsideration.
Hence, this petition for review on certiorari.
Petitioner contends that it is exempt from paying the ECOLA because pursuant to the CBA, it already
granted a wage increase of P20.00 a day or P523.20 a month effective January 1, 1991. Likewise,
petitioner claims it is entitled to creditable benefits on the basis of Section 7 of Interim Wage Order No.
RX-02 which provides:
"(W)age increases, rice allowance (in kind or cash), and other allowances granted by employers to
their workers because of, or in anticipation of the fuel price hikes on December 05, 1990 and exclusive
of compliance with Wage Order Nos. RX-01 and RX-01-A are creditable, provided that if the amount is
less than that prescribed in this Interim Wage Order, the employer shall give the difference."
Along the same line, petitioner maintains that under Section 5 of the Implementing Rules and
Regulations of Wage Order No. RX-02, its grant of wage increase to its workers pursuant to the CBA is
Summary: Union and Mindanao steel had a
considered compliance with the Order, thus: CBA which provided for wage increase. CBA
"Section 5. Creditable Benefits - Any wage increases or adjustments granted between November 22, also expressly provided that it was exclusive of
1990 and January 06, 1991 shall be considered as compliance with the Order provided that if the any other wage increase. An ECOLA was
ordered to be given due to the increase in fuel
amount is less than that prescribed, the employer shall pay the difference. prices but Mindanao Steel did not implement
"In addition, any of the following shall be considered as compliance: wage order, contending that the wage increase
provided in the CBA should be credited
"a. All forms of wage increases granted unilaterally or under collective bargaining agreement excluding already. Parties agreed to submit to VA's
company anniversary increases and those resulting from regularization, promotion and merit increases. jurisdiction and VA ruled ifo workers. CA
"b. All kinds of allowances in cash or in kind for whatever purpose, such as transportation, meal affirmed VA. Court also affirmed VA, saying
that CBA terms are clear that the wage order is
allowance, rice subsidy and others. exclusive of the wage increase in the CBA.
"c. All forms of economic assistance such as productivity bonus, housing, bus services for the family and
other similar activities." Facts:
-Mindanao Steel and Minsteel Free Workers
Org entered a CBA whihc provided a P20
Petitioner’s contentions lack merit. increae in worker's daily wage (executed June
29, 1990)
To begin with, any doubt or ambiguity in the contract between management and the union members -December 5, 1990, due to fuel increase,
should be resolved in the light of Article 1702 of the Civil Code which provides: "(I)n case of doubt, all Regional Tripartite Wages and Productiv ity
labor legislation and all labor contracts shall be construed in favor of the safety and decent living for the Board issued Interim Wage Order No. RX-02
granting all workers an ECOLA for 3 months.
laborer."6 -ER refused to implement wage order
-Union filed COMPLAINT FOR PAYMENT OF
The basic issue for our resolution is whether or not petitioner is exempt from paying the ECOLA in light ECOLA in NCMB. Parties agreed to submit to
VA
of the CBA entered into by the parties. -VA: ER pay ECOLA. MR denied
-CA: ER pay ECOLA. Grant of P20 increase in
wage did not have purpose of granting
Pertinent is Section 3, Article VII of the CBA which provides: temporary allowance
"It is hereby agreed that these salary increases shall be exclusive of any wage increase that may be ...plus CBA provided that the salary increases
provided by law as a result of any economic change." shall be exclusive of any wage that may be
provided by law. Since that is what they agreed
to, they should be bound by it.MR denied
The above provision is clear that the salary increases, such as the P20.00 provided under the CBA, shall
not include any wage increase that may be provided by law as a result of any economic change. WON ER should be exempt from paying
ECOLA? NO
Hence, aside from the P20.00 CBA wage increase, respondent’s members are also entitled to the ECOLA -ER's argument why it did not pay ECOLA:
under the Interim Wage Order. there was a crediting clause in the wage order
providing that Wage increases shall be
creditable
The CBA provision under Section 3, Article VII needs no interpretation. Contracts which are not -BUT CBA IS CLEAR: Section 3, Article 7 of CBA
ambiguous are to be interpreted according to their literal meaning and not beyond their obvious provides the ff:
"It is hereby agreed that these salary increases
intendment. 7 shall be exclusive of any wage increase that
may be provided by law as a result of any
In Mactan Workers Union vs. Aboitiz,8 we held that "the terms and conditions of a collective bargaining economic change."
-so it is clear that the P20 salary increase in the
contract constitute the law between the parties. Those who are entitled to its benefits can invoke its CBA does not include any wage increase that
provisions. In the event that an obligation therein imposed is not fulfilled, the aggrieved party has the may be provided by law as a result of any
economic change. Since not ambiguous, no
right to go to court for redress." need for interpretation
-WAGE INCREASE NOT CREDITABLE: the order
Finally, the P20.00 daily wage increase granted by petitioner to its employees under the CBA can not be provided that for a wage increase to be
creditable, it should have been given because
considered as creditable benefit or compliance with the Interim Wage Order because such was of, o in anticipation of the fuel price hikes in
intended as a CBA or negotiated wage increase and not "because of, or in anticipation of the fuel price December 1990.
hikes on December 5, 1990 x x x."
Thus, the Court of Appeals did not commit any error when it rendered the assailed Decision and
Resolution, the same being consistent with law and jurisprudence.
WHEREFORE, the petition is DENIED. The assailed Decision dated May 30, 1997 and Resolution dated
August 22, 1997 rendered by the Court of Appeals in CA-G.R. SP No. 40919 are AFFIRMED. Costs against
petitioner.
SO ORDERED.

SO ORDERED.
Vitug, (Chairman), Corona, and Carpio-Morales, JJ., concur.
Footnotes
1
Annex "F" of the Petition for Review on Certiorari, Rollo at 48-54.
2 Annex "H", id. at 64.
3 Annex "A", id. at 21-24.
4 Except (1) workers who are members of the family of the employer but dependent upon the latter for
support; (2) household or domestic helpers; and (3) persons in the personal service of another.
5 Section 2 of Interim Wage Order No. RX-02. That the amount of such Emergency Cost of Living
Allowance shall be not less than the following:

Category for Establishment Amount of ECOLA
1. With not more than 20 employees P200 / month
2. With 21 but not more than 150 employees P300 / month
3. With 151 but not more than 300 employees P400 / month
4. With more than 300 employees P500 / month
6 Plastic Town Center Corporation vs. NLRC, G.R. No. 81176, April 19, 1989, 172 SCRA 580, 587.
7
See Ibid. at 585, citing Herrera vs. Petrophil Corp., 146 SCRA 385 (1986).
8 G.R. No. L-30241, June 30, 1972, 45 SCRA 577, 581, citing Shell Oil Workers Union vs. Shell Company of
the Philippines, 39 SCRA 276 (1971).


union of nestle workers v nestle 391 s 204 -200
12:57 PM

G.R. No. 148303 October 17, 2002
UNION OF NESTLE WORKERS CAGAYAN DE ORO FACTORY vs. NESTLE PHILPPINES, INC.

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 148303 October 17, 2002
UNION OF NESTLE WORKERS CAGAYAN DE ORO FACTORY (UNWCF for brevity),
represented by its President YURI P. BERTULFO and officers, namely,
DEXTER E. AGUSTIN, DANTE S. SEÑAREZ, EDDIE P. OGNIR, JEFFREY C. RELLIQUETE,
ENRIQUITO B. BUAGAS, EDWIN P. SALVAÑA, RAMIL B. MONSANTO, JERRY A. TABILIRAN, ARNOLD A.
TADLAS,
REYQUE A. FACTURA, NAPOLEON S. GALERINA, JR., TOLENTINO T. MICABALO and EDDIE O.
MACASOCOL, petitioners,
vs.
NESTLE PHILPPINES, INC.,
represented by its President JUAN B. SANTOS, RUDY P. TRILLANES, Factory Manager, Cagayan de Oro
City Branch
and FRANCIS L. LACSON, Cagayan de Oro City Human Resources Manager, respondents.
DE C I S I O N
Before us is a petition for review on certiorari 1 challenging the Decision of the Court of Appeals dated
December 28, 2000 and its Resolution dated April 19, 2001 in CA GR-SP No. 56656, "Union of Nestle
Workers Cagayan de Oro Factory, et al. vs. Nestle Philippines, Inc. et al."
On August 1, 1999, Nestle Philippines, Inc. (Nestle) adopted Policy No. HRM 1.8, otherwise known as
the "Drug Abuse Policy." Pursuant to this policy, the management shall conduct simultaneous drug
tests on all employees from different factories and plants. Thus, on August 17, 1999, drug testing
commenced at the Lipa City factory, then followed by the other factories and plants.
However, there was resistance to the policy in the Nestle Cagayan de Oro factory. Out of 496
employees, only 141 or 28.43% submitted themselves to drug testing. On August 20, 1999, the Union of
Nestle Workers Cagayan de Oro Factory and its officers, petitioners, wrote Nestle challenging the
implementation of the policy and branding it as a mere subterfuge to defeat the employees’
constitutional rights. Nestle claimed that the policy is in keeping with the government’s thrust to
eradicate the proliferation of drug abuse, explaining that the company has the right: (a) to ensure that
its employees are of sound physical and mental health and (b) to terminate the services of an employee
who refuses to undergo the drug test.
On August 23, 1999, petitioners filed with the Regional Trial Court (RTC), Branch 40, Cagayan de Oro
City, a complaint for injunction with prayer for the issuance of a temporary restraining order against
Nestle, Rudy P. Trillanes, Factory Manager of the Cagayan de Oro City Branch, and Francis L. Lacson,
Cagayan de Oro City Human Resources Manager (respondents herein), docketed as Civil Case No.
99-471.
On August 24, 1999, the RTC issued a temporary restraining order enjoining respondents from
proceeding with the drug test. Forthwith, they filed a motion to dismiss the complaint on the ground
that the RTC has no jurisdiction over the case as it involves a labor dispute or enforcement of a
company personnel policy cognizable by the Voluntary Arbitrator or Panel of Voluntary Arbitrators.
Petitioners filed their opposition, contending that the RTC has jurisdiction since the complaint raises
purely constitutional and legal issues.
RTC: On September 8, 1999, the RTC dismissed the complaint for lack of jurisdiction, thus:
"This Court originally is of the honest belief that the issue involved in the instant case is more
constitutional than labor. It was convinced that the dispute involves violation of employees’
constitutional rights to self-incrimination, due process and security of tenure. Hence, the issuance of
the Temporary Restraining Order.
"However, based on the pleadings and pronouncements of the parties, a close scrutiny of the issues
would actually reveal that the main issue boils down to a labor dispute. The company implemented a
new drug abuse policy whereby all its employees should undergo a drug test under pain of penalty for
refusal. The employees who are the union members questioned the implementation alleging that: ‘can

refusal. The employees who are the union members questioned the implementation alleging that: ‘can
they be compelled to undergo the drug test even against their will, which violates their right against self -
incrimination?’ At this point, the issue seems constitutional. But if we go further and ask the reason for
their refusal to undergo the drug test, the answer is – because the policy was formulated and
implemented without proper consultation with the union members. So that, the issue here boils down to
a labor dispute between an employer and employees.
xxx x xx x xx
"Clearly, in the case at bar, the constitutional issue is closely related or intertwined with the labor issue, SUMMARY: The company
so much so that this Court is inclined to believe that it has no jurisdiction but the NLRC." 2 implemented Policy No. HRM 1.8
imposing simultaneous drug test
on all employees. Union contested
Petitioners filed a motion for reconsideration but was denied, prompting them to file with this Court a its implementation and filed
petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure, as amended. They alleged that Complaint for Injunction in RTC.
Their main allegations is that the
in dismissing their complaint for lack of jurisdiction, the RTC gravely abused its discretion. implementation of the policy is
arbitrary because it was not done
On November 24, 1999, this Court referred the petition to the Court of Appeals for consideration and w/ consultation w/ the union. RTC
held that it had no jurisdiction over
adjudication on the merits or any other action as it may deem appropriate. the case, it being a labor dispute.
R65 P4C filed w/ SC but was
referred to CA. CA dismissed
CA: On December 28, 2000, the Appellate Court rendered its Decision 3 dismissing the petition, thus: petition, saying wrong remedy plus
"Settled is the rule that the remedy against a final order is an appeal, and not a petition for certiorari injunction already moot because
under Rule 65 of the 1997 Rules of Civil Procedure. The party aggrieved does not have the option to policy was already implemented.
Now Court upheld RTC and CA,
substitute the special civil action of certiorari under Rule 65 for the remedy of appeal. The existence and saying first that since this involved
availability of the right of appeal are antithetical to the availment of the special civil action of the implementation of company
personnel policy, it should be
certiorari. And while the special civil action of certiorari may be resorted to even if the remedy of under VA jurisdiction. Further, it
appeal is available, it must be shown that the appeal is inadequate, slow, insufficient and will not said that remedy should have been
promptly relieve a party from the injurious effects of the order complained of, or where the appeal is ordinary R45 appeal to CA.
ineffective. Facts:
"Inasmuch as only questions of law are raised by petitioners in assailing the Order of respondent Judge -Nestle implemented Policy No.
dismissing their complaint for injunction, the proper remedy, therefore, is appeal to the Supreme Court HRM 1.8 (Drug Abuse Policy) which
provided for the simultaneous
by petition for review on certiorari in accordance with Rule 45 of the 1997 Rules of Civil Procedure. drug testing of all employees of
Other than the bare, stereotyped allegation in the petition that there is ‘no appeal, nor any plain, Nestle
-Union contested the drug testing
speedy, and adequate remedy in the ordinary course of law available to the petitioner herein whose with only 28.43% of the employees
right has been violated,’ petitioners have not justified their resort to Rule 65 of the 1997 Rules of Civil submitting themselves to the drug
Procedure. testing.
-Union then filed w/ RTC
xxx x xx x xx COMPLAINT FOR INJUUNCTION
"It is noteworthy that petitioners have not disputed the allegations in paragraph 28 of private W/TRO. RTC issued TRO
respondents’ Comment on the petition that drug testing of the entire workforce of Nestle Cagayan de -Nestle filed MTD: this is a labor
dispute on the enforcement of a
Oro factory, including herein petitioners, submitted themselves to the drug test required by company personnel policy so
management and was confirmed free from illegal drug abuse . In view thereof, the instant petition, should be under VA
-why argue CONSTITUTIONAL
which prays for an injunction of the drug test of the Nestle Cagayan de Oro factory workers, had become ISSUE: right against self-
moot and academic. The remedy of injunction could no longer be entertained because the act sought to incrimination, to due process and
be prevented had been consummated." to security of tenure.
RTC: dismissed complaint: main
issue is a labor dispute because the
Petitioners sought reconsideration but to no avail. Hence this petition for review on certiorari. union contest the policy for lack of
proper consultation w/ union
members. MR denied
Petitioners raise the following issues for our resolution: -R65 petition for certiorari filed w/
I. Whether the Regional Trial Court has jurisdiction over petitioners’ suit for injunction; and SC, referred to CA
II. Whether petitioners’ resort to certiorari under Rule 65 is in order. -CA: dismissed petition: R45 should
be the correct remedy plus
injunction moot because the
On the first issue, we hold that petitioners’ insistence that the RTC has jurisdiction over their complaint petitioners themselves already
subjected themselves to drug
since it raises constitutional and legal issues is sorely misplaced. The fact that the complaint was testing
denominated as one for injunction does not necessarily mean that the RTC has jurisdiction. Well -
settled is the rule that jurisdiction is determined by the allegations in the complaint .4 WON RTC has jurisdiction? NO, VA
has.
The pertinent allegations of petitioners’ amended complaint read: -the fact that the complaint was
"x x x x x x x x x denominated as one for injunction
5. Plaintiffs are aggrieved employees of the Nestle Philippines, Inc. who are subjected to the new policy does not necessarily mean that the
RTC has jurisdiction. Well-settled is
of the management for compulsory Drug Test, without their consent and approval; the rule that jurisdiction is
xxx x xx x xx determined by the allegations in
the complaint
8. That the said policy was implemented last August 1, 1999, and the Union was only informed last -allegations in the complaint
August 20, 1999, during a meeting held on that day, that all employees who are assigned at the CDO basically says that the
Factory will be compulsorily compelled to undergo drug test, whether they like it or not, without even implementation of the policy was
arbitrary because:
informing the Union on this new policy adopted by the Management and no guidelines was set (1) the employees were not
pertaining to this drug test policy. consulted prior to its
9. That there was no consultation made by the management or even consultation from the employees implementation;
(2) the policy is punitive inasmuch
of this particular policy, as the nature of the policy is punitive in character, as refusal to submit yourself as an employee who refuses to
to drug test would mean suspension from work for four (4) to seven (7) days, for the first refusal to abide with the policy may be
dismissed from the service; and
undergo drug test and dismissal for second refusal to undergo drug test, hence, they were not afforded (3) such implementation is subject
due process x x x; to limitations provided by law
xxx x xx x xx which were disregarded by the
management.
12. That it is not the question of whether or not the person will undergo the drug test but it is the -so this is a dispute involving
manner how the drug test policy is being implemented by the management which is arbitrary in COMPANY PERSONNEL POLICY
character. (DEF: San Miguel v. NLRC):
"Company personnel policies are
xxx x xx x xx

character.
"Company personnel policies are
xxx x xx x xx guiding principles stated in broad,
16. That the exercise of management prerogative to implement the said drug test, even against the will long-range terms that express the
philosophy or beliefs of an
of the employees, is not absolute but subject to the limitation imposed by law x x x;" 5 organization’s top authority
regarding personnel matters. They
It is indubitable from the foregoing allegations that petitioners are not per se questioning "whether or deal with matter affecting
efficiency and well-being of
not the person will undergo the drug test" or the constitutionality or legality of the Drug Abuse Policy. employees and include, among
They are assailing the manner by which respondents are implementing the policy. According to them, others, the procedure in the
administration of wages, benefits,
it is "arbitrary in character" because: (1) the employees were not consulted prior to its implementation; promotions, transfer and other
(2) the policy is punitive inasmuch as an employee who refuses to abide with the policy may be personnel movements which are
dismissed from the service; and (3) such implementation is subject to limitations provided by law which usually not spelled out in the
collective agreement."
were disregarded by the management. -since this involves
implementation of company
Is the complaint, on the basis of its allegations, cognizable by the RTC? personnel policy, it is w/n VA's
jurisdiction and not RTC's
Respondent Nestle’s Drug Abuse Policy states that "(i)llegal drugs and use of regulated drugs beyond the
medically prescribed limits are prohibited in the workplace. Illegal drug use puts at risk the integrity of WON R65 P4C proper? NO
Nestle operations and the safety of our products. It is detrimental to the health, safety and work - -should have filed APPEAL under
R45. R65 P4C not a substitute for a
performance of employees and is harmful to the welfare of families and the surrounding community." 6 lost appeal
This pronouncement is a guiding principle adopted by Nestle to safeguard its employees’ welfare and
ensure their efficiency and well-being. To our minds, this is a company personnel policy. In San Miguel
Corp. vs. NLRC, 7 this Court held:
"Company personnel policies are guiding principles stated in broad, long-range terms that express the
philosophy or beliefs of an organization’s top authority regarding personnel matters. They deal with
matter affecting efficiency and well-being of employees and include, among others, the procedure in the
administration of wages, benefits, promotions, transfer and other personnel movements which are
usually not spelled out in the collective agreement."
Considering that the Drug Abuse Policy is a company personnel policy, it is the Voluntary Arbitrators or
Panel of Voluntary Arbitrators, not the RTC, which exercises jurisdiction over this case . Article 261 of
the Labor Code, as amended, pertinently provides:
Art. 261. Jurisdiction of Voluntary Arbitrators or Panel of Voluntary Arbitrators. – The Voluntary
policies x x x." (Emphasis supplied)
With respect to the second issue raised by petitioners, what they should have interposed is an appeal to
the Court of Appeals, not a petition for certiorari which they initially filed with this Court , since the
assailed RTC order is final. 8 Certiorari is not a substitute for an appeal. 9 For certiorari to prosper, it is not
enough that the trial court committed grave abuse of discretion amounting to lack or excess of
jurisdiction, as alleged by petitioners. The requirement that there is no appeal, nor any plain, speedy
and adequate remedy in the ordinary course of law must likewise be satisfied. 10 We must stress that the
remedy of appeal was then available to petitioners, but they did not resort to it. And while this Court in
exceptional instances allowed a party’s availment of certiorari instead of appeal, we find that no such
exception exists here.
WHEREFORE, the instant petition for review on certiorari is DENIED. The Decision of the Court of
Appeals dated December 28, 2000 and its Resolution dated April 19, 2001 in CA GR -SP No. 56656 are
affirmed.
SO ORDERED.
Puno, (Chairman), Panganiban, Corona, and Carpio Morales, JJ., concur.
Footnotes
1 Under Rule 45 of the 1997 Rules of Civil Procedure, as amended.
2 Rollo, p. 86.
3 In CA GR-SP No. 56656, penned by Associate Justice Marina L. Buzon, and concurred in by Associate
Justices Eubolo G. Verzola and Edgardo P. Cruz.

4 Herrera, et al. vs. Bollos, et al., G.R. No. 138258, January 18, 2002; Sta. Clara Homeowners’ Association
vs. Gaston, G.R. No. 141961, January 23, 2002; Ceroferr Realty Corp. vs. Court of Appeals, G.R. No.
135939, February 5, 2002.
5
Comment, pp. 7-8; Rollo, pp. 119-120.
6 Annex "1," Comment; Rollo, p. 151.
7
255 SCRA 133 (1996); Maneja vs. NLRC, 290 SCRA 603 (1998).
8 GSIS vs. Olisa, 304 SCRA 421 (1999); Sps. Hontiveros vs. RTC, Branch 25, Quezon City, 309 SCRA 340
(1999); DBP vs. Court of Appeals, 357 SCRA 626 (2001).

9 Almuete vs. Andres, G.R. No. 122276, November 20, 2001; San Miguel Corporation vs. Court of
Appeals, G.R. No. 146775, January 30, 2002; Del Mar vs. Court of Appeals, G.R. No. 139008, March 13,
2002.
10
Republic vs. Court of Appeals, 322 SCRA 81 (2000); Lagera vs. NLRC, 329 SCRA 436 (2000); Heirs of
Pedro Atega vs. Garilao, 357 SCRA 203 (2001).

Pasted from <http://www.lawphil.net/judjuris/juri2002/oct2002/gr_148303_2002.html >

san miguel foods v san miguel corp employees union -ptwgo gr no
168569 - october 5 2007
12:57 PM
G.R. No. 168569 October 5, 2007
SAN MIGUEL FOODS, INC. vs. SAN MIGUEL CORPORATION EMPLOYEES UNION -PTWGO

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 168569 October 5, 2007
SAN MIGUEL FOODS, INC., petitioner,
vs.
SAN MIGUEL CORPORATION EMPLOYEES UNION-PTWGO, respondent.
DECIS ION
CARPIO MORALES, J.:
The present petition for review on certiorari raises the issue of whether respondent’s complaint is one
for unfair labor practice (ULP) over which a Labor Arbiter has jurisdiction .
At the time material to the case, respondent, San Miguel Corporation Employees Union – PTWGO (the
Union), was the sole bargaining agent of all the monthly paid employees of petitioner San Miguel Foods,
Incorporated (SMFI). On November 9, 1992, some employees of SMFI’s Finance Department, through
the Union represented by Edgar Moraleda, brought a grievance against Finance Manager Gideon
Montesa (Montesa), for "discrimination, favoritism, unfair labor practices, not flexible [sic],
harassment, promoting divisiveness and sectarianism , etc.,"1 before SMFI Plant Operations Manager
George Nava in accordance with Step 1 of the grievance machinery adopted in the Collective Bargaining
Agreement (CBA) forged by SMFI and the Union.
The Union sought the "1. review, evaluat[ion] & upgrad[ing of] all Finance staff and 2. promot[ion of]
G.Q. Montesa to other SMC affiliate[s] & subsidiaries." 2
At the grievance meeting held on January 14, 1993, SMFI informed the Union that it planned to address
the grievance through a "work management review" which would be completed by March 1993, hence,
it asked the finance personnel to give it their attention and cooperation.
The "work management review" was not completed by March 1993, however, prompting the Union to,
on March 26, 1993, elevate the grievance to Step 2. 3
Almost nine months after the grievance meeting was held or on October 6, 1993, SMFI rendered a
"Decision on Step 1 Grievance" stating that it was still in the process of completing the "work
management review," 4 hence, the Union’s requests could not be granted.
The Union thereupon filed a complaint on October 20, 1993 before the National Labor Relations
Commission (NLRC), Arbitration Branch, against SMFI, 5 its President Amadeo P. Veloso, and its Finance
Manager Montesa for "unfair labor practice, [and] unjust discrimination in matters of promotion . . . "6
It prayed that SMFI et al. be ordered to promote the therein named employees "with the corresponding
pay increases or adjustment including payment of salary differentials plus attorney’s fees*,+ and to cease
and desist from committing the same unjust discrimination in matters of promotion." 7
Instead of filing a position paper as required by the Labor Arbiter, SMFI et al. filed a motion to dismiss,8
contending that the issues raised in the complaint were grievance issues and, therefore, "should be
resolved in the grievance machinery provided in [the] collective bargaining agreements [sic] of the
parties or in the mandated provision of voluntary arbitration which is also provided in the CBA ."9 The
Union opposed the motion to dismiss.
In its Position Paper, the Union specified acts of ULP of SMFI et al. under Article 248, paragraphs (e) and
(i) of the Labor Code 10 which Article reads:
Art. 248. Unfair labor practices of employers. – It shall be unlawful for an employer to commit any of the
following unfair labor practices:
xxx x
(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
xxx x
xxx x Summary: Some employees of
San Miguel Foods Inc (SMFI)

xxx x
San Miguel Foods Inc (SMFI)
brought a grievance against
LA: By Order of February 18, 1994, the Labor Arbiter granted SMFI et al.’s motion to dismiss and the Finance Manager for
discrimination, favoritism, etc.
ordered the remand of the case to the grievance machinery for completion of the proceedings. 11 The Before Plant Operations
Union appealed the said order to the NLRC by "Motion for Reconsideration/Appeal" 12 which its Second Manager. Union sought
Division granted and accordingly ordered the Labor Arbiter to continue the proceedings on the Union’s Grievance machinery step 1
but SMFI took so long to
complaint.13 SMFI et al. filed a Motion for Reconsideration of the NLRC order but it was denied, hence, resolve it so they filed a
they filed a petition for certiorari with this Court. After the parties and the Solicitor General had filed COMPLAINT FOR ULP before
their respective pleadings, this Court, by Resolution of January 25, 1999, referred the case to the Court NLRC . SMFI filed MTD saying it
should be subject to the
of Appeals pursuant to St. Martin Funeral Homes v. NLRC.14 grievance machinery provided
in CBA. LA granted MTD so
Union appealed to NLRC. NLRC
CA: By Decision of July 31, 2002, 15 the Court of Appeals denied SMFI et al.’s petition for certiorari, it ordered LA to continue
holding that the Labor Arbiter has jurisdiction over the complaint of the Union , they having violated proceedings so SMFI MR but
the seniority rule under the CBA by appointing and promoting certain employees which amounted to a denied. So P4C R65 w/ SC but
referred to CA. CA held that LA
ULP.16 had jurisdiction since it is a
ULP. Court held that first,
Before this Court, SMFI lodged the present petition for review on certiorari, faulting the appellate court procedural rules under ROC
not strictly applied in Labor
in proceedings. Second, there is
A. NO ULP as to the questioned
. . . FINDING THAT THE LABOR ARBITER HAS JURISDICTION OVER THE COMPLAINT OF RESPONDENT promotions because it was not
alleged that they were done to
UNION discourage unionism. Third, on
B. ULP on alleged violations of
CBA, it was held that under LC,
. . . FINDING THAT SMFI’S ALLEGED VIOLATION OF THE CBA CONSTITUTES UNFAIR LABOR PRACTICE. if it is not an economic
provision, it is not considered
The jurisdiction of Labor Arbiters, enumerated in Article 217 of the Labor Code, includes complaints for gross violation of CBA w/c is
under LA jurisdiction. Since the
ULP. failure to follow the grievance
machinery is not an economic
SMFI argues that the allegations in the Union’s complaint filed before the Labor Arbiter do not establish provision, it is not considered
gross violation. However,
a cause of action for ULP, the Union having merely contended that SMFI was guilty thereof without violation of seniority was
specifying the ultimate facts upon which it was based . It cites Section 1 of Rule 8 of the Rules of Court considered a gross violation of
the CBA so that sole issue is
as applying suppletorily to the proceedings before the Labor Arbiter, which Section reads: under LA's jurisdiction.
Section 1. In general. – Every pleading shall contain in a methodical and logical form, a plain concise and
direct statement of the ultimate facts on which the party pleading relies for his claim . . . FACTS
-Some of the employees of
SMIFI's Finance Department
Alleging that the Union failed to comply with this Rule, SMFI concludes that the Labor Arbiter has no brought a grievance against
Finance Manager for
jurisdiction over its complaint. discrimination, favoritism, etc.
On the promotion of junior
A perusal of the complaint shows that, indeed, the particular acts of ULP alleged to have been employees, bypassing some
senior employees
committed by SMFI were not specified; neither were the ultimate facts in support thereof. In its -Grievance machinery Step 1
Position Paper, however, the Union detailed the particular acts of ULP attributed to SMFI and the was followed, so grievance
ultimate facts in support thereof. brought before Plant
Operations Manager.
-Union sought the review,
Section 7, Rule V of the New Rules of Procedure of the NLRC provides: evaluation and upgrading of all
Nature of Proceedings. – The proceedings before the Labor Arbiter shall be non -litigious in nature. Finance staff and promotion of
employee.
Subject to the requirements of due process, the technicalities of law and procedure and the rules -Grievance meeting held,
obtaining in the courts of law shall not strictly apply thereto . The Labor Arbiter may avail himself of all where management addressed
the grievance by conducting a
reasonable means to ascertain the facts of the controversy speedily, including ocular inspection and WORK MANAGEMENT REVIEW
examination of well-informed persons. (Emphasis and underscoring supplied) -however, almost 9 months
after the first grievance
meeting nothing happened so
Section 1 of Rule 8 of the Rules of Court should thus not be strictly applied to a case filed before a the Union filed a COMPLAINT
Labor Arbiter. In determining jurisdiction over a case, allegations made in the complaint, as well as FOR ULP AND UNJUST
DICRIMINATION IN MATTERS
those in the position paper, may thus be considered. OF PROMOTION W/ NLRC
-SMFI filed MTD: grievance
As stated above, the Union, in its Position Paper, mentioned the particular acts of ULP and the ultimate issues involved so Grievance
proceedings should be
facts in support thereof. Thus it alleged: followed, and if not followed,
VA
This is a complaint for unfair labor practices pursuant to Article 248 (e) and (i) of the Labor Code , as -parties submitted position
papers. In their position
amended, which reads: papers, the Union alleged that
Art. 248. Unfair labor practices of employers. – It shall be unlawful for an employer to commit any of the some of its members were
bypassed in promotion. The ER
following unfair labor practices: also allegedly violated the CBA
xxx x for failure to follow the
(e) To discriminate in regard to wages, hours of work, and other terms and conditions of employment grievance procedure and the
seniority rule
in order to encourage or discourage membership in any labor organization. LA:DISMISSED: grievance
xxx x machinery fshould be followed
(i) to violate a collective bargaining agreement. NLRC: LA continue
proceedings. SMFI MR
and which was committed by herein respondents as follows: SC: referred to CA
1. large scale and wanton unjust discrimination in matters of promotion , particularly upon the CA: LA has jurisdiction over the
following members of complainant: Ellen Ventura, Julie Geronimo, Ronnie Cruz, Rita Calasin, Romy de complaint for violation of the
seniority rule under the CBA
Peralta, Malou Alano, And E. M. Moraleda, all assigned with the Finance Department or respondent
SMFI. WON The conplaint should be
dismissed for failure to
2. gross and blatant violations by respondent SMFI of Section 5, Article III ( Job Security) and Section 4, establish a COA since the
Article VIII (Grievance Machinery) of the current collective bargaining agreement (CBA) between complaint does not state the
complainant and respondent SMFI, which provisions of said CBA are hereunder quoted for easy ultimate facts constituting

complainant and respondent SMFI, which provisions of said CBA are hereunder quoted for easy ultimate facts constituting
ULP? NO
reference. (Emphasis and underscoring supplied) -Procedural rules should not be
strictly applied to labor
On the questioned promotions, the Union did not allege that they were done to encourage or proceedings
-here: Complaint + Position
discourage membership in a labor organization. In fact, those promoted were members of the papers show the acts
complaining Union. The promotions do not thus amount to ULP under Article 248(e) of the Labor Code. constituting ULP
WON LA has jurisdiction on the

As for the alleged ULP committed under Article 248(i), for violation of a CBA, this Article is qualified by Union's complaint on
Article 261 of the Labor Code, the pertinent portion of which latter Article reads: discrimination in the
promotion? NO
x x x violations of a Collective Bargaining Agreement, except those which are gross in character, shall -For it to be a ULP, it should
no longer be treated as unfair labor practice and shall be resolved as grievances under the Collective have been done to discourage
membership in a union or
Bargaining Agreement. For purposes of this article, gross violations of Collective Bargaining Agreement labor organization. Here, no
shall mean flagrant and/or malicious refusal to comply with the economic provisions of such allegation as to that the
agreement. (Emphasis and underscoring supplied) alleged discrimination was
done to discourage unionism.
The employees promoted were
Silva v. NLRC instructs that for a even members of the
ULP case to be cognizable by the Labor Arbiter, and the NLRC to exercise its appellate jurisdiction, the complaining Union
allegations in the complaint should show prima facie the concurrence of two things, namely: (1) gross WON the violation of the CBA:
violation of the CBA; AND (2) the violation pertains to the economic provisions of the CBA .17 (Emphasis failure to comply with the
grievance procedure in the
and underscoring supplied) CBA, is under the jurisdiction
of the LA? NO.
As reflected in the above-quoted allegations of the Union in its Position Paper, the Union charges SMFI -For violations of CBA to be not
under VA, it should be:
to have violated the grievance machinery provision in the CBA. The grievance machinery provision in 1. gross in character
the CBA is not an economic provision, however, hence, the second requirement for a Labor Arbiter to 2. economic. Provision
exercise jurisdiction of a ULP is not present. -the said violation is not an
economic provision
The Union likewise charges SMFI, however, to have violated the Job Security provision in the CBA, WON the violation of the CBA
specifically the seniority rule, in that SMFI "appointed less senior employees to positions at its Finance as to the seniority is under
jurisdiciton of LA? YES
Department, consequently intentionally by -passing more senior employees who are deserving of said -the ER violated the JOB
appointment." SECURITY PROVISION OF THE
CBA, PARTICULARYLY THE
SENIORITY RULE
Article 4 of the Labor Code provides that "All doubts in the implementation and interpretation of the -all doubts are resolved ifo
provisions of this Code, including implementing rules and regulations, shall be resolved in favor of labor
-seniority rule in the
labor." Since the seniority rule in the promotion of employees has a bearing on salary and benefits, it promotion of the employees
may, following a liberal construction of Article 261 of the Labor Code, be considered an "economic has a bearing on salary and
benefits. Thus it is an economic
provision" of the CBA. provision the CBA and its
violation is under LA's
As above-stated, the Union charges SMFI to have promoted less senior employees, thus bypassing jurisdiction
others who were more senior and equally or more qualified. It may not be seriously disputed that this
charge is a gross or flagrant violation of the seniority rule under the CBA, a ULP over which the Labor
Arbiter has jurisdiction.
SMFI, at all events, questions why the Court of Appeals came out with a finding that it (SMFI)
disregarded the seniority rule under the CBA when its petition before said court merely raised a
question of jurisdiction. The Court of Appeals having affirmed the NLRC decision finding that the Labor
Arbiter has jurisdiction over the Union’s complaint and thus remanding it to the Labor Arbiter for
continuation of proceedings thereon, the appellate court’s said finding may be taken to have been made
only for the purpose of determining jurisdiction.
WHEREFORE, the Petition is DENIED.
SO ORDERED.
Quisumbing, Carpio, Tinga, Velasco, Jr., JJ., concur.
Footnotes
1 Records, p. 33.
2
Ibid.
3 Id. at 35-39.
4 Id. at 65-66.
5
NLRC-NCR No. 00-10-06543-93; id. at 2-4.
6
Id. at 3.
7
Ibid.
8 Id. at 20-29.
9
Id. at 26-27.
10
Id. at 46-54.
11
Id. at 81-82.
12 Id. at 87-89.
13
CA rollo, pp. 32-35.
14
G.R. No. 130866, September 16, 1998, 295 SCRA 494. [T]he Court En Banc declared that all appeals
from the NLRC to the Supreme Court [petition for certiorari under Rule 65 of the 1997 Rules of Civil
Procedure] should henceforth be initially filed in the Court of Appeals as the appropriate forum for the
relief desired in strict observance of the doctrine on the hierarchy of courts.
15
Penned by Justice Roberto A. Barrios, and concurred in by Justices Bienvenido L. Reyes and Edgardo F.
Sundiam, CA rollo, pp. 259-267.
16
Rollo, pp. 47-50.

Sundiam, CA rollo, pp. 259-267.
16 Rollo, pp. 47-50.
17
G.R. No. 110226, June 19, 1997, 274 SCRA 159, 173.
Pasted from <http://www.lawphil.net/judjuris/juri2007/oct2007/gr_168569_2007.html >

landtex v ca 529 s 631 - 2007
1:01 PM
SECOND DIVISION
LANDTEX INDUSTRIES and G.R. No.

WILLIAM GO, 150278
Petitioners,
Present:
QUISUMBING,
J.,
- versus - Chairperson,
CARPIO,
CARPIO
MORALES,
TINGA, and
COURT OF APPEALS, VELASCO, JR.,
SALVADOR M. AYSON, and JJ.
LANDTEX INDUSTRIES WORKERS UNION – FEDERATION OF
FREE WORKERS (FFW),
Respondents.
Promulgated:
August 9, 2007
x- - - - - - - - - - -- - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - -- - - - - - x
DEC I S IO N
CARPIO, J.:
The Case
This is a petition for review on certiorari[1] of the Decision[2] dated 13

February 2001 and of the Resolution[3] dated 16 October 2001 of the Court of
Appeals (appellate court) in CA-G.R. SP No. 50060. The Decision ordered
petitioners Landtex Industries (Landtex) and William Go to award respondent

Salvador M. Ayson (Ayson) separation pay in lieu of reinstatement, backwages,
13th month pay, service incentive leave pay, and attorney’s fees.
The Facts
Landtex, a sole proprietorship owned by Alex Go and managed by William

Go, is a business enterprise engaged in the manufacture of garments. Ayson
worked in Landtex as a knitting operator from 19 May 1979 to 6 July 1996. Ayson
was an officer[4] of Landtex Industries Workers Union – Federation of Free
Workers (union) which had an existing collective bargaining agreement (CBA) with
Landtex.
Ayson received a letter[5] from Landtex dated 16 March 1996 which stated
that Ayson committed acts contrary to company policies on 2 and 7 March
1996. The letter required Ayson to explain in writing within 24 hours from receipt
why no disciplinary action should be taken against him for spreading damaging
rumors about the personal life of an unspecified person, and for having an
altercation with one of the company’s owners when he was asked to submit an ID
picture.
Ayson replied in writing[6] that he could not defend himself from the charge
of spreading damaging rumors because Landtex’s letter failed to state what
rumors he was supposed to have spread. Ayson further explained that he merely
replied in a loud voice to the company owner’s request because he was carrying
textiles. Ayson then apologized for his actions.
Landtex sent Ayson another letter dated 2 April 1996 informing him of its
receipt of his explanation. Landtex informed Ayson that the omission of the
details about the damaging rumors was intentional because other employees
might be able to read the letter. Furthermore, Landtex decided to conduct an
investigation on 26 April 1996 in view of Ayson’s denials.
The first meeting between Ayson and Landtex’s counsel took place on 26
April 1996. The minutes of the 26 April 1996 meeting state that Ayson was
informed that there were witnesses who could testify that he spread rumors
about the personal life of William Go and his family. Ayson denied that he spread
rumors and requested for another meeting so that he could hear the alleged
witnesses and defend himself. Ayson further requested that the next
investigation be held at Landtex’s Mauban office because he and the union
officers accompanying him suffer salary deductions for their attendance of
investigations during office hours.[7] Another meeting was scheduled for 5 May

1996, but Ayson was unable to attend it and went home early because he
allegedly needed to look after his child.
The second meeting between Ayson and Landtex’s counsel took place on 5
June 1996. The minutes of the 5 June 1996 meeting state that Ayson and a union
officer accompanying him appeared but refused to sign the attendance sheet or
to participate. Landtex’s counsel, Atty. Generosa Jacinto, made a note in the
minutes which reads, “Pls. advise mgt. They can take any action they want.”[8]
In a letter dated 19 June 1996, Landtex terminated Ayson’s services

effective 30 June 1996 because of Ayson’s lack of cooperation during the
investigations. Despite this notice, Ayson still reported for work until 6 July 1996.
In a letter dated 8 July 1996, the union president requested Landtex for a
formal dialogue regarding Ayson’s case. Landtex reaffirmed its decision to
terminate Ayson in meetings with the union held on 10 and 16 July 1996. Landtex
and the union agreed to refer the matter to a third party in accordance with the
provisions of law and of the CBA. Landtex expected Ayson to refer the issue to
the National Conciliation and Mediation Board (NCMB) for the selection of a
voluntary arbitrator. Ayson and the union, however, filed a complaint before the
labor arbiter.[9]
The labor arbiter conducted mandatory conferences for amicable

settlement with the participation of all parties. The parties agreed to the idea of
payment of separation pay in lieu of reinstatement but differed as to the
amount. Ayson wanted to receive one month basic salary for every year of
service while Landtex wanted to pay only one-half month basic salary for every
year of service from date of hiring to termination of employment.[10] The parties
were not able to settle; hence, the labor arbiter ordered them to submit their
position papers.
In his position paper, Ayson asked whether his dismissal from employment
has any just cause. Ayson also asked whether Landtex complied with procedural
due process when it terminated his employment.
On the other hand, Landtex and William Go revealed in their position paper
that Ayson was seen having a drinking session with other Landtex employees near
the company premises. A Landtex security guard, who was a part of the drinking
session but whose identity was not revealed, stated that Ayson maliciously
narrated spiteful stories about the personal life of William Go. Landtex also
questioned the jurisdiction of the labor arbiter over Ayson’s case. Landtex

insisted that the labor arbiter should dismiss Ayson’s case and refer it to the
NCMB for the selection of a voluntary arbitrator.
The Ruling of the Labor Arbiter
On 30 September 1997, the labor arbiter promulgated his decision[11]

which ruled in favor of Ayson. The labor arbiter declared that despite the union’s
manifestation of its desire to refer Ayson’s case to “a third party in accordance
with provisions of law and CBA,”[12] this manifestation did not affect Landtex’s
termination of Ayson’s employment. Ayson’s termination thus properly falls
under the jurisdiction of the labor arbiter. Moreover, the labor arbiter did not
find any evidence supporting Landtex’s allegations that Ayson spread malicious
rumors about William Go or shouted at William Go’s wife. The pertinent
portions of the labor arbiter’s decision read:
Dismissal of a worker is no trifling matter; more so, of herein [Ayson] who had been employed
with [Landtex] for seventeen years, more or less. The dismissal must be for a just cause, let alone with
due process, and must be based on substantial evidence. Mere allegations will not suffice.
WHEREFORE, premises considered, judgment is hereby rendered ordering [Landtex Industries and
William Go] to reinstate [Ayson] to his former position without loss of seniority rights with full
backwages from the date his salary has been withheld until the actual date of reinstatement.
*Landtex Industries and William Go+ are further ordered to pay ten (10%) percent of *Ayson’s+
total monetary award as attorney’s fees.
Backwages
6/30/96 – 8/31/97 = 14.0 mos.
P165.00 x 30 x 14.00 mos. = P 69,300.00
th
13 Month Pay = 5,775.00
SILP
5.833 days x P165.00 = 962.50
P 76,037.50
Attorney’s Fees = 7,603.75
TOTAL P 83,641.25
All other claims of [Ayson] are dismissed for lack of merit.
SO ORDERED.[13]
Landtex and William Go appealed the labor arbiter’s decision to the National
Labor Relations Commission (NLRC). Landtex and William Go posted a bond in
the amount of the total award in the labor arbiter’s decision to perfect their
appeal and to enjoin the execution of the decision. Landtex and William Go
insisted that the labor arbiter had no jurisdiction over the parties and over the
subject matter in the present case.
The Ruling of the NLRC
On 20 July 1998, the NLRC promulgated its decision[14] which agreed with
Landtex and William Go’s argument that Ayson’s case falls within the original and

exclusive jurisdiction of the voluntary arbitrators, as provided in Article 261 of the
Labor Code. Landtex merely imposed a disciplinary measure when it terminated
Ayson’s employment. Furthermore, the NLRC ruled that Ayson waived his right to
have his case heard before any other forum when he did not undergo the
grievance process mandated by his union’s CBA with Landtex. The NLRC declared
that the disciplinary action meted out by Landtex to Ayson and the waiver of
Ayson’s right to have his case heard were matters which require the
interpretation of the CBA, and thus were within the original and exclusive
jurisdiction of the voluntary arbitrators. The dispositive portion of the NLRC’s
decision reads:
WHEREFORE, the decision appealed from is hereby SET ASIDE on the ground of lack of jurisdiction
over the subject matter. The instant case is hereby referred to Voluntary Arbitration in accordance with
the Collective Bargaining Agreement.
SO ORDERED.[15]
The NLRC dismissed Ayson and the union’s motion for reconsideration on 11
September 1998. Ayson and the union then filed a petition for certiorari before
the appellate court.
The Ruling of the Appellate Court
In a decision promulgated on 13 February 2001, the appellate court

sustained the jurisdiction of the labor arbiter and modified the award in favor of
Ayson. The appellate court further stated that the records are “bereft of any
showing that a grievance mediation had been undertaken so as to thresh out any
disciplinary measure against *Ayson+.”[16] The appellate court took Landtex and
William Go to task because they took “the avenue of least resistance” and
discussed the possibility of an amicable settlement instead of filing a motion to
dismiss before the labor arbiter. Moreover, the appellate court found that Ayson
was illegally dismissed because his termination was characterized by “bad faith,
*and+ wanton and reckless exercise of management prerogative.”[17] Landtex’s
allegations against Ayson failed to show that Ayson’s dismissal was for a just
cause. The appellate court awarded Ayson full backwages, separation pay
(equivalent to one month’s pay for every year of service, a fraction of at least six
months being considered as one whole year) in lieu of reinstatement, 13th month
pay, service incentive leave pay, and attorney’s fees. The dispositive portion of
the decision of the appellate court reads:
WHEREFORE, premises considered, the petition is GRANTED— and the decision (promulgated on
July 20, 1998) and the resolution (promulgated on September 11, 1998) of the public respondent
(National Labor Relations Commission) in NLRC NCR Case No. 00-07-04492-92 is hereby REVERSED and
SET ASIDE. The decision of the labor arbiter, which was rendered on September 30, 1997 is hereby
REINSTATED—subject, however, to the MODIFICATION that separation pay shall be awarded to [Ayson]

in lieu of reinstatement. No pronouncement as to costs.
SO ORDERED.[18]
Landtex and William Go filed a motion for reconsideration of the appellate

court’s decision. Ayson and the union also contested the appellate court’s award
of separation pay in lieu of reinstatement. The appellate court dismissed both
motions in a resolution promulgated on 16 October 2001.
Landtex and William Go then filed a petition for review before this Court on
11 December 2001. Ayson and the union also filed a petition for review, docketed
as G.R. No. 150392, but this petition was withdrawn as Ayson no longer desired
to question the resolution of the appellate court.[19] Emilia P. Ayson, respondent
Ayson’s wife, later made a manifestation that she would like to represent Ayson
in the present case since her husband died on 28 August 2002. She attached
Ayson’s death certificate and their marriage certificate to prove her allegations.
When Landtex and William Go filed their memorandum in the present case,
they stated that Landtex started to suffer serious business reverses in the first
quarter of 2001. Landtex’s cutting and knitting departments temporarily closed in
December 2002, and Landtex permanently ceased its operations in February
2003. Landtex and William Go attached Landtex’s notice of closure to the union
dated 9 January 2003, Landtex’s balance sheets for the years 2000 to 2002,
Landtex’s profit and loss statements for the years 2000 to 2002, notice of extra-
judicial sale of the property of spouses Alex and Nancy Go, demand letters
addressed to Alex Go, and unpaid utility bills in the name of Alex Go to prove their
allegations.
The Issues
Landtex and William Go raise the following issues before this Court:
Whether the NLRC correctly ruled that jurisdiction over the subject matter of the instant
case pertains exclusively to the voluntary arbitrator considering that
The existing CBA provides that “a grievance is one that arises from the interpretation or
implementation of this agreement, including disciplinary action imposed on any covered
employee”; and
The parties have undergone the grievance machinery of the collective bargaining
agreement.
Whether the instant case concerns enforcement and implementation of company personnel
policy and that the issue therein was timely raised.
Whether there is a valid ground for termination of the employment of [Ayson].
Whether [Ayson] is entitled to backwages and separation pay.

Whether [the appellate court] committed grave and patent abuse of discretion and errors of
law in setting aside the decision of the NLRC.[20]
The Labor Arbiter’s Jurisdiction
Landtex and William Go insist that the matter subject of the present petition
is covered by the CBA’s provision on voluntary arbitration and thus is excluded
from the labor arbiter’s jurisdiction. They allege that Ayson’s termination merely
enforced Landtex’s personnel policy against misconduct. They further claim that
the union’s request for a formal dialogue signified the initiation of the grievance
procedure outlined in the CBA. Landtex and William Go even assert that because
of Ayson’s failure to submit his claim before the NCMB, he is barred from seeking
relief from a forum other than that provided in the CBA.
Section 1 of Article XV, Grievance Procedure, of the union’s CBA with

Landtex reads:
Grievance Machinery. — For purposes of this Agreement, a grievance is one that arises from the
interpretation or implementation of this Agreement, including disciplinary action imposed on any
covered employee. Any grievance, dispute, or complaint which a covered employee or UNION may have
against the COMPANY: (a) relative to the meaning, interpretation and application of the terms of this
agreement; or (b) arising out of the employment relationship, shall be submitted to the grievance
machinery in accordance with the following procedure:
Step I The employee shall present his grievance, dispute, or complaint in writing to the COMPANY’s
Section Head/In Charge and to the UNION’s authorized representative, and thereupon the
said Section Head and UNION representative shall endeavor to work out a settlement within
four (4) working days from presentation.
Step II If, under Step I, no settlement is reached within four (4) working days from presentation, the
grievance shall be taken up by the UNION representative with the General Manager.
Step III If, under Step II, no settlement is reached within four (4) working days, the grievance shall be
referred by the parties to the Management-Employee Committee.
Step IV If under Step III, no settlement is reached within eight (8) working days, the grievance shall be
referred by both parties to the National Conciliation and Mediation Board (NCMB) for
submission to voluntary arbitration in accordance with NCMB’s rules within ten (10) days
from the date of the last meeting of the Management-Employee Committee.
Where the grievance or complaint involves the UNION directly, Steps I and II of the foregoing procedure
shall be dispensed with and only Steps III and IV shall be followed.[21]
Articles 217, 261, and 262 of the Labor Code tackle the jurisdiction of labor
arbiters and voluntary arbitration as follows:

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
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;
employee relations;
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.
Art. 261. Jurisdiction of Voluntary Arbitrators or panel of Voluntary Arbitrators. - The Voluntary
labor practice and shall be resolved as grievances under the Collective Bargaining Agreement. For
The Commission, its Regional Offices and the Regional Directors of the Department of Labor and
ART. 262. Jurisdiction over other labor disputes. - The Voluntary Arbitrator or panel of Voluntary
The labor arbiter, the appellate court, and the NLRC differed in their rulings
on the matter of jurisdiction. The labor arbiter and the appellate court agreed
with Ayson and the union’s position. The labor arbiter assumed jurisdiction and
emphasized that when the union met with Landtex on 8 July 1996, Ayson was no
longer an employee because Landtex terminated him effective 30 June 1996. The
manifestation of the union’s desire to “refer the matter to a third party in
accordance with law and the CBA” does not deviate from the fact that Ayson was

already dismissed. On the other hand, the NLRC sustained Landtex and William
Go’s position. The NLRC asserted that the determination of whether Ayson’s
dismissal constitutes a “disciplinary action” within the scope of the CBA calls for
an interpretation of the CBA. When the union called for a meeting with Landtex,
the union effectively initiated the grievance procedure. Thus, Ayson’s case should
have been subjected to voluntary arbitration.
We agree with Ayson and the union and affirm the rulings of the labor
arbiter and the appellate court.
Article 261 of the Labor Code provides that voluntary arbitrators shall have
original and exclusive jurisdiction to hear and decide all unresolved grievances
Agreement and those arising from the interpretation or enforcement of company
personnel policies. On the other hand, a reading of Article 217 in conjunction
with Article 262 shows that termination disputes fall under the jurisdiction of the
labor arbiter unless the union and the company agree that termination disputes
should be submitted to voluntary arbitration. Such agreement should be clear
and unequivocal. Existing law is an intrinsic part of a valid contract without need
for the parties to expressly refer to it. Thus, the original and exclusive jurisdiction
of the labor arbiter over unfair labor practices, termination disputes, and claims
for damages cannot be arrogated into the powers of voluntary arbitrators in the
absence of an express agreement between the union and the company.[22]
In the present case, the CBA between Landtex and the union does not
clearly state that termination disputes, as opposed to mere disciplinary actions,
are covered by the CBA. The CBA defined a grievance as “one that arises from the
interpretation or implementation of this Agreement, including disciplinary action
imposed on any covered employee.” The CBA did not explicitly state that
termination disputes should be submitted to the grievance machinery.
In ruling that the present case should have been submitted to voluntary
arbitration, the NLRC relied on the union’s act of meeting with Landtex. The
union’s letter to Landtex, dated 8 July 1996, reads:
We received your letter dated 19 June 1996 re: TERMINATION LETTER of MR. SALVADOR AYSON who
happened to be *a+ union officer of LANDTEX INDUSTRIES EMPLOYEE’S UNION.
In connection to [sic] this, we would like to request for a formal dialogue regarding the above matter at
a [sic] soonest possible time.
We are hoping that the management is with us in resolving this termination of our officer.
May we have a continuous harmonious relationship.
Thank you.[23]
The CBA’s provisions on grievance directly involving the union state that the

grievance shall be referred by the parties to the Management-Employee
Committee. The Management-Employee Committee shall be composed of three
representatives each from the union and Landtex. According to the minutes of
the meeting prepared by Landtex’s counsel, when the union met with Landtex on
10 July 1996, there were seven union members and two Landtex representatives
in attendance. The minutes of the meeting read:
The mgt.’s position is that it will no longer reconsider the termination of Mr. Ayson. The union on
the other hand opened discussion of other possibilities in lieu of reinstatement.
The union requested for time to study possibilities. The mgt. will do likewise.
Reset 16 July 96[,] 5 pm at factory.[24]
The next meeting proceeded with the same number of representatives from both
parties. The minutes of the meeting state that there was “*n+o settlement. Union
will refer matter to third party in accordance with provision of law and CBA.”[25]
We find nothing in the records which shows that the meetings between the
union and Landtex already constitute the grievance machinery as mandated by
the CBA. The meetings happened only after the effectivity of Ayson’s
termination. The meetings did not comply with the requisite number of
participants. The CBA mandated that there should be three representatives each
from the union and Landtex but there were seven union members and two
Landtex representatives who attended the meetings. More importantly, there
was nothing in the minutes that shows that the attendees constituted a
Management-Employee Committee.
Finally, the appellate court is correct in stating that if Landtex really believed
that the labor arbiter did not have jurisdiction over the present case, then
Landtex should have filed a motion to dismiss in accordance with Section 15, Rule
V of The New Rules of Procedure of the NLRC.[26] Instead of filing a motion to
dismiss, Landtex participated in the proceedings before the labor arbiter. Had
Landtex immediately filed a motion to dismiss, the labor arbiter would have
determined the issue outright before proceeding with hearing the case. In the
present case, Landtex raised the issue of jurisdiction only after the labor arbiter
required the parties to submit their position papers.
Validity of Ayson’s Dismissal
The requisites for a valid dismissal are (1) the dismissal must be for any of
the causes expressed in Article 282 of the Labor Code, and (2) the opportunity to

be heard and to defend oneself.[27] Landtex and William Go assert that Ayson’s
termination was for a just cause as defined in Article 282[28] of the Labor Code;
hence, the two-notice rule[29] should be followed.
The contents of Landtex’s first memorandum to Ayson, signed by Landtex’s

counsel, read:
Ipinagbigay-alam sa amin ng pamahalaang Landtex Industries and [sic] tungkol sa nangyaring insidente
nuong ika-2 at 7 Marso 1996.
Ayon sa isang saksi, ikaw ay nagkakalat ng mga balitang nakakasira sa aming personal na buhay. Bukod
pa dito nuong ika-7 ng Marso ng ikaw ay hingan ng iyong ID pictures bilang isa sa mga regulasyon ng
kompanya, ikaw ay sumungaw sa harap pa mismo ng nagmamay-ari ng kompanya na naging dahilan
upang magkasagutan kayo.
Iyong nalalaman na ang ganitong gawain ay taliwas sa umiiral na patakaran ng kompanya. Bunga nito[,]
ikaw ay hinihingan ng nakasulat na paliwanag 24 oras mula sa pagkakatanggap ng liham na ito. Ang
hindi mo pagsunod ay nangangahulugan na maaari ng gumawa ng susunod na aksyong pang-disiplina
and [sic] kompanya laban sa iyo.[30]
Ayson’s handwritten response reads:

Ayon sa salaysay ng inyong saksi ako ay nagkakalat ng balitang nakakasira sa inyong personal na
buhay.
Ipagpaumanhin po ninyo ang hindi ko pagtugon sa inyong sulat na nakasaad na ako ay nagkakalat
ng balitang nakakasira ng inyong personal na buhay sa dahilan na wala naman pong nakasaad sa sulat
kung anong balita na ipinagkakalat ko na nakakasira sa personal na buhay ninyo.
Noon po ika-7 ng Marso ako po ay hiningan ng ID picture bilang isa sa mga regulasyon ng
kompanya at nakasaad po sa sulat na ako po ay “sumungaw” o “sumigaw” sa harap mismo ng may-ari
ng kompanya. Hindi po ako sumigaw[,] ako po ay sumagot lamang sa tanong nila. Kung ang pagkasagot
ko man ay medyo napakalakas ito po ay sa dahilan na nang mga oras na iyon ay may buhat-buhat akong
tela na aming inaakyat. Kung ito po ay minamasama ninyo, ay ihinihingi ko na lamang ng
paumanhin.[31]
Landtex then summoned Ayson on 26 April 1996 to a meeting to investigate

the 2 and 7 March 1996 incidents. The minutes of the 26 April 1996 meeting
read:
Mr. Ayson was apprised of the incident that happened on March 2 & 7 wherein it was alleged
that he is spreading some rumors involving [the] personal life of Mr. Go and his family. He was informed
that there were witnesses who can testify on this.
Mr. Ayson however requested that another investigaton be conducted wherein the alleged
witnesses be presented since he cannot answer whether what was reported was true or not. He further
denies allegations that he is spreading said rumors.
Mr. Ayson together with union officers requested that investigation be conducted instead at
Mauban, Quezon City since they are being deducted everytime they attend investigations like this
during office hours.
Mr. Ayson & union to be notified when another investigation [will] be scheduled.[32]
The next meeting was held on 5 June 1996. The minutes of the meeting
read:
Mr. Ferdinand Samson, union Sgt. at Arms [and] Mr. Salvador Ayson appeared but refused to sign
attendance or participate in [the] investigation. Accord. to them, they will consult FFW.[33]

Landtex informed Ayson of its decision to terminate his services in a letter

dated 19 June 1996. The letter, signed by Landtex’s counsel, reads:
Ito ay hinggil sa insidenteng nangyari na kinasangkutan mo noong ika-2 at 7 ng Marso 1996. Hindi lingid
sa iyong kaalaman na ikaw ay binigyan ng pamunuan ng Landtex ng lahat ng pagkakataon upang marinig
ang iyong panig at maipagtanggol ang iyong sarili sa paraang naaayon sa batas ngunit, ikaw ay hindi
nakiisa o nakipagtulungan.
Sa katunayan, noong nakaraang 16 Marso 1996 ikaw [ay] pinadalhan ng memo kung saan nakasaad ang
nasabing insidente at kasama ang paghingi ng iyong nakasulat na paliwanag. Noong nakaraang 02 Abril
1996 isang sulat ang pinadala sa iyo kung saan ikaw ay inatasang dumalo sa isang pagsisiyasat. Sa
nasabing imbestigasyon, iminungkahi mo at ng iyong mga kasama (mga opisyales ng unyon) na
magsagawa ulit ng isa pang imbestigasyon at nais ninyong ito ay isagawa sa inyong pagawaan. Kaya’t ito
ay muling inskedyul noon 06 Mayo 1996 ngunit ikaw ay tumawag ng araw din yaon at sinabing kailangan
mong umuwi ng maaga dahil walang magbabantay sa iyong anak.
Muli na naman nagtakda ng isa pang pagsisiyasat noong ika-05 Hunyo 1996 ngunit, sa nasabing
imbestigasyon ikaw ay tumangging maimbestigahan at tumanggi ring pumirma sa attendance. Ilang
pagkakataon na iyong pinalampas kung saan sana ay naipadinig mo ang iyong panig at naipagtanggol mo
ang iyong sarili.
Kaugnay nito, ikinalulungkot na ipinababatid sa iyo ng pamunuan na batay sa akusasyon sa iyo, sa

pagpatunay ng testigo laban sa iyo ikaw ay tinatanggal sa trabaho. Ang iyong paglilingkod sa Landtex
Industries ay hanggang sa ika-30 ng Hunyo 1996 na lamang.[34]
Landtex and William Go, in their appeal before the NLRC, stated that
paragraphs (a) and (d) of Article 282[35] were applicable to Ayson. They added
that the employer, exercising management prerogative, has the right to protect
its interest by imposing the appropriate penalties on erring employees. However,
upon reading the records of the case, we cannot deduce any proof of Landtex and
William Go’s accusations against Ayson. Moreover, the NLRC did not make any
pronouncement as to whether Ayson was dismissed for a just cause. The
appellate court and the labor arbiter were one in ruling that there was no just
cause in Ayson’s dismissal. We quote the labor arbiter’s factual findings with
approval:
We have painstakingly read the records of this case and, sadly, this Office finds no shred of
evidence to show that indeed *Ayson+ had been spreading “news and gossips” or that he ever shouted
at Mr. Go and engaged Mr. Go in a heated argument.
No affidavit of either the security guard who claimed to be one of the drinking group who heard
the alleged malicious news or gossips or that of Mr. and Mrs. Go who had been the subject of *Ayson’s+
alleged shouting has been presented if only to substantiate *Landtex and William Go’s+ self-serving
claims.[36]
Procedural due process in the dismissal of employees requires notice and

hearing. The employer must furnish the employee two written notices before
termination may be effected. The first notice apprises the employee of the
particular acts or omissions for which his dismissal is sought, while the second
notice informs the employee of the employer’s decision to dismiss him.[37] In

the present case, Landtex more than complied with the two-notice rule.
The requirement of a hearing, on the other hand, is complied with as long as

there was an opportunity to be heard, and not necessarily that an actual hearing
was conducted.[38] In the present case, Landtex scheduled three meetings
before terminating Ayson. However, Landtex failed to understand the law’s
purpose in requiring the opportunity to be heard. Landtex scheduled meetings
with Ayson but these meetings were not free from arbitrariness. Ayson could not
adequately defend himself from Landtex’s and William Go’s accusations. No
witness was ever presented against Ayson, hence Ayson could not test the
veracity of their claims.
Unsubstantiated suspicions, accusations, and conclusions of the employer

are not sufficient to justify an employee’s dismissal. The employer must prove by
substantial evidence the facts and incidents upon which the accusations are
made.[39] In Philippine Associated Smelting and Refining Corporation (PASAR) v.
NLRC,[40] we ruled that the mere conduct of an investigation and the statements
of the company’s security guard are not enough to establish the validity of the
charge of wrongdoing against the dismissed employees. It is not enough for an
employer who wishes to dismiss an employee to charge him with
wrongdoing. The validity of the charge must be established in a manner
consistent with due process. A suspicion or belief no matter how sincerely felt
cannot substitute for factual findings carefully established through an orderly
procedure.
Landtex and William Go failed to observe due process in terminating
Ayson. They likewise failed to establish that Ayson’s termination was for a just
cause. Thus, we rule that Landtex and William Go illegally dismissed Ayson.
WHEREFORE, we DENY the petition. We AFFIRM the Decision dated 13

February 2001 and the Resolution dated 16 October 2001 of the Court of Appeals
in CA-G.R. SP No. 50060. Emilia P. Ayson, in representation of Salvador M. Ayson,
is entitled to receive the amounts due Salvador M. Ayson.
Costs against the petitioners.
SO ORDERED.
ANTONIO T. CARPIO
Associate Justice

WE CONCUR:
Associate Justice
Chairperson
CONCHITA CARPIO MORALES DANTE O. TINGA


Associate Justice
ATTESTATION
Court’s Division.

Associate Justice
Chairperson
CERTIFICATION
REYNATO S. PUNO
Chief Justice
[1] Under Rule 45 of the 1997 Rules of Civil Procedure.

[2] Rollo, pp. 58-75. Penned by Associate Justice Ramon Mabutas, Jr. with Associate Justices
Roberto A. Barrios and Edgardo P. Cruz, concurring.
[3] Id. at 76. Penned by Associate Justice Ramon Mabutas, Jr. with Associate Justices
[4] Id. at 125.
[5] Id. at 118.
[6] Id. at 119.
[7] Id. at 121-122.
[8] Id. at 123.
[9] Labor Arbiter Emerson C. Tumanon heard the parties in this case.
[10] Rollo, p. 102.
[11] Id. at 136-142.
[12] Id. at 127.
[13] Id. at 141-142.
[14] Id. at 165-179. Penned by Commissioner Ireneo B. Bernardo, with Presiding
Commissioner Lourdes C. Javier and Commissioner Tito F. Genilo, concurring.
[15] Id. at 176-177.
[16] Id. at 70.
[17] Id. at 71.
[18] Id. at 74. The case is also referred to as NLRC NCR Case No. 00-07-04492-96 in
various portions of the records.
[19] Id. at 736-741.
[20] Id. at 30-31.
[21] Id. at 812-813
[22] See San Miguel Corp. v. NLRC, 325 Phil. 401 (1996).
[23] Records, p. 55.

[24] Rollo, p. 126.
[25] Id. at 127.
[26] Motion to Dismiss. — On or before the date set for the conference the respondent may file

[25] Id. at 127.
a motion to dismiss. Any motion to dismiss on the ground of lack of jurisdiction, improper venue
or that the cause of action is barred by prior judgment or by prescription shall be
immediately resolved by the Labor Arbiter by a written order. An order denying the motion to
dismiss or suspending its resolution until the final determination of the case is not appealable.
[27] Maneja v. NLRC, 353 Phil. 45, 61-62 (1998).
[28] Art. 282. Termination by employer. — An employer may terminate an employment for any of
the following causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer
or representative in connection with his work;
(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly
authorized representative;
(d) Commission of a crime or offense by the employee against the person of his employer or any
immediate member of his family or his duly authorized representative; and
[29] The pertinent portion of Section 2(d), Rule 1, Book VI of the Implementing Rules of the
Labor Code reads as follows:
(d) In all cases of termination of employment, the following standards of due process shall be
substantially observed:
For termination of employment based on just causes as defined in Article 282 of the Labor Code:
(i) A written notice served on the employee specifying the ground or grounds for termination, and
giving said employee reasonable opportunity within which to explain his side.
(ii) A hearing or conference during which the employee concerned, with the assistance of counsel if
he so desires is given the opportunity to respond to the charge, present his evidence, or rebut the evidence
presented against him.
(iii) A written notice of termination served on the employee, indicating that upon due consideration
of all the circumstances, grounds have been established to justify his termination.
[30] Rollo, p. 118.
[31] Id. at 119.
[32] Id. at 121-122.
[33] Id. at 123.
[34] Id. at 124.
[35] Supra note 28.
[36] Rollo, pp. 140-141.
[37] See Pono v. National Labor Relations Commission, G.R. No. 118860, 17 July 1997, 275 SCRA 611.
[38] See Pamantasan ng Lungsod ng Maynila v. Civil Service Commission, 311 Phil. 573 (1995).
[39] See Mendoza v. NLRC, 369 Phil. 1113 (1999).
[40] G.R. Nos. 82866-67, 29 June 1989, 174 SCRA 550.
Pasted from <http://sc.judiciary.gov.ph/jurisprudence/2007/august2007/150278.htm>
SECOND DIVISION
LANDTEX INDUSTRIES and G.R. No.

WILLIAM GO, 150278
Petitioners,
Present:
QUISUMBING,
J.,
- versus - Chairperson,
CARPIO,

CARPIO,
CARPIO
MORALES,
TINGA, and
COURT OF APPEALS, VELASCO, JR.,
SALVADOR M. AYSON, and JJ.
LANDTEX INDUSTRIES WORKERS UNION – FEDERATION OF
FREE WORKERS (FFW),
Respondents.
Promulgated:
August 9, 2007
x- - - - - - - - - - -- - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - -- - - - - - x
DEC I S IO N
CARPIO, J.:
The Case
This is a petition for review on certiorari[1] of the Decision[2] dated 13

February 2001 and of the Resolution[3] dated 16 October 2001 of the Court of
Appeals (appellate court) in CA-G.R. SP No. 50060. The Decision ordered
Salvador M. Ayson (Ayson) separation pay in lieu of reinstatement, backwages,
13th month pay, service incentive leave pay, and attorney’s fees.
The Facts
Landtex, a sole proprietorship owned by Alex Go and managed by William

Go, is a business enterprise engaged in the manufacture of garments. Ayson
worked in Landtex as a knitting operator from 19 May 1979 to 6 July 1996. Ayson
was an officer[4] of Landtex Industries Workers Union – Federation of Free
Workers (union) which had an existing collective bargaining agreement (CBA) with
Landtex.
Ayson received a letter[5] from Landtex dated 16 March 1996 which stated
that Ayson committed acts contrary to company policies on 2 and 7 March

1996. The letter required Ayson to explain in writing within 24 hours from receipt
why no disciplinary action should be taken against him for spreading damaging
rumors about the personal life of an unspecified person, and for having an
altercation with one of the company’s owners when he was asked to submit an ID
picture.
Ayson replied in writing[6] that he could not defend himself from the charge
of spreading damaging rumors because Landtex’s letter failed to state what
rumors he was supposed to have spread. Ayson further explained that he merely
replied in a loud voice to the company owner’s request because he was carrying
textiles. Ayson then apologized for his actions.
Landtex sent Ayson another letter dated 2 April 1996 informing him of its
receipt of his explanation. Landtex informed Ayson that the omission of the
details about the damaging rumors was intentional because other employees
might be able to read the letter. Furthermore, Landtex decided to conduct an
investigation on 26 April 1996 in view of Ayson’s denials.
The first meeting between Ayson and Landtex’s counsel took place on 26
April 1996. The minutes of the 26 April 1996 meeting state that Ayson was
informed that there were witnesses who could testify that he spread rumors
about the personal life of William Go and his family. Ayson denied that he spread
rumors and requested for another meeting so that he could hear the alleged
witnesses and defend himself. Ayson further requested that the next
investigation be held at Landtex’s Mauban office because he and the union
officers accompanying him suffer salary deductions for their attendance of
1996, but Ayson was unable to attend it and went home early because he
allegedly needed to look after his child.
The second meeting between Ayson and Landtex’s counsel took place on 5
June 1996. The minutes of the 5 June 1996 meeting state that Ayson and a union
officer accompanying him appeared but refused to sign the attendance sheet or
to participate. Landtex’s counsel, Atty. Generosa Jacinto, made a note in the
minutes which reads, “Pls. advise mgt. They can take any action they want.”[8]
In a letter dated 19 June 1996, Landtex terminated Ayson’s services

effective 30 June 1996 because of Ayson’s lack of cooperation during the
investigations. Despite this notice, Ayson still reported for work until 6 July 1996.
In a letter dated 8 July 1996, the union president requested Landtex for a
formal dialogue regarding Ayson’s case. Landtex reaffirmed its decision to

terminate Ayson in meetings with the union held on 10 and 16 July 1996. Landtex
and the union agreed to refer the matter to a third party in accordance with the
provisions of law and of the CBA. Landtex expected Ayson to refer the issue to
the National Conciliation and Mediation Board (NCMB) for the selection of a
voluntary arbitrator. Ayson and the union, however, filed a complaint before the
labor arbiter.[9]
The labor arbiter conducted mandatory conferences for amicable

settlement with the participation of all parties. The parties agreed to the idea of
payment of separation pay in lieu of reinstatement but differed as to the
amount. Ayson wanted to receive one month basic salary for every year of
service while Landtex wanted to pay only one-half month basic salary for every
year of service from date of hiring to termination of employment.[10] The parties
were not able to settle; hence, the labor arbiter ordered them to submit their
position papers.
In his position paper, Ayson asked whether his dismissal from employment
has any just cause. Ayson also asked whether Landtex complied with procedural
due process when it terminated his employment.
On the other hand, Landtex and William Go revealed in their position paper
that Ayson was seen having a drinking session with other Landtex employees near
the company premises. A Landtex security guard, who was a part of the drinking
session but whose identity was not revealed, stated that Ayson maliciously
narrated spiteful stories about the personal life of William Go. Landtex also
questioned the jurisdiction of the labor arbiter over Ayson’s case. Landtex
insisted that the labor arbiter should dismiss Ayson’s case and refer it to the
NCMB for the selection of a voluntary arbitrator.
The Ruling of the Labor Arbiter
On 30 September 1997, the labor arbiter promulgated his decision[11]

which ruled in favor of Ayson. The labor arbiter declared that despite the union’s
manifestation of its desire to refer Ayson’s case to “a third party in accordance
with provisions of law and CBA,”[12] this manifestation did not affect Landtex’s
termination of Ayson’s employment. Ayson’s termination thus properly falls
under the jurisdiction of the labor arbiter. Moreover, the labor arbiter did not
find any evidence supporting Landtex’s allegations that Ayson spread malicious
rumors about William Go or shouted at William Go’s wife. The pertinent
portions of the labor arbiter’s decision read:
Dismissal of a worker is no trifling matter; more so, of herein [Ayson] who had been employed

with [Landtex] for seventeen years, more or less. The dismissal must be for a just cause, let alone with
due process, and must be based on substantial evidence. Mere allegations will not suffice.
WHEREFORE, premises considered, judgment is hereby rendered ordering [Landtex Industries and
William Go] to reinstate [Ayson] to his former position without loss of seniority rights with full
backwages from the date his salary has been withheld until the actual date of reinstatement.
*Landtex Industries and William Go+ are further ordered to pay ten (10%) percent of *Ayson’s+
total monetary award as attorney’s fees.
Backwages
6/30/96 – 8/31/97 = 14.0 mos.
P165.00 x 30 x 14.00 mos. = P 69,300.00
13th Month Pay = 5,775.00
SILP
5.833 days x P165.00 = 962.50
P 76,037.50
Attorney’s Fees = 7,603.75
TOTAL P 83,641.25
All other claims of [Ayson] are dismissed for lack of merit.
SO ORDERED.[13]
Landtex and William Go appealed the labor arbiter’s decision to the National
Labor Relations Commission (NLRC). Landtex and William Go posted a bond in
the amount of the total award in the labor arbiter’s decision to perfect their
appeal and to enjoin the execution of the decision. Landtex and William Go
insisted that the labor arbiter had no jurisdiction over the parties and over the
subject matter in the present case.
The Ruling of the NLRC
On 20 July 1998, the NLRC promulgated its decision[14] which agreed with
Landtex and William Go’s argument that Ayson’s case falls within the original and
exclusive jurisdiction of the voluntary arbitrators, as provided in Article 261 of the
Labor Code. Landtex merely imposed a disciplinary measure when it terminated
Ayson’s employment. Furthermore, the NLRC ruled that Ayson waived his right to
have his case heard before any other forum when he did not undergo the
grievance process mandated by his union’s CBA with Landtex. The NLRC declared
that the disciplinary action meted out by Landtex to Ayson and the waiver of
Ayson’s right to have his case heard were matters which require the
interpretation of the CBA, and thus were within the original and exclusive
jurisdiction of the voluntary arbitrators. The dispositive portion of the NLRC’s
decision reads:
WHEREFORE, the decision appealed from is hereby SET ASIDE on the ground of lack of jurisdiction
over the subject matter. The instant case is hereby referred to Voluntary Arbitration in accordance with
the Collective Bargaining Agreement.
SO ORDERED.[15]
The NLRC dismissed Ayson and the union’s motion for reconsideration on 11
the appellate court.
The Ruling of the Appellate Court
In a decision promulgated on 13 February 2001, the appellate court

sustained the jurisdiction of the labor arbiter and modified the award in favor of
Ayson. The appellate court further stated that the records are “bereft of any
showing that a grievance mediation had been undertaken so as to thresh out any
disciplinary measure against *Ayson+.”[16] The appellate court took Landtex and
William Go to task because they took “the avenue of least resistance” and
discussed the possibility of an amicable settlement instead of filing a motion to
dismiss before the labor arbiter. Moreover, the appellate court found that Ayson
was illegally dismissed because his termination was characterized by “bad faith,
*and+ wanton and reckless exercise of management prerogative.”[17] Landtex’s
allegations against Ayson failed to show that Ayson’s dismissal was for a just
cause. The appellate court awarded Ayson full backwages, separation pay
(equivalent to one month’s pay for every year of service, a fraction of at least six
months being considered as one whole year) in lieu of reinstatement, 13th month
pay, service incentive leave pay, and attorney’s fees. The dispositive portion of
the decision of the appellate court reads:
WHEREFORE, premises considered, the petition is GRANTED— and the decision (promulgated on
July 20, 1998) and the resolution (promulgated on September 11, 1998) of the public respondent
(National Labor Relations Commission) in NLRC NCR Case No. 00-07-04492-92 is hereby REVERSED and
SET ASIDE. The decision of the labor arbiter, which was rendered on September 30, 1997 is hereby
REINSTATED—subject, however, to the MODIFICATION that separation pay shall be awarded to [Ayson]
in lieu of reinstatement. No pronouncement as to costs.
SO ORDERED.[18]
Landtex and William Go filed a motion for reconsideration of the appellate

court’s decision. Ayson and the union also contested the appellate court’s award
of separation pay in lieu of reinstatement. The appellate court dismissed both
motions in a resolution promulgated on 16 October 2001.
Landtex and William Go then filed a petition for review before this Court on
11 December 2001. Ayson and the union also filed a petition for review, docketed
as G.R. No. 150392, but this petition was withdrawn as Ayson no longer desired
to question the resolution of the appellate court.[19] Emilia P. Ayson, respondent
Ayson’s wife, later made a manifestation that she would like to represent Ayson
in the present case since her husband died on 28 August 2002. She attached
Ayson’s death certificate and their marriage certificate to prove her allegations.
When Landtex and William Go filed their memorandum in the present case,
quarter of 2001. Landtex’s cutting and knitting departments temporarily closed in
December 2002, and Landtex permanently ceased its operations in February
2003. Landtex and William Go attached Landtex’s notice of closure to the union
dated 9 January 2003, Landtex’s balance sheets for the years 2000 to 2002,
Landtex’s profit and loss statements for the years 2000 to 2002, notice of extra-
judicial sale of the property of spouses Alex and Nancy Go, demand letters
addressed to Alex Go, and unpaid utility bills in the name of Alex Go to prove their
allegations.
The Issues
Landtex and William Go raise the following issues before this Court:
Whether the NLRC correctly ruled that jurisdiction over the subject matter of the instant
case pertains exclusively to the voluntary arbitrator considering that
The existing CBA provides that “a grievance is one that arises from the interpretation or
implementation of this agreement, including disciplinary action imposed on any covered
employee”; and
The parties have undergone the grievance machinery of the collective bargaining
agreement.
Whether the instant case concerns enforcement and implementation of company personnel
policy and that the issue therein was timely raised.
Whether there is a valid ground for termination of the employment of [Ayson].
Whether [Ayson] is entitled to backwages and separation pay.
Whether [the appellate court] committed grave and patent abuse of discretion and errors of
law in setting aside the decision of the NLRC.[20]
The Labor Arbiter’s Jurisdiction
Landtex and William Go insist that the matter subject of the present petition
is covered by the CBA’s provision on voluntary arbitration and thus is excluded
from the labor arbiter’s jurisdiction. They allege that Ayson’s termination merely
enforced Landtex’s personnel policy against misconduct. They further claim that
the union’s request for a formal dialogue signified the initiation of the grievance
procedure outlined in the CBA. Landtex and William Go even assert that because
relief from a forum other than that provided in the CBA.
Section 1 of Article XV, Grievance Procedure, of the union’s CBA with

Landtex reads:
Grievance Machinery. — For purposes of this Agreement, a grievance is one that arises from the
interpretation or implementation of this Agreement, including disciplinary action imposed on any
covered employee. Any grievance, dispute, or complaint which a covered employee or UNION may have
against the COMPANY: (a) relative to the meaning, interpretation and application of the terms of this
agreement; or (b) arising out of the employment relationship, shall be submitted to the grievance
machinery in accordance with the following procedure:
Step I The employee shall present his grievance, dispute, or complaint in writing to the COMPANY’s
Section Head/In Charge and to the UNION’s authorized representative, and thereupon the
said Section Head and UNION representative shall endeavor to work out a settlement within
four (4) working days from presentation.
Step II If, under Step I, no settlement is reached within four (4) working days from presentation, the
grievance shall be taken up by the UNION representative with the General Manager.
Step III If, under Step II, no settlement is reached within four (4) working days, the grievance shall be
referred by the parties to the Management-Employee Committee.
Step IV If under Step III, no settlement is reached within eight (8) working days, the grievance shall be
referred by both parties to the National Conciliation and Mediation Board (NCMB) for
submission to voluntary arbitration in accordance with NCMB’s rules within ten (10) days
from the date of the last meeting of the Management-Employee Committee.
Where the grievance or complaint involves the UNION directly, Steps I and II of the foregoing procedure
shall be dispensed with and only Steps III and IV shall be followed.[21]
Articles 217, 261, and 262 of the Labor Code tackle the jurisdiction of labor
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
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;
employee relations;
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.

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.
Art. 261. Jurisdiction of Voluntary Arbitrators or panel of Voluntary Arbitrators. - The Voluntary
labor practice and shall be resolved as grievances under the Collective Bargaining Agreement. For
The Commission, its Regional Offices and the Regional Directors of the Department of Labor and
ART. 262. Jurisdiction over other labor disputes. - The Voluntary Arbitrator or panel of Voluntary
The labor arbiter, the appellate court, and the NLRC differed in their rulings
on the matter of jurisdiction. The labor arbiter and the appellate court agreed
with Ayson and the union’s position. The labor arbiter assumed jurisdiction and
emphasized that when the union met with Landtex on 8 July 1996, Ayson was no
longer an employee because Landtex terminated him effective 30 June 1996. The
manifestation of the union’s desire to “refer the matter to a third party in
accordance with law and the CBA” does not deviate from the fact that Ayson was
already dismissed. On the other hand, the NLRC sustained Landtex and William
Go’s position. The NLRC asserted that the determination of whether Ayson’s
dismissal constitutes a “disciplinary action” within the scope of the CBA calls for
an interpretation of the CBA. When the union called for a meeting with Landtex,
the union effectively initiated the grievance procedure. Thus, Ayson’s case should
have been subjected to voluntary arbitration.
We agree with Ayson and the union and affirm the rulings of the labor
arbiter and the appellate court.
Article 261 of the Labor Code provides that voluntary arbitrators shall have
original and exclusive jurisdiction to hear and decide all unresolved grievances
Agreement and those arising from the interpretation or enforcement of company
personnel policies. On the other hand, a reading of Article 217 in conjunction
with Article 262 shows that termination disputes fall under the jurisdiction of the
labor arbiter unless the union and the company agree that termination disputes
and unequivocal. Existing law is an intrinsic part of a valid contract without need
for the parties to expressly refer to it. Thus, the original and exclusive jurisdiction
of the labor arbiter over unfair labor practices, termination disputes, and claims
for damages cannot be arrogated into the powers of voluntary arbitrators in the
absence of an express agreement between the union and the company.[22]
In the present case, the CBA between Landtex and the union does not
clearly state that termination disputes, as opposed to mere disciplinary actions,
are covered by the CBA. The CBA defined a grievance as “one that arises from the
interpretation or implementation of this Agreement, including disciplinary action
imposed on any covered employee.” The CBA did not explicitly state that
termination disputes should be submitted to the grievance machinery.
In ruling that the present case should have been submitted to voluntary
arbitration, the NLRC relied on the union’s act of meeting with Landtex. The
union’s letter to Landtex, dated 8 July 1996, reads:
We received your letter dated 19 June 1996 re: TERMINATION LETTER of MR. SALVADOR AYSON who
happened to be *a+ union officer of LANDTEX INDUSTRIES EMPLOYEE’S UNION.
In connection to [sic] this, we would like to request for a formal dialogue regarding the above matter at
a [sic] soonest possible time.
We are hoping that the management is with us in resolving this termination of our officer.
May we have a continuous harmonious relationship.
Thank you.[23]
grievance shall be referred by the parties to the Management-Employee
Committee. The Management-Employee Committee shall be composed of three
representatives each from the union and Landtex. According to the minutes of
the meeting prepared by Landtex’s counsel, when the union met with Landtex on
10 July 1996, there were seven union members and two Landtex representatives
in attendance. The minutes of the meeting read:
The mgt.’s position is that it will no longer reconsider the termination of Mr. Ayson. The union on
the other hand opened discussion of other possibilities in lieu of reinstatement.
The union requested for time to study possibilities. The mgt. will do likewise.
Reset 16 July 96[,] 5 pm at factory.[24]
The next meeting proceeded with the same number of representatives from both
parties. The minutes of the meeting state that there was “*n+o settlement. Union
will refer matter to third party in accordance with provision of law and CBA.”[25]
We find nothing in the records which shows that the meetings between the
union and Landtex already constitute the grievance machinery as mandated by
the CBA. The meetings happened only after the effectivity of Ayson’s
participants. The CBA mandated that there should be three representatives each
from the union and Landtex but there were seven union members and two
Landtex representatives who attended the meetings. More importantly, there
was nothing in the minutes that shows that the attendees constituted a
Management-Employee Committee.
Finally, the appellate court is correct in stating that if Landtex really believed
that the labor arbiter did not have jurisdiction over the present case, then
Landtex should have filed a motion to dismiss in accordance with Section 15, Rule
V of The New Rules of Procedure of the NLRC.[26] Instead of filing a motion to
dismiss, Landtex participated in the proceedings before the labor arbiter. Had
Landtex immediately filed a motion to dismiss, the labor arbiter would have
determined the issue outright before proceeding with hearing the case. In the
present case, Landtex raised the issue of jurisdiction only after the labor arbiter
required the parties to submit their position papers.
Validity of Ayson’s Dismissal
The requisites for a valid dismissal are (1) the dismissal must be for any of
the causes expressed in Article 282 of the Labor Code, and (2) the opportunity to
be heard and to defend oneself.[27] Landtex and William Go assert that Ayson’s
termination was for a just cause as defined in Article 282[28] of the Labor Code;
hence, the two-notice rule[29] should be followed.
The contents of Landtex’s first memorandum to Ayson, signed by Landtex’s

counsel, read:
Ipinagbigay-alam sa amin ng pamahalaang Landtex Industries and [sic] tungkol sa nangyaring insidente
nuong ika-2 at 7 Marso 1996.
Ayon sa isang saksi, ikaw ay nagkakalat ng mga balitang nakakasira sa aming personal na buhay. Bukod
pa dito nuong ika-7 ng Marso ng ikaw ay hingan ng iyong ID pictures bilang isa sa mga regulasyon ng
kompanya, ikaw ay sumungaw sa harap pa mismo ng nagmamay-ari ng kompanya na naging dahilan
upang magkasagutan kayo.
Iyong nalalaman na ang ganitong gawain ay taliwas sa umiiral na patakaran ng kompanya. Bunga nito[,]
ikaw ay hinihingan ng nakasulat na paliwanag 24 oras mula sa pagkakatanggap ng liham na ito. Ang
hindi mo pagsunod ay nangangahulugan na maaari ng gumawa ng susunod na aksyong pang-disiplina
and [sic] kompanya laban sa iyo.[30]
Ayson’s handwritten response reads:

Ayon sa salaysay ng inyong saksi ako ay nagkakalat ng balitang nakakasira sa inyong personal na
buhay.

buhay.
ng balitang nakakasira ng inyong personal na buhay sa dahilan na wala naman pong nakasaad sa sulat
kung anong balita na ipinagkakalat ko na nakakasira sa personal na buhay ninyo.
Noon po ika-7 ng Marso ako po ay hiningan ng ID picture bilang isa sa mga regulasyon ng
kompanya at nakasaad po sa sulat na ako po ay “sumungaw” o “sumigaw” sa harap mismo ng may-ari
ng kompanya. Hindi po ako sumigaw[,] ako po ay sumagot lamang sa tanong nila. Kung ang pagkasagot
ko man ay medyo napakalakas ito po ay sa dahilan na nang mga oras na iyon ay may buhat-buhat akong
tela na aming inaakyat. Kung ito po ay minamasama ninyo, ay ihinihingi ko na lamang ng
paumanhin.[31]
Landtex then summoned Ayson on 26 April 1996 to a meeting to investigate

the 2 and 7 March 1996 incidents. The minutes of the 26 April 1996 meeting
read:
Mr. Ayson was apprised of the incident that happened on March 2 & 7 wherein it was alleged
that he is spreading some rumors involving [the] personal life of Mr. Go and his family. He was informed
that there were witnesses who can testify on this.
Mr. Ayson however requested that another investigaton be conducted wherein the alleged
witnesses be presented since he cannot answer whether what was reported was true or not. He further
denies allegations that he is spreading said rumors.
Mr. Ayson together with union officers requested that investigation be conducted instead at
Mauban, Quezon City since they are being deducted everytime they attend investigations like this
during office hours.
Mr. Ayson & union to be notified when another investigation [will] be scheduled.[32]
The next meeting was held on 5 June 1996. The minutes of the meeting
read:
Mr. Ferdinand Samson, union Sgt. at Arms [and] Mr. Salvador Ayson appeared but refused to sign
Landtex informed Ayson of its decision to terminate his services in a letter

dated 19 June 1996. The letter, signed by Landtex’s counsel, reads:
Ito ay hinggil sa insidenteng nangyari na kinasangkutan mo noong ika-2 at 7 ng Marso 1996. Hindi lingid
sa iyong kaalaman na ikaw ay binigyan ng pamunuan ng Landtex ng lahat ng pagkakataon upang marinig
ang iyong panig at maipagtanggol ang iyong sarili sa paraang naaayon sa batas ngunit, ikaw ay hindi
nakiisa o nakipagtulungan.
Sa katunayan, noong nakaraang 16 Marso 1996 ikaw [ay] pinadalhan ng memo kung saan nakasaad ang
nasabing insidente at kasama ang paghingi ng iyong nakasulat na paliwanag. Noong nakaraang 02 Abril
1996 isang sulat ang pinadala sa iyo kung saan ikaw ay inatasang dumalo sa isang pagsisiyasat. Sa
nasabing imbestigasyon, iminungkahi mo at ng iyong mga kasama (mga opisyales ng unyon) na
magsagawa ulit ng isa pang imbestigasyon at nais ninyong ito ay isagawa sa inyong pagawaan. Kaya’t ito
ay muling inskedyul noon 06 Mayo 1996 ngunit ikaw ay tumawag ng araw din yaon at sinabing kailangan
mong umuwi ng maaga dahil walang magbabantay sa iyong anak.
Muli na naman nagtakda ng isa pang pagsisiyasat noong ika-05 Hunyo 1996 ngunit, sa nasabing
imbestigasyon ikaw ay tumangging maimbestigahan at tumanggi ring pumirma sa attendance. Ilang
pagkakataon na iyong pinalampas kung saan sana ay naipadinig mo ang iyong panig at naipagtanggol mo
ang iyong sarili.
Kaugnay nito, ikinalulungkot na ipinababatid sa iyo ng pamunuan na batay sa akusasyon sa iyo, sa


Industries ay hanggang sa ika-30 ng Hunyo 1996 na lamang.[34]
Landtex and William Go, in their appeal before the NLRC, stated that
paragraphs (a) and (d) of Article 282[35] were applicable to Ayson. They added
that the employer, exercising management prerogative, has the right to protect
its interest by imposing the appropriate penalties on erring employees. However,
upon reading the records of the case, we cannot deduce any proof of Landtex and
William Go’s accusations against Ayson. Moreover, the NLRC did not make any
pronouncement as to whether Ayson was dismissed for a just cause. The
appellate court and the labor arbiter were one in ruling that there was no just
cause in Ayson’s dismissal. We quote the labor arbiter’s factual findings with
approval:
We have painstakingly read the records of this case and, sadly, this Office finds no shred of
evidence to show that indeed *Ayson+ had been spreading “news and gossips” or that he ever shouted
at Mr. Go and engaged Mr. Go in a heated argument.
No affidavit of either the security guard who claimed to be one of the drinking group who heard
the alleged malicious news or gossips or that of Mr. and Mrs. Go who had been the subject of *Ayson’s+
alleged shouting has been presented if only to substantiate *Landtex and William Go’s+ self-serving
claims.[36]
Procedural due process in the dismissal of employees requires notice and

hearing. The employer must furnish the employee two written notices before
termination may be effected. The first notice apprises the employee of the
particular acts or omissions for which his dismissal is sought, while the second
the present case, Landtex more than complied with the two-notice rule.
The requirement of a hearing, on the other hand, is complied with as long as

there was an opportunity to be heard, and not necessarily that an actual hearing
was conducted.[38] In the present case, Landtex scheduled three meetings
before terminating Ayson. However, Landtex failed to understand the law’s
purpose in requiring the opportunity to be heard. Landtex scheduled meetings
with Ayson but these meetings were not free from arbitrariness. Ayson could not
adequately defend himself from Landtex’s and William Go’s accusations. No
witness was ever presented against Ayson, hence Ayson could not test the
veracity of their claims.
Unsubstantiated suspicions, accusations, and conclusions of the employer

are not sufficient to justify an employee’s dismissal. The employer must prove by
substantial evidence the facts and incidents upon which the accusations are
made.[39] In Philippine Associated Smelting and Refining Corporation (PASAR) v.
NLRC,[40] we ruled that the mere conduct of an investigation and the statements

of the company’s security guard are not enough to establish the validity of the
charge of wrongdoing against the dismissed employees. It is not enough for an
employer who wishes to dismiss an employee to charge him with
wrongdoing. The validity of the charge must be established in a manner
consistent with due process. A suspicion or belief no matter how sincerely felt
cannot substitute for factual findings carefully established through an orderly
procedure.
Landtex and William Go failed to observe due process in terminating
Ayson. They likewise failed to establish that Ayson’s termination was for a just
cause. Thus, we rule that Landtex and William Go illegally dismissed Ayson.
WHEREFORE, we DENY the petition. We AFFIRM the Decision dated 13

February 2001 and the Resolution dated 16 October 2001 of the Court of Appeals
in CA-G.R. SP No. 50060. Emilia P. Ayson, in representation of Salvador M. Ayson,
is entitled to receive the amounts due Salvador M. Ayson.
Costs against the petitioners.
SO ORDERED.
ANTONIO T. CARPIO
Associate Justice
WE CONCUR:
Associate Justice
Chairperson


Associate Justice
ATTESTATION
Court’s Division.
Associate Justice
Chairperson
CERTIFICATION
REYNATO S. PUNO
Chief Justice

[2] Rollo, pp. 58-75. Penned by Associate Justice Ramon Mabutas, Jr. with Associate Justices
[3] Id. at 76. Penned by Associate Justice Ramon Mabutas, Jr. with Associate Justices
[4] Id. at 125.
[5] Id. at 118.
[6] Id. at 119.
[7] Id. at 121-122.
[8] Id. at 123.
[9] Labor Arbiter Emerson C. Tumanon heard the parties in this case.
[10] Rollo, p. 102.
[11] Id. at 136-142.
[12] Id. at 127.
[13] Id. at 141-142.
[14] Id. at 165-179. Penned by Commissioner Ireneo B. Bernardo, with Presiding
Commissioner Lourdes C. Javier and Commissioner Tito F. Genilo, concurring.
[15] Id. at 176-177.
[16] Id. at 70.
[17] Id. at 71.
[18] Id. at 74. The case is also referred to as NLRC NCR Case No. 00-07-04492-96 in
various portions of the records.
[19] Id. at 736-741.
[20] Id. at 30-31.
[21] Id. at 812-813
[22] See San Miguel Corp. v. NLRC, 325 Phil. 401 (1996).
[23] Records, p. 55.

[24] Rollo, p. 126.
[25] Id. at 127.
a motion to dismiss. Any motion to dismiss on the ground of lack of jurisdiction, improper venue
or that the cause of action is barred by prior judgment or by prescription shall be
immediately resolved by the Labor Arbiter by a written order. An order denying the motion to
dismiss or suspending its resolution until the final determination of the case is not appealable.
[27] Maneja v. NLRC, 353 Phil. 45, 61-62 (1998).
[28] Art. 282. Termination by employer. — An employer may terminate an employment for any of
the following causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer
or representative in connection with his work;
(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly
authorized representative;
(d) Commission of a crime or offense by the employee against the person of his employer or any
immediate member of his family or his duly authorized representative; and
[29] The pertinent portion of Section 2(d), Rule 1, Book VI of the Implementing Rules of the
Labor Code reads as follows:
(d) In all cases of termination of employment, the following standards of due process shall be
substantially observed:
For termination of employment based on just causes as defined in Article 282 of the Labor Code:
(i) A written notice served on the employee specifying the ground or grounds for termination, and
giving said employee reasonable opportunity within which to explain his side.
(ii) A hearing or conference during which the employee concerned, with the assistance of counsel if
he so desires is given the opportunity to respond to the charge, present his evidence, or rebut the evidence

presented against him.
(iii) A written notice of termination served on the employee, indicating that upon due consideration
of all the circumstances, grounds have been established to justify his termination.
[30] Rollo, p. 118.
[31] Id. at 119.
[32] Id. at 121-122.
[33] Id. at 123.
[34] Id. at 124.
[35] Supra note 28.
[36] Rollo, pp. 140-141.
[37] See Pono v. National Labor Relations Commission, G.R. No. 118860, 17 July 1997, 275 SCRA 611.
[38] See Pamantasan ng Lungsod ng Maynila v. Civil Service Commission, 311 Phil. 573 (1995).
[39] See Mendoza v. NLRC, 369 Phil. 1113 (1999).
[40] G.R. Nos. 82866-67, 29 June 1989, 174 SCRA 550.
Pasted from <http://sc.judiciary.gov.ph/jurisprudence/2007/august2007/150278.htm>

olvido v ca gr no 141166-67 oct 15 2007
1:01 PM
SECOND DIVISION
RONILO OLVIDO, CRISTINA DULGUIME, SOFRONIA HERNANDEZ, WILMA SUICO, G.R.

ARSENIA MAYORES, ERLINDA HIDALGO, MARIETTA MONDERO, MA. THERESA Nos.
MACASINAG, ELMIRA PAMARANGLAS, CRISTINA SAMBITAN, ELIZABETH MANALON, 141166-67
GLORIA VIZCARRA, LAARNI APULI, CASTIELA MENDOZA and MERIAM OLVIDO,
Petitioners, Present
:
Quisu
mbing, J.,
Chairperson,
Carpio,
Carpio
Morales,
Tinga,
and
VELASC
O, JR., JJ.
- versus -
COURT OF APPEALS, NATIONAL LABOR RELATIONS COMMISSION, SICALTEK

MANUFACTURING, INC./ CHARLIE ADARNE, SICALTEK EMPLOYEES UNION-ADFLO/
DINA VILLAGRACIA and ANTONIO C. CEDILLA,
Respondents.
Promul
gated:
October
15, 2007
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION
QUISUMBING, J.:
Subject of the present petition for review on certiorari is the Decision [1] dated May 19, 1999, as
well as the Resolution[2] dated December 9, 1999, of the Court of Appeals in CA-G.R. SP Nos.
52108 and 52109. The appellate court affirmed the Resolution dated July 31, 1996 of the National

52108 and 52109. The appellate court affirmed the Resolution dated July 31, 1996 of the National
Labor Relations Commission (NLRC) in NCR CA No. 008784-95, which had reversed the Decision
dated February 6, 1995 of the Labor Arbiter in NLRC NCR No. 00-03-02163-93.
These are the facts:
Petitioners Ronilo Olvido, Cristina Dulguime, Sofronia Hernandez, Wilma Suico, Arsenia Mayores,
Erlinda Hidalgo, Marietta Mondero, Ma. Theresa Macasinag, Elmira Pamaranglas, Cristina
Sambitan, Elizabeth Manalon, Gloria Vizcarra, Laarni Apuli, Castiela Mendoza and Meriam Olvido
were regular employees of respondent Sicaltek Manufacturing, Inc.
Petitioners R. Olvido, Suico, and Macasinag were also the President, Vice-President, and Sergeant-
at-Arms, respectively, of respondent Sicaltek Employees Union-ADFLO[3] (SEU-ADFLO) while the
other petitioners were the founding or original members thereof.
On August 24, 1992, R. Olvido, Suico, and Macasinag, with the assistance of respondent Antonio C.
Cedilla, President of their Federation, ADFLO, filed a complaint for illegal lay-off, illegal
deductions, non-payment of overtime pay, premium pay for holiday, service incentive leave
pay, 13th month pay, and night shift differential pay.
In the meantime, SEU-ADFLO filed a petition for certification election on August 28, 1992. During
the certification proceedings, ADFLO and Sicaltek agreed that SEU-ADFLO will withdraw the labor
case in exchange for the company’s voluntary recognition of SEU-ADFLO as the sole bargaining
agent of its employees. On September 10, 1992, the Med-Arbiter issued an order certifying SEU-
ADFLO as the sole bargaining agent of Sicaltek’s rank-and-file employees.
ADFLO then prepared a motion to dismiss the labor case, but petitioners refused to sign it. Thus,
ADFLO barred R. Olvido and Suico from attending and participating in the initial negotiations of
the new Collective Bargaining Agreement (CBA). This prompted petitioners to disaffiliate from
SEU-ADFLO on September 17, 1992. They formed another union, the Sicaltek Workers Union
(SWU), and filed a petition for certification election on October 5, 1992. The petition was,
however, dismissed due to the earlier certification order by the Med-Arbiter. SWU appealed to
the Secretary of Labor and Employment, but the appeal was also denied.
On October 10, 1992, Sicaltek and SEU-ADFLO concluded their new CBA made effective on October 1,
1992.
SEU-ADFLO, through its new President, respondent Dina Villagracia, forthwith demanded that
Sicaltek dismiss petitioners as provided in the Modified Union Shop Provision in the CBA, [4] due
to falsification and disloyalty. On March 3, 1993, Sicaltek required petitioners to explain in writing
why they should not be dismissed. Petitioners countered that the demand for their dismissal was
pure harassment since the certification issue between the two unions was still pending at the time
with the Secretary of Labor and Employment while the falsification charge had no basis.
On March 22, 1993, Sicaltek dismissed petitioners. Petitioners then filed a complaint for unfair
labor practice, illegal dismissal, damages, and attorney’s fees.
The Labor Arbiter dismissed the complaint for lack of merit. On appeal, the NLRC reversed the
decision of the Labor Arbiter. It ordered petitioners’ reinstatement to their former positions but
without backwages.

Petitioners and respondents filed separate petitions, docketed as G.R. Nos. 129104 and 128798,
respectively, with this Court. After the petitions were consolidated, this Court referred the case to
the Court of Appeals in accordance with St. Martin Funeral Home v. NLRC.[5]
In CA-G.R. SP No. 52108, Sicaltek contended that the NLRC committed grave abuse of discretion when it
ruled that (1) petitioners’ dismissal was unjustified; (2) petitioners cannot be validly charged with
disloyalty to SEU-ADFLO because they were not members thereof; and (3) petitioners are entitled to
reinstatement. Sicaltek argued that since petitioners were former officers and members of SEU-ADFLO,
the certified exclusive bargaining agent of the rank-and-file employees, they are covered by the
Modified Union Shop provision in the CBA. In CA-G.R. SP No. 52109, petitioners assailed the denial of
the payment of backwages.
On May 19, 1999, the appellate court dismissed the consolidated petitions:
WHEREFORE, the petitions in these cases are hereby DENIED DUE COURSE and
accordingly DISMISSED, for lack of merit.
SO ORDERED.[6]
The appellate court ruled that petitioners were not covered by the Modified Union Shop provision in the
CBA. The provision requires all new employees to become union members after sometime, but does
not require present employees to join the union. The appellate court noted that when the CBA was
signed on October 10, 1992, petitioners were already regular employees and were already members of
SWU as of September 17, 1992. Thus, they could not be obliged to become members of SEU-ADFLO
after the signing of the CBA under pain of being dismissed from employment.
Nevertheless, the appellate court ruled that the dismissal was not attended by bad faith. The
appellate court held that contrary to petitioners’ contentions, there was nothing sinister about the
company’s act of settling amicably the labor case with ADFLO. Sicaltek also had a right to inform the
Med-Arbiter that there was already a certified collective bargaining agent in the company. Further,
there was no evidence that Sicaltek and SEU-ADFLO rushed the execution of the CBA to prevent SWU
from being certified as the new collective bargaining agent. The appellate court further held that
Sicaltek cannot be faulted for complying with the demand of SEU-ADFLO to dismiss petitioners since it
was only protecting itself. In any event, according to the appellate court, Sicaltek sent petitioners show-
cause letters before actually terminating their employment.
Petitioners now come to this Court via the present petition. They argue that the Court of Appeals
erred:
IN RULING THAT PETITIONERS ARE NOT ENTITLED TO THEIR BACKWAGES DESPITE [THE]
CLEAR FINDING THAT PETITIONERS WERE ILLEGALLY DISMISSED BY THE COMPANY[.] [7]
Thus, the sole issue for our resolution is: Are petitioners entitled to backwages?
Notably, Sicaltek did not assail the finding of the Court of Appeals that petitioners were not
covered by the Modified Union Shop provision in the CBA. The appellate court found that
petitioners were already members of SWU when the CBA was signed on October 10, 1992. Thus,
they could not be obliged to become members of SEU-ADFLO after the CBA was signed, and their

they could not be obliged to become members of SEU-ADFLO after the CBA was signed, and their
dismissal by reason of disloyalty or disaffiliation was illegal. Such being the case, the ruling of the
appellate court in this regard should now be considered final.
Nevertheless, petitioners contend that their dismissal was effected by Sicaltek in bad faith, thus,
entitling them not only to reinstatement but also the payment of backwages. Sicaltek counters
that it merely complied in good faith with its covenant in the CBA.
It has been the jurisprudential rule for quite sometime that the employer is not considered guilty
of unfair labor practice if it merely complied in good faith with the request of the certified union
for the dismissal of employees expelled from the union pursuant to the union security clause in
the CBA.[8] Hence, the company may not be ordered to grant either backwages or financial
assistance in the form of separation pay as a form of penalty. [9]
However, we have recently ruled that this doctrine is inconsistent with Article 279 [10] of the
Labor Code, as amended by Republic Act No. 6715. [11] It is now provided in the Labor Code that
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. Thus, where reinstatement is
adjudged, the award of backwages and other benefits continues beyond the date of the Labor
Arbiter’s decision ordering reinstatement and extends up to the time said order of reinstatement
is actually carried out. [12]
WHEREFORE, the petition is GRANTED. The Decision dated May 19, 1999 and the Resolution
dated December 9, 1999 of the Court of Appeals in CA-G.R. SP Nos. 52108 and 52109, which
affirmed the Resolution dated July 31, 1996 of the National Labor Relations Commission in NCR CA
No. 008784-95, are MODIFIED accordingly. Petitioners are hereby awarded full backwages and
other allowances, without qualifications and diminutions, computed from the time they were
illegally dismissed up to the time they are actually reinstated. Let this case be remanded to the
Labor Arbiter for proper computation of the full backwages due petitioners, in accordance with
Article 279 of the Labor Code, as expeditiously as possible.
SO ORDERED.
Associate Justice
WE CONCUR:
ANTONIO T. CARPIO

ANTONIO T. CARPIO
Associate Justice


Associate Justice
ATTE STATION
I attest that the conclusions in the above Decision had been reached in consultation before the
case was assigned to the writer of the opinion of the Court’s Division.
Associate Justice
Chairperson
CER T IF I CA TI O N
Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairperson’s Attestation, I
certify that the conclusions in the above Decision had been reached in consultation before the case was
assigned to the writer of the opinion of the Court’s Division.
REYNATO S. PUNO
Chief Justice
[1] Rollo, pp. 39-46. Penned by Associate Justice Hector L. Hofileña, with Associate Justices Bernardo
P. Abesamis and Presbitero J. Velasco, Jr. (now a member of this Court) concurring.
[2] Id. at 38.
[3] Alliance of Democratic and Free Labor Organization.
[4] Section 1. Modified UNION shop. All union members as of the signing date of this Agreement shall
maintain their membership in good standing during its term or extension as a condition of continued
employment. Those present employees covered by the agreed bargaining unit but not yet members,
although eligible for membership, may join the UNION at any time, while those who shall become
regular employment during the effectivity of the Agreement shall join the UNION within fifteen (15)
days from the date of regular employment also a condition of continued employment.
Section 2. Termination upon UNION demand. The company shall, upon the written demand of

Section 2. Termination upon UNION demand. The company shall, upon the written demand of
the UNION supported by a duly approved Resolution of its Executive Board, suspend or dismiss from the
company or Union member in the Bargaining Unit, provided the said demand is based on any of the
following grounds:
a) Upon written finding by the UNION Executive Board of a deliberate failure of refusal by a
covered employee to join the UNION as provided for herein to above.
d) Organizing or joining another labor group during the lifetime of this Agreement and
participating in activities derogatory to the UNION decision.
e) Upon written finding by the UNION, copy furnished the COMPANY, of any violation of the
UNION’s Constitution and by Laws, Code of Discipline, and other Rules and Regulations of the UNION,
provided however, that the UNION shall furnish, the COMPANY, within five (5) days after signing of this
Constitution and By-Laws, Code of Discipline and other Rules and Regulation and such other
amendments made from time to time.
f) Non-payment of duly authorized and legitimate UNION dues, fines, fees and other
assessment. (Rollo, pp. 42-43.)
[5] G.R. No. 130866, September 16, 1998, 295 SCRA 494.
[6] Rollo, p. 45.
[7] Id. at 22.
[8] Soriano v. Atienza, G.R. No. 68619, March 16, 1989, 171 SCRA 284, 289-290; National Labor Union
v. Zip Venetian Blind, Nos. L-15827 and L-15828, May 31, 1961, 2 SCRA 509, 514-515.
[9] Soriano v. Atienza, id.
[10] 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.
[11] An Act to Extend Protection to Labor, Strengthen the Constitutional Rights of Workers to Self-Organization,
Collective Bargaining and Peaceful Concerted Activities, Foster Industrial Peace and Harmony, Promote the
Preferential Use of Voluntary Modes of Settling Labor Disputes, and Reorganize the National Labor Relations
Commission, Amending for these Purposes Certain Provisions of Presidential Decree No. 442, as Amended,
Otherwise Known as the Labor Code of the Philippines, Appropriating Funds Therefor, and for Other Purposes.
Effective March 21, 1989.
[12] Del Monte Philippines, Inc. v. Saldivar, G.R. No. 158620, October 11, 2006, 504 SCRA 192, 211.
Pasted from <http://sc.judiciary.gov.ph/jurisprudence/2007/october2007/141166-67.htm>

del monte v saldivar 504 phil 192 2006
1:01 PM
G.R. No. 158620 October 11, 2006
DEL MONTE PHILIPPINES, INC., ET AL. vs. MARIANO SALDIVAR, ET AL.

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 158620 October 11, 2006
DEL MONTE PHILIPPINES, INC. and WARFREDO C. BALANDRA, petitioners,
vs.
MARIANO SALDIVAR, NENA TIMBAL, VIRGINIO VICERA, ALFREDO AMONCIO and NAZARIO S. COLASTE,
respondents.
DECIS ION
TINGA, J.:
The main issue for resolution herein is whether there was sufficient cause for the dismissal of a rank-
and-file employee effectuated through the enforcement of a closed-shop provision in the Collective
Bargaining Agreement (CBA) between the employer and the union.
The operative facts are uncomplicated.
The Associated Labor Union (ALU) is the exclusive bargaining agent of plantation workers of petitioner
Del Monte Philippines, Inc. (Del Monte) in Bukidnon. Respondent Nena Timbal (Timbal), as a rank-and-
file employee of Del Monte plantation in Bukidnon, is also a member of ALU. Del Monte and ALU
entered into a Collective Bargaining Agreement (CBA) with an effective term of five (5) years from 1
September 1988 to 31 August 1993.1
Timbal, along with four other employees (collectively, co-employees), were charged by ALU for
disloyalty to the union, particularly for encouraging defections to a rival union, the National Federation
of Labor (NFL). The charge was contained in a Complaint dated 25 March 1993, which specifically
alleged, in relation to Timbal: "That on July 13, 1991 and the period prior or after thereto, said Nena
Timbal personally recruited other bonafide members of the ALU to attend NFL seminars and has actually
attended these seminars together with the other ALU members."2 The matter was referred to a body
within the ALU organization, ominously named "Disloyalty Board."
The charge against Timbal was supported by an affidavit executed on 23 March 1993 by Gemma Artajo
(Artajo), also an employee of Del Monte. Artajo alleged that she was personally informed by Timbal on
13 July 1991 that a seminar was to be conducted by the NFL on the following day. When Artajo
demurred from attending, Timbal assured her that she would be given honorarium in the amount of
P500.00 if she were to attend the NFL meeting and bring new recruits. Artajo admitted having attended
the NFL meeting together with her own recruits, including Paz Piquero (Piquero). Artajo stated that after
the meeting she was given P500.00 by Timbal.3
Timbal filed an Answer before the Disloyalty Board, denying the allegations in the complaint and the
averments in Artajo's Affidavit. She further alleged that her husband, Modesto Timbal, had filed a
complaint against Artajo for collection of a sum of money on 17 March 1993, or just six (6) days before
Artajo executed her affidavit. She noted that the allegations against her were purportedly committed
nearly two (2) years earlier, and that Artajo's act was motivated by hate and revenge owing to the filing
of the aforementioned civil action.4
Nevertheless, the ALU Disloyalty Board concluded that Timbal was guilty of acts or conduct inimical to
the interests of ALU, through a Resolution dated 7 May 1993.5 It found that the acts imputed to Timbal
were partisan activities, prohibited since the "freedom period" had not yet commenced as of that time.

Thus, the Disloyalty Board recommended the expulsion of Timbal from membership in ALU, and likewise
her dismissal from Del Monte in accordance with the Union Security Clause in the existing CBA between
ALU and Del Monte. The Disloyalty Board also reached the same conclusions as to the co-employees,
expressed in separate resolutions also recommending their expulsion from ALU.6
On 21 May 1993, the Regional Vice President of ALU adopted the recommendations of the Disloyalty
Board and expelled Timbal 7 and her co-employees from ALU.8 The ALU National President affirmed the
expulsion.9 On 17 June 1993, Del Monte terminated Timbal and her co-employees effective 19 June
1993, noting that the termination was "upon demand of [ALU] pursuant to Sections 4 and 5 of Article III
of the current Collective Bargaining Agreement."10
Timbal and her co-employees filed separate complaints against Del Monte and/or its Personnel Manager
Warfredo C. Balandra and ALU with the Regional Arbitration Branch (RAB) of the National Labor
Relations Commission (NLRC) for illegal dismissal, unfair labor practice and damages.11 The complaints
were consolidated and heard before Labor Arbiter Irving Pedilla.
LA: The Labor Arbiter affirmed that all five (5) were illegally dismissed and ordered Del Monte to
reinstate complainants, including Timbal, to their former positions and to pay their full backwages and
other allowances, though the other claims and charges were dismissed for want of basis.12
NLRC: Only Del Monte interposed an appeal with the NLRC.13 The NLRC reversed the Labor Arbiter and
ruled that all the complainants were validly dismissed.14
CAL On review, the Court of Appeals ruled that only Timbal was illegally dismissed.15 At the same time,
the appellate court found that Del Monte had failed to observe procedural due process in dismissing
the co-employees, and thus ordered the company to pay P30,000.00 to each of the co-employees as
penalties. The co-employees sought to file a Petition for Review16 with this Court assailing the ruling of
the Court of Appeals affirming their dismissal, but the petition was denied because it was not timely
filed.17
On the other hand, Del Monte, through the instant petition, assails the Court of Appeals decision insofar
as it ruled that Timbal was illegally dismissed. Notably, Del Monte does not assail in this petition the
award of P30,000.00 to each of the co-employees, and the ruling of the Court of Appeals in that regard
should now be considered final.
The reason offered by the Court of Appeals in exculpating Timbal revolves around the problematic
relationship between her and Artajo, the complaining witness against her. As explained by the
appellate court:
However, the NLRC should have considered in a different light the situation of petitioner Nena Timbal.
Timbal asserted before the NLRC, and reiterates in this petition, that the statements of Gemma Artajo,
ALU's sole witness against her, should not be given weight because Artajo had an ax[e] to grind at the
time when she made the adverse statements against her. Respondents never disputed the claim of
Timbal that in the two (2) collection suits initiated by Timbal and her husband, Artajo testified for the
defendant in the first case and she was even the defendant in the second case which was won by
Timbal. We find it hard to believe that Timbal would so willingly render herself vulnerable to expulsion
from the Union by revealing to an estranged colleague her desire to shift loyalty. The strained
relationship between Timbal and Artajo renders doubtful the charge against the former that she
attempted to recruit Artajo to join a rival union. Inasmuch as the respondents failed to justify the
termination of Timbal's employment, We hold that her reinstatement to her former position in
accordance with the September 27, 1996 decision of the Labor Arbiter is appropriate.18
The Labor Arbiter, in his favorable ruling to the dismissed employees, had noted that "complainant
Timbal['s] x x x accuser has an axe to grind against her for an unpaid debt so that her testimony cannot
be given credit."19 The NLRC, in reversing the Labor Arbiter, did not see it fit to mention the
circumstances of the apparent feud between Timbal and Artajo, except in the course of narrating
Timbal's allegations.

Timbal's allegations.
However, in the present petition, Del Monte utilizes a new line of argument in justifying Timbal's
dismissal. While it does not refute the contemporaneous ill-will between Timbal and Artajo, it
nonetheless alleges that there was a second witness, Paz Piquero, who testified against Timbal before
the Disloyalty Board.20 Piquero had allegedly corroborated Artajo's allegations and positively identified
Timbal as among those present during the seminar of the NFL conducted on 14 July 1992 and as having
given her transportation money after the seminar was finished. Del Monte asserts that Piquero was a
disinterested witness against Timbal.21
Del Monte also submits two (2) other grounds for review. It argues that the decision of the Labor
Arbiter, which awarded Timbal full backwages and other allowances, was inconsistent with
jurisprudence which held that an employer who acted in good faith in dismissing employees on the basis
of a closed-shop provision is not liable to pay full backwages.22 Finally, Del Monte asserts that it had,
from the incipience of these proceedings consistently prayed that in the event that it were found with
finality that the dismissal of Timbal and the others is illegal, ALU should be made liable to Del Monte
pursuant to the CBA. The Court of Appeals is faulted for failing to rule upon such claim.
For her part, Timbal observes that Piquero's name was mentioned for the first time in Del Monte's
Motion for Partial Reconsideration of the decision of the Court of Appeals.23 She claims that both
Piquero and Artajo were not in good terms with her after she had won a civil suit for the collection of a
sum of money against their immediate superior, one Virgie Condeza.24
The legality of Timbal's dismissal is obviously the key issue in this case. We are particularly called upon
to determine whether at this late stage, the Court may still give credence to the purported testimony of
Piquero and justify Timbal's dismissal based on such testimony.
It bears elaboration that Timbal's dismissal is not predicated on any of the just or authorized causes for
dismissal under Book Six, Title I of the Labor Code,25 but on the union security clause in the CBA
between Del Monte and ALU. Stipulations in the CBA authorizing the dismissal of employees are of
equal import as the statutory provisions on dismissal under the Labor Code, since "[a] CBA is the law
between the company and the union and compliance therewith is mandated by the express policy to
give protection to labor."26 The CBA, which covers all regular hourly paid employees at the pineapple
plantation in Bukidnon,27 stipulates that all present and subsequent employees shall be required to
become a member of ALU as a condition of continued employment. Sections 4 and 5, Article II of the
CBA further state:
ARTICLE II
Section 4. Loss of membership in the UNION shall not be a ground for dismissal by the Company except
where loss of membership is due to:
1. Voluntary resignation from [ALU] earlier than the expiry date of this [CBA];
2. Non-payment of duly approved and ratified union dues and fees; and
3. Disloyalty to [ALU] in accordance with its Constitution and By-Laws as duly registered with the
Department of Labor and Employment.
Section 5. Upon request of [ALU], [Del Monte] shall dismiss from its service in accordance with law, any
member of the bargaining unit who loses his membership in [ALU] pursuant to the provisions of the
preceding section. [ALU] assumes full responsibility for any such termination and hereby agrees to hold
[Del Monte] free from any liability by judgment of a competent authority for claims arising out of
dismissals made upon demand of [ALU], and [the] latter shall reimburse the former of such sums as it
shall have paid therefor. Such reimbursement shall be deducted from union dues and agency fees until
duly paid.28
The CBA obviously adopts a closed-shop policy which mandates, as a condition of employment,
membership in the exclusive bargaining agent. A "closed-shop" may be defined as an enterprise in
which, by agreement between the employer and his employees or their representatives, no person may
be employed in any or certain agreed departments of the enterprise unless he or she is, becomes, and,
for the duration of the agreement, remains a member in good standing of a union entirely comprised of

for the duration of the agreement, remains a member in good standing of a union entirely comprised of
or of which the employees in interest are a part.29 A CBA provision for a closed-shop is a valid form of
union security and it is not a restriction on the right or freedom of association guaranteed by the
Constitution.30
Timbal's expulsion from ALU was premised on the ground of disloyalty to the union, which under Section
4(3), Article II of the CBA, also stands as a ground for her dismissal from Del Monte. Indeed, Section 5,
Article II of the CBA enjoins Del Monte to dismiss from employment those employees expelled from ALU
for disloyalty, albeit with the qualification "in accordance with law."
Article 279 of the Labor Code ordains that "in cases of regular employment, the employer shall not
terminate the services of an employee except for a just cause or when authorized by [Title I, Book Six of
the Labor Code]." Admittedly, the enforcement of a closed-shop or union security provision in the CBA
as a ground for termination finds no extension within any of the provisions under Title I, Book Six of
the Labor Code. Yet jurisprudence has consistently recognized, thus: "It is State policy to promote
unionism to enable workers to negotiate with management on an even playing field and with more
persuasiveness than if they were to individually and separately bargain with the employer. For this
reason, the law has allowed stipulations for 'union shop' and 'closed shop' as means of encouraging
workers to join and support the union of their choice in the protection of their rights and interests vis-a-
vis the employer."31
It might be suggested that since Timbal was expelled from ALU on the ground of disloyalty, Del Monte
had no choice but to implement the CBA provisions and cause her dismissal. Similarly, it might be
posited that any tribunal reviewing such dismissal is precluded from looking beyond the provisions of
the CBA in ascertaining whether such dismissal was valid. Yet deciding the problem from such a closed
perspective would virtually guarantee unmitigated discretion on the part of the union in terminating the
employment status of an individual employee. What the Constitution does recognize is that all workers,
whether union members or not, are "entitled to security of tenure."32 The guarantee of security of
tenure itself is implemented through legislation, which lays down the proper standards in determining
whether such right was violated.33
Agabon v. NLRC34 did qualify that constitutional due process or security of tenure did not shield from
dismissal an employee found guilty of a just cause for termination even if the employer failed to render
the statutory notice and hearing requirement. At the same time, it should be understood that in the
matter of determining whether cause exists for termination, whether under Book Six, Title I of the Labor
Code or under a valid CBA, substantive due process must be observed as a means of ensuring that
security of tenure is not infringed.
Agabon observed that due process under the Labor Code comprised of two aspects: "substantive, i.e.,
the valid and authorized causes of employment termination under the Labor Code; and procedural, i.e.,
the manner of dismissal."35 No serious dispute arose in Agabon over the observance of substantive due
process in that case, or with the conclusion that the petitioners therein were guilty of abandonment of
work, one of the just causes for dismissal under the Labor Code. The controversy in Agabon centered on
whether the failure to observe procedural due process, through the non-observance of the two-notice
rule, should lead to the invalidation of the dismissals. The Court ruled, over the dissents of some
Justices, that the failure by the employer to observe procedural due process did not invalidate the
dismissals for just cause of the petitioners therein. However, Agabon did not do away with the
requirement of substantive due process, which is essentially the existence of just cause provided by law
for a valid dismissal. Thus, Agabon cannot be invoked to validate a dismissal wherein substantive due
process, or the proper determination of just cause, was not observed.
Even if the dismissal of an employee is conditioned not on the grounds for termination under the Labor
Code, but pursuant to the provisions of a CBA, it still is necessary to observe substantive due process in
order to validate the dismissal. As applied to the Labor Code, adherence to substantive due process is
a requisite for a valid determination that just or authorized causes existed to justify the dismissal.36 As

a requisite for a valid determination that just or authorized causes existed to justify the dismissal.36 As
applied to the dismissals grounded on violations of the CBA, observance of substantial due process is
indispensable in establishing the presence of the cause or causes for dismissal as provided for in the
CBA.
Substantive due process, as it applies to all forms of dismissals, encompasses the proper presentation
and appreciation of evidence to establish that cause under law exists for the dismissal of an employee.
This holds true even if the dismissal is predicated on particular causes for dismissal established not by
the Labor Code, but by the CBA. Further, in order that any CBA-mandated dismissal may receive the
warrant of the courts and labor tribunals, the causes for dismissal as provided for in the CBA must
satisfy to the evidentiary threshold of the NLRC and the courts.
It is necessary to emphasize these principles since the immutable truth under our constitutional and
labor laws is that no employee can be dismissed without cause. Agabon may have tempered the
procedural due process requirements if just cause for dismissal existed, but in no way did it eliminate
the existence of a legally prescribed cause as a requisite for any dismissal. The fact that a CBA may
provide for additional grounds for dismissal other than those established under the Labor Code does
not detract from the necessity to duly establish the existence of such grounds before the dismissal
may be validated. And even if the employer or, in this case, the collective bargaining agent, is satisfied
that cause has been established to warrant the dismissal, such satisfaction will be of no consequence
if, upon legal challenge, they are unable to establish before the NLRC or the courts the presence of
such causes.
In the matter at bar, the Labor Arbiter—the proximate trier of facts—and the Court of Appeals both
duly appreciated that the testimony of Artajo against Timbal could not be given credence, especially
in proving Timbal's disloyalty to ALU. This is due to the prior animosity between the two engendered by
the pending civil complaint filed by Timbal's husband against Artajo. Considering that the civil complaint
was filed just six (6) days prior to the execution of Artajo's affidavit against Timbal, it would be plainly
injudicious to presume that Artajo possessed an unbiased state of mind as she executed that affidavit.
Such circumstance was considered by the Labor Arbiter, and especially the Court of Appeals, as they
rendered a favorable ruling to Timbal. The NLRC may have decided against Artajo, but in doing so, it
failed to provide any basis as to why Artajo's testimony should be believed, instead of disbelieved. No
credible disputation was offered by the NLRC to the claim that Artajo was biased against Timbal; hence,
we should adjudge the findings of the Labor Arbiter and the Court of Appeals as more cogent on that
point.
Before this Court, Del Monte does not even present any serious argument that Artajo's testimony
against Timbal was free from prejudice. Instead, it posits that Piquero's alleged testimony against Timbal
before the Disloyalty Board should be given credence, and that taken with Artajo's testimony, should
sufficiently establish the ground of disloyalty for which Timbal should be dismissed.
The Court sees the danger to jurisprudence and the rights of workers in acceding to Del Monte's
position. The dismissal for cause of employees must be justified by substantial evidence, as appreciated
by an impartial trier of facts. None of the trier of facts below—the Labor Arbiter, the NLRC and the Court
of Appeals—saw fit to accord credence to Piquero's testimony, even assuming that such testimony was
properly contained in the record. Even the NLRC decision, which was adverse to Timbal, made no
reference at all to Piquero's alleged testimony.
Del Monte is able to point to only one instance wherein Piquero's name and testimony appears on the
record. It appears that among the several attachments to the position paper submitted by the ALU
before the NLRC-RAB was a copy of the raw stenographic notes transcribed, apparently on 17 April
1993, during a hearing before the Disloyalty Board. The transcription is not wholly legible, but there
appears to be references therein to the name "Paz Piquero," and her apparent testimony before the
Disloyalty Board. We are unable to reproduce with accuracy, based on the handwritten stenographic
notes, the contents of this seeming testimony of Piquero, although Del Monte claims before this Court
that Piquero had corroborated Artajo's claims during such testimony, "positively identified [Timbal's]

that Piquero had corroborated Artajo's claims during such testimony, "positively identified [Timbal's]
presence in the NFL seminar on 14 July 1992," and "confirmed that Timbal gave Artajo P500.00 for
recruiting participants in the NFL seminar."37
There are evident problems on our part, at this late stage, in appreciating these raw stenographic notes
adverting to the purported testimony of Piquero, especially as a means of definitively concluding that
Timbal was guilty of disloyalty. Certainly, these notes cannot be appreciated as entries in the official
record, which are presumed prima facie evidence of the facts therein stated,38 as such records can only
be made by a public officer of the Philippines or by a person in the performance of a duty specially
enjoined by law. These transcripts were not taken during a hearing conducted by any public office in the
Philippines, but they were committed in the course of an internal disciplinary mechanism devised by a
privately organized labor union. Unless the authenticity of these notes is duly proven before, and
appreciated by the triers of fact, we cannot accord them any presumptive or conclusive value.
Moreover, despite the fact that the apparent record of Piquero's testimony was appended to ALU's
position paper, the position paper itself does not make any reference to such testimony, or even to
Piquero's name for that matter. The position paper observes that "[t]his testimony of [Artajo] was
directly corroborated by her actual attendance on July 14, 1992 at the agreed [venue]," but no mention
is made that such testimony was also "directly corroborated" by Piquero. Then again, it was only Artajo,
and not Piquero, who executed an affidavit recounting the allegations against Timbal.
Indeed, we are inclined to agree with Timbal's observation in her Comment on the present petition that
from the time the complaint was filed with the NLRC-RAB, Piquero's name and testimony were invoked
for the first time only in Del Monte's motion for reconsideration before the Court of Appeals. Other than
the handwritten reference made in the raw stenographic notes attached to ALU's position paper before
the NLRC-RAB, Piquero's name or testimony was not mentioned either by ALU or Del Monte before any
of the pleadings filed before the NLRC-RAB, the NLRC, and even with those submitted to the Court of
Appeals prior to that court's decision.
In order for the Court to be able to appreciate Piquero's testimony as basis for finding Timbal guilty of
disloyalty, it is necessary that the fact of such testimony must have been duly established before the
NLRC-RAB, the NLRC, or at the very least, even before the Court of Appeals. It is only after the fact of
such testimony has been established that the triers of fact can come to any conclusion as to the veracity
of the allegations in the testimony.
It should be mentioned that the Disloyalty Board, in its Resolution finding Timbal guilty of disloyalty, did
mention that Artajo's testimony "was corroborated by Paz Piquero who positively identified and
testified that Nena Timbal was engaged in recruitment of ALU members at [Del Monte] to attend NFL
seminars."39
The Disloyalty Board may have appreciated Piquero's testimony in its own finding that Timbal was guilty,
yet the said board cannot be considered as a wholly neutral or dispassionate tribunal since it was
constituted by the very organization that stood as the offended party in the disloyalty charge. Without
impugning the integrity of ALU and the mechanisms it has employed for the internal discipline of its
members, we nonetheless hold that in order that the dismissal of an employee may be validated by this
Court, it is necessary that the grounds for dismissal are justified by substantial evidence as duly
appreciated by an impartial trier of facts.40 The existence of Piquero's testimony was appreciated only
by the Disloyalty Board, but not by any of the impartial tribunals which heard Timbal's case. The
appreciation of such testimony by the Disloyalty Board without any similar affirmation or concurrence
by the NLRC-RAB, the NLRC, or the Court of Appeals, cannot satisfy the substantive due process
requirement as a means of upholding Timbal's dismissal.
All told, we see no error on the part of the Court of Appeals when it held that Timbal was illegally
dismissed.
We now turn to the second issue raised, whether the Labor Arbiter correctly awarded full backwages to
Timbal.
Del Monte cites a jurisprudential rule that an employer who acted in good faith in dismissing employees
on the basis of a closed- shop provision may not be penalized even if the dismissal were illegal. Such a
doctrine is admittedly supported by the early case of National Labor Union v. Zip Venetian Blind41 and
the later decision in 1989 of Soriano v. Atienza,42 wherein the Court affirmed the disallowance of
backwages or "financial assistance" in dismissals under the aforementioned circumstance.
However, the Court now recognizes that this doctrine is inconsistent with Article 279 of the Labor Code,

backwages or "financial assistance" in dismissals under the aforementioned circumstance.
However, the Court now recognizes that this doctrine is inconsistent with Article 279 of the Labor Code,
as amended by Republic Act No. 6715, which took effect just five (5) days after Soriano was
promulgated. It is now provided in the Labor Code that "[a]n 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."
Thus, where reinstatement is adjudged, the award of backwages and other benefits continues beyond
the date of the labor arbiter's decision ordering reinstatement and extends up to the time said order of
reinstatement is actually carried out.43
Rep. Act No. 6715 effectively mitigated previous jurisprudence which had limited the extent to which
illegally dismissed employees could claim for backwages. We explained in Ferrer v. NLRC:44
With the passage of Republic Act No. 6715 which took effect on March 21, 1989, Article 279 of the Labor
Code was amended to read as follows:
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.
and as implemented by Section 3, Rule 8 of the 1990 New Rules of Procedure of the National Labor
Relations Commission, it would seem that the Mercury Drug Rule (Mercury Drug Co., Inc. vs. Court of
Industrial Relations, 56 SCRA 694 [1974]) which limited the award of back wages of illegally dismissed
workers to three (3) years "without deduction or qualification" to obviate the need for further
proceedings in the course of execution, is no longer applicable.
A legally dismissed employee may now be paid his back wages, allowances, and other benefits for the
entire period he was out of work subject to the rule enunciated before the Mercury Drug Rule, which is
that the employer may, however, deduct any amount which the employee may have earned during the
period of his illegal termination (East Asiatic Company, Ltd. vs. Court of Industrial Relations, 40 SCRA 521
[1971]). Computation of full back wages and presentation of proof as to income earned elsewhere by
the illegally dismissed employee after his termination and before actual reinstatement should be
ventilated in the execution proceedings before the Labor Arbiter concordant with Section 3, Rule 8 of
the 1990 New Rules of Procedure of the National Labor Relations Commission.
Inasmuch as we have ascertained in the text of this discourse that the OFC whimsically dismissed
petitioners without proper hearing and has thus opened OFC to a charge of unfair labor practice, it
ineluctably follows that petitioners can receive their back wages computed from the moment their
compensation was withheld after their dismissal in 1989 up to the date of actual reinstatement. In such
a scenario, the award of back wages can extend beyond the 3-year period fixed by the Mercury Drug
Rule depending, of course, on when the employer will reinstate the employees.
It may appear that Article 279 of the Labor Code, as amended by Republic Act No. 6715, has made the
employer bear a heavier burden than that pronounced in the Mercury Drug Rule, but perhaps Republic
Act No. 6715 was enacted precisely for the employer to realize that the employee must be immediately
restored to his former position, and to impress the idea that immediate reinstatement is tantamount to
a cost-saving measure in terms of overhead expense plus incremental productivity to the company
which lies in the hands of the employer.45
The Labor Arbiter's ruling, which entitled Timbal to claim full backwages and other allowances, "without
qualifications and diminutions, computed from the time [she was] illegally dismisse[d] up to the time
[she] will be actually reinstated," conforms to Article 279 of the Labor Code. Hence, the Court of Appeals
was correct in affirming the Labor Arbiter insofar as Timbal was concerned.
Finally, we address the claim that the Court of Appeals erred when it did not rule on Del Monte's claim
for reimbursement against ALU. We do observe that Section 5 of the CBA stipulated that "[ALU] assumes
full responsibility of any such termination [of any member of the bargaining unit who loses his
membership in ALU] and hereby agrees to hold [Del Monte] free from any liability by judgment of a
competent authority for claims arising out of dismissals made upon demand of [ALU], and latter shall
reimburse the former of such sums as it shall have paid therefore."46
This stipulation does present a cause of action in Del Monte's favor should it be held financially liable for

This stipulation does present a cause of action in Del Monte's favor should it be held financially liable for
the dismissal of an employee by reason of expulsion from ALU. Nothing in this decision should preclude
the operation of this provision in the CBA. At the same time, we are unable to agree with Del Monte
that the Court of Appeals, or this Court, can implement this provision of the CBA and accordingly directly
condemn ALU to answer for the financial remuneration due Timbal.
Before the Labor Arbiter, Del Monte had presented its cross-claim against ALU for reimbursement
should it be made liable for illegal dismissal or unfair labor practice, pursuant to the CBA. The Labor
Arbiter had actually passed upon this claim for reimbursement, stating that "[as] for the cross-claims of
respondent DMPI and Tabusuares against the respondent ALU-TUCP, this Branch cannot validly
entertain the same in the absence of employer-employee relationship between the former and the
latter."47 We have examined Article 217 of the Labor Code,48 which sets forth the original jurisdiction of
the Labor Arbiters. Article 217(c) states:
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. [Emphasis supplied.]
In contrast, Article 261 of the Labor Code indubitably vests on the Voluntary Arbitrator or panel of
Voluntary Arbitrators the "original and exclusive jurisdiction to hear and decide all unresolved
grievances arising from the interpretation or implementation of the Collective Bargaining Agreement."49
Among those areas of conflict traditionally within the jurisdiction of Voluntary Arbitrators are contract-
interpretation and contract-implementation,50 the questions precisely involved in Del Monte's claim
seeking enforcement of the CBA provision mandating restitution by ALU should the company be held
financially liable for dismissals pursuant to the union security clause.
In reconciling the grants of jurisdiction vested under Articles 261 and 217 of the Labor Code, the Court
has pronounced that "the original and exclusive jurisdiction of the Labor Arbiter under Article 217(c) for
money claims is limited only to those arising from statutes or contracts other than a Collective
Bargaining Agreement. The Voluntary Arbitrator or Panel of Voluntary Arbitrators will have original and
exclusive jurisdiction over money claims 'arising from the interpretation or implementation of the
Collective Bargaining Agreement and, those arising from the interpretation or enforcement of company
personnel policies', under Article 261."51
Our conclusion that the Labor Arbiter in the instant case could not properly pass judgment on the cross-
claim is further strengthened by the fact that Del Monte and ALU expressly recognized the jurisdiction of
Voluntary Arbitrators in the CBA. Section 2, Article XXXI of the CBA provides:
Section 2. In the event a dispute arises concerning the application of, or interpretation of this
Agreement which cannot be settled pursuant to the [grievance procedure set forth in the] preceding
Section, the dispute shall be submitted to an arbitrator agreed to by [Del Monte] and [ALU].
Should the parties fail to agree on the arbitrator, the same shall be drawn by lottery from a list of
arbitrators furnished by the Bureau of Labor Relations of the Department of Labor and Employment.
xxx x
Thus, as the law indubitably precludes the Labor Arbiter from enforcing money claims arising from the
implementation of the CBA, the CBA herein complementarily recognizes that it is the Voluntary
Arbitrators which have jurisdiction to hear the claim. The Labor Arbiter correctly refused to exercise
jurisdiction over Del Monte's cross-claim, and the Court of Appeals would have no basis had it acted
differently. At the same time, even as we affirm the award of backwages against Del Monte, our ruling
should not operate to prejudice in any way whatever causes of action Del Monte may have against ALU,
in accordance with the CBA.
WHEREFORE, the instant petition is DENIED. The assailed Decision of the Court of Appeals dated 26
August 2002 is AFFIRMED. Costs against petitioner.
SO ORDERED.
Quisumbing, J., Chairperson, Carpio, Carpio Morales, and Velasco, Jr., JJ., concur.
Footnotes
1 Rollo, p. 137.
2 Id. at 163.
3 Id. at 173.
4 Id. at 167-168.

3
Id. at 173.
4 Id. at 167-168.
5
Id. at 203-206.
6 Id. at 207-215, 252-255, 257-260.
7
See rollo, p. 216.
8
Id. at 217-218, 256, 261.
9
Id. at 140-141, 266-267, 271-272.
10 See id. at 142-144. See also id. at 73.
11
Rollo, p. 73. "The complaints of Mariano Saldivar and Nazario Colaste were respectively docketed as
RAB 10-07-00433-93 and RAB 10-09-00473-93 while those of Nena Timbal, Virginio Vicera and Alfredo
Amoncio were docketed as RAB 10-07-00442-93."
12 Id. at 364.
13 Id. at 369-382.
14
Id. at 403-423. Decision authored by Acting Presiding Commissioner Oscar N. Abella, concurred in by
Commissioner Leon G. Gonzaga, Jr.
15
In a Decision dated 26 August 2002, penned by then Court of Appeals Associate Justice (now Supreme
Court Associate Justice) Cancio C. Garcia, concurred in by Associate Justices Marina L. Buzon and Eliezer
R. de los Reyes. See rollo, pp. 12-23.
16 Docketed as G.R. No. 158394.
17 In a Resolution dated 1 September 2003. See rollo (G.R. No. 158394), pp. 674-676-401.
18 Rollo, p. 21.
19Id. at 358.
20 See rollo, p. 51.
21
Id. at 52.
22
Particularly citing Confederated Sons of Labor v. Anakan Lumber Co., et al., 107 Phil. 915 (1960);
National Labor Union v. Zip Venetian Blind, 112 Phil. 407 (1961) and Soriano v. Atienza, G.R. No. 68619,
16 March 1989, 171 SCRA 284. See rollo, pp. 55-58.
23
Rollo, p. 683.
24 Id.
25
See Labor Code, Arts. 282-284.
26 Ferrer v. NLRC, G.R. No. 100898, 5 July 1993, 224 SCRA 410, 418.
27 See rollo, p. 97.
28 Id. at 99-100.
29Rothenberg on Labor Relations, p. 48; cited in Confederated Sons of Labor v. Anakan Lumber Co., et al.,
107 Phil. 915, 918 (1960).

30 Ferrer v. NLRC, supra note 26 at 418, citing Lirag Textile Mills, Inc. v. Blanco, 109 SCRA 87 (1981).
31 Rivera v. Hon. Espiritu, 425 Phil. 169, 184 (2002), citing Liberty Flour Mills Employees v. Liberty Flour
Mills, Inc., G.R. Nos. 58768-70, 180 SCRA 668, 679-680 (1989).
32 See Constitution, Art. XIII, Sec. 3.
33 See Agabon v. NLRC, G.R. No. 158693, 17 November 2004, 442 SCRA 573, 689-690, J. Tinga, Separate
Opinion citing Phil. Aeolus Automotive United Corp. v. NLRC, 387 Phil. 250 (2000); Gonzales v. National
Labor Relations Commission, 372 Phil. 39 (1999); Jardine Davies v. National Labor Relations Commission,
370 Phil 310 (1999); Pearl S. Buck Foundation v. National Labor Relations Commission, G.R. No. 80728,
February 21, 1990, 182 SCRA 446; Bagong Bayan Corporation, Realty Investors & Developers v. National
Labor Relations Commission, G.R. No. 61272, September 29, 1989, 178 SCRA 107; Labajo v. Alejandro, et
al., No. L-80383, September 26, 1988, 165 SCRA 747; D.M. Consunji, Inc. v. Pucan, et al., No. L-71413,
March 21, 1988, 159 SCRA 107; Santos v. National Labor Relations Commission, L-76271, September 21,
1987, 154 SCRA 166; People's Bank & Trust Co. v. People's Bank & Trust Co. Employees Union, 161 Phil
15 (1976); Philippine Movie Pictures Association v. Premiere Productions, 92 Phil. 843 (1953).
34 Id.
35 Agabon v. NLRC, supra note 33 at 612.
36 "Substantive due process mandates that an employee can only be dismissed based on just or
authorized causes." Maneja v. NLRC, 353 Phil. 45, 66 (1998).

37 Rollo, p. 51.
38 See Rules of Civil Procedure, Rule 130, Sec. 44.
39 Rollo, p. 204.

38
See Rules of Civil Procedure, Rule 130, Sec. 44.
39 Rollo, p. 204.
40
There is no dispute that the requirement of an impartial tribunal is integral to substantive and
administrative due process. "On the imperative of ensuring due process in administrative proceedings,
Ang Tibay laid down the guidelines for administrative tribunals to observe. However, what Ang Tibay
failed to explicitly state was, prescinding from the general principles governing due process, the
requirement of an impartial tribunal which, needless to say, dictates that one called upon to resolve a
dispute may not sit as judge and jury simultaneously, neither may he review his decision on appeal."
GSIS v. Court of Appeals, 357 Phil. 511, 533 (1998).
41 Supra note 22.
42 Id.
43 See Pheschem Industrial Corp. v. Moldez, G.R. No. 161158, 9 May 2005 citing Rasonable v. NLRC, 253
SCRA 815 (1996).

44
Supra note 26 at 423. Incidentally, a case wherein the employees ordered reinstated were dismissed
after having been expelled from their union.
45
Supra note 26 at 423-424.
46 Rollo, p. 100.
47
Id. at 363.
48 Which reads in full: "Art. 217. Jurisdiction of Labor Arbiters and the Commission — (a) Except as
otherwise provided under this code, the Labor Arbiters shall have original and exclusive jurisdiction to
hear and decide, within thirty (30) calendar days after the submission of the case by the parties for
decision without extension, even in the absence of stenographic notes, the following cases involving all
workers, whether agricultural or non-agricultural:
(1) Unfair labor practice cases;
(2) Termination disputes;
(3) If accompanied with a claim of reinstatement, those cases that workers may file involving wages,
(4) Claims for actual, moral, exemplary and other forms of damages arising from the employer-
employee relation;
(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 persons in domestic or
household service, involving an amount exceeding five thousand pesos (P5,000.00), regardless of
whether or not accompanied with a claim for reinstatement.
(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 by
the Labor Arbiter by referring the same to the grievance machinery and voluntary arbitration as may be
provided in said agreements."
49 See Labor Code, Art. 261. See also Sanyo Phil. Workers Union v. Canizares, G.R. No. 101619, 8 July
1992.
50 See Vivero v. Court of Appeals, 398 Phil. 158, 170 (2000).
51 San Jose v. NLRC, 355 Phil. 759, 772 (1998).

imperial textile v sampang 219 s 651 - 1993
1:01 PM
No motions for reconsideration of

VA decisions are allowed.
G.R. No. 94960 March 8, 1993
IMPERIAL TEXTILE MILLS, INC., petitioner,
vs.
HON. VLADIMIR P.L. SAMPANG and IMPERIAL TEXTILE MILLS-MONTHLY EMPLOYEES
ASSOCIATION (ITM-MEA), respondents.
Batino, Angala, Salud & Fabia Law Offices for petitioner.
Carlo A. Domingo for private respondent.
CRUZ, J.:
On March 20, 1987, petitioner Imperial Textile Mills, Inc. (the Company, for brevity) and
respondent Imperial Textile Mills-Monthly Employees Association (the Union, for brevity)
entered into a collective bargaining agreement providing across-the-board salary increases and
other benefits retroactive to November 1, 1986.
On August 21, 1987, they executed another agreement on the job classification and wage
standardization plan. This was also to take effect retroactively on November 1, 1986.
A dispute subsequently arose in the interpretation of the two agreements. The parties then
submitted it to arbitration and designated public respondent Vladimir P.L. Sampang as the
Voluntary Arbitrator. The understanding was that his decision would be final, executory and
inappealable. 1
The Company maintained that the wage of a particular employee subject of possible adjustment
on base pay should be the pay with the first year CBA increase already integrated therein.
The Union argued that the CBA increases should not be included in adjusting the wages to the
base pay level, as it was separate and distinct from the increases resulting from the job
classification and standardization scheme.
On July 12, 1988, the Voluntary Arbitrator rendered a decision upholding the formula used by
the Company.
The Union filed a motion for reconsideration which was opposed by the Company.
On December 14, 1988, after a conference with the parties, the Voluntary Arbitrator rendered
another decision, this time in favor of the Union.
On January 20, 1989, the Company appealed to the NLRC. The appeal was dismissed for lack
of jurisdiction. The reason was that the original rule allowing appeal if the Voluntary Arbitrator's
award was more than P100,000.00 had already been repealed by BP 130. Moreover, under
Article 262-A of the Labor Code, as amended, awards or decisions of voluntary arbitrators
become final and executory after calendar 10 days from notice thereof to the parties.
The Company then came to this Court in this petition for certiorari under Rule 65 of the Rules of
Court.
The Court has deliberated on the arguments of the parties in light of the established facts and
the applicable law and finds for the Company.
The Union erred in filing a motion for reconsideration of the decision dated July 12, 1988. So did
the respondent Voluntary Arbitrator in entertaining the motion and vacating his first decision.
When the parties submitted their grievance to arbitration, they expressly agreed that the
decision of the Voluntary Arbitrator would be final, executory and inappealable. In fact, even
without this stipulation, the first decision had already become so by virtue of Article 263 of the
Labor Code making voluntary arbitration awards or decisions final and executory.
The philosophy underlying this rule was explained by Judge Freedman in the case of La Vale
Plaza, Inc., v. R.S. Noonan, Inc., 2 thus:
It is an equally fundamental common law principle that once an arbitrator has made and published a final
award, his authority is exhausted and be is functus officio and can do nothing more in regard to the
subject matter of the arbitration. The policy which lies behind this is an unwillingness to permit one who

subject matter of the arbitration. The policy which lies behind this is an unwillingness to permit one who
not a is judicial officer and who acts informally and sporadically, to re-examine a final decision which he
has already rendered, because of the potential evil of outside communication and unilateral influence
which might affect a new conclusion. The continuity of judicial office and the tradition which surround
judicial conduct is lacking in the isolated activity of an arbitrator, although even here the vast increase in
the arbitration of labor disputes has created the office of the specialized provisional arbitrator.
(Washington-Baltimore N.G., Loc. 35 v. Washington Post Co., 442 F. 2d 1234 (1971], pp. 1238-1239)
In the case of The Consolidated Bank & Trust Corporation (SOLIDBANK) v. Bureau of Labor
Relations, et al., 3 this Court held that the Voluntary Arbitrator lost jurisdiction over the case
submitted to him the moment be rendered his decision. Therefore, he could no longer entertain
a motion for reconsideration of the decision for its reversal or modification. Thus:
By modifying the original award, respondent arbitrator exceeded his authority as such, a fact he was well
aware of, as shown by his previous Resolution of Inhibition wherein he refused to act on the Union's
motion for reconsideration of the award or decision. Thus, respondent arbitrator emphatically ruled:
It would be well to remind the Parties in this case that the arbitration law or jurisprudence on the matter is
explicit in its stand against revocation and amendment of the submission agreement and the arbitration
award once such has been made. The rationale behind this is that:
An award should be regarded as the judgment of a court of last resort, so that all reasonable
presumptions should be ascertained in its favor and none to overthrow it. Otherwise, arbitration
proceedings, instead of being a quick and easy mode of obtaining justice, would be merely an
unnecessary step in the course of litigation, causing delay and expenses, but not finally settling anything.
Notwithstanding the natural reluctance of the courts to interfere with matters determined by the
arbitrators. they will do so in proper cases where the law ordains them. (Arbitration, Manguiat, citing U.S.
v. Gleason, 175 US 588)
The power and authority of the Voluntary Arbitrator to act in the case commences from his appointment
and acceptance to act as such under the submission agreement of the Parties and terminates upon his
rendition of his decision or award which is accorded the benefits of the doctrine of res judicata as in
judgments of our regular courts of law. Since the power and authority of the arbitrator to render a valid
award, order or resolution rest upon the continuing mutual consent of the parties, and there is none
shown here, the Voluntary Arbitrator has no choice but to decline to rule on the pleadings submitted by
the parties. (Emphasis supplied)
It is true that the present rule makes the voluntary arbitration award final and executory after ten
calendar days from receipt of the copy of the award or decision by the parties. 4 Presumably, the
decision may still be reconsidered by the Voluntary Arbitrator on the basis of a motion for
reconsideration duly filed during that period. Such a provision, being procedural, may be applied
retroactively to pending actions as we have held in a number of cases. 5 However, it cannot be
applied to a case in which the decision had become final before the new provision took effect,
as in the case at bar. 6 R.A. 6715, which introduced amended Article 262-A of the Labor Code,
became effective on March 21, 1989. The first decision of the Voluntary Arbitrator was rendered
on July 12, 1988, when the law in force was Article 263 of the Labor Code, which provided that:
Voluntary arbitration awards or decisions shall be final, inappealable, and executory.
The above-quoted provision did not expressly fix the time when the Voluntary Arbitrator's
decision or award would become final. We have held, however, that it would assume the
attribute of finality upon its issuance, subject only to judicial review in appropriate cases. 7
The public respondent exceeded his authority when he acted on the Union's motion for
reconsideration and reversed his original decision. Corollarily his second decision dated
December 14, 1988, having been rendered in violation of law, must be considered null and void
and of no force and effect whatsoever. 8
WHEREFORE, the decision of the Voluntary Arbitrator dated December 14, 1988, is SET
ASIDE for lack of jurisdiction and his decision dated July 12, 1988, is REINSTATED.
SO ORDERED.
Griño-Aquino, Bellosillo and Quiason, JJ., concur.
# Footnotes
1 Original Records, p. 1.
2 Fernandez, Labor Arbitration, 1975 ed., p. 380.
3 G.R. No. 64926, October 15, 1984.
4 Article 262-A, Labor Code, as amended by R.A. 6715.
5 Enrile v. CFI, 36 Phil. 574; Hosana v. Diomano and Diomano, 56 Phil. 741; Laguio v. Gamet, 171 SCRA
392).
6 People v. Sumilang, 77 Phil. 764.
7 Consolidated Bank & Trust Corp. (SOLIDBANK) v. Bureau of Labor Relations, supra.
8 Ibid.; Cayena v. NLRC, 194 SCRA 134; Egypt Air Local Employees Association NTUIA-Transphil Tupas

7 Consolidated Bank & Trust Corp. (SOLIDBANK) v. Bureau of Labor Relations, supra.
8 Ibid.; Cayena v. NLRC, 194 SCRA 134; Egypt Air Local Employees Association NTUIA-Transphil Tupas
v. NLRC, et al., G.R. No. 98933.

smc v nlrc 255 s 133 -1996
1:01 PM
Company personnel policies: guiding

principles stated in broad, long-range
terms that express the philosophy or
beliefs of an organization’s top authority
regarding personnel matters. The usual
source of grievances are rules and
regulations governing disciplinary
actions.
Discharges based on redundancy
can hardly be considered a
company personnel policy.
CBA agreement to arbitrate must be
plain and unambiguous – must
expressly state that termination disputes
and unfair labor practice cases under
In the same manner, job security
provisions invoking grievance
procedure must be strictly construed
(e.g. union reconsideration
requirement).
G.R. No. 108001 March 15, 1996
SAN MIGUEL CORPORATION, ANGEL G. ROA and MELINDA MACARAIG, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION (Second Division), LABOR ARBITER
EDUARDO J. CARPIO, ILAW AT BUKLOD NG MANGGAGAWA (IBM), ET AL., respondents.
HERMOSISIMA, JR., J.:p

In the herein petition for certiorari under Rule 65, petitioners question the jurisdiction of the
Labor Arbiter to hear a complaint for unfair labor practice, illegal dismissal, and damages,
notwithstanding the provision for grievance and arbitration in the Collective Bargaining
Agreement.
Let us unfurl the facts.

Private respondents, employed by petitioner San Miguel Corporation (SMC) as mechanics,
machinists, and carpenters, were and still are, bona fide officers and members of private
respondent Ilaw at Buklod ng Manggagawa.
On or about July 31, 1990, private respondents were served a Memorandum from petitioner
Angel G. Roa, Vice-President and Manager of SMC's Business Logistics Division (BLD), to the
effect that they had to be separated from the service effective October 31, 1990 on the
ground of "redundancy or excess personnel." Respondent union, in behalf of private
respondents, opposed the intended dismissal and asked for a dialogue with management.
Accordingly, a series of dialogues were held between petitioners and private respondents.
Even before the conclusion of said dialogues, the aforesaid petitioner Angel Roa issued another
Memorandum on October 1, 1990 informing private respondents that they would be dismissed Even before grievance
from work effective as of the close of business hours on November 2, 1990. Private procedure finished,
respondents were in fact purged on the date aforesaid. employees were terminated

Thus, on February 25, 1991, private respondents filed a complaint against petitioners for -EE filed complaint for
Illegal Dismissal and Unfair Labor Practices, with a prayer for damages and attorney's fees, ILLEGAL DISMISSAL and
with the Arbitration Branch of respondent National Labor Relations Commission. The complaint 1
ULP w/ LA
was assigned to Labor Arbiter Eduardo F. Carpio for hearing and proper disposition.
-ER filed MTD: should
On April 15, 1991, petitioners filed a motion to dismiss the complaint, alleging that respondent undergo grievance
Labor Arbiter had no jurisdiction over the subject matter of the complaint, and that procedure
respondent Labor Arbiter must defer consideration of the unfair labor practice complaint LA: denied MTD (probably
until after the parties have gone through the grievance procedure provided for in the ruled ifo Employees)
existing Collective Bargaining Agreement (CBA). Respondent Labor Arbiter denied this motion -ER appealed before NLRC
in a Resolution, dated September 23, 1991. NLRC: dismissed appeal
by LA, MR denied
The petitioners appealed the denial to respondent Commission on November 8, 1991.
Unimpressed by the grounds therefor, respondent Commission dismissed the appeal in its Petition on Certiorari filed
assailed Resolution, dated August 11, 1992. Petitioners promptly filed a Motion for
by ER
Reconsideration which, however, was denied through the likewise assailed Resolution, dated
October 29, 1992.
Hence, the instant petition for certiorari alleging the following grounds was filed by the
petitioners:
I
RESPONDENT LABOR ARBITER CANNOT EXERCISE JURISDICTION OVER THE ALLEGED
ILLEGAL TERMINATION AND ALLEGED ULP CASES WITHOUT PRIOR RESORT TO GRIEVANCE
AND ARBITRATION PROVIDED UNDER THE CBA.
II
THE STRONG STATE POLICY ON 'THE PROMOTION OF VOLUNTARY MODES OF SETTLEMENT
OF LABOR DISPUTES CRAFTED IN THE CONSTITUTION AND THE LABOR CODE DICTATES THE
SUBMISSION OF THE CBA DISPUTE TO GRIEVANCE AND ARBITRATION. 2
Petitioners posit the basic principle that a collective bargaining agreement is a contract between
management and labor that must bind and be enforced in the first instance as between the
parties thereto. In this case, the CBA between the petitioners and respondent union provides,
under Section 1, Article V entitled ARBITRATION, that "wages, hours of work, conditions of
employment and/or employer-employee relations shall be settled by arbitration." Petitioners'
thesis is that the dispute as to the termination of the union members and the unfair labor
practice should first be settled by arbitration, and not directly by the labor arbiter, following the
above provision of the CBA, which ought to be treated as the law between the parties thereto.
The argument is unmeritorious. The law in point is Article 217 (a) of the Labor Code. It is
elementary that this law is deemed written into the CBA. In fact, the law speaks in plain and
unambiguous terms that termination disputes, together with unfair labor practices, are matters
falling under the original and exclusive jurisdiction of the Labor Arbiter, to wit:
Art. 217 Jurisdiction of Labor Arbiters and the
Commission — (a) Except as otherwise provided under this Code, the Labor Arbiters shall have original
and exclusive jurisdiction to hear and decide . . . the following cases involving all workers, whether
(1) Unfair labor practice cases;
(2) Termination disputes;
xxx xxx xxx
The sole exception to the above rule can be found under Article 262 of the same Code, which
provides:
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 dead locks. (As added by RA 6715).
We subjected the records of this case, particularly the CA to meticulous scrutiny and we find no
agreement between SMC and the respondent union that would state in unequivocal language
that petitioners and the respondent union conform to the submission of termination disputes and
unfair labor practices to voluntary arbitration. Section 1, Article V of the CBA, cited by the
herein petitioners, certainly does not provide so. Hence, consistent with the general rule
under Article 217 (a) of the Labor Code, the Labor Arbiter properly has jurisdiction over
the complaint filed by the respondent union on February 25, 1991 for illegal dismissal
and unfair labor practice.
Petitioners point however to Section 2, Article III of the CBA, under the heading Job Security, to
show that the dispute is a proper subject of the grievance procedure, viz:
. . . The UNION, however, shall have the right to seek reconsideration of any discharge, lay-off or
disciplinary action, and such requests for reconsideration shall be considered a dispute or grievance to be
dealt with in accordance with the procedure outlined in Article IV hereof [on Grievance Machinery] . . . 3
(Emphasis ours)
Petitioners allege that respondent union requested management for a "reconsideration and
review" of the company's decision to terminate the employment of the union members. By this
act, petitioners argue, respondent union recognized that the questioned dismissal is a grievable
dispute by virtue of Section 2, Article III of the CBA. This allegation was strongly denied by the
respondent union. In a Memorandum filed for the public respondent NLRC, the Solicitor General
supported the position of the respondent union that it did not seek reconsideration from
the SMC management in regard to the dismissal of the employees.
Petitioners fail miserably to prove that, indeed, the respondent union requested for a
reconsideration or review of the management decision to dismiss the private respondents. A
punctilious examination of the records indubitably reveals that at no time did the respondent
union exercise its right to seek reconsideration of the company's move to terminate the
employment of the union members, which request for reconsideration would have triggered the
application of Section 2, Article III of the CBA, thus resulting in the treatment of the dispute as a
grievance to be dealt with in accordance with the Grievance Machinery laid down in Article IV of

grievance to be dealt with in accordance with the Grievance Machinery laid down in Article IV of
the CBA. Stated differently, the filing of a request for reconsideration by the respondent union,
which is the condition sine qua non to categorize the termination dispute and the ULP complaint
as a grievable dispute, was decidedly absent in the case at bench. Hence, the respondent union
acted well within their rights in filing their complaint for illegal dismissal and ULP directly with the
Labor Arbiter under Article 217 (a) of the Labor Code.
Second. Petitioners insist that involved in the controversy is the interpretation and
implementation of the CBA which is grievable and arbitrable by law under Article 217 (c) of the
Labor Code, viz:
Art. 217 (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 RA 6715).
Petitioners theorize that since respondents questioned the discharges, the main question for
resolution is whether SMC had the management right or prerogative to effect the discharges on
the ground of redundancy, and this necessarily calls for the interpretation or implementation of
Article III (Job Security) in relation to Article IV (Grievance Machinery) of the CBA. 4
Petitioner's theory does not hold water. There is no connection whatsoever between SMC's
management prerogative to effect the discharges and the interpretation or implementation of
Articles III and IV of the CBA. The only relevant provision under Article III that may need
interpretation or implementation is Section 2 which was cited herein. However, as patiently
pointed out by this court, said provision does not come into play considering that the union
never exercised its right to seek reconsideration of the discharges effected by the
company. It would have been different had the union sought reconsideration. Such recourse
under Section 2 would have been treated as a grievance under Article IV (Grievance Machinery)
of the CBA, thus calling for the possible interpretation or implementation of the entire provision
on Grievance Machinery as agreed upon by the parties. This was not the case however. The
union brought the termination dispute directly to the Labor Arbiter rendering Articles III and IV of
the CBA inapplicable for the resolution of this case.
The discharges, petitioners also contend, call for the interpretation or enforcement of company
personnel policies, particularly SMC's personnel policies on lay-offs arising from redundancy,
and so, they may be considered grievable and arbitrable by virtue of Article 217 (c). Not
necessarily so. Company personnel policies are guiding principles stated in broad, long-range
terms that express the philosophy or beliefs of an organization's top authority regarding
personnel matters. They deal with matters affecting efficiency and well being of employees and
include, among others, the procedure in the administration of wages, benefits, promotions,
transfer and other personnel movements which are usually not spelled out in the collective
agreement. The usual source of grievances, however, is the rules and regulations governing
disciplinary actions. 5 Judging therefrom, the questioned discharges due to alleged redundancy
can hardly be considered company personnel policies and therefore need not directly be subject
to the grievance machinery nor to voluntary arbitration.
Third. Petitioners would like to persuade us that respondents' ULP claims are merely conclusory
and cannot serve to vest jurisdiction to the Labor Arbiters. Petitioners argue with passion: "How
was the employee discharges' (sic) right to self-organization restrained by their termination?
Respondent did not show. There is no allegation of the existence of anti-union animus or of the
ultimate facts showing how the discharges affected the rights to self-organization of individual
respondents." 6 In short, petitioners maintain that respondents complaint does not allege a
genuine case for ULP.
The Court is not convinced.
The complaint alleges that:

5. Individual complainants are bona fide officers and members of complainant Ilaw at Buklod ng
Manggagawa (IBM). They are active and militant in the affairs and activities of the union.
xxx xxx xxx
23. The dismissal or lock-out from work of the individual complainants clearly constitutes an act of unfair
labor practices in the light of the fact that the work being performed by the individual complainants are
being contracted out by the respondent company, and, therefore, deprives individual complainants of their
right to work and it constitutes a criminal violation of existing laws.
xxx xxx xxx
25. The acts of the respondent company in economically coercing employees to accept payment of
separation and/or retirement benefits, pending final resolution of the labor disputes between the parties
constitute acts of unfair labor practice in the light of the fact that there is undue interference, restraint, and
coercion of employees in the exercise of their right to self-organization and collective bargaining. 7
Short of pre-empting the proceedings before the Labor Arbiter, the above complaint, makes out
a genuine case for ULP.
In Manila Pencil Co. v. CIR, 8 this Court had occasion to observe that even where business
conditions justified a lay-off of employees, unfair labor practices were committed in the form of
discriminatory dismissal where only unionists were permanently dismissed. This was despite the
valid excuse given by the Manila Pencil Company that the dismissal of the employees was due
to the reduction of the company's dollar allocations for importation and that both union members
and non-union members were laid-off. The Court, thru Justice Makalintal, rebuffed the petitioner
Company and said:
. . . The explanation, however, does not by any means account for the permanent dismissal of five of the
unionists, where it does not appear that non-unionists were similarly dismissed.
xxx xxx xxx
And the discrimination shown by the Company strongly is confirmed by the fact that during the period
from October 1958 to August 17, 1959 it hired from fifteen to twenty new employees and ten apprentices.

It says these employees were for its new lead factory, but is (sic) not shown that the five who had been
permanently dismissed were not suitable for work in that new factory.
A similar ruling was made by this Court in People's Bank and Trust Co. v. People's Bank and
Trust Co. Employees Union 9 involving the lay-off by a bank of sixty-five (65) employees who
were active union members allegedly by reason of retrenchment. The Court likewise found the
employer in that case to have committed ULP in effecting the discharges.
This Court was more emphatic however in Bataan Shipyard and Engineering Co., Inc. v. NLRC,
et al.: 10
Under the circumstances obtaining in this case, We are inclined to believe that the company had indeed
been discriminatory in selecting the employees who were to be retrenched. All of the retrenched
employees are officers and members of the NAFLU. The record of the case is bereft of any satisfactory
explanation from the Company regarding this situation. As such, the action taken by the firm becomes
highly suspect. It leads Us to conclude that the firm had been discriminating against membership in the
NAFLU, an act which amounts to interference in the employees' exercise of their right of self-organization.
Under Art. 249 (now Art. 248) of the Labor Code of the Philippines, such interference is considered an act
of unfair labor practice on the part of the Company . . . (Emphasis ours).
It matters not that the cause of termination in the above cited cases was retrenchment while that
in the instant case was redundancy. The important fact is that in all of these cases, including
the one at bar, all of the dismissed employees were officers and members of their
respective unions, and their employers failed to give a satisfactory explanation as to why
this group of employees was singled out.
It may be the case that employees other than union members may have been terminated also
by petitioner SMC on account of its redundancy program. If that is true, the discharges may
really be for a bona fide authorized cause under Article 283 11 of the Labor Code. On the other
hand, it is also possible that such may only be a clever scheme of the petitioner company to
camouflage its real intention of discriminating against union members particularly the private
respondents. In any case, these matters will be best ventilated in a hearing before the Labor
Arbiter.
It is for the above reason that we cannot hold the petitioners guilty of the ULP charge. This will
be the task of the Labor Arbiter. We however find that based on the circumstances surrounding
this case and settled jurisprudence on the subject, the complaint filed by the private
respondents on February 25, 1991 alleges facts sufficient to constitute a bona fide case
of ULP, and therefore properly cognizable by the Labor Arbiter under Article 217 (a) of
the Labor Code. This is consistent with the rule that jurisdiction over the subject matter is
determined by the allegations of the complaint. 12
Finally, petitioners try to impress on this Court the strong State policy on the promotion of
voluntary modes of settlement of labor disputes crafted in the Constitution and the Labor Code
which dictate the submission of the CBA dispute to grievance and arbitration. 13
In this regard, the response of the Solicitor General is apt:
Petitioners deserve commendation for divulging and bringing to public respondents' attention the noble
legislative intent behind the law mandating the inclusion of grievance and voluntary arbitration provisions
in the CBA. However, in the absence of an express legal conferment thereof, jurisdiction cannot be
appropriated by an official or tribunal (sic) no matter how well-intentioned it is, even in the pursuit of the
dearest substantial right (Concurring Opinion of Justice Barredo, Estanislao v. Honrado, 114 SCRA 748,
29 June 1982). 14
In the same manner, petitioners cannot arrogate into the powers of voluntary arbitrators the original and
exclusive jurisdiction of Labor Arbiters over unfair labor practices, termination disputes, and claims for
damages, in the absence of an express agreement between the parties in order for Article 262 15 of the
Labor Law to apply in the case at bar. 16
WHEREFORE, the instant petition is DISMISSED for lack of merit and the resolutions of the
National Labor Relations Commission dated August 11, 1992 and October 29, 1992 are hereby
AFFIRMED.
SO ORDERED.
Bellosillo, Vitug and Kapunan, JJ., concur.
Footnotes
1 Docketed as NLRC-NCR-Case No. 00-02-01210-91.
3 Rollo, p. 41.
4 Rollo, p. 242.
5 C.A. Azucena, The Labor Code With Comments and Cases, Volume II, 1993 ed., p. 272.
7 Rollo, pp. 82, 86.
8 14 SCRA 955 [1965].
9 69 SCRA 10 [1976].
10 161 SCRA 271 [1988].
11 Art. 283. Closure of establishment and reduction of personnel. — The employer may also terminate
the employment of any employee due to the installation of labor-saving devices, redundancy,
retrenchment to prevent losses or the closing or cessation of operation of the establishment or
undertaking . . .
12 Regalado, Florenz D., Remedial Law Compendium, Volume One, Fifth Revised Edition. p. 8. citing
Edward J. Nell & Co. v. Cubacub, L-20843, 23 June 1965; Time, Inc. v. Reyes, L-28882, 31 May 1971;
Ganadin v. Ramos, L-23547, 11 September 1980.
14 Memorandum of Public Respondents, p. 13; p. 271.
15 Art. 262, Jurisdiction over other labor disputes. — The voluntary arbitrator or panel or voluntary
arbitrators, upon agreement of the parties, shall also hear and decide all other labor disputes including
16 Rollo, p. 272.

continental marble v nlrc 161 s 151 1998
1:02 PM
Findings of VA must be supported

by substantial evidence
G.R. No. L-43825 May 9, 1988
CONTINENTAL MARBLE CORP. and FELIPE DAVID, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION (NLRC); ARBITRATOR JOSE T. COLLADO
and RODITO NASAYAO, respondents.
Benito P. Fabie for petitioners.
Narciso C. Parayno, Jr. for respondents.
PADILLA, J.:
In this petition for mandamus, prohibition and certiorari with preliminary injunction, petitioners
seek to annul and set aside the decision rendered by the respondent Arbitrator Jose T. Collado,
dated 29 December 1975, in NLRC Case No. LR-6151, entitled: "Rodito Nasayao, complainant,
versus Continental Marble Corp. and Felipe David, respondents," and the resolution issued by
the respondent Commission, dated 7 May 1976, which dismissed herein petitioners' appeal
from said decision.
In his complaint before the NLRC, herein private respondent Rodito Nasayao claimed that
sometime in May 1974, he was appointed plant manager of the petitioner corporation, with an
alleged compensation of P3,000.00, a month, or 25% of the monthly net income of the
company, whichever is greater, and when the company failed to pay his salary for the months
of May, June, and July 1974, Rodito Nasayao filed a complaint with the National Labor
Relations Commission, Branch IV, for the recovery of said unpaid varies. The case was
docketed therein as NLRC Case No. LR-6151.
Answering, the herein petitioners denied that Rodito Nasayao was employed in the company as
plant manager with a fixed monthly salary of P3,000.00. They claimed that the undertaking
agreed upon by the parties was a joint venture, a sort of partnership, wherein Rodito
Nasayao was to keep the machinery in good working condition and, in return, he would
get the contracts from end-users for the installation of marble products, in which the
company would not interfere. In addition, private respondent Nasayao was to receive an
amount equivalent to 25% of the net profits that the petitioner corporation would realize,
should there be any. Petitioners alleged that since there had been no profits during said
period, private respondent was not entitled to any amount.
VA: The case was submitted for voluntary arbitration and the parties selected the herein
respondent Jose T. Collado as voluntary arbitrator. In the course of the proceedings, however,
the herein petitioners challenged the arbitrator's capacity to try and decide the case fairly
and judiciously and asked him to desist from further hearing the case. But, the respondent
arbitrator refused. In due time, or on 29 December 1975, he rendered judgment in favor of the
complainant, ordering the herein petitioners to pay Rodito Nasayao the amount of P9,000.00,
within 10 days from notice. 1
Upon receipt of the decision, the herein petitioners appealed to the National Labor Relations
Commission on grounds that the labor arbiter gravely abused his discretion in persisting to
hear and decide the case notwithstanding petitioners' request for him to desist therefrom: and
that the appealed decision is not supported by evidence. 2
On 18 March 1976, Rodito Nasayao filed a motion to dismiss the appeal on the ground that
the decision of the voluntary arbitrator is final, unappealable, and immediately executory;

the decision of the voluntary arbitrator is final, unappealable, and immediately executory;
3 and, on 23 March 1976, he filed a motion for the issuance of a writ of execution. 4
NLRC: Acting on the motions, the respondent Commission, in a resolution dated 7 May 1976,
dismissed the appeal on the ground that the decision appealed from is final,
unappealable and immediately executory, and ordered the herein petitioners to comply with
the decision of the voluntary arbitrator within 10 days from receipt of the resolution. 5
The petitioners are before the Court in the present recourse. As prayed for, the Court issued a
temporary restraining order, restraining herein respondents from enforcing and/or carrying out
the questioned decision and resolution. 6
The issue for resolution is whether or not the private respondent Rodito Nasayao was
employed as plant manager of petitioner Continental Marble Corporation with a monthly
salary of P3,000.00 or 25% of its monthly income, whichever is greater, as claimed by
said respondent, or entitled to receive only an amount equivalent to 25% of net profits, if
any, that the company would realize, as contended by the petitioners. (SO FACTUAL)
The respondent arbitrator found that the agreement between the parties was for the petitioner
company to pay the private respondent, Rodito Nasayao, a monthly salary of P3,000.00, and,
consequently, ordered the company to pay Rodito Nasayao the amount of P9,000.00 covering a
period of three (3) months, that is, May, June and July 1974.
The respondent Rodito Nasayao now contends that the judgment or award of the voluntary
arbitrator is final, unappealable and immediately executory, and may not be reviewed by the
Court. His contention is based upon the provisions of Art. 262 of the Labor Code, as amended.
The petitioners, upon the other hand, maintain that "where there is patent and manifest
abuse of discretion, the rule on unappealability of awards of a voluntary arbitrator
becomes flexible and it is the inherent power of the Courts to maintain the people's faith
in the administration of justice." The question of the finality and unappealability of a decision
and/or award of a voluntary arbitrator had been laid to rest in Oceanic Bic Division (FFW) vs.
Romero, 7 and reiterated in Mantrade FMMC Division Employees and Workers Union vs.
Bacungan. 8 The Court therein ruled that it can review the decisions of voluntary arbitrators,
thus-
We agree with the petitioner that the decisions of voluntary arbitrators must be given the highest respect
and as a general rule must be accorded a certain measure of finality. This is especially true where the
arbitrator chosen by the parties enjoys the first rate credentials of Professor Flerida Ruth Pineda Romero,
Director of the U.P. Law Center and an academician of unquestioned expertise in the field of Labor Law.
It is not correct, however, that this respect precludes the exercise of judicial review over their decisions.
Article 262 of the Labor Code making voluntary arbitration awards final, inappealable, and executory
except where the money claims exceed P l 00,000.00 or 40% of paid-up capital of the employer or where
there is abuse of discretion or gross incompetence refers to appeals to the National Labor Relations
Commission and not to judicial review.
Inspite of statutory provisions making 'final' the decisions of certain administrative agencies, we have
taken cognizance of petitions questioning these decisions where want of jurisdiction, grave abuse of
discretion, violation of due process, denial of substantial justice, or erroneous interpretation of
the law were brought to our attention. There is no provision for appeal in the statute creating the
Sandiganbayan but this has not precluded us from examining decisions of this special court
brought to us in proper petitions. ...
The Court further said:
A voluntary arbitrator by the nature of her fucntions acts in quasi-judicial capacity. There is no reason
why herdecisions involving interpretation of law should be beyond this Court's review. Administrative
officials are presumed to act in accordance with law and yet we do hesitate to pass upon their work where
a question of law is involved or where a showing of abuse of authority or discretion in their official acts is
properly raised in petitions for certiorari.
The foregoing pronouncements find support in Section 29 of Republic Act No. 876, otherwise
known as the Arbitration Law, which provides:
Sec. 29. Appeals — An appeal may be taken from an order made in a proceeding under this Act, or from
a judgment entered upon an award through certiorari proceedings, but such appeals shall be limited to
questions of law. The proceedings upon such an appeal, including the judgment thereon shall be

questions of law. The proceedings upon such an appeal, including the judgment thereon shall be
governed by the Rules of Court in so far as they are applicable.
The private respondent, Rodito Nasayao, in his Answer to the petition, 9 also claims that the
case is premature for non-exhaustion of administrative remedies. He contends that the decision
of the respondent Commission should have been first appealed by petitioners to the Secretary
of Labor, and, if they are not satisfied with his decision, to appeal to the President of the
Philippines, before resort is made to the Court.
The contention is without merit. The doctrine of exhaustion of administrative remedies

cannot be invoked in this case, as contended. In the recent case of John Clement
Consultants, Inc. versus National Labor Relations Commission, 10 the Court said:
As is well known, no law provides for an appeal from decisions of the National Labor Relations
Commission; hence, there can be no review and reversal on appeal by higher authority of its
factual or legal conclusions. When, however, it decides a case without or in excess of its jurisdiction, or
with grave abuse of discretion, the party thereby adversely affected may obtain a review and nullification
of that decision by this Court through the extraordinary writ of certiorari. Since, in this case, it appears that
the Commission has indeed acted without jurisdiction and with grave abuse of discretion in taking
cognizance of a belated appeal sought to be taken from a decision of Labor Arbiter and thereafter
reversing it, the writ of certiorari will issue to undo those acts, and do justice to the aggrieved party.
We also find no merit in the contention of Rodito Nasayao that only questions of law, and not
findings of fact of a voluntary arbitrator may be reviewed by the Court, since the findings of fact
of the voluntary arbitrator are conclusive upon the Court.
While the Court has accorded great respect for, and finality to, findings of fact of a voluntary
arbitrator 11 and administrative agencies which have acquired expertise in their respective fields,
like the Labor Department and the National Labor Relations Commission, 12 their findings of
fact and the conclusions drawn therefrom have to be supported by substantial evidence.
ln that instant case, the finding of the voluntary arbitrator that Rodito Nasayao was an employee
of the petitioner corporation is not supported by the evidence or by the law.
On the other hand, we find the version of the petitioners to be more plausible and in accord with
human nature and the ordinary course of things. As pointed out by the petitioners, it was illogical
for them to hire the private respondent Rodito Nasayao as plant manager with a monthly salary
of P3,000.00, an amount which they could ill-afford to pay, considering that the business was
losing, at the time he was hired, and that they were about to close shop in a few months' time.
Besides, there is nothing in the record which would support the claim of Rodito Nasayao that he
was an employee of the petitioner corporation. He was not included in the company payroll, nor
in the list of company employees furnished the Social Security System.
Most of all, the element of control is lacking. In Brotherhood Labor Unity Movement in the
Philippines vs. Zamora, 13 the Court enumerated the factors in determining whether or not an
employer-employee relationship exists, to wit:
In determining the existence of an employer-employee relationship, the elements that are generally
considered are the following: (a) the selection and engagement of the employee; (b) the payment of
wages; (c) the power of dismissal; and (d) the employer's power to control the employee with respect to
the means and methods by which the work is to be accomplished. It is the so-called "control test" that is
the most important element (Investment Planning Corp. of the Phils. vs. The Social Security System, 21
SCRA 924; Mafinco Trading Corp. v. Ople, supra, and Rosario Brothers, Inc. v. Ople, 131 SCRA 72).
In the instant case, it appears that the petitioners had no control over the conduct of Rodito
Nasayao in the performance of his work. He decided for himself on what was to be done and
worked at his own pleasure. He was not subject to definite hours or conditions of work and, in
turn, was compensated according to the results of his own effort. He had a free hand in running
the company and its business, so much so, that the petitioner Felipe David did not know, until
very much later, that Rodito Nasayao had collected old accounts receivables, not covered by
their agreement, which he converted to his own personal use. It was only after Rodito Nasayao
had abandoned the plant following discovery of his wrong- doings, that Felipe David assumed
management of the plant.

Absent the power to control the employee with respect to the means and methods by which his
work was to be accomplished, there was no employer-employee relationship between the
parties. Hence, there is no basis for an award of unpaid salaries or wages to Rodito Nasayao.
WHEREFORE, the decision rendered by the respondent Jose T. Collado in NLRC Case No.
LR-6151, entitled: "Rodito Nasayao, complainant, versus Continental Marble Corp. and Felipe
David, respondents," on 29 December 1975, and the resolution issued by the respondent
National Labor Relations Commission in said case on 7 May 1976, are REVERSED and SET
ASIDE and another one entered DISMISSING private respondent's complaints. The temporary
restraning order heretofore isued by the Court is made permanent. Without costs.
SO ORDERED.
Yap, C.J, Melencio-Herrera, Paras and Sarmiento, JJ, concur.
Footnotes
1 Rollo, p. 15.
2 Id., p. 23.
3 Id., p. 43.
4 Id., p. 47,
5 Id., p. 51,
6 Id., p. 55.
7 G.R. No. L-43890, July 16,1984,130 SCRA 392.
8 G.R. No. L-48437, Sept. 30,1986,144 SCRA 510.
9 Rollo, pp. 69, 76.
10 G.R. No. 72096, January 29,1988.
11 Oceanic Bic Division (FFW) vs. Romero, supra.
12 Franklin Baker Company of the Philippines vs. Trajano G.R. No 75039, Jan. 28, 1988, and cases cited.
13 G.R. No. L-48645, Jan. 7, 1987, 147 SCRA 49, 54, See also: Bautista vs. Inciong, G.R. No. 52824, March 16, 1988.
Pasted from <http://www.lawphil.net/judjuris/juri1988/may1988/gr_l_43825_1988.html>

Notes on 15 September 2010
6:22 PM
Voluntary Arbitration sampler

"Huge thanks!"
Atty. Allan Montano - National president of FFW
Capt. Saulog - accredited arbitrator for maritime disputes
Madeja - complainant
-initial hearing!
PROCEDURE
1. Get from both parties confirmation (confirming the designation and appointment of the chairman and
the panel of the arbitrators) - ratification
2. Get confirmation of the parties that the arbitrable issue is that delineated in the submission agreement
(here: WON madeja is entitled to disability benefits, etc...under CBA)
"Futher explicitate"
3. Schedule and procedure to be followed
Proposal: parties simultaneously submit position papers
On possibility of a settlement
-Differentiate conciliation, arbitration and conciliation
-but in any stage, if there's a chance for settlement, pede pa rin
HERE: neither party shutting door to settlement. So at any stage of the proceedings, pede pa magsettle
Sabi ni Atty. Montano: no formal procedure

-hearing/conference (clarificatory) not necessary to some Vas
-when the counsels sign the minutes, they would be bound by it
-it is the parties who make their own rules - but the VAs not precluded from providing a guideline to
follow
-the fact that the parties have agreed, it would be binding upon them - they would abide w/ whatever
decision the VA would render
-absent a determination of the parties as to the procedure to follow, the LC provisions would apply
If there's a MTD before NCMB: is it w/n its jurisdiction

What is the effect of agreeing to a submission agreement (July 30) after an MTD (May)?
...an allegedly an Opposition was filed
...August: NCMB appointed the VA
-in VA, the authority of the VA is limited to the issues submitted to it by the parties. ANY ISSUE outside it
cannot be determined by it. HERE, MTD is not submitted before the VA
-panel directed the counsel for the respondent to submit a MTD before them, not the NCMB
RESOLUTION: Respondent agreed that the proceedings be continued, subject to the resolution on MTD
SO OPENING/INITIATORY STATEMENT
-very important because it is where they have the opportunity to impress the arbitrator
• What the case all about
• What relief sought
-counter: no legal basis for the claim...
Tips ni sir:
• Tell them what you're going to tell the audience
• Tell them what you're supposed to tell them

• Tell them what you're supposed to tell them
• Tell them what you have just told them
...
Almost always galing sa NCMB ang mga VA case
Report...
Boo i don't have glasses so i can't see
Grievance Machinery
-parties agree
-in default: there's one provided under DOLE DO 40-03
Get copy of the report from the reporters...can't follow
Submission agreement - if ayaw mag-agree, notice to arbitrate given to the other party
Nature of VA
-not adversarial
-ought to be non-litigious
-min: must comply with DUE PROCESS requirements
-failure to follow the procedure should render the decision of the VA null and void
Initiatory conference
-explore possibilities for settlement
NOTICES
-given to all parties
-can call for clarificatory issues
APPEARANCE
-if party fails to attend 2 consecutive conferences, can ask the parties to just submit position papers
-failure to submit position papers would deem the case submitted for resolution
There ought to be consistency with the arbitrable issues submitted

-can't assert a new issue in the middle of the conference
WHO MAY ATTEND

-anyone with direct interest
X: subject to the discretion of the arbitrator
ARBITRATION CONFERENCES
-opportunity to be heard
- treated as confidential, unless the parties waive it
Decisions
-if the parties agreed to the period, that would be followed
-if none: 20 calendar days
AWARDS
-specify law and the facts upon which it is based
-specify the monetary award
FINALITY
10 calendar days from receipt of decision
-MR apparently barred BUT in 2007, DOLE released DO that allowed MR before 10 days lapse

-MR apparently barred BUT in 2007, DOLE released DO that allowed MR before 10 days lapse
EXECUTION OF THE VA AWARD

-WoE may be issued
>party files Motion for Execution...see LC
Noncomplying party may also be guilty for contempt and payment of fees
SETTLEMENT even in the end

-VA or LA may call for pre-execution conference before execution
• Appeal would not stay the execution of the VA Award
Next meeting: read cases

Cox article
Schulman
Kahn (all 3 appearing on page 9)
Calderon - concentrate on comments coming from Gov 't labor and private sectors

Notes for 22 September 2010
5:55 PM
EO signed during Ramos time authorizing QJ officers to direct the parties to draft or submit draft
decisions - but di maganda tignan epsecially if the parties agreed to pay the VA so much (walang ginawa)
• In the previous sample VA, the counsel for the company questioned the jurisdiction of the VA and raised
the MTD. Relate this with Apalisok Case
Summary: Apalisok was dismissed from RPN after being issued a memo for her to explain the admin charges
against her and then afterwards just informed of her dismissal. She waived resort to the grievance procedure and
filed case with NLRC but undergone VA, to which the parties submitted a Submission Agreement. VA ruled ifo
Apalisok so RPN appealed to CA. CA held that VA had no jurisdiction because waiver of grievance machinery is
waiver to resort to VA since the dispute becomes a resolved grievance. Court held that even if a party waives the
grievance procedure, if they agree to submit themselves to VA it is allowed.
In VA during the era of CIR, there's actually no more trial. Witnesses may be invited, there is even a
direct and cross exam and even redirect and recross. So if there's such instance, follow procedural rules
in ROC
When NLRC decided to revise its rules of procedure, it did away with "full dress trials on the merit".
Conflicting rulings of SC resulted:
No need for hearing. Minimum There should be hearings! Give due process esp. If
requirements of Due Process issues are complicated
Finally, there's a SC decision saying that the SC should listen to the LA. If he feels that the issues are
complicated and not suitable for summary resolution, and in order to dispense labor justice, conduct
hearing. Let him. But if not, submission of position papers enough (like in administrative and QJA -
summary resolution)
WHY JUST POSITION PAPERS: if the issues are not that complicated, then resolve them summarily.
Declog the dockets
In the realm of LA, if you want to be an effective counsel for the complainant or the respondent,
effective dispenser of justice, you have to unlearn a whole lot of things that you have learned in
evidence. What may be valid in a criminal case or civil case in a regular court, what would be applicable
in those fora would not necessarily be applicable in Labor disputes before VA or LA. There is a rule in LC
that procedural and technical rules are not strictly applied in labor cases. Substantial evidence enough.
Boatswain (bozun)
• Sa NLRC, ang una: proforma complaint

-available for poor litigants who cannot engage the services of counsels
-form is fill in the blanks or check list
-at the end, there is a jurat potion to be signed by the administering officer of the NLRC
-this is sufficient to initiate an action in NLRC
• But there are parties who can afford. So kuha sila abogado. Since they are being paid, they would make
own complaint
• Afterwards, position papers would be submitted
San jose V. Nlrc

-jurisdiction as to money claims
LA (217(c)): EOJ for money claims is limited only to those arising from statutes or contracts other than a Collective Bargaining Agreement.
VA: EOJ over money claims "arising from the interpretation or implementation of the Collective Bargaining Agreement and, those arising from
the interpretation or enforcement of company personnel policies", under Article 261.

the interpretation or enforcement of company personnel policies", under Article 261.
Sanyo v. NLRC
-termination disputes are under LA's jurisdiction
-if no union involved, no grievance procedure necessary - so not under VA
-lack of grievance procedure does not excuse the LA from assuming jurisdiction
Apalisok v. RPN
-even if a party waives the grievance procedure, if they agree to submit themselves to VA they can do so
Apalisok vis a vis the Saulog case (sample): The company contested the jurisdiction of VA even after they
have agreed to submit themselves to VA
-Corporation is estopped from assailing jurisdiction
ATLAS CASE
Termination proceedings still under LA, unless express agreement to the contrary
Olvido v. CA
A279 on security of tenure and backwages
Court discussed that before, if ER terminates service of EE in pursuant to union security clause, not liable
to pay backwages. But with the Article now providing that employees should be dismissed only for just
cause (follow substantive due process) - which does not include the union security clause in the CBA - ER
still liable for backwages

Awards/Orders
4:14 PM
Davao Integrated Port Stevedoring Services vs. Abarquez, supra
City Bank Employees Union v. MOLE (1980)

F: employees are claiming holiday pay from Citibank. They agreed to submit their dispute to VA. VA
ordered Citibank to pay the employees their holiday pay on the basis of the finding that the monthly
salary of said employees does not include their pay for unworked holidays. Award was partially
implemented but MOLE issued INTEGRATED IMPLEMENTING RULES OF THE LABOR CODE which
provided that workers paid monthly shall be presumed to be paid for ALL days in the month whether
worked or not worked, and the POLICY INSTRUCTION NO. 9 which provided that an employee is
presumed to be already paid the 10 paid legal holidays if he is receiving not less than the maximum
monthly minimum wage. Thus, Citibank refused to further implement the award.
H: The award of the arbitrator in this case IS NOT TO BE EQUATED WITH A JUDICIAL DECISION. In effect,
when in relation to a controversy as to working conditions, which necessarily include the
• Amount of wages
• Allowances
• Bonuses
• Overtime pay
• Holiday pay
• Etc.
...The parties submit their differences to arbitration, they do not seek any judicial pronouncement
techically as such; they are merely asking the arbitrator to fix for them what would be the fair and just
condition or term rearding the matter in dispute that should govern further collective bargaining
relations between them. THE ARBITRATOR'S AWARD WHEN STIPULATED BY THE PARTIES TO BE
CONCLUSIVE BECOMES PART AND PARCEL OF TEH CBA.
*Regardless of any law anterior or posterior to the Arbitrator's award, the collective bargaining
agreement in this case has been correspondingly amended in a manner that is unalterable, immovable
and immutable like the rock of Gibraltar, during thelifetime of the CBA.
Volkschel Labor Union v. NLRC (1980)

-The awards of VA determine the rights of parties; hence, their decisions have the same legal effect as
judgments of a court
APPEAL
Oceanic BIC Division v. Romero (1984)
-a VA by the nature of her functions acts in a quasi-judicial capactiy.
Luzon Dev't Bank v. Association of Luzon Development Bank Employees (1995)

-the VA, whether acting solely or in a panel, enjoys in law the status of a quasi-judicial agency but
independent of, and apart from, the NLRC since his decisions are not appealable to the latter.
-assuming arguendo that the VA or the panel of VA may not strictly be considered as a quasi-judicial
agency, board or commission, still both he and the panel are comprehended within the concept of a
"quasi-judicial instrumentality"
Manila Central Line Corp. v. Manila Central Line Free Workers Union (1998)
-before: conciliation fails >>> referred to labor arb
-now: Conciliation fails >>> referred to VA
-here:

Davao Integrated Port, supra
7:32 PM
Petitioner-company's objection to the authority of the Voluntary Arbitrator to direct the

commutation of the unenjoyed portion of the sick leave with pay benefits of intermittent workers in
his decision is misplaced. Article 261 of the Labor Code is clear.
 The questioned directive of the herein public respondent is the necessary consequence of the
exercise of his arbitral power as Voluntary Arbitrator under Article 261 of the Labor Code "to hear
and decide all unresolved grievances arising from the interpretation or implementation of the
Collective Bargaining Agreement."
 We, therefore, find that no grave abuse of discretion was committed by public respondent in
issuing the award (decision). Moreover, his interpretation of Sections 1 and 3, Article VIII of the 1989
CBA cannot be faulted with and is absolutely correct.

7:39 PM
VOLKSCHEL LABOR UNION V BUREAU OF LABOR RELATIONS (ALUMETAL)

137 SCRA 42
CUEVAS; June 19, 1985
NATURE
Petition for certiorari to review the resolutions of the Bureau of Labor Relations.
FACTS
- Petitioner Volkschel Labor Union (Volkschel) w as once affiliated with the Associated Labor Union for Metal Workers (ALUMETAL).
Both unions, using the name Volkschel-ALUMETAL, jointly entered into a collective bargaining agreement w ith respondent
companies.
- One of the subjects dealt w ith is the payment of union dues w hich is provided for in Section 3, Art. 1, of the CBA, w hich says that
“the COMPANY agrees to make payroll deductions not oftener than twice a month of UNION membership dues and such special
assessments fees or fines as may be duly authorized by the UNION, provided that the same is covered by the individual check-off
authorization of the UNION members.”
- March 10, 1976: a majority of petitioner’s members decided to disaffiliate from respondent federation in order to operate on its ow n
as an independent labor group pursuant to Art. 241 of the Labor Code:
“Incumbent affiliates of existing federations or national unions may disaffiliate only for the purpose of joining a federation or national
union in the industry or region in w hich it properly belongs or for the purpose of operating as an independent labor group.”
- A resolution w as adopted and signed by petitioner’s members revoking their check-off authorization in favor of ALUMETAL and
notices thereof w ere served on ALUMETAL and respondent companies.
- Med-Arbiter George Eduvalla rendered a Resolution w hich found the disaffiliation legal but at the same time gave the opinion that
members should continue paying their dues to ALUMETAL. Director Francisco Estrella reversed the Med-Arbiter’s decision and
declared that the Bureau recognized the continued affiliation of Volkschel w ith ALUMETAL.
ISSUES
1. WON Volkschel Labor Union’s disaffiliation from ALUMETAL is valid.
2. WON respondent companies have the right to effect union dues collections despite revocation by the employees.
HELD
1. YES
Ratio A local union, being a separate and voluntary association, is free to serve the interest of all its members including the freedom
to disaffiliate w hen circumstances warrant.
Reasoning This right is consistent w ith the Constitutional guarantee of freedom of association (Art. III, Sec. 8, 1987 Constitution).
- The disaffiliation w as prompted by the federation’s deliberate and habitual dereliction of duties as mother federation tow ards
petitioner union.
- It w ould go against the spirit of the labor law to restrict petitioner’s right to self-organization due to the existence of the CBA. A
disaffiliation does not disturb the enforceability and administration of a collective agreement; it does not occasion a change of
administrators of the contract nor even an amendment of the provisions thereof.
2. NO
Ratio The obligation of respondent companies is conditioned on the individual check-off authorization of petitioner’s members. The
employees’ check-off authorization, even if declared irrevocable, is good only as long as they remain members of the union
concerned.
Reasoning ALUMETAL is entitled to receive the dues from respondent companies as long as petitioner union is affiliated w ith it and
respondent companies are authorized by their employees (members of petitioner union) to deduct union dues.
- Without said affiliation, the employer has no link to the mother union.
DISPOSITION
Resolutions of Bureau of Labor Relations are reversed and set aside. ALUMETAL is ordered to return to petitioner all the union
dues.

OCEANIC BIC DIVISION v. ROMERO
7:39 PM
G.R. No. L-43890 July 16, 1984

OCEANIC BIC DIVISION (FFW), PABLITO ORDANOSO, petitioners,
vs.
FLERIDA RUTH P. ROMERO AS VOLUNTARY ARBITRATOR. OCEANIC BIC
MANUFACTURING, and GLICERIO LEDESMA, respondents.
Jaime D. Lauron for petitioners.
Siguion Reyna, Montecillo & Ongsiako Law Office for respondents.
GUTIERREZ, JR., J.:

In this petition for review on certiorari, we are asked to interpret Section 1 1 of Presidential
Decree No. 21, ("Creating A National Labor Relations Commission And For Other Purposes") in
relation to Sections 1, 3, and 10 of the Implementing Instructions No. 1 dated November 9, 1972
issued by the then ad hoc National Labor Relations Commission. The provisions refer to the
clearance requirements for the dismissal, lay-off, or termination from employment of an
employee by his employer.
The facts of the case are not in dispute. Petitioner Pablito Ordanoso entered into a contract of
temporary employment for the period of six (6) months beginning from October 3, 1973 to April
3, 1974 with the respondent corporation. Incorporated in the contract is a stipulation that "it is
understood that the company has the right to separate you from its employ at anytime within the
above period should your services not be satisfactory." When the contract expired on April 3,
1974, Ordanoso entered into another 6-month contract of employment, this time as probationary
worker with the respondent company, from April 4, 1974 to October 4, 1974. A note to the effect
that "this extension of your employment contract is being given with formal advice that you
improve on your performance" was added to the stipulation which formed part of the first
contract.
The respondent company through "group leaders" conducts periodic performance ratings on the
workers. The results are considered for the workers' conversion from probationary to regular
permanent employment. The criteria for performance ratings were cooperation, attendance,
quality of work, skill, initiative and interest in work, leadership, obedience and intelligence.
In the case of Ordanoso, Mr. Glicerio Ledesma, production manager, explained that the
aforestated note attached to his contract of employment shows that Ordanoso's performance
rating during his first six months employment in the company was "just passing." Subsequent
performance ratings of Ordanoso by his group leaders submitted to Mr. Ledesma showed that
his work performance was not satisfactory. Hence, in the memorandum prepared by Ledesma
on workers' performance ratings which he sent to K. Bachmann, Jr., general manager,
Ordanoso's name was included among those with below average performance. On the following
day, Ledesma sent a memorandum to Ordanoso, telling him to improve his performance as he
only attained a 2.75 rating
On September 10, 1974, a memorandum was issued by Ledesma to some workers, among
them Ordanoso, warning them of their low average performance with the advice to perform on
the average performance level.
On October 3, 1974, Ledesma terminated Ordanoso's services in the company because of his
below average performance rating.
Thereafter, the following events transpired:
On October 4, 1974, complainant union (FFW Oceanic BIC Manufacturing Chapter), through its union
president, Alfonso Leonids sent a letter dated October 3, 1974, to the Management of the respondent
company wherein the union asked the company for a grievance conference in order to discuss the
dismissal of complainant Pablito Ordanoso effective October 4, 1974. Apparently, the parties failed to
reach an amicable settlement in the grievance conference. On October 25, 1974, the complainants (the
local union and Pablito Ordanoso) filed a complaint with the NLRC, Dept. of Labor, docketed as NLRC
Case No. Lr-6538. In the said complaint, the complainants charged the respondents company and
Ledesma for:
1. Unfair Labor Practice;
2. Unjust and illegal dismissal of complainant Pabiko Ordanoso;
3. Violation of the CBA

4. Violation of P.D. No. 21 and its Implementing Rules.
xxx xxx xxx
IV
The afore-mentioned complaint (bearing another case no. Lr431-74) was finally disposed of by the
conciliator of the Dept. of Labor, Regional Office No. IV, on January 16, 1975, by referring back the case
to the parties for exhaustion of the grievance procedure in accordance with the CBA. ...
V
On January 20, 1975, the Federation of Free Workers, the mother federation of complainant union, sent a
letter to the management of respondent company wherein the Federation suggested three (3) names to
select from, as voluntary arbitrator. The parties failed to mutually select any of the three named in said
letter but later selected Atty. Flerida Ruth P. Romero of the U.P. Law Center, Diliman, Quezon City. ...
(Petition, Rollo, pp. 5-6).
After due hearing, the voluntary arbitrator issued her decision dated April 30, 1976 upholding
the company's actions. The dispositive portion of the decision reads:
xxx xxx xxx
Ipinapasya ng Tagahatol na ang pagtitiwalag kay Ordanoso ay hindi unfair labor practice, hindi labag sa
collective bargaining contract at sa P.D. No. 21 o sa alituntunin nito, sapagkat hindi nauukol sa kanya ang
pangangailangan ng written clearance bago magtanggal ng isang manggagawa.
Isinagawa sa siyudad ng Quezon nitong ika-30 ng Abril, 1976.
The respondents raise a jurisdictional issue. They contend that this Court does not have the
power to review the voluntary arbitrator's award on the ground that: 1) Presidential Decree No.
442, (Labor Code) precludes this Court from reviewing voluntary arbitration awards save on
special circumstances which are not present in the instant case; and 2) the nature of voluntary
arbitration awards should be considered final.
Petitioner Ordanoso was dismissed on October 4, 1974. He filed the complaint for illegal
dismissal with the Department of Labor on October 25, 1974. Article 294 of the Labor Code, as
amended provides: "All actions or claims accruing prior to the effectivity of this Code shall be
determined in accordance with the laws in force at the time of their accrual." The law applicable
in the instant case is Presidential Decree No. 21. In fact, the voluntary arbitrator herself admits
this fact in her decision when she said: "Noong itiniwalag si Ordanoso noong ika-4 ng Oktubre,
1974, ang batas na umiiral ukol sa pagtatanggal ng mga tauhan ng mga bahay-kalakal ay ang
Presidential Decree No. 21 at mga alituntunin nito ...
Anent the proposition that voluntary arbitration awards should be considered final, the
respondents cite American precedents:
The nature of an arbitrator's award is that it is equivalent to the first law of the parties. It is so because the
disputants have willingly and contractually consented that the will of the arbitrator shall be substituted in
place of theirs. For, after all, the parties have mutually reposed their trust and confidence in the honesty,
integrity, competence and capability of the arbitrator.
Such being the case, the role of the reviewer of a voluntary arbitration award is very limited, It merely acts
as a guardian to see to it that no serious miscarriage of justice may be perpetuated or that public order or
public policy might be subverted.
The refusal of courts to review the merits of an arbitration award is the proper approach to an arbitration
under collective bargaining agreements. The federal policy of settling labor disputes by arbitration would
be undermined if courts had the final say on the merits of the awards. (Margetta v. Pam Pam Corporation,
354 F. Supp. 158, 1973), p. 160; cited in Fernandez, Labor Arbitration [1975], p. 355.
xxx xxx xxx
be undermined if courts had the final say on the merits of the awards. (Union Emp. Div., Etc. v. Columbia
Typographical Union No. 101, 353 F. Supp. 1348); (1973), p. 1349; cited in Fernandez, Ibid., pp.
355-356;
We hold that the District Court misconstrued its mandate. The duty of the courts is not to determine
whether a prima facie case on the merits has been put forth by the party seeking arbitration. It is not the
province of the court to look into the facts of the case. (Chambers v. Beaunit Corp., 404 F. 2d 128,
Sanitary Corp. v. Local 7, International Brotherhood of Operative Potters, 358 F. 2d 455, 458 (6th Cir.
1966). The arbitrator is not to be viewed as a special master who will be called in after a prima facie case
on the merits has been made out. (Local No. 6, M. & P. Int. U. of Am. v. Boyd G. Heminger, Inc., 483 F.
2d 129):(1973), p. 131.
xxx xxx xxx
It is particularly understood that the arbitral process in collective bargaining presupposes that the parties
wanted the informed judgment of an arbitrator, precisely for the reason that judges cannot provide it.
Therefore, a court asked to enforce a promise to arbitrate should ordinarily refrain from involving itself in
the interpretation of the substantive provisions of the contract. (Morris v. Werner Continental, Inc. 466

F.2d (1185); (1972), pp. 1190-1191, Ibid.)
We agree with the petitioner that the decisions of voluntary arbitrators must be given the highest
respect and as a general rule must be accorded a certain measure of finality. This is especially
true where the arbitrator chosen by the parties enjoys the first rate credentials of Professor
Flerida Ruth Pineda Romero, Director of the U.P. Law Center and an academician of
unquestioned expertise in the field of Labor Law. It is not correct, however, that this respect
precludes the exercise of judicial review over their decisions. Article 262 of the Labor Code
making voluntary arbitration awards final, inappealable, and executory except where the money
claims exceed P100,000.00 or 40% of paid-up capital of the employer or where there is abuse
of discretion or gross incompetence refers to appeals to the National Labor Relations
Inspite of statutory provisions making "final" the decisions of certain administrative agencies, we
have taken cognizance of petitions questioning these decisions where want of jurisdiction, grave
abuse of discretion, violation of due process, denial of substantial justice, or erroneous
interpretation of the law were brought to our attention. There is no provision for appeal in the
statute creating the Sandiganbayan but this has not precluded us from examining decisions of
this special court brought to us in proper petitions. Thus, we have ruled:
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. 507, Sec. 165). 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).
"The courts may declare an action or resolution of an administrative authority to be illegal (1) because it
violates or fails to comply with some mandatory provision of the law or (2) because it is corrupt, arbitrary
or capricious" (Borromeo vs. City of Manila and Rodriguez Lanuza, 62 Phil. 512, 516; Villegas vs. Auditor
General, L-21352, November 29,1966, 18 SCRA 877, 891). [San Miguel Corporation v. Secretary of
Labor, 64 SCRA 601].
xxx xxx xxx
It is now settled rule that under the present Labor Code, (Presidential Decree No. 442, as amended
[1974] if lack of power or arbitrary or improvident exercise of authority be shown, thus giving rise to a
jurisdictional question, this Court may, in appropriate certiorari proceedings, pass upon the validity of the
decisions reached by officials or administrative agencies in labor controversies. So it was assumed in
Maglasang v. Ople, (L-38813, April 29, 1975, 63 SCRA 508). It was explicitly announced in San Miguel
Corporation v. Secretary of Labor, (L-39195, May 16, 1975, 64 SCRA 56) the opinion being penned by
Justice Aquino. Accordingly, cases of that character continue to find a place in our docket. (Cf. United
Employees Union of Gelmart Industries v. Noriel, L-40810, Oct. 3, 1975, 67 SCRA 267). The present suit
is of that category. [Kapisanan ng mga Manggagawa sa La Suerte-Foitaf vs. Noriel, 77 SCRA 415-416].
A voluntary arbitrator by the nature of her functions acts in a quasi-judicial capacity, There is no
reason why her decisions involving interpretation of law should be beyond this Court's review.
Administrative officials are presumed to act in accordance with law and yet we do not hesitate to
pass upon their work where a question of law is involved or where a showing of abuse of
authority or discretion in their official acts is properly raised in petitions for certiorari.
On the merits of the petition, the petitioner questions the voluntary arbitrator's decision that
under Presidential Decree No. 21, petitioner Ordanoso was properly dismissed by the
respondent company without a written clearance from the Secretary of Labor, to wit:
xxx xxx xxx
Nang itiniwalag si Ordanoso noong ika-4 ng Oktubre, 1974, ang batas na umiiral ukol sa pagtatanggal ng
mga tauhan sa mga bahay-kalakal ay ang Presidential Decree No. 21 at mga alituntunin nito. Ayon sa
ikalabing-isang talata ng nasabing batas, walang pangasiwaan na maaring magtanggal ng kanilang mga
regular na empleado na nakapanungkulan na nang isang taon nang walang written clearance ng Kalihim
ng Paggawa.
Ano naman ang pakahulugan ng batas sa taguring regular na empleado? Ayon sa Implementing
Instructions No. 1 na nagpapaliwanag sa nasabing ikalabing-isang talata ng P.D. No. 21, ang regular na

empleado ay yaong manggagawa na nakapaglingkod na nang hindi kukulangin sa labingdalawang
buwan sa loob ng nakaraang magkasunod na dalawang taon bago natanggal ang nasabing
manggagawa, kahit anupaman ang taguri ng pangasiwaan sa kaniyang pagkakahirang. Alalaong baga,
upang mataguriang regular na empleado, kailangan ay una, ang manggagawa ay kawani na ng bahay-
kalakal nang hindi kukulangin sa dalawang taon nang nakararaan, at ikalawa, siya ay nakapaglingkod na
nang hindi kukulangin sa kabuuang labindalawang buwan na hindi kailangang magkakasunod sa loob
noong nasabing dalawang taon bago naganap ang pagtitiwalag. Kapag mapatunayan ng isang
manggagawa na ang dalawang pangangailangang iyan ay nasa kanya, siya ay masasabing regular na
empleado at hindi siya kagyat na matatanggal nang walang written clearance ng Kagawaran ng
Paggawa. Kung ang manggagawang itiniwalag ay kulang sa isang pangangailangang iyan, siya'y hindi
regular na empleado at hindi na kailangan ang written clearance upang siya ay matanggal. Mapapansin
na ang manggagawang higit na matagal ang panunungkulan ang siyang tinatangkilik ng batas.
Matapos ang paliwanag na iyan, mamamalas na si Ordanoso ay hindi regular na empleado, sapagkat
isang taon pa lamang siyang naglilingkod sa bahay-kalakal ng Oceanic Commercial, Inc. Kung gayon,
hindi kailangan ang written clearance upang siya ay matanggal ng pangasiwaan. Hindi nalalabag sa
batas ang gayong pagtitiwalag sa kanya nang walang written clearance "
The petitioner takes exception to the voluntary arbitrator's conclusions on the interpretation to
be given Section 3 of Implementing Instruction No.1 —
xxx xxx xxx
Pag-ukulan naman natin ng pansin ang isa pang matuwid ng manananggol ring nag-uusig. Ayon raw sa
Seksiyon 1(d) ng Alituntunin, kailangan rin ng "clearance" lahat ng mga pagtanggal ng manggagawa na
hindi nasasaklaw ng Seksiyon 3 nito. Ang Seksiyon 3 naman ay nililista ang mga pangyayari na
kailangan lamang magharap ng ulat ang kompanya at hindi "clearance". Isa na rito ay ang pagtiwalag ng
empleado na kulang ng isang taon ang panunungkulan. Kung gayon raw, mapaghuhulo na kapag isang
taon o higit nang isang taon paninilbihan, hindi nga ulat lamang ang kailangan kung hindi 'clearance' na.
Ipinalabas na si Ordanoso ay nasasakop sa kalagayang iyan — na ang paglilingkod niya ay kulang ng
isang taon kaya't hindi ulat lamang ang kailangan kung hindi "clearance" na sapagkat isang taon o nahigit
na siyang naglilingkod,
Hindi naman tumpak ang pakahulugan ng kabilang panig sa batas na pinag-uukulan ng pansin Malinaw
at tiyak ang pangungusap ng Seksiyon 1 ng Alituntunin na "clearance" ang kailangan kapag ang ititiwalag
ay regular na empleyado na nanilbihan na ng isa man lamang taon. Kung paghambingin ang hulo lamang
(implication) ng manananggol ng nag-uusig at ang tiyak na salita ng batas na "regular na empleado," ang
lulong matimbang ay ang tiyak at tahas na pananalita. Hindi kailangan ng "clearance" sa pagtanggal ng
kahi't sino lamang na empleado na nakapaglingkod nang higit sa isang taon. Kailangang siya ay "regular
na empleado", lalu't lalo na kapag ang empleado ay pangsamantala lamang o dili kaya'y "probationary."
Siya ay dagling sinusubok pa lamang kaya't kung sa panahon ng pagsusubok ay mapatunayang hindi sila
mahusay, maaari silang tanggalin kaagad nang walang 'clearance' kapag humantong na sa katapusan na
napagkasunduang panahon. Ganyan na nga mismo ang ginagawa ng bahay-kalakal na Oceanic Bic
Manufacturing nang humantong na ang katapusan ng pangalawang anim na buwan at hindi sili
nasisiyahan sa paglilingkod ni Ordanoso. (Emphasis supplied)
In ascertaining the mandatory nature and the ambit of the clearance requirements before
termination of employees may be effected, we start with the statutory provision found in Section
11 of Presidential Decree No. 21 which provides:
No employers may shut down his establishment or dismiss or terminate the services of regular employees
with at least one year of service without the written clearance of the Secretary of labor.
The pertinent provisions of the Implementing Instructions No. 1 are as follows:
Section 1. When Clearance Required. — Every employer shall secure a written prior clearance from the
Secretary of labor for any of the following cases irrespective of whether the employer complies with the
requirements of existing laws on the service of notice terminating the services of an employee and the
payment of severance pay;
(a) All dismissals, with or without just cause, of regular employees with at least one (1) year of service;
xxx xxx xxx
xxx xxx xxx
(d) Any termination of employment, suspension or lay-off not otherwise covered by Section 3 of these
instructions.
xxx xxx xxx
Section 3. When Reports Required. — Every employer shall submit a report in the form and manner
prescribed by this issuance on the following termination of employment, suspension, lay-off or shutdown
which may be effected by the employer without the prior clearance of the Secretary of Labor.
xxx xxx xxx
(b) All dismissals, suspensions, or lay-offs of employees with less than one (1) year of service; (Emphasis
supplied).
Under the definition in Section 1 of the Implementing Instructions, a regular employee is one
with an aggregate service of at least twelve months for the last two consecutive years prior to

the proposed termination. Ordanoso was not a regular employee but a probationary employee
when his services were terminated. It appears clear from the law that he was not covered by the
requirement of a written prior clearance from the Secretary of Labor. Neither was he covered by
Section 3 of the implementing rules which requires a report, not a prior clearance, whenever an
employee with less than one year of service is dismissed, suspended, or laid-off. Ordanoso had
slightly more than one year of service.
There is a hiatus or gap in the clearance and reporting requirements provided by the
administrative regulations. As a general rule, such a gap should be resolved in favor of the
dismissed worker. For an employee who has served one year and one day not to have the
minimal protection of at least a report on the cause of his dismissal while those who have
served less than a year are entitled to such a report also appears incongruous. In this particular
case, however, the poor job performance of Ordanoso is documented. The hearings before the
respondent arbitrator establish that the respondent employer did not act arbitrarily or even
wrongly in declaring Ordanoso's work performance as below the required ratings. During his first
six months as a temporary employee when he should have exerted extra efforts to prove his
capability for permanent employment, he was at the bottom or barely passing ratings of the
required performance. He had to be placed on another six months' trial period as a probationary
worker. During this second period, he clearly failed to make the grade. Ordanoso was given
sufficient warnings each time that his job performance was unsatisfactory. There is no issue of
due process violations.
The petitioners concentrated on the failure of the employer to get a prior clearance from the
Secretary of Labor and did not discuss the significance of the reporting requirements at all.
Under the facts of this case and the applicable law, such a prior clearance was not necessary. It
would also be most unfair to the employer to compel it to keep a below average worker simply
because ambiguity in administrative requirements for clearances or reports depending on the
length of service and employment status of a worker results in its not being instructed clearly to
either report a dismisssal already effected or seek prior clearance before the dismissal.
Considering the foregoing, we affirm the findings of the respondent voluntary arbitrator.
WHEREFORE, the instant petition is DISMISSED for lack of merit. The Kapasiyahan of the
voluntary arbitrator is AFFIRMED.
SO ORDERED.
Relova and De la Fuente, JJ., concur.
Melencio-Herrera, J., is on leave.
Separate Opinions
TEEHANKEE, J., concurring:

I concur on the ground that petitioner Pablito Ordanoso was not a regular employee but a
probationary employee and there was manifestly valid cause for his dismissal or separation as
such. He had been given sufficient warnings about his unsatisfactory job performance and
therefore his dismissal at the end of the second six months trial period was for just cause in
accordance with the terms of his probationary employment.
On the question, however, of whether his dismissal falls under section 3 of the Implementing
Instructions quoted in the main opinion, whereby the employer is required to submit a report of
his dismissal which may be affected without prior clearance, it is my view that the gap or hiatus
in the clearance and reporting requirements should be resolved in his favor and those similarly
circumstanced. In other words, the fact that he and other such probationary workers may have
slightly more than one year of service would not mean that the employer would not have to file
the corresponding report of their dismissal. As is aptly stated in the main opinion, "for an
employee who has served one year and one day not to have the minimal protection of at least a
report on the cause of his dismissal while those who have served less than a year are entitled to
such a report (also) appears incongruous." The employer's failure to file such report would not,
however, make his dismissal for just cause illegal in view of the vagueness or ambiguity of the
Administrative Instructions. But the employer who fails to file such report may be subjected to
such administrative penalties or sanctions as may be duly provided.

Separate Opinions
Pasted from <http://www.lawphil.net/judjuris/juri1984/jul1984/gr_l43890_1984.html>

G.R. No. L-43890 July 16, 1984
OCEANIC BIC DIVISION (FFW), PABLITO ORDANOSO, petitioners,
vs.
FLERIDA RUTH P. ROMERO AS VOLUNTARY ARBITRATOR. OCEANIC BIC
MANUFACTURING, and GLICERIO LEDESMA, respondents.
Jaime D. Lauron for petitioners.
Siguion Reyna, Montecillo & Ongsiako Law Office for respondents.
GUTIERREZ, JR., J.:

In this petition for review on certiorari, we are asked to interpret Section 1 1 of Presidential
Decree No. 21, ("Creating A National Labor Relations Commission And For Other Purposes") in
relation to Sections 1, 3, and 10 of the Implementing Instructions No. 1 dated November 9, 1972
issued by the then ad hoc National Labor Relations Commission. The provisions refer to the
clearance requirements for the dismissal, lay-off, or termination from employment of an
employee by his employer.
The facts of the case are not in dispute. Petitioner Pablito Ordanoso entered into a contract of
temporary employment for the period of six (6) months beginning from October 3, 1973 to April
3, 1974 with the respondent corporation. Incorporated in the contract is a stipulation that "it is
understood that the company has the right to separate you from its employ at anytime within the
above period should your services not be satisfactory." When the contract expired on April 3,
1974, Ordanoso entered into another 6-month contract of employment, this time as probationary
worker with the respondent company, from April 4, 1974 to October 4, 1974. A note to the effect
that "this extension of your employment contract is being given with formal advice that you
improve on your performance" was added to the stipulation which formed part of the first
contract.
The respondent company through "group leaders" conducts periodic performance ratings on the
workers. The results are considered for the workers' conversion from probationary to regular
permanent employment. The criteria for performance ratings were cooperation, attendance,
quality of work, skill, initiative and interest in work, leadership, obedience and intelligence.
In the case of Ordanoso, Mr. Glicerio Ledesma, production manager, explained that the
aforestated note attached to his contract of employment shows that Ordanoso's performance
rating during his first six months employment in the company was "just passing." Subsequent
performance ratings of Ordanoso by his group leaders submitted to Mr. Ledesma showed that
his work performance was not satisfactory. Hence, in the memorandum prepared by Ledesma
on workers' performance ratings which he sent to K. Bachmann, Jr., general manager,
Ordanoso's name was included among those with below average performance. On the following
day, Ledesma sent a memorandum to Ordanoso, telling him to improve his performance as he

On September 10, 1974, a memorandum was issued by Ledesma to some workers, among
them Ordanoso, warning them of their low average performance with the advice to perform on
the average performance level.
On October 3, 1974, Ledesma terminated Ordanoso's services in the company because of his
below average performance rating.
Thereafter, the following events transpired:
On October 4, 1974, complainant union (FFW Oceanic BIC Manufacturing Chapter), through its union
president, Alfonso Leonids sent a letter dated October 3, 1974, to the Management of the respondent
company wherein the union asked the company for a grievance conference in order to discuss the
dismissal of complainant Pablito Ordanoso effective October 4, 1974. Apparently, the parties failed to
reach an amicable settlement in the grievance conference. On October 25, 1974, the complainants (the
local union and Pablito Ordanoso) filed a complaint with the NLRC, Dept. of Labor, docketed as NLRC
Case No. Lr-6538. In the said complaint, the complainants charged the respondents company and
Ledesma for:
1. Unfair Labor Practice;
2. Unjust and illegal dismissal of complainant Pabiko Ordanoso;
4. Violation of P.D. No. 21 and its Implementing Rules.
xxx xxx xxx
IV
The afore-mentioned complaint (bearing another case no. Lr431-74) was finally disposed of by the
conciliator of the Dept. of Labor, Regional Office No. IV, on January 16, 1975, by referring back the case
to the parties for exhaustion of the grievance procedure in accordance with the CBA. ...
V
On January 20, 1975, the Federation of Free Workers, the mother federation of complainant union, sent a
letter to the management of respondent company wherein the Federation suggested three (3) names to
select from, as voluntary arbitrator. The parties failed to mutually select any of the three named in said
letter but later selected Atty. Flerida Ruth P. Romero of the U.P. Law Center, Diliman, Quezon City. ...
(Petition, Rollo, pp. 5-6).
After due hearing, the voluntary arbitrator issued her decision dated April 30, 1976 upholding
the company's actions. The dispositive portion of the decision reads:
xxx xxx xxx
Ipinapasya ng Tagahatol na ang pagtitiwalag kay Ordanoso ay hindi unfair labor practice, hindi labag sa
collective bargaining contract at sa P.D. No. 21 o sa alituntunin nito, sapagkat hindi nauukol sa kanya ang
pangangailangan ng written clearance bago magtanggal ng isang manggagawa.
Isinagawa sa siyudad ng Quezon nitong ika-30 ng Abril, 1976.
The respondents raise a jurisdictional issue. They contend that this Court does not have the
power to review the voluntary arbitrator's award on the ground that: 1) Presidential Decree No.
442, (Labor Code) precludes this Court from reviewing voluntary arbitration awards save on
special circumstances which are not present in the instant case; and 2) the nature of voluntary
arbitration awards should be considered final.
Petitioner Ordanoso was dismissed on October 4, 1974. He filed the complaint for illegal
dismissal with the Department of Labor on October 25, 1974. Article 294 of the Labor Code, as
amended provides: "All actions or claims accruing prior to the effectivity of this Code shall be
determined in accordance with the laws in force at the time of their accrual." The law applicable
in the instant case is Presidential Decree No. 21. In fact, the voluntary arbitrator herself admits
this fact in her decision when she said: "Noong itiniwalag si Ordanoso noong ika-4 ng Oktubre,
1974, ang batas na umiiral ukol sa pagtatanggal ng mga tauhan ng mga bahay-kalakal ay ang
Presidential Decree No. 21 at mga alituntunin nito ...
Anent the proposition that voluntary arbitration awards should be considered final, the
respondents cite American precedents:
The nature of an arbitrator's award is that it is equivalent to the first law of the parties. It is so because the
disputants have willingly and contractually consented that the will of the arbitrator shall be substituted in
place of theirs. For, after all, the parties have mutually reposed their trust and confidence in the honesty,
integrity, competence and capability of the arbitrator.
Such being the case, the role of the reviewer of a voluntary arbitration award is very limited, It merely acts
as a guardian to see to it that no serious miscarriage of justice may be perpetuated or that public order or
public policy might be subverted.
be undermined if courts had the final say on the merits of the awards. (Margetta v. Pam Pam Corporation,
xxx xxx xxx

xxx xxx xxx
be undermined if courts had the final say on the merits of the awards. (Union Emp. Div., Etc. v. Columbia
Typographical Union No. 101, 353 F. Supp. 1348); (1973), p. 1349; cited in Fernandez, Ibid., pp.
355-356;
We hold that the District Court misconstrued its mandate. The duty of the courts is not to determine
whether a prima facie case on the merits has been put forth by the party seeking arbitration. It is not the
province of the court to look into the facts of the case. (Chambers v. Beaunit Corp., 404 F. 2d 128,
Sanitary Corp. v. Local 7, International Brotherhood of Operative Potters, 358 F. 2d 455, 458 (6th Cir.
1966). The arbitrator is not to be viewed as a special master who will be called in after a prima facie case
on the merits has been made out. (Local No. 6, M. & P. Int. U. of Am. v. Boyd G. Heminger, Inc., 483 F.
2d 129):(1973), p. 131.
xxx xxx xxx
It is particularly understood that the arbitral process in collective bargaining presupposes that the parties
wanted the informed judgment of an arbitrator, precisely for the reason that judges cannot provide it.
Therefore, a court asked to enforce a promise to arbitrate should ordinarily refrain from involving itself in
F.2d (1185); (1972), pp. 1190-1191, Ibid.)
We agree with the petitioner that the decisions of voluntary arbitrators must be given the highest
respect and as a general rule must be accorded a certain measure of finality. This is especially
true where the arbitrator chosen by the parties enjoys the first rate credentials of Professor
Flerida Ruth Pineda Romero, Director of the U.P. Law Center and an academician of
unquestioned expertise in the field of Labor Law. It is not correct, however, that this respect
precludes the exercise of judicial review over their decisions. Article 262 of the Labor Code
making voluntary arbitration awards final, inappealable, and executory except where the money
claims exceed P100,000.00 or 40% of paid-up capital of the employer or where there is abuse
of discretion or gross incompetence refers to appeals to the National Labor Relations
Inspite of statutory provisions making "final" the decisions of certain administrative agencies, we
have taken cognizance of petitions questioning these decisions where want of jurisdiction, grave
abuse of discretion, violation of due process, denial of substantial justice, or erroneous
interpretation of the law were brought to our attention. There is no provision for appeal in the
statute creating the Sandiganbayan but this has not precluded us from examining decisions of
this special court brought to us in proper petitions. Thus, we have ruled:
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. 507, Sec. 165). 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).
"The courts may declare an action or resolution of an administrative authority to be illegal (1) because it
violates or fails to comply with some mandatory provision of the law or (2) because it is corrupt, arbitrary
or capricious" (Borromeo vs. City of Manila and Rodriguez Lanuza, 62 Phil. 512, 516; Villegas vs. Auditor
General, L-21352, November 29,1966, 18 SCRA 877, 891). [San Miguel Corporation v. Secretary of
Labor, 64 SCRA 601].
xxx xxx xxx
It is now settled rule that under the present Labor Code, (Presidential Decree No. 442, as amended
[1974] if lack of power or arbitrary or improvident exercise of authority be shown, thus giving rise to a
jurisdictional question, this Court may, in appropriate certiorari proceedings, pass upon the validity of the
decisions reached by officials or administrative agencies in labor controversies. So it was assumed in
Maglasang v. Ople, (L-38813, April 29, 1975, 63 SCRA 508). It was explicitly announced in San Miguel
Corporation v. Secretary of Labor, (L-39195, May 16, 1975, 64 SCRA 56) the opinion being penned by
Justice Aquino. Accordingly, cases of that character continue to find a place in our docket. (Cf. United

is of that category. [Kapisanan ng mga Manggagawa sa La Suerte-Foitaf vs. Noriel, 77 SCRA 415-416].
A voluntary arbitrator by the nature of her functions acts in a quasi-judicial capacity, There is no
reason why her decisions involving interpretation of law should be beyond this Court's review.
Administrative officials are presumed to act in accordance with law and yet we do not hesitate to
pass upon their work where a question of law is involved or where a showing of abuse of
authority or discretion in their official acts is properly raised in petitions for certiorari.
On the merits of the petition, the petitioner questions the voluntary arbitrator's decision that
under Presidential Decree No. 21, petitioner Ordanoso was properly dismissed by the
respondent company without a written clearance from the Secretary of Labor, to wit:
xxx xxx xxx
Nang itiniwalag si Ordanoso noong ika-4 ng Oktubre, 1974, ang batas na umiiral ukol sa pagtatanggal ng
mga tauhan sa mga bahay-kalakal ay ang Presidential Decree No. 21 at mga alituntunin nito. Ayon sa
ikalabing-isang talata ng nasabing batas, walang pangasiwaan na maaring magtanggal ng kanilang mga
regular na empleado na nakapanungkulan na nang isang taon nang walang written clearance ng Kalihim
ng Paggawa.
Ano naman ang pakahulugan ng batas sa taguring regular na empleado? Ayon sa Implementing
empleado ay yaong manggagawa na nakapaglingkod na nang hindi kukulangin sa labingdalawang
buwan sa loob ng nakaraang magkasunod na dalawang taon bago natanggal ang nasabing
manggagawa, kahit anupaman ang taguri ng pangasiwaan sa kaniyang pagkakahirang. Alalaong baga,
upang mataguriang regular na empleado, kailangan ay una, ang manggagawa ay kawani na ng bahay-
kalakal nang hindi kukulangin sa dalawang taon nang nakararaan, at ikalawa, siya ay nakapaglingkod na
nang hindi kukulangin sa kabuuang labindalawang buwan na hindi kailangang magkakasunod sa loob
noong nasabing dalawang taon bago naganap ang pagtitiwalag. Kapag mapatunayan ng isang
manggagawa na ang dalawang pangangailangang iyan ay nasa kanya, siya ay masasabing regular na
empleado at hindi siya kagyat na matatanggal nang walang written clearance ng Kagawaran ng
Paggawa. Kung ang manggagawang itiniwalag ay kulang sa isang pangangailangang iyan, siya'y hindi
regular na empleado at hindi na kailangan ang written clearance upang siya ay matanggal. Mapapansin
na ang manggagawang higit na matagal ang panunungkulan ang siyang tinatangkilik ng batas.
Matapos ang paliwanag na iyan, mamamalas na si Ordanoso ay hindi regular na empleado, sapagkat
isang taon pa lamang siyang naglilingkod sa bahay-kalakal ng Oceanic Commercial, Inc. Kung gayon,
hindi kailangan ang written clearance upang siya ay matanggal ng pangasiwaan. Hindi nalalabag sa
batas ang gayong pagtitiwalag sa kanya nang walang written clearance "
The petitioner takes exception to the voluntary arbitrator's conclusions on the interpretation to
be given Section 3 of Implementing Instruction No.1 —
xxx xxx xxx
Pag-ukulan naman natin ng pansin ang isa pang matuwid ng manananggol ring nag-uusig. Ayon raw sa
Seksiyon 1(d) ng Alituntunin, kailangan rin ng "clearance" lahat ng mga pagtanggal ng manggagawa na
hindi nasasaklaw ng Seksiyon 3 nito. Ang Seksiyon 3 naman ay nililista ang mga pangyayari na
kailangan lamang magharap ng ulat ang kompanya at hindi "clearance". Isa na rito ay ang pagtiwalag ng
empleado na kulang ng isang taon ang panunungkulan. Kung gayon raw, mapaghuhulo na kapag isang
taon o higit nang isang taon paninilbihan, hindi nga ulat lamang ang kailangan kung hindi 'clearance' na.
Ipinalabas na si Ordanoso ay nasasakop sa kalagayang iyan — na ang paglilingkod niya ay kulang ng
isang taon kaya't hindi ulat lamang ang kailangan kung hindi "clearance" na sapagkat isang taon o nahigit
na siyang naglilingkod,
Hindi naman tumpak ang pakahulugan ng kabilang panig sa batas na pinag-uukulan ng pansin Malinaw
at tiyak ang pangungusap ng Seksiyon 1 ng Alituntunin na "clearance" ang kailangan kapag ang ititiwalag
ay regular na empleyado na nanilbihan na ng isa man lamang taon. Kung paghambingin ang hulo lamang
(implication) ng manananggol ng nag-uusig at ang tiyak na salita ng batas na "regular na empleado," ang
lulong matimbang ay ang tiyak at tahas na pananalita. Hindi kailangan ng "clearance" sa pagtanggal ng
kahi't sino lamang na empleado na nakapaglingkod nang higit sa isang taon. Kailangang siya ay "regular
na empleado", lalu't lalo na kapag ang empleado ay pangsamantala lamang o dili kaya'y "probationary."
Siya ay dagling sinusubok pa lamang kaya't kung sa panahon ng pagsusubok ay mapatunayang hindi sila
mahusay, maaari silang tanggalin kaagad nang walang 'clearance' kapag humantong na sa katapusan na
napagkasunduang panahon. Ganyan na nga mismo ang ginagawa ng bahay-kalakal na Oceanic Bic
Manufacturing nang humantong na ang katapusan ng pangalawang anim na buwan at hindi sili
nasisiyahan sa paglilingkod ni Ordanoso. (Emphasis supplied)
In ascertaining the mandatory nature and the ambit of the clearance requirements before
termination of employees may be effected, we start with the statutory provision found in Section
11 of Presidential Decree No. 21 which provides:
No employers may shut down his establishment or dismiss or terminate the services of regular employees

Section 1. When Clearance Required. — Every employer shall secure a written prior clearance from the
Secretary of labor for any of the following cases irrespective of whether the employer complies with the
requirements of existing laws on the service of notice terminating the services of an employee and the
payment of severance pay;
(a) All dismissals, with or without just cause, of regular employees with at least one (1) year of service;
xxx xxx xxx
xxx xxx xxx
(d) Any termination of employment, suspension or lay-off not otherwise covered by Section 3 of these
instructions.
xxx xxx xxx
Section 3. When Reports Required. — Every employer shall submit a report in the form and manner
prescribed by this issuance on the following termination of employment, suspension, lay-off or shutdown
which may be effected by the employer without the prior clearance of the Secretary of Labor.
xxx xxx xxx
(b) All dismissals, suspensions, or lay-offs of employees with less than one (1) year of service; (Emphasis
supplied).
Under the definition in Section 1 of the Implementing Instructions, a regular employee is one
the proposed termination. Ordanoso was not a regular employee but a probationary employee
when his services were terminated. It appears clear from the law that he was not covered by the
requirement of a written prior clearance from the Secretary of Labor. Neither was he covered by
Section 3 of the implementing rules which requires a report, not a prior clearance, whenever an
employee with less than one year of service is dismissed, suspended, or laid-off. Ordanoso had
slightly more than one year of service.
There is a hiatus or gap in the clearance and reporting requirements provided by the
administrative regulations. As a general rule, such a gap should be resolved in favor of the
dismissed worker. For an employee who has served one year and one day not to have the
minimal protection of at least a report on the cause of his dismissal while those who have
served less than a year are entitled to such a report also appears incongruous. In this particular
case, however, the poor job performance of Ordanoso is documented. The hearings before the
respondent arbitrator establish that the respondent employer did not act arbitrarily or even
wrongly in declaring Ordanoso's work performance as below the required ratings. During his first
six months as a temporary employee when he should have exerted extra efforts to prove his
capability for permanent employment, he was at the bottom or barely passing ratings of the
required performance. He had to be placed on another six months' trial period as a probationary
worker. During this second period, he clearly failed to make the grade. Ordanoso was given
sufficient warnings each time that his job performance was unsatisfactory. There is no issue of
due process violations.
The petitioners concentrated on the failure of the employer to get a prior clearance from the
Secretary of Labor and did not discuss the significance of the reporting requirements at all.
Under the facts of this case and the applicable law, such a prior clearance was not necessary. It
would also be most unfair to the employer to compel it to keep a below average worker simply
because ambiguity in administrative requirements for clearances or reports depending on the
length of service and employment status of a worker results in its not being instructed clearly to
either report a dismisssal already effected or seek prior clearance before the dismissal.
Considering the foregoing, we affirm the findings of the respondent voluntary arbitrator.
WHEREFORE, the instant petition is DISMISSED for lack of merit. The Kapasiyahan of the
voluntary arbitrator is AFFIRMED.
SO ORDERED.
Relova and De la Fuente, JJ., concur.
Melencio-Herrera, J., is on leave.
Separate Opinions


Separate Opinions
Pasted from <http://www.lawphil.net/judjuris/juri1984/jul1984/gr_l43890_1984.html>

7:37 PM
MANTRADE/FMMC DIVISION EMPLOYEES AND WORKERS UNION V BACUNGAN

144 SCRA 510
FERIA; September 30, 1986
NATURE
Petition for Certiorari and Mandamus
FACTS
- Petitioner employ ees question the v alidity of the pertinent section of the Rules and Regulations Implementing the Labor Code as amended on which respondent
arbitrator Froilan M. Bacungan based his decision ruling that Mantrade Dev t Corp is not under legal obligation to pay holiday pay (as provided for in Article 94 of
the Labor Code) to its monthly paid employees who are uniformly paid by the month, irrespective of the number of w orking days therein, with a salary of not less
than the statutory or established minimum wage, and that this rule is applicable not only as of March 2, 1976 but as of November 1, 1974.
- Respondent corporation contends, among others that petitioner is barred from pursuing the present action in view of (1) Article 263 of the Labor Code; (2) the
pertinent prov ision of the CBA betw een petitioner and respondent corporation; and (3) Article 2044 of the Civil Code; that the special civ il action of certiorari does
not lie because respondent arbitrator is not an "officer ex ercising judicial functions" within the contemplation of Rule 65, Section 1, of the Rules of Court; that the
instant petition raises an error of judgment on the part of respondent arbitrator and not an error of jurisdiction; that it pray s for the annulment of certain rules and
regulations issued by the DOLE, not for the annulment of the v oluntary arbitration proceedings; and that appeal by certiorari under Section 29 of the Arbitration
Law , Republic Act No. 876, is not applicable to the case at bar because arbitration in labor disputes is expressly excluded by Section 3 of said law .
ISSUES
1. WON decisions of arbitrators are subject to judicial review
2. WON Mantrade employees are entitled to holiday pay
3. WON mandamus lies in the case at bar
HELD
1. YES
- Oceanic Bic Division (FFW) vs. Romero (July 16, 1984): The decisions of voluntary arbitrators must be given the highest respect and as a general rule must be
accorded a certain measure of finality . It is not correct, however, that this respect precludes the exercise of judicial review over their decisions. Article 262 of the
Labor Code making voluntary arbitration awards final, inappealable and executory, except where the money claims exceed P100,000.00 or 40% of the paid-up
capital of the employ er or w here there is abuse of discretion or gross incompetence refers to appeals to the National Labor Relations Commission and not to
judicial rev iew. Judicial review still lies where want of jurisdiction, grave abuse of discretion, violation of due process, denial of substantial justice, or erroneous
interpretation of the Law are brought to SC’s attention.
2. YES
- Under Art. 94 of the Labor Code, monthly salaried employees are not among those excluded from receiv ing holiday pay. But they appear to be excluded under
Sec. 2, Rule IV, Book III of the Rules and Regulations implementing said provision.
- Insular Bank of Asia and America Employees' Union (IBAAEU) vs. Inciong (October 24, 1984): Section 2, Rule IV, Book III of the implementing rules and Policy
Instruction No. 9, issued by the then Secretary of Labor are null and v oid since in the guise of clarify ing the Labor Code's provis ions on holiday pay, they in effect
amended them by enlarging the scope of their ex clusion.
- Chartered Bank Employees Association vs. Ople (August 28, 1985): An administrative interpretation which diminis hes the benefits of labor more than w hat the
statute delimits or w ithholds is obviously ultra vires.
3. YES
- While it is true that mandamus is not proper to enforce a contractual obligation, the remedy being an action for specific performance, in view of the above cited
subsequent decisions of this Court clearly defining the legal duty to grant holiday pay to monthly salaried employees, mandamus is an appropriate equitable
remedy .
Disposition Questioned decision of respondent arbitrator is SET ASIDE and respondent corporation is ordered to GRANT holiday pay to its monthly salaried
employ ees. No costs.
Pasted from <file:///D:\5y,%201s\Labor%20Arb\COMPILED%20LABOR2-disini\LABOR1%20DIGEST%20PART4.doc>

Centro Escolar University Faculty & Allied Workers Union vs. Court
of Appeals
Sunday, October 03, 2010
11:29 PM
CENTRO ESCOLAR UNIVERSITY FACULTY AND ALLIED WORKERS UNION - INDEPENDENT VS. HON. COURT
OF APPEALS

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 165486 May 31, 2006
CENTRO ESCOLAR UNIVERSITY FACULTY AND ALLIED WORKERS UNION – INDEPENDENT, Petitioner,
vs.
HON. COURT OF APPEALS, APRON MANGABAT as Voluntary Arbitrator, and CENTRO ESCOLAR
UNIVERSITY, Respondents.
DE C I S I O N
PUNO, J.:
Republic Act No. (R.A.) 6728, otherwise known as the "Government Assistance To Students and
Teachers in Private Education Act," allows private schools to increase their tuition fees on the condition
that 70% of the tuition fee increases shall go to the payment of salaries, wages, allowances and other
benefits of teaching and non-teaching personnel. The petition at bar poses the issue of whether
respondent Centro Escolar University may source from the 70% incremental proceeds (IP) the integrated
IP incorporated into the salaries of its teaching and non-teaching staff pursuant to the collective
bargaining agreements (CBAs) entered into by their union.
It appears that petitioner union, representing the teaching and the non-teaching staff of respondent
university, has existing CBAs with the university. Their respective CBAs granted both the teaching and
the non-teaching staff increases in their compensation. The following increases were provided in the
CBA of the teaching personnel for the period 2000 to 2005:
ARTICLE V
SALARIES
Section 1. Salary Scales. In order to achieve a sound and effective administration, the UNIVERSITY and
the UNION hereby agree on the salary scale based on the 2000 Faculty Ranking, which shall be given
during the lifetime of this Agreement.
Section 2. Hiring Rates. The following shall be the salary scale for the college teachers (inclusive of the
amount of P3.00 per hour for faculty members with rank and P1.50 for those without rank) as a result of
negotiation aimed at preventing distortion of the salary rate.
In addition to the above rates, an integration of IP is added according to the following schedule:
xxx
Section 3. Improvement in salary due to Educational Qualifications. Any faculty member in the College
Level shall be given P3.00 per hour increase in pay upon presentation to the Human Resource
Department of his Special Order for a Master’s Degree and P5.00 per hour increase in pay upon
presentation to the Human Resource Development of his Special Order for a Doctoral Degree; provided
the same has not been considered in the determination of his rank.
Section 4. Other benefits.
a) Emergency Financial Assistance. The faculty member shall receive an additional P350.00 to the
previous P800.00 for a total of P1,150.00 for the Emergency Financial Assistant (EFA).
b) Mid-year Bonus. Mid-year bonus shall be improved from 115% to 120% of basic pay, effective April 1,
2000 to March 31, 2003.

2000 to March 31, 2003.
c) There shall be an improvement of summer pay for permanent faculty members with master’s degree
using the following table:
xxx
Section 5. At no time shall a faculty member suffer a reduction of the salary rate he enjoyed before the
effectivity of this agreement even if his rate exceeds that which corresponds to his rank as established in
the CBA Pay Scale set forth.
Section 6. Salary increases arising from the CBA’s (sic) and from faculty ranking shall not be deductible
from the 70% share in the Incremental Proceeds (IP) of the faculty and non-teaching staff.1 (emphases
supplied)
Respondent university admits that salary increases provided under Sections 1, 2, 3 and 4 are taken from
the university fund, while the salary increases brought about by the IP integration are deducted from
the IP.2lawphil.net
The CBA for the non-teaching personnel, on the other hand, provided:
ARTICLE V
SALARIES
Section 1. Effective April 1, 2000 to March 31, 2005, all employees shall receive an additional basic salary
of P600.00 per month. This is an across the board increase, over and above legislated wage increase.
All employees shall also receive an additional P350.00 or a total of P1,150.00 for their EFA.
Section 2. Job Classification and Salary Scale. The University agrees to adopt a table or classification of
jobs in the University with component grade levels and corresponding salary ranges which shall form
part of this contract by reference.
Starting April 1, 2000, an increase of not more than 50% of the improvement given to the faculty shall
be given to the non-teaching staff.
Section 3. Effective April 1, 2000 to March 31, 2005, longevity pay for the non-teaching staff shall be
improved, following this table:
xxx
Section 4. There shall be a partial integration of incremental proceeds in the basic pay amounting to
not more than P1,000/per month, according to the following schedule:
xxx
Section 5. Salary increases arising from CBA’s (sic) from job classification shall not be deductible from
the 70% share of the IP of the faculty and non-teaching staff.3 (emphases supplied)
As with the salary increases for the school’s faculty, the increases provided under Sections 1, 2 and 3 are
also taken from the university fund, while the increases under Section 4 are deducted from the IP.4
Petitioner asserts that the integrated IP granted in the CBAs should not be deducted from the
personnel’s 70% share in the IP. It cites the common provision in the CBAs of the faculty and the non-
teaching staff prohibiting the deduction of salary increases arising from the CBA from their 70% share in
the IP. Petitioner also sought the payment of additional IP for the faculty members with overload and
permanent substitution units.
On February 5, 2002, petitioner filed with the National Conciliation and Mediation Board a preventive
mediation for the recovery of IP losses due to the university’s alleged deduction of the cost of CBA-won
economic benefits from the 70% share of the teachers and employees in the IP.
The parties submitted their position papers before the voluntary arbitrator. Petitioner contended that
the deduction of the IP integration from the 70% share of tuition fee increase is illegal and contrary to
the CBA, as the IP integration in the salary is considered a CBA-won increase, hence, may not be
deducted from the 70%. It also claims that the IP is computed on a pro-rata basis, depending on the
number of hours worked. Hence, those who are assigned overload units must also receive the
corresponding IP for the extra assignment.5
Respondent university, meanwhile, averred that there are two kinds of salary increases in the CBA—the
CBA-negotiated increase taken from the university fund, and the increase as a result of IP integration
which, by its nature, is taken from the 70% share of the school personnel in the IP. It further argued that
it would not be feasible to grant additional IP to teachers with overload or permanent substitution
assignments, as the IP is distributed among all employees of the school, whether teaching or non-
teaching. The only conceivable formula to accommodate the claim of teachers with overload or
permanent substitution assignment is to reduce the share of the employees who have no such load.

permanent substitution assignment is to reduce the share of the employees who have no such load.
This, respondent university claimed, would create more problems than solutions for the university.6
In his decision dated April 10, 2003,7 Voluntary Arbitrator Apron Mangabat upheld the position of
respondent university and dismissed the case. The dispositive portion of the decision reads:
WHEREFORE, premises considered, judgment is hereby issued in favor of the Centro Escolar University
and ordering that:
1. Integration of incremental proceeds in the basic pay as provided for in the Collective Bargaining
Agreement shall be deducted from the employees’ share on the incremental proceeds;
2. Other than that currently provided in the Collective Bargaining Agreement, no other incremental
proceeds shall be integrated in the basic pay;
3. No additional incremental proceeds shall be granted to faculty members with overload assignments
and with permanent substitution classes; and,
4. The case is hereby dismissed.8
Petitioner elevated the case to the Court of Appeals via petition for certiorari under Rule 65 of the 1997
Rules of Civil Procedure. The appellate court dismissed the petition on the ground that petitioner used a
wrong mode of appeal. It held that petitioner should have filed an appeal under Rule 43 of the 1997
Rules of Civil Procedure.9
The Court of Appeals also denied the motion for reconsideration filed by petitioner.10
Hence, this petition based on the following grounds:
1. Respondent court committed reversible error in dismissing the instant petition on technical ground
that appeal under Rule 43 is the proper remedy, and not certiorari under Rule 65, when no less than
Section 2 of Rule 43 explicitly provides that Rule 43 does not apply in labor cases.
2. Respondent court committed reversible error in relying on Bautista vs. Court of Appeals when
Bautista refers to criminal case (while this is a labor case) and the citation is a mere obiter dictum,
hence, inapplicable.
3. Respondent court committed reversible error in denying pertitioner’s motion for reconsideration
based on the case of Luzon Development Bank vs. Association of Luzon Development Bank Employees,
to further support the original ruling that Rule 43 is the correct remedy. However, in that case, the
Supreme Court equates the award or decisions of voluntary arbitrator with that of RTC and ruled that in
a petition for certiorari from that award or decision, Court of Appeals have concurrent jurisdiction with
Supreme Court. Thus it ordered the remanding of the petition for certiorari to the Court of Appeals,
thereby recognizing certiorari as a proper remedy.
4. Respondent court committed reversible error in not holding that, as ruled by the Honorable Supreme
Court in a long line of cases, decision of voluntary arbitrator is final and unappealable, except when
there is want or excess of jurisdiction, grave abuse of discretion, denial of substantial justice or
erroneous interpretation of the law. In such cases, certiorari is the proper remedy.
5. Respondent court committed reversible errors in not holding that the voluntary arbitrator has acted
with grave abuse of discretion, without or in excess of jurisdiction, in ignoring the CBA as the law
between the parties and in not deciding the grievances through the interpretation or implementation of
the CBA pursuant to his limited authority under Article 260 of the New Labor Code.
6. Respondent court committed reversible error in conveniently disposing the merit of the case on a
one-sentence, one paragraph coup de grace that petitioner has failed to offer meritorious reasons or
arguments for allowance of petition. The truth is that petitioner has adduced ample meritorious reasons
and arguments. Since the assailed deductions and estimated amounts are all uncontroverted only
questions of law are involved, i.e., whether the deductions are valid in view of the CBA prohibition, and
whether the university is liable to refund the deducted amount totaling P500 million.11
The issues in this case are two-pronged: first, the procedural issue – whether the decision of the
voluntary arbitrator is appealable to the Court of Appeals under Rule 43 of the 1997 Rules of Civil
Procedure; and second, the substantive issues – (1) whether the university may deduct from the 70%
share of the personnel in the IP the integrated IP granted in the CBAs of the teaching and the non-
teaching staff; and (2) whether the teaching staff is entitled to additional IP for overload and permanent
substitution units.
We shall first address the procedural issue.
We find that the Court of Appeals did not err in holding that petitioner used a wrong remedy when it
filed a special civil action on certiorari under Rule 65 instead of an appeal under Rule 43 of the 1997

filed a special civil action on certiorari under Rule 65 instead of an appeal under Rule 43 of the 1997
Rules of Civil Procedure. The Court held in Luzon Development Bank v. Association of Luzon
Development Bank Employees12 that decisions of the voluntary arbitrator under the Labor Code are
appealable to the Court of Appeals. In that case, the Court observed that the Labor Code was silent as
regards the appeals from the decisions of the voluntary arbitrator, unlike those of the Labor Arbiter
which may be appealed to the National Labor Relations Commission. The Court noted, however, that the
voluntary arbitrator is a government instrumentality within the contemplation of Section 9 of Batas
Pambansa Blg. (BP) 12913 which provides for the appellate jurisdiction of
the Court of Appeals.14 The decisions of the voluntary arbitrator are akin to those of the Regional Trial
Court, and, therefore, should first be appealed to the Court of Appeals before being elevated to this
Court. This is in furtherance and consistent with the original purpose of Circular No. 1-91 to provide a
uniform procedure for the appellate review of adjudications of all quasi-judicial agencies not expressly
excepted from the coverage of Section 9 of BP 129. Circular No. 1-91 was later revised and became
Revised Administrative Circular No. 1-95. The Rules of Court Revision Committee incorporated said
circular in Rule 43 of the 1997 Rules of Civil Procedure. The inclusion of the decisions of the voluntary
arbitrator in the Rule was based on the Court’s pronouncements in Luzon Development Bank v.
Association of Luzon Development Bank Employees.15 Petitioner’s argument, therefore, that the ruling
in said case is inapplicable in this case is without merit.
Moreover, a petition for certiorari is an extraordinary remedy that is adopted to correct errors of
jurisdiction committed by the lower court or quasi-judicial agency, or when there is grave abuse of
discretion on the part of such court or agency amounting to lack or excess of jurisdiction. Where the
error is not one of jurisdiction, but of law or fact which is a mistake of judgment, the proper remedy
should be appeal.16 In addition, an independent action for certiorari may be availed of only when there
is no appeal or any plain, speedy and adequate remedy in the ordinary course of law.17 There was no
question of jurisdiction involved in the decision of the voluntary arbitrator. What was being questioned
was merely his findings of whether the university’s practice of sourcing the integrated IP in the CBA from
the 70% share of the personnel in the IP violates the provisions of the CBA. Such is a proper subject of an
appeal.
Nonetheless, even if we overlook petitioner’s procedural lapse, the case should still be dismissed on
substantive grounds.
Section 5 (2) of R.A. 6728 provides:
SEC. 5. Tuition Fee Supplement for Student in Private High School
xxx
(2) Assistance under paragraph (1), subparagraphs (a) and (b) shall be granted and tuition fee under
subparagraph (c) may be increased, on the condition that seventy percent (70%) of the amount
subsidized allotted for tuition fee or of the tuition fee increases shall go to the payment of salaries,
wages, allowances and other benefits of teaching and non-teaching personnel except administrators
who are principal stockholders of the school, and may be used to cover increases as provided for in the
collective bargaining agreements existing or in force at the time when this Act is approved and made
effective: Provided, That government subsidies are not used directly for salaries of teachers of
nonsecular subjects. x x x
In Cebu Institute of Medicine v. Cebu Institute of Medicine Employees’ Union-National Federation of
Labor,18 the Court held that the private institution concerned has the discretion on the disposition of the
seventy percent (70%) incremental tuition fee increase. It enjoys the privilege of determining how much
increase in salaries to grant and the kind and amount of allowances and other benefits to give. The only
precondition is that seventy percent (70%) of the incremental tuition fee increase goes to the payment
of salaries, wages, allowances and other benefits of teaching and non-teaching personnel. In other
words, the allocation of the 70% of the IP is considered a management prerogative. In that case, the
Court allowed the charging against the 70% the employer’s share in the SSS, Medicare and Pag-ibig
premiums, they falling within the category of "other benefits" as provided in Section 5 (2) of RA 6728.
There is an additional element, however, in the case at bar. Here, the CBAs between the university and
the teaching and the non-teaching staff prohibit the deduction of the CBA-won benefits from the 70% of
the IP. The CBA is a negotiated contract between a legitimate labor organization and the employer
concerning wages, hours of work and all other terms and conditions of employment in a bargaining unit,
including mandatory provisions for grievances and arbitration machineries.19 It is the law between the

including mandatory provisions for grievances and arbitration machineries.19 It is the law between the
parties, and they are obliged to comply with its provisions. We need to resolve, therefore, whether the
charging of the integrated IP against the 70% is violative of the CBA.
We find that it is not.
The voluntary arbitrator described the nature of the IP, thus:
The allocation of 70% of the IP for payment of salaries, wages, allowances and other benefits of teaching
and non-teaching personnel is clearly mandated by law. Yet, nowhere is it provided in Republic Act No.
6728 that the IP should be integrated with the salary and wages. The nature of IP is that it bears a
reasonable relation as to whether or not universities/schools will increase their tuition fees. Like that of
a bonus, IP is additional compensation subject to a resolutory condition imposed for its payment. But
unlike a bonus or commission, the IP is not given for extra efforts exerted. Thus, a teacher originally
handling a load of 21 units will not be provided IP the next school year even with the same teaching
load, should there be a tuition fee increase. Historically, IP was allocated "to alleviate the sad plight of
private schools, their personnel and all those directly and indirectly dependent on school incomes." It is
additional benefit accorded to the employees. Hence, the determination of the amount of IP to be
integrated into employees’ basic salary entails the exercise of the right of an employer to regulate all
aspects of employment. Precisely, the employer has the right to change the basis of the payment of
wages of the employees, subject to provisions of law.
xxx
Distinct and separate from employees’ basic salary, IP are sourced from increase in tuition fees while the
basic salaries and wages and incidental salary increases i.e., due to educational qualifications,
emergency financial assistance, mid-year bonus, longevity pay, job classification, among others are
sourced from the university fund.
This distinction bears importance in the IP integration as provided under the Collective Bargaining
Agreement (CBA) between the parties. x x x20
The integrated IP provided in the CBAs of the teaching and the non-teaching staff is actually the share of
the employees in the 70% of the IP that is incorporated into their salaries as a result of the negotiation
between the university and its personnel. The purpose of the integration is to regularize the receipt by
the personnel of the benefits arising from the increase in the school’s tuition fees. But it does not
change the nature of the benefit as IP. There is no basis, therefore, for petitioner’s objection to the
sourcing of the integrated IP from the 70% of the tuition fee increases.
Finally, we agree with the discussion of the voluntary arbitrator as regards the award of additional IP to
members of the faculty with overload or permanent substitution assignment:
Coming now to the claim for additional IP for faculty members with overload assignments and with
permanent substitution classes, the same must be denied. To be entitled to IP, it matters not that a
teacher is handling a regular full teaching load or is handling extra teaching load. Professors handling
extra teaching loads are correspondingly compensated depending on the extra units they are assigned.
To grant them additional IP would amount to double compensation. As argued by University, "[t]he only
conceivable formula to satisfy petitioner’s claim for additional incremental proceeds is to deduct from
the IP benefits of teaching personnel who do not have overload assignments or who do not have
permanent substitution classes, and from non-teaching staff, which formula will create more problems
than solution[s]."21
In view of the foregoing, we find that the Court of Appeals did not err in dismissing the petition filed
before it by herein petitioner.
IN VIEW WHEREOF, the petition is DENIED.
SO ORDERED.
REYNATO S. PUNO
Associate Justice

LUZON DEVELOPMENT BANK V ASSOCIATION OF DEVELOPMENT
BANK EMPLOYEES
7:37 PM
249 SCRA 162

ROMERO; October 6, 1995
NATURE
Petition for certiorari and prohibition seeking to set aside the decision of the Voluntary Arbitrator and to prohibit her from enforcing
the same
FACTS
-Luzon Development Bank (LDB) and the Association of Luzon Development Bank Employees (ALDBE) submitted to arbitration to
resolve WON the company has violated the Collective Bargaining Agreement provision and the Memorandum of Agreement dated
April 1994, on promotion
-The parties agreed to submit their respective Position Papers on December 1-15, 1994.
-Atty. Ester S. Garcia, in her capacity as Voluntary Arbitrator, received ALDBE's Position Paper on January 18, 1995.
-LDB, on the other hand, failed to submit its Position Paper
-On May 24, 1995, w ithout LDB's Position Paper, the Voluntary Arbitrator rendered a decision finding that the Bank has not adhered
to the Collective Bargaining Agreement provision nor the Memorandum of Agreement on promotion.
-Hence, this petition
ISSUE
WON the Voluntary Arbitrator erred in finding that the Bank has not adhered to the Collective Bargaining Agreement provision nor
the Memorandum of Agreement on promotion
(the Court referred the case to the CA so the issue w asn’t resolved…it said that elevating a decision or aw ard of a voluntary
arbitrator to the Supreme Court on a petition for certiorari is in effect equating the voluntary arbitrator with the NLRC or the Court of
Appeals, w hich in its view is illogical and imposes an unnecessary burden upon it)
HELD
(only obiter… pertaining to topic)
ART. 260. Grievance machinery and voluntary arb itration. - The parties to a Collective Bargaining Agreement shall
include therein provisions that will ensure the mutual observance of its terms and conditions. They shall establish a
machinery for the adjustment and resolution of grievances arising from the interpretation or implementation of their
Collective Bargaining Agreement and those arising from the interpretation or enforcement of company personnel
policies.
All grievances submitted to the grievance machinery which are not settled within seven (7) calendar days from the
date of its submission shall automatically be referred to voluntary arbitration prescribed in the Collective Bargaining
Agreement.
For this purpose, parties to a Collective Bargaining Agreement shall name and designate in advance a Voluntary
Arbitrator or panel of Voluntary Arbitrators, or include in the agreement a procedure for the selection of such
Voluntary Arbitrator or panel of Voluntary Arbitrators, preferably from the listing of qualified Voluntary Arbitrators duly
accredited by the Board. In case the parties fail to select a Voluntary Arbitrator or panel of Voluntary Arbitrators, the
Board shall designate the Voluntary Arbitrator or panel of Voluntary Arbitrators, as may be necessary, pursuant to the
selection procedure agreed upon in the Collective Bargaining Agreement, which shall act with the same force and
effect as if the Arbitrator or panel of Arbitrators has been selected by the parties as described above.
-In labor law context, arbitration is the reference of a labor dispute to an impartial third person for determination on the basis of
evidence and arguments presented by such parties w ho have bound themselves to accept the decision of the arbitrator as final and
binding.
-Arbitration may either be compulsory or voluntary.
-Compulsory arbitration is a system w hereby the parties to a dispute are compelled by the government to forego their right to strike
and are compelled to accept the resolution of their dispute through arbitration by a third party.
-Under voluntary arbitration, on the other hand, referral of a dispute by the parties is made, pursuant to a voluntary
arbitration clause in their collective agreement, to an im partial third person for a final and binding resolution.
-Ideally, arbitration aw ards are supposed to be complied w ith by both parties w ithout delay, such that once an aw ard has been
rendered by an arbitrator, nothing is left to be done by both parties but to comply w ith the same. After all, they are presumed to have
freely chosen arbitration as the mode of settlement for that particular dispute. Pursuant thereto, they have chosen a mutually
acceptable arbitrator w ho shall hear and decide their case. Above all, they have mutually agreed to de bound by said arbitrator's
decision.
-In the Philippine context, the parties to a Collective Bargaining Agreement (CBA) are required to include therein provisions
for a m achinery for the resolution of grievances arising from the interpretation or implementation of the CBA or company
personnel policies.
-For this purpose, parties to a CBA shall name and designate therein a voluntary arbitrator or a panel of arbitrators, or include a
procedure for their selection, preferably from those accredited by the National Conciliation and Mediation Board (NCMB).
Disposition
The Court resolved to REFER this case to the Court of Appeals
***
G.R. No. 120319 October 6, 1995

vs.
ASSOCIATION OF LUZON DEVELOPMENT BANK EMPLOYEES and ATTY. ESTER S.
GARCIA in her capacity as VOLUNTARY ARBITRATOR, respondents.
ROMERO, J.:
From a submission agreement of the Luzon Development Bank (LDB) and the Association of
Luzon Development Bank Employees (ALDBE) arose an arbitration case to resolve the
following issue:
ALDBE's Position Paper on January 18, 1995. LDB, on the other hand, failed to submit its
Position Paper despite a letter from the Voluntary Arbitrator reminding them to do so. As of May
23, 1995 no Position Paper had been filed by LDB.
Hence, this petition for certiorari and prohibition seeking to set aside the decision of the
Voluntary Arbitrator and to prohibit her from enforcing the same.
determination on the basis of evidence and arguments presented by such parties who have
bound themselves to accept the decision of the arbitrator as final and binding.
government to forego their right to strike and are compelled to accept the resolution of their
dispute through arbitration by a third party. 1 The essence of arbitration remains since a
resolution of a dispute is arrived at by resort to a disinterested third party whose decision is final
and binding on the parties, but in compulsory arbitration, such a third party is normally
appointed by the government.
Under voluntary arbitration, on the other hand, referral of a dispute by the parties is made,
pursuant to a voluntary arbitration clause in their collective agreement, to an impartial third
person for a final and binding resolution. 2 Ideally, arbitration awards are supposed to be
complied with by both parties without delay, such that once an award has been rendered by an
arbitrator, nothing is left to be done by both parties but to comply with the same. After all, they
are presumed to have freely chosen arbitration as the mode of settlement for that particular
dispute. Pursuant thereto, they have chosen a mutually acceptable arbitrator who shall hear and
decide their case. Above all, they have mutually agreed to de bound by said arbitrator's
decision.
parties to a CBA shall name and designate therein a voluntary arbitrator or a panel of
arbitrators, or include a procedure for their selection, preferably from those accredited by the
National Conciliation and Mediation Board (NCMB). Article 261 of the Labor Code accordingly
provides for exclusive original jurisdiction of such voluntary arbitrator or panel of arbitrators over
(1) the interpretation or implementation of the CBA and (2) the interpretation or enforcement of
company personnel policies. Article 262 authorizes them, but only upon agreement of the
parties, to exercise jurisdiction over other labor disputes.
. . . (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:

4. Claims for actual, moral, exemplary and other forms of damages arising from the employer-employee
relations;
xxx xxx xxx
It will thus be noted that the jurisdiction conferred by law on a voluntary arbitrator or a panel of
such arbitrators is quite limited compared to the original jurisdiction of the labor arbiter and the
appellate jurisdiction of the National Labor Relations Commission (NLRC) for that matter. 4 The
state of our present law relating to voluntary arbitration provides that "(t)he award or decision of
the Voluntary Arbitrator . . . shall be final and executory after ten (10) calendar days from receipt
of the copy of the award or decision by the parties," 5 while the "(d)ecision, awards, or orders of
the Labor Arbiter are final and executory unless appealed to the Commission by any or both
parties within ten (10) calendar days from receipt of such decisions, awards, or orders." 6 Hence,
while there is an express mode of appeal from the decision of a labor arbiter, Republic Act No.
6715 is silent with respect to an appeal from the decision of a voluntary arbitrator.
Yet, past practice shows that a decision or award of a voluntary arbitrator is, more often than
not, elevated to the Supreme Court itself on a petition for certiorari, 7 in effect equating the
voluntary arbitrator with the NLRC or the Court of Appeals. In the view of the Court, this is
illogical and imposes an unnecessary burden upon it.
In Volkschel Labor Union, et al. v. NLRC, et al., 8 on the settled premise that the judgments of
courts and awards of quasi-judicial agencies must become final at some definite time, this Court
ruled that the awards of voluntary arbitrators determine the rights of parties; hence, their
decisions have the same legal effect as judgments of a court. In Oceanic Bic Division (FFW), et
al. v. Romero, et al., 9 this Court ruled that "a voluntary arbitrator by the nature of her functions
acts in a quasi-judicial capacity." Under these rulings, it follows that the voluntary arbitrator,
whether acting solely or in a panel, enjoys in law the status of a quasi-judicial agency but
independent of, and apart from, the NLRC since his decisions are not appealable to the latter. 10
xxx xxx xxx
(B) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders or awards of
Regional Trial Courts and quasi-judicial agencies, instrumentalities, boards or commissions, including the
Securities and Exchange Commission, the Employees Compensation Commission and the Civil Service
Commission, except those falling within the appellate jurisdiction of the Supreme Court in accordance
with the Constitution, the Labor Code of the Philippines under Presidential Decree No. 442, as amended,
the provisions of this Act, and of subparagraph (1) of the third paragraph and subparagraph (4) of the
fourth paragraph of Section 17 of the Judiciary Act of 1948.
xxx xxx xxx
Assuming arguendo that the voluntary arbitrator or the panel of voluntary arbitrators may not
strictly be considered as a quasi-judicial agency, board or commission, still both he and the
panel are comprehended within the concept of a "quasi-judicial instrumentality." It may even be
stated that it was to meet the very situation presented by the quasi-judicial functions of the
voluntary arbitrators here, as well as the subsequent arbitrator/arbitral tribunal operating under
the Construction Industry Arbitration Commission, 11 that the broader term "instrumentalities"
was purposely included in the above-quoted provision.
"agency" or "instrumentality" are synonymous in the sense that either of them is a means by
which a government acts, or by which a certain government act or function is performed. 13 The
word "instrumentality," with respect to a state, contemplates an authority to which the state
delegates governmental power for the performance of a state function. 14 An individual person,
like an administrator or executor, is a judicial instrumentality in the settling of an estate, 15 in the
same manner that a sub-agent appointed by a bankruptcy court is an instrumentality of the
court, 16 and a trustee in bankruptcy of a defunct corporation is an instrumentality of the state. 17
delegated to him under the provisions therefor in the Labor Code and he falls, therefore, within
the contemplation of the term "instrumentality" in the aforequoted Sec. 9 of B.P. 129. The fact

the contemplation of the term "instrumentality" in the aforequoted Sec. 9 of B.P. 129. The fact
that his functions and powers are provided for in the Labor Code does not place him within the
exceptions to said Sec. 9 since he is a quasi-judicial instrumentality as contemplated therein. It
will be noted that, although the Employees Compensation Commission is also provided for in
the Labor Code, Circular No. 1-91, which is the forerunner of the present Revised Administrative
Circular No. 1-95, laid down the procedure for the appealability of its decisions to the Court of
Appeals under the foregoing rationalization, and this was later adopted by Republic Act No.
7902 in amending Sec. 9 of B.P. 129.
A fortiori, the decision or award of the voluntary arbitrator or panel of arbitrators should likewise
be appealable to the Court of Appeals, in line with the procedure outlined in Revised
Administrative Circular No. 1-95, just like those of the quasi-judicial agencies, boards and
commissions enumerated therein.
provide a uniform procedure for the appellate review of adjudications of all quasi-judicial entities
18 not expressly excepted from the coverage of Sec. 9 of B.P. 129 by either the Constitution or
another statute. Nor will it run counter to the legislative intendment that decisions of the NLRC
be reviewable directly by the Supreme Court since, precisely, the cases within the adjudicative
competence of the voluntary arbitrator are excluded from the jurisdiction of the NLRC or the
labor arbiter.
In the same vein, it is worth mentioning that under Section 22 of Republic Act No. 876, also
known as the Arbitration Law, arbitration is deemed a special proceeding of which the court
specified in the contract or submission, or if none be specified, the Regional Trial Court for the
province or city in which one of the parties resides or is doing business, or in which the
arbitration is held, shall have jurisdiction. A party to the controversy may, at any time within one
(1) month after an award is made, apply to the court having jurisdiction for an order confirming
the award and the court must grant such order unless the award is vacated, modified or
corrected. 19
In effect, this equates the award or decision of the voluntary arbitrator with that of the regional
trial court. Consequently, in a petition for certiorari from that award or decision, the Court of
Appeals must be deemed to have concurrent jurisdiction with the Supreme Court. As a matter of
policy, this Court shall henceforth remand to the Court of Appeals petitions of this nature for
proper disposition.
SO ORDERED.
Footnotes
2 Ibid.
7 Oceanic Bic Division (FFW), et al. v. Romero, et al., 130 SCRA 392 (1984); Sime Darby Pilipinas, Inc.
v. Magsalin, et al., 180 SCRA 177 (1989).
8 98 SCRA 314 (1980).
9 Supra.
12 Laurens Federal Sav. and Loan Ass'n v. South Carolina Tax Commission, 112 S.E. 2d 716, 719, 236
S.C. 2.
19 Section 23, R.A. No. 876.

q=cache:Eiet7jdRgsIJ:www.lawphil.net/judjuris/juri1995/oct1995/gr_120319_
1995.html+LUZON+DEVELOPMENT+BANK+V+ASSOCIATION+OF+DEVELOPMENT+BANK+EMPLOYEES&cd=1
&hl=en&ct=clnk&ie=UTF-8>

September 29 Labor Arbitration Class Notes
6:40 PM
"Free and blameless/harmless clause" - clause in the CBA in relation to the Union security Clause which
provides that in the event the ER terminates the services of the employee who the Union finds to be not
anymore in good standing in the Union, the ER would not be liable for any claims by the employee
Del Monte Case

-importance: determines which body has exclusive jurisdiction in determining disputes
-here: CBA provision, should be VA
Imperial Textile Case

-functus officio
What is controlling now, because of conflicting rulings, that the new rules provide (in the revised
procedural guidelines in the conduct of voluntary arbitration proceedings):
Once the aggrieved party receives unfavorable ruling, no MR needed to be filed before VA w/n 10 days!
Leading case: Malayan Insurance Case before CA
-what would happen when he files a MR: period would lapse...
Continental Marble v. NLRC

VA's decision usually final and unappealable unless GADALEJ - here no substantial evidence to support
Nasayao's claim that he is an employee
In the Imperial Textile Case v. Sumpang, Sumpang is a Labor Arbitrator

In Manila Central Line Corporation v. Manila Central Line Free Workers Union - A labor arbitrator was
chosen by the parties as voluntary arbitrator
-inthis case, court held that the parties are not precluded from choosing a labor arbitrator as the chosen
voluntary arbitrator
-at the time it was decided, the rules were not as clear cut as the rules we have now.
-when this decision came, there's a DOLE DO prohibiting labor arbiters from accepting cases and
deciding them as VA
A217: LA's jurisdiction
Debate
LA is expressly prohibited by DOLE to accept VA position. But parties wanted so much LA to be their VA,
and so LA did so. Is there something wrong?
2 situations:
1. LA hired as VA from the start under Voluntary arbitration proceedings.
2. Compulsory arbitration first but converted to VA
• Parties have a case, decide to resolve dispute to VA. Chose impartial 3P. BUT 3P is not a duly accredited
arbitrator. Is this allowed?
>>>
Note: now, there is no distinction between conciliation and mediation. Even if you are a conciliator,
you're not prohibited from mediating!
Source of VA is the PAVA list (accredited arbitrators)

Source of VA is the PAVA list (accredited arbitrators)

Manila Central Line Corp vs. Manila Central Line Free Workers,
supra
11:49 PM

Sevilla Trading v. Semana
11:52 PM
SECOND DIVISION
[G.R. No. 152456. April 28, 2004]
SEVILLA TRADING COMPANY, petitioner, vs. A.V.A. TOMAS E. SEMANA, SEVILLA TRADING WORKERS
UNION–SUPER, respondents.
DE C I S I O N
PUNO, J.:
On appeal is the Decision[1] of the Court of Appeals in CA-G.R. SP No. 63086 dated 27 November 2001
sustaining the Decision[2] of Accredited Voluntary Arbitrator Tomas E. Semana dated 13 November 2000,
as well as its subsequent Resolution[3] dated 06 March 2002 denying petitioner’s Motion for
Reconsideration.
The facts of the case are as follows:
For two to three years prior to 1999, petitioner Sevilla Trading Company (Sevilla Trading, for short), a
domestic corporation engaged in trading business, organized and existing under Philippine laws, added
to the base figure, in its computation of the 13th-month pay of its employees, the amount of other
benefits received by the employees which are beyond the basic pay. These benefits included:
(a) Overtime premium for regular overtime, legal and special holidays;
(b) Legal holiday pay, premium pay for special holidays;
(c) Night premium;
(d) Bereavement leave pay;
(e) Union leave pay;
(f) Maternity leave pay;
(g) Paternity leave pay;
(h) Company vacation and sick leave pay; and
(i) Cash conversion of unused company vacation and sick leave.
Petitioner claimed that it entrusted the preparation of the payroll to its office staff, including the
computation and payment of the 13th-month pay and other benefits. When it changed its person in
charge of the payroll in the process of computerizing its payroll, and after audit was conducted, it
allegedly discovered the error of including non-basic pay or other benefits in the base figure used in the
computation of the 13th-month pay of its employees. It cited the Rules and Regulations Implementing
P.D. No. 851 (13th-Month Pay Law), effective December 22, 1975, Sec. 2(b) which stated that:
“Basic salary” shall include all remunerations or earnings paid by an employer to an employee for
services rendered but may not include cost-of-living allowances granted pursuant to P.D. No. 525 or
Letter of Instruction No. 174, profit-sharing payments, and all allowances and monetary benefits which
are not considered or integrated as part of the regular or basic salary of the employee at the time of the
promulgation of the Decree on December 16, 1975.
Petitioner then effected a change in the computation of the thirteenth month pay, as follows:
13th-month pay = net basic pay
12 months
where:
net basic pay = gross pay – (non-basic pay or other benefits)
Now excluded from the base figure used in the computation of the thirteenth month pay are the
following:
a) Overtime premium for regular overtime, legal and special holidays;
b) Legal holiday pay, premium pay for special holidays;
c) Night premium;
d) Bereavement leave pay;
e) Union leave pay;
f) Maternity leave pay;
g) Paternity leave pay;

g) Paternity leave pay;
h) Company vacation and sick leave pay; and
i) Cash conversion of unused vacation/sick leave.
Hence, the new computation reduced the employees’ thirteenth month pay. The daily piece-rate
workers represented by private respondent Sevilla Trading Workers Union – SUPER (Union, for short), a
duly organized and registered union, through the Grievance Machinery in their Collective Bargaining
Agreement, contested the new computation and reduction of their thirteenth month pay. The parties
failed to resolve the issue.
On March 24, 2000, the parties submitted the issue of “whether or not the exclusion of leaves and other
related benefits in the computation of 13th-month pay is valid” to respondent Accredited Voluntary
Arbitrator Tomas E. Semana (A.V.A. Semana, for short) of the National Conciliation and Mediation
Board, for consideration and resolution.
The Union alleged that petitioner violated the rule prohibiting the elimination or diminution of
employees’ benefits as provided for in Art. 100 of the Labor Code, as amended. They claimed that paid
leaves, like sick leave, vacation leave, paternity leave, union leave, bereavement leave, holiday pay and
other leaves with pay in the CBA should be included in the base figure in the computation of their 13th-
month pay.
On the other hand, petitioner insisted that the computation of the 13th-month pay is based on basic
salary, excluding benefits such as leaves with pay, as per P.D. No. 851, as amended. It maintained that,
in adjusting its computation of the 13th-month pay, it merely rectified the mistake its personnel
committed in the previous years.
A.V.A. Semana decided in favor of the Union. The dispositive portion of his Decision reads as follows:
WHEREFORE, premises considered, this Voluntary Arbitrator hereby declared that:
1. The company is hereby ordered to include sick leave and vacation leave, paternity leave, union
leave, bereavement leave and other leave with pay in the CBA, premium for work done on rest days and
special holidays, and pay for regular holidays in the computation of the 13th-month pay to all covered
and entitled employees;
2. The company is hereby ordered to pay corresponding backwages to all covered and entitled
employees arising from the exclusion of said benefits in the computation of 13th-month pay for the year
1999.
Petitioner received a copy of the Decision of the Arbitrator on December 20, 2000. It filed before the
Court of Appeals, a “Manifestation and Motion for Time to File Petition for Certiorari” on January 19,
2001. A month later, on February 19, 2001, it filed its Petition for Certiorari under Rule 65 of the 1997
Rules of Civil Procedure for the nullification of the Decision of the Arbitrator. In addition to its earlier
allegations, petitioner claimed that assuming the old computation will be upheld, the reversal to the old
computation can only be made to the extent of including non-basic benefits actually included by
petitioner in the base figure in the computation of their 13th-month pay in the prior years. It must
exclude those non-basic benefits which, in the first place, were not included in the original
computation. The appellate court denied due course to, and dismissed the petition.
Hence, this appeal. Petitioner Sevilla Trading enumerates the grounds of its appeal, as follows:
1. THE DECISION OF THE RESPONDENT COURT TO REVERT TO THE OLD COMPUTATION OF THE 13TH-
MONTH PAY ON THE BASIS THAT THE OLD COMPUTATION HAD RIPENED INTO PRACTICE IS WITHOUT
LEGAL BASIS.
2. IF SUCH BE THE CASE, COMPANIES HAVE NO MEANS TO CORRECT ERRORS IN COMPUTATION WHICH
WILL CAUSE GRAVE AND IRREPARABLE DAMAGE TO EMPLOYERS.[4]
First, we uphold the Court of Appeals in ruling that the proper remedy from the adverse decision of the
arbitrator is a petition for review under Rule 43 of the 1997 Rules of Civil Procedure, not a petition for
certiorari under Rule 65. Section 1 of Rule 43 states:
RULE 43
Appeals from the Court of Tax Appeals and
Quasi-Judicial Agencies to the Court of Appeals
SECTION 1. Scope. — This Rule shall apply to appeals from judgments or final orders of the Court of Tax
Appeals and from awards, judgments, final orders or resolutions of or authorized by any quasi-judicial
agency in the exercise of its quasi-judicial functions. Among these agencies are the Civil Service
Commission, Central Board of Assessment Appeals, Securities and Exchange Commission, Office of the

Commission, Central Board of Assessment Appeals, Securities and Exchange Commission, Office of the
President, Land Registration Authority, Social Security Commission, Civil Aeronautics Board, Bureau of
Patents, Trademarks and Technology Transfer, National Electrification Administration, Energy
Regulatory Board, National Telecommunications Commission, Department of Agrarian Reform under
Republic Act No. 6657, Government Service Insurance System, Employees Compensation Commission,
Agricultural Inventions Board, Insurance Commission, Philippine Atomic Energy Commission, Board of
Investments, Construction Industry Arbitration Commission, and voluntary arbitrators authorized by
law. [Emphasis supplied.]
It is elementary that the special civil action of certiorari under Rule 65 is not, and cannot be a substitute
for an appeal, where the latter remedy is available, as it was in this case. Petitioner Sevilla Trading failed
to file an appeal within the fifteen-day reglementary period from its notice of the adverse decision of
A.V.A. Semana. It received a copy of the decision of A.V.A. Semana on December 20, 2000, and should
have filed its appeal under Rule 43 of the 1997 Rules of Civil Procedure on or before January 4,
2001. Instead, petitioner filed on January 19, 2001 a “Manifestation and Motion for Time to File Petition
for Certiorari,” and on February 19, 2001, it filed a petition for certiorari under Rule 65 of the 1997 Rules
of Civil Procedure. Clearly, petitioner Sevilla Trading had a remedy of appeal but failed to use it.
A special civil action under Rule 65 of the Rules of Court will not be a cure for failure to timely file a
petition for review on certiorari under Rule 45 (Rule 43, in the case at bar) of the Rules of Court. Rule 65
is an independent action that cannot be availed of as a substitute for the lost remedy of an ordinary
appeal, including that under Rule 45 (Rule 43, in the case at bar), especially if such loss or lapse was
occasioned by one’s own neglect or error in the choice of remedies.[5]
Thus, the decision of A.V.A. Semana had become final and executory when petitioner Sevilla Trading
filed its petition for certiorari on February 19, 2001. More particularly, the decision of A.V.A. Semana
became final and executory upon the lapse of the fifteen-day reglementary period to appeal, or on
January 5, 2001. Hence, the Court of Appeals is correct in holding that it no longer had appellate
jurisdiction to alter, or much less, nullify the decision of A.V.A. Semana.
Even assuming that the present petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure
is a proper action, we still find no grave abuse of discretion amounting to lack or excess of jurisdiction
committed by A.V.A. Semana. “Grave abuse of discretion” has been interpreted to mean “such
capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction, or, in other words
where the power is exercised in an arbitrary or despotic manner by reason of passion or personal
hostility, and it must be so patent and gross as to amount to an evasion of positive duty or to a virtual
refusal to perform the duty enjoined or to act at all in contemplation of law.”[6] We find nothing of that
sort in the case at bar.
On the contrary, we find the decision of A.V.A. Semana to be sound, valid, and in accord with law and
jurisprudence. A.V.A. Semana is correct in holding that petitioner’s stance of mistake or error in the
computation of the thirteenth month pay is unmeritorious. Petitioner’s submission of financial
statements every year requires the services of a certified public accountant to audit its finances. It is
quite impossible to suggest that they have discovered the alleged error in the payroll only in 1999. This
implies that in previous years it does not know its cost of labor and operations. This is merely basic cost
accounting. Also, petitioner failed to adduce any other relevant evidence to support its
contention. Aside from its bare claim of mistake or error in the computation of the thirteenth month
pay, petitioner merely appended to its petition a copy of the 1997-2002 Collective Bargaining
Agreement and an alleged “corrected” computation of the thirteenth month pay. There was no
explanation whatsoever why its inclusion of non-basic benefits in the base figure in the computation of
their 13th-month pay in the prior years was made by mistake, despite the clarity of statute and
jurisprudence at that time.
The instant case needs to be distinguished from Globe Mackay Cable and Radio Corp. vs. NLRC,[7] which
petitioner Sevilla Trading invokes. In that case, this Court decided on the proper computation of the
cost-of-living allowance (COLA) for monthly-paid employees. Petitioner Corporation, pursuant to Wage
Order No. 6 (effective 30 October 1984), increased the COLA of its monthly-paid employees by
multiplying the P3.00 daily COLA by 22 days, which is the number of working days in the company. The
Union disagreed with the computation, claiming that the daily COLA rate of P3.00 should be multiplied
by 30 days, which has been the practice of the company for several years. We upheld the contention of
the petitioner corporation. To answer the Union’s contention of company practice, we ruled that:

the petitioner corporation. To answer the Union’s contention of company practice, we ruled that:
Payment in full by Petitioner Corporation of the COLA before the execution of the CBA in 1982 and in
compliance with Wage Orders Nos. 1 (26 March 1981) to 5 (11 June 1984), should not be construed as
constitutive of voluntary employer practice, which cannot now be unilaterally withdrawn by
petitioner. To be considered as such, it should have been practiced over a long period of time, and must
be shown to have been consistent and deliberate . . . The test of long practice has been enunciated
thus:
. . . Respondent Company agreed to continue giving holiday pay knowing fully well that said employees
are not covered by the law requiring payment of holiday pay.” (Oceanic Pharmacal Employees Union
[FFW] vs. Inciong, 94 SCRA 270 [1979])
Moreover, before Wage Order No. 4, there was lack of administrative guidelines for the implementation
of the Wage Orders. It was only when the Rules Implementing Wage Order No. 4 were issued on 21
May 1984 that a formula for the conversion of the daily allowance to its monthly equivalent was laid
down.
Absent clear administrative guidelines, Petitioner Corporation cannot be faulted for erroneous
application of the law . . .
In the above quoted case, the grant by the employer of benefits through an erroneous application of the
law due to absence of clear administrative guidelines is not considered a voluntary act which cannot be
unilaterally discontinued. Such is not the case now. In the case at bar, the Court of Appeals is correct
when it pointed out that as early as 1981, this Court has held in San Miguel Corporation vs. Inciong[8]
that:
Under Presidential Decree 851 and its implementing rules, the basic salary of an employee is used as the
basis in the determination of his 13th-month pay. Any compensations or remunerations which are
deemed not part of the basic pay is excluded as basis in the computation of the mandatory bonus.
Under the Rules and Regulations Implementing Presidential Decree 851, the following compensations
are deemed not part of the basic salary:
a) Cost-of-living allowances granted pursuant to Presidential Decree 525 and Letter of Instruction No.
174;
b) Profit sharing payments;
c) All allowances and monetary benefits which are not considered or integrated as part of the regular
basic salary of the employee at the time of the promulgation of the Decree on December 16, 1975.
Under a later set of Supplementary Rules and Regulations Implementing Presidential Decree 851 issued
by the then Labor Secretary Blas Ople, overtime pay, earnings and other remunerations are excluded as
part of the basic salary and in the computation of the 13th-month pay.
The exclusion of cost-of-living allowances under Presidential Decree 525 and Letter of Instruction No.
174 and profit sharing payments indicate the intention to strip basic salary of other payments which are
properly considered as “fringe” benefits. Likewise, the catch-all exclusionary phrase “all allowances and
monetary benefits which are not considered or integrated as part of the basic salary” shows also the
intention to strip basic salary of any and all additions which may be in the form of allowances or “fringe”
benefits.
Moreover, the Supplementary Rules and Regulations Implementing Presidential Decree 851 is even
more empathic in declaring that earnings and other remunerations which are not part of the basic salary
shall not be included in the computation of the 13th-month pay.
While doubt may have been created by the prior Rules and Regulations Implementing Presidential
Decree 851 which defines basic salary to include all remunerations or earnings paid by an employer to
an employee, this cloud is dissipated in the later and more controlling Supplementary Rules and
Regulations which categorically, exclude from the definition of basic salary earnings and other
remunerations paid by employer to an employee. A cursory perusal of the two sets of Rules indicates
that what has hitherto been the subject of a broad inclusion is now a subject of broad exclusion. The
Supplementary Rules and Regulations cure the seeming tendency of the former rules to include all
remunerations and earnings within the definition of basic salary.
The all-embracing phrase “earnings and other remunerations” which are deemed not part of the basic
salary includes within its meaning payments for sick, vacation, or maternity leaves, premium for works
performed on rest days and special holidays, pay for regular holidays and night differentials. As such
they are deemed not part of the basic salary and shall not be considered in the computation of the 13th-

they are deemed not part of the basic salary and shall not be considered in the computation of the 13th-
month pay. If they were not so excluded, it is hard to find any “earnings and other remunerations”
expressly excluded in the computation of the 13th-month pay. Then the exclusionary provision would
prove to be idle and with no purpose.
In the light of the clear ruling of this Court, there is, thus no reason for any mistake in the construction
or application of the law. When petitioner Sevilla Trading still included over the years non-basic benefits
of its employees, such as maternity leave pay, cash equivalent of unused vacation and sick leave, among
others in the computation of the 13th-month pay, this may only be construed as a voluntary act on its
part. Putting the blame on the petitioner’s payroll personnel is inexcusable.
In Davao Fruits Corporation vs. Associated Labor Unions, we likewise held that:[9]
The “Supplementary Rules and Regulations Implementing P.D. No. 851” which put to rest all doubts in
the computation of the thirteenth month pay, was issued by the Secretary of Labor as early as January
16, 1976, barely one month after the effectivity of P.D. No. 851 and its Implementing Rules. And yet,
petitioner computed and paid the thirteenth month pay, without excluding the subject items therein
until 1981. Petitioner continued its practice in December 1981, after promulgation of the aforequoted
San Miguel decision on February 24, 1981, when petitioner purportedly “discovered” its mistake.
From 1975 to 1981, petitioner had freely, voluntarily and continuously included in the computation of
its employees’ thirteenth month pay, without the payments for sick, vacation and maternity leave,
premium for work done on rest days and special holidays, and pay for regular holidays. The
considerable length of time the questioned items had been included by petitioner indicates a unilateral
and voluntary act on its part, sufficient in itself to negate any claim of mistake.
A company practice favorable to the employees had indeed been established and the payments made
pursuant thereto, ripened into benefits enjoyed by them. And any benefit and supplement being
enjoyed by the employees cannot be reduced, diminished, discontinued or eliminated by the employer,
by virtue of Sec. 10 of the Rules and Regulations Implementing P.D. No. 851, and Art. 100 of the Labor
Code of the Philippines which prohibit the diminution or elimination by the employer of the employees’
existing benefits. [Tiangco vs. Leogardo, Jr., 122 SCRA 267 (1983)]
With regard to the length of time the company practice should have been exercised to constitute
voluntary employer practice which cannot be unilaterally withdrawn by the employer, we hold that
jurisprudence has not laid down any rule requiring a specific minimum number of years. In the above
quoted case of Davao Fruits Corporation vs. Associated Labor Unions,[10] the company practice lasted
for six (6) years. In another case, Davao Integrated Port Stevedoring Services vs. Abarquez,[11] the
employer, for three (3) years and nine (9) months, approved the commutation to cash of the unenjoyed
portion of the sick leave with pay benefits of its intermittent workers. While in Tiangco vs. Leogardo,
Jr.,[12] the employer carried on the practice of giving a fixed monthly emergency allowance from
November 1976 to February 1980, or three (3) years and four (4) months. In all these cases, this Court
held that the grant of these benefits has ripened into company practice or policy which cannot be
peremptorily withdrawn. In the case at bar, petitioner Sevilla Trading kept the practice of including non-
basic benefits such as paid leaves for unused sick leave and vacation leave in the computation of their
13th-month pay for at least two (2) years. This, we rule likewise constitutes voluntary employer practice
which cannot be unilaterally withdrawn by the employer without violating Art. 100 of the Labor Code:
Art. 100. Prohibition against elimination or diminution of benefits. –Nothing in this Book shall be
construed to eliminate or in any way diminish supplements, or other employee benefits being enjoyed
at the time of promulgation of this Code.
IN VIEW WHEREOF, the petition is DENIED. The Decision of the Court of Appeals in CA-G.R. SP No.
63086 dated 27 November 2001 and its Resolution dated 06 March 2002 are hereby AFFIRMED.
SO ORDERED.
Quisumbing, Austria-Martinez, and Tinga, JJ., concur.
Callejo, Sr., J., no part.
[1] CA Rollo, pp. 124-134.

[2] CA Rollo, pp. 31-43.
[3] Rollo, p. 141.
[4] Rollo, p. 22.

[4] Rollo, p. 22.
[5] National Irrigation Administration vs. Court of Appeals, 318 SCRA 255,
265 (1999).
[6] Concurring Opinion of Justice Angelina Sandoval-Gutierrez in the consolidated cases of Tecson vs.
COMELEC, G.R. No. 161434, Velez vs. Poe, G.R. No. 161634, and Fornier vs. COMELEC, G.R. No. 161824,
03 March 2004, citing Benito vs. COMELEC, 349 SCRA 705 (2001).
[7] 163 SCRA 71 (1988).
[8] 103 SCRA 139 (1981).
[9] 225 SCRA 562 (1993).
[10] Ibid.
[11] 220 SCRA 197 (1993).
[12] 122 SCRA 267 (1983).
Pasted from <http://sc.judiciary.gov.ph/jurisprudence/2004/apr2004/152456.htm>

United Kimberly Clark Employees Union v. KCPI, supra
11:53 PM

Leyte IV Electric Cooperative vs. Luyeco IV Employees Union
11:54 PM

Supreme Court
Manila
THIRD DIVISION
LEYTE IV ELECTRIC G.R. No. 157775

COOPERATIVE, INC.,
Petitioner, Present:
YNARES-SANTIAGO, J.,
Chairperson,
- versus - AUSTRIA-MARTINEZ,
CHICO-NAZARIO,
NACHURA, and
REYES, JJ.
LEYECO IV Employees Union-
ALU, Promulgated:
Respondent. October 19, 2007
x- - - - - - - - - - -- - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - -- - - - x
DEC I S IO N
AUSTRIA-MARTINEZ, J.:
Before the Court is a Petition for Review on Certiorari under Rule 45 of the
Rules of Court assailing the Resolution[1] dated September 4, 2002 of the
Court of Appeals (CA) in CA-G.R. SP No. 72336 which dismissed outright
petitioner's Petition for Certiorari for adopting a wrong mode of appeal and
the CA Resolution[2] dated February 28, 2003 which denied petitioner's
the CA Resolution[2] dated February 28, 2003 which denied petitioner's
Motion for Reconsideration.
The facts:
On April 6, 1998, Leyte IV Electric Cooperative, Inc. (petitioner) and Leyeco IV
Employees Union-ALU (respondent) entered into a Collective Bargaining
Agreement (CBA)[3] covering petitioner rank-and-file employees, for a period
of five (5) years effective January 1, 1998.
On June 7, 2000, respondent, through its Regional Vice-President, Vicente P.

Casilan, sent a letter to petitioner demanding holiday pay for all employees,
as provided for in the CBA.[4]
On June 20, 2000, petitioner, through its legal counsel, sent a letter-reply to
Casilan, explaining that after perusing all available pay slips, it found that it
had paid all employees all the holiday pays enumerated in the CBA.[5]
After exhausting the procedures of the grievance machinery, the parties

agreed to submit the issues of the interpretation and implementation of
Section 2, Article VIII of the CBA on the payment of holiday pay, for
arbitration of the National Conciliation and Mediation Board (NCMB),
Regional Office No. VIII in Tacloban City.[6] The parties were required to
submit their respective position papers, after which the dispute was
submitted for decision.
While admitting in its Position Paper[7] that the employees were paid all of
the days of the month even if there was no work, respondent alleged that it
is not prevented from making separate demands for the payment of regular
holidays concomitant with the provisions of the CBA, with its supporting
documents consisting of a letter demanding payment of holiday pay,
petitioner's reply thereto and respondent's rejoinder, a computation in the
amount of P1,054,393.07 for the unpaid legal holidays, and several pay slips.
Petitioner, on the other hand, in its Position Paper,[8] insisted payment of

the holiday pay in compliance with the CBA provisions, stating that payment
was presumed since the formula used in determining the daily rate of pay of
the covered employees is Basic Monthly Salary divided by 30 days or Basic
Monthly Salary multiplied by 12 divided by 360 days, thus with said formula,
the employees are already paid their regular and special days, the days when
no work is done, the 51 un-worked Sundays and the 51 un-worked Saturdays.
On March 1, 2001, Voluntary Arbitrator Antonio C. Lopez, Jr. rendered a

Decision[9] in favor of respondent, holding petitioner liable for payment of
unpaid holidays from 1998 to 2000 in the sum of P1,054,393.07. He
reasoned that petitioner miserably failed to show that it complied with the
CBA mandate that holiday pay be “reflected during any payroll period of
occurrence” since the payroll slips did not reflect any payment of the paid
holidays. He found unacceptable not only petitioner's presumption of
payment of holiday pay based on a formula used in determining and
computing the daily rate of each covered employee, but also petitioner's
further submission that the rate of its employees is not less than the
statutory minimum wage multiplied by 365 days and divided by twelve.
On April 11, 2001, petitioner filed a Motion for Reconsideration[10] but it

was denied by the Voluntary Arbitrator in a Resolution[11] dated June 17,
2002. Petitioner received said Resolution on June 27, 2002.[12]
Thirty days later, or on July 27, 2002,[13] petitioner filed a Petition for
Certiorari[14] in the CA, ascribing grave abuse of discretion amounting to lack
of jurisdiction to the Voluntary Arbitrator: (a) for ignoring that in said
company the divisor for computing the applicable daily rate of rank-and-file
employees is 360 days which already includes payment of 13 un-worked
regular holidays under Section 2, Article VIII of the CBA;[15] and (b) for
holding the petitioner liable for the unpaid holidays just because the payroll
slips submitted as evidence did not show any payment for the regular
holidays.[16]
In a Resolution[17] dated September 4, 2002, the CA dismissed outright

petitioner's Petition for Certiorari for adopting a wrong mode of appeal. It
reasoned:
Considering that what is assailed in the present recourse is a Decision of a Voluntary

Arbitrator, the proper remedy is a petition for review under Rule 43 of the 1997 Rules of
Civil Procedure; hence, the present petition for certiorari under Rule 65 filed on August 15,
2002, should be rejected, as such a petition cannot be a substitute for a lost appeal. And in
this case, the period for appeal via a petition for review has already lapsed since the
petitioner received a copy of the Resolution denying its motion for reconsideration on June
27, 2002, so that its last day to appeal lapsed on July 12, 2002.
x x x x[18]
Petitioner filed a Motion for Reconsideration[19] but it was denied by the CA

in a Resolution[20] dated February 28, 2003.
Hence, the present petition anchored on the following grounds:
(1) The Honorable Court of Appeals erred in rejecting the petition for certiorari under Rule 65 of

(1) The Honorable Court of Appeals erred in rejecting the petition for certiorari under Rule 65 of
the Rules of Court filed by herein petitioner to assail the Decision of the Voluntary Arbitrator. [21]
(2) Even if decisions of voluntary arbitrator or panel of voluntary arbitrators are appealable to the
Honorable Court of Appeals under Rule 43, a petition for certiorari under Rule 65 is still available if
it is grounded on grave abuse of discretion. Hence, the Honorable Court of Appeals erred in
rejecting the petition for certiorari under Rule 65 of the Rules of Court filed by herein
petitioner.[22]
(3) The Honorable Court of Appeals erred in refusing to rule on the legal issue presented by
herein petitioner in the petition for certiorari that it had filed and in putting emphasis instead on a
technicality of procedure. The legal issues needs a clear-cut ruling by this Honorable Court for the
guidance of herein petitioner and private respondent. [23]
Petitioner contends that Rule 65 of the Rules of Court is the applicable mode
of appeal to the CA from judgments issued by a voluntary arbitrator since
Rule 43 only allows appeal from judgments of particular quasi-judicial
agencies and voluntary arbitrators authorized by law and not those
judgments and orders issued under the Labor Code; that the petition before
the CA did not raise issues of fact but was founded on jurisdictional issues
and, therefore, reviewable through a special civil action for certiorari under
Rule 65; that technicalities of law and procedure should not be utilized to
subvert the ends of substantial justice.
In its Comment,[24] respondent avers that Luzon Development Bank v.

Association of Luzon Development Bank Employees[25] laid down the
prevailing rule that judgments of the Voluntary Arbitrator are appealable to
the CA under Section 1, Rule 43 of the Rules of Court; that having failed to
file the appropriate remedy due to the lapse of the appeal period, petitioner
cannot simply invoke Rule 65 for its own convenience, as an alternative
remedy.
In its Reply,[26] petitioner submits that the ruling in Luzon Development Bank
does not expressly exclude the filing of a petition for certiorari under Rule 65
of the Rules of Court to assail a decision of a voluntary arbitrator. It
reiterates that technicalities of law and procedure should not be utilized to
subvert the ends of substantial justice.
It has long been settled in the landmark case Luzon Development Bank that a
voluntary arbitrator, whether acting solely or in a panel, enjoys in law the status
of a quasi-judicial agency; hence, his decisions and awards are appealable to the
CA. This is so because the awards of voluntary arbitrators become final and
executory upon the lapse of the period to appeal;[27] and since their awards
determine the rights of parties, their decisions have the same effect as judgments

of a court. Therefore, the proper remedy from an award of a voluntary arbitrator
is a petition for review to the CA, following Revised Administrative Circular No.
1-95, which provided for a uniform procedure for appellate review of all
adjudications of quasi-judicial entities, which is now embodied in Section 1, Rule
43 of the 1997 Rules of Civil Procedure, which reads:
SECTION 1. Scope. — This Rule shall apply to appeals from judgments or final orders of the
Court of Tax Appeals and from awards, judgments, final orders or resolutions of or
authorized by any quasi-judicial agency in the exercise of its quasi-judicial functions. Among
these agencies are the Civil Service Commission, Central Board of Assessment Appeals,
Securities and Exchange Commission, Office of the President, Land Registration Authority,
Social Security Commission, Civil Aeronautics Board, Bureau of Patents, Trademarks and
Technology Transfer, National Electrification Administration, Energy Regulatory Board,
National Telecommunications Commission, Department of Agrarian Reform under Republic
Act No. 6657, Government Service Insurance System, Employees Compensation
Commission, Agricultural Inventions Board, Insurance Commission, Philippine Atomic Energy
Commission, Board of Investments, Construction Industry Arbitration Commission, and
voluntary arbitrators authorized by law.[28] (Emphasis supplied)
Section 2, Rule 43 of the 1997 Rules of Civil Procedure which provides that:
SEC. 2. Cases not covered. - This Rule shall not apply to judgments or final orders issued
under the Labor Code of the Philippines.
did not alter the Court's ruling in Luzon Development Bank. Section 2, Rule 42 of
the 1997 Rules of Civil Procedure, is nothing more than a reiteration of the
exception to the exclusive appellate jurisdiction of the CA,[29] as provided for in
Section 9, Batas Pambansa Blg. 129,[30] as amended by Republic Act No.
7902:[31]
(3) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders or
awards of Regional Trial Courts and quasi-judicial agencies, instrumentalities, boards or
commissions, including the Securities and Exchange Commission, the Employees’
Compensation Commission and the Civil Service Commission, except those falling within
the appellate jurisdiction of the Supreme Court in accordance with the Constitution, the
Labor Code of the Philippines under Presidential Decree No. 442, as amended, the
provisions of this Act and of subparagraph (1) of the third paragraph and subparagraph (4)
of the fourth paragraph of Section 17 of the Judiciary Act of 1948.
The Court took into account this exception in Luzon Development Bank but,
nevertheless, held that the decisions of voluntary arbitrators issued pursuant
to the Labor Code do not come within its ambit, thus:
x x x. The fact that *the voluntary arbitrator’s+ functions and powers are provided for in the
Labor Code does not place him within the exceptions to said Sec. 9 since he is a quasi-
judicial instrumentality as contemplated therein. It will be noted that, although the
Employees’ Compensation Commission is also provided for in the Labor Code, Circular No.
1-91, which is the forerunner of the present Revised Administrative Circular No. 1-95, laid
down the procedure for the appealability of its decisions to the Court of Appeals under the
foregoing rationalization, and this was later adopted by Republic Act No. 7902 in amending

foregoing rationalization, and this was later adopted by Republic Act No. 7902 in amending
Sec. 9 of B.P. 129.
A fortiori, the decision or award of the voluntary arbitrator or panel of arbitrators should
likewise be appealable to the Court of Appeals, in line with the procedure outlined in
Revised Administrative Circular No. 1-95, just like those of the quasi-judicial agencies,
boards and commissions enumerated therein.
This would be in furtherance of, and consistent with, the original purpose of Circular No.
1-91 to provide a uniform procedure for the appellate review of adjudications of all quasi-
judicial entities not expressly excepted from the coverage of Sec. 9 of B.P. 129 by either the
Constitution or another statute. Nor will it run counter to the legislative intendment that
decisions of the NLRC be reviewable directly by the Supreme Court since, precisely, the
cases within the adjudicative competence of the voluntary arbitrator are excluded from the
jurisdiction of the NLRC or the labor arbiter.[32]
This ruling has been repeatedly reiterated in subsequent cases[33] and

continues to be the controlling doctrine. Thus, the general rule is that the
proper remedy from decisions of voluntary arbitrators is a petition for review
under Rule 43 of the Rules of Court.
Nonetheless, a special civil action for certiorari under Rule 65 of the Rules of
Court is the proper remedy for one who complains that the tribunal, board or
officer exercising judicial or quasi-judicial functions acted in total disregard
of evidence material to or decisive of the controversy.[34] As this Court
elucidated in Garcia v. National Labor Relations Commission[35] -
[I]n Ong v. People, we ruled that certiorari can be properly resorted to where the factual
findings complained of are not supported by the evidence on record. Earlier, in Gutib v.
Court of Appeals, we emphasized thus:
[I]t has been said that a wide breadth of discretion is granted a court of justice
in certiorari proceedings. The cases in which certiorari will issue cannot be
defined, because to do so would be to destroy its comprehensiveness and
usefulness. So wide is the discretion of the court that authority is not wanting to
show that certiorari is more discretionary than either prohibition or mandamus.
In the exercise of our superintending control over inferior courts, we are to be
guided by all the circumstances of each particular case “as the ends of justice
may require.” So it is that the writ will be granted where necessary to prevent
a substantial wrong or to do substantial justice. [36]
In addition, while the settled rule is that an independent action for certiorari
may be availed of only when there is no appeal or any plain, speedy and
adequate remedy in the ordinary course of law[37] and certiorari is not a
substitute for the lapsed remedy of appeal,[38] there are a few significant
exceptions when the extraordinary remedy of certiorari may be resorted to
despite the availability of an appeal, namely: (a) when public welfare and the
advancement of public policy dictate; (b) when the broader interests of
justice so require; (c) when the writs issued are null; and (d) when the

justice so require; (c) when the writs issued are null; and (d) when the
questioned order amounts to an oppressive exercise of judicial
authority.[39]
In this case, while the petition was filed on July 27, 2002,[40] 15 days after
July 12, 2002, the expiration of the 15-day reglementary period for filing an
appeal under Rule 43, the broader interests of justice warrant relaxation of
the rules on procedure. Besides, petitioner alleges that the Voluntary
Arbitrator’s conclusions have no basis in fact and in law; hence, the petition
should not be dismissed on procedural grounds.
The Voluntary Arbitrator gravely abused its discretion in giving a strict or

literal interpretation of the CBA provisions that the holiday pay be reflected
in the payroll slips. Such literal interpretation ignores the admission of
respondent in its Position Paper[41] that the employees were paid all the
days of the month even if not worked. In light of such admission,
petitioner's submission of its 360 divisor in the computation of employees’
salaries gains significance.
In Union of Filipro Employees v. Vivar, Jr.[42] the Court held that “*t+he
divisor assumes an important role in determining whether or not holiday pay
is already included in the monthly paid employee’s salary and in the
computation of his daily rate”. This ruling was applied in Wellington
Investment and Manufacturing Corporation v. Trajano,[43] Producers Bank of
the Philippines v. National Labor Relations Commission[44] and Odango v.
National Labor Relations Commission,[45] among others.[46]
In Wellington,[47] the monthly salary was fixed by Wellington to provide for

compensation for every working day of the year including the holidays
specified by law – and excluding only Sundays. In fixing the salary,
Wellington used what it called the “314 factor”; that is, it simply deducted 51
Sundays from the 365 days normally comprising a year and used the
difference, 314, as basis for determining the monthly salary. The monthly
salary thus fixed actually covered payment for 314 days of the year, including
regular and special holidays, as well as days when no work was done by
reason of fortuitous cause, such as transportation strike, riot, or typhoon or
other natural calamity, or cause not attributable to the employees.
In Producers Bank,[48] the employer used the divisor 314 in arriving at the
daily wage rate of monthly salaried employees. The divisor 314 was arrived
at by subtracting all Sundays from the total number of calendar days in a
year, since Saturdays are considered paid rest days. The Court held that the
use of 314 as a divisor leads to the inevitable conclusion that the ten legal

use of 314 as a divisor leads to the inevitable conclusion that the ten legal
holidays are already included therein.
In Odango v. National Labor Relations Commission,[49] the Court ruled that

the use of a divisor that was less than 365 days cannot make the employer
automatically liable for underpayment of holiday pay. In said case, the
employees were required to work only from Monday to Friday and half of
Saturday. Thus, the minimum allowable divisor is 287, which is the result of
365 days, less 52 Sundays and less 26 Saturdays (or 52 half Saturdays). Any
divisor below 287 days meant that the employees were deprived of their
holiday pay for some or all of the ten legal holidays. The 304-day divisor
used by the employer was clearly above the minimum of 287 days.
In this case, the employees are required to work only from Monday to
Friday. Thus, the minimum allowable divisor is 263, which is arrived at by
deducting 51 un-worked Sundays and 51 un-worked Saturdays from 365
days. Considering that petitioner used the 360-day divisor, which is clearly
above the minimum, indubitably, petitioner's employees are being given
their holiday pay.
Thus, the Voluntary Arbitrator should not have simply brushed aside
petitioner's divisor formula. In granting respondent's claim of non-payment
of holiday pay, a “double burden” was imposed upon petitioner because it
was being made to pay twice for its employees' holiday pay when payment
thereof had already been included in the computation of their monthly
salaries. Moreover, it is absurd to grant respondent's claim of non-payment
when they in fact admitted that they were being paid all of the days of the
month even if not worked. By granting respondent's claim, the Voluntary
Arbitrator sanctioned unjust enrichment in favor of the respondent and
caused unjust financial burden to the petitioner. Obviously, the Court cannot
allow this.
While the Constitution is committed to the policy of social justice[50] and the
protection of the working class, [51] it should not be supposed that every labor
dispute would automatically be decided in favor of labor. Management also
has it own rights which, as such, are entitled to respect and enforcement in
the interest of simple fair play. Out of concern for those with less privileges
in life, this Court has inclined more often than not toward the worker and
upheld his cause in his conflicts with the employer. Such favoritism, however,
has not blinded us to the rule that justice is in every case for the deserving,
to be dispensed in the light of the established facts and the applicable law
and doctrine.[52]

WHEREFORE, the petition for review is GRANTED. The Resolutions dated
September 4, 2002 and February 28, 2003 of the Court of Appeals in CA-G.R. SP
No. 72336 are REVERSED and SET ASIDE. The Decision dated March 1, 2001 and
Resolution dated June 17, 2002 of the Voluntary Arbitrator are declared NULL and
VOID.
SO ORDERED.
MA. ALICIA AUSTRIA-MARTINEZ

Associate Justice
WE CONCUR:
CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson
MINITA V. CHICO-NAZARIO ANTONIO EDUARDO B. NACHURA

RUBEN T. REYES
Associate Justice
ATTESTATION
Court’s Division.
CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson, Third Division

Chairperson, Third Division
CER T IF ICA TI ON
Chairperson’s Attestation, it is hereby certified that the conclusions in the above
Decision had been reached in consultation before the case was assigned to the
writer of the opinion of the Court’s Division.
REYNATO S. PUNO
Chief Justice
• The present petition impleaded the Court of Appeals as respondent. Pursuant to Section 4, Rule 45 of
the Rules of Court, the name of the Court of Appeals is deleted from the title.
[1] Penned by Associate Justice Salvador J. Valdez, Jr. (now deceased) and concurred in by
Associate Justices Mercedes Gozo-Dadole (retired) and Amelita G. Tolentino, CA rollo, p. 55.
[2] Id. at 73.
[4] Id. at 24 and 22.
[5] Id. at 25.
[6] Id. at 29.
[7] Id. at 30.
[9] Id. at 46.
[10] Id. at 49.
[11] Id. at 53.
[12] Id. at 8.
[13] CA rollo, p. 4. Envelope showing date of posting by registered mail on July 27, 2002. Petition
was received by the CA on August 15, 2002.
[14] Id. at 3.
[15] Id. at 9.
[16] Id. at11.
[17] Supra note 1.
[18] Id.
[19] Id. at 56.
[20] Supra note 2.
[21] CA rollo, p. 19.
[22] Id. at 24.
[23] Id. at 26.
[24] Id. at 116.
[26] Rollo, p. 123.
[27] Supra note 22 at 168, citing Volkschel Labor Union v. National Labor Relations Commission,
No. L-39686, June 25, 1980, 98 SCRA 314.
[28] 1997 Rules of Civil Procedure, Rule 43, Sec. 1.
[29] Alcantara, Jr. v. Court of Appeals, G.R. No. 143397, August 6, 2002, 386 SCRA 370, 379.
[30] An Act Reorganizing the Judiciary, Appropriating Funds Therefor, and for Other Purposes.
[31] An Act Expanding the Jurisdiction of the Court of Appeals, Amending for the Purpose Section

Nine of Batas Pambansa Blg. 129, as Amended, Known as The Judiciary Reorganization Act of 1980.
[32] Supra note 23, at 170-171.
[33] See Centro Escolar University Faculty and Allied Workers Union-Independent v. Court of
Appeals, G.R. No. 165486, May 31, 2006, 490 SCRA 61; Nippon Paint Employees Union-Olalia v. Court of
Appeals, G.R. No. 159010, November 19, 2004, 443 SCRA 286; Alcantara, Jr. v. Court of Appeals, supra.
[34] Maraguinot, Jr. v. National Labor Relations Commission, 348 Phil. 580; 284 SCRA 539 (1998):
Sajonas v. National Labor Relations Commission,, G.R. No. 49286, March 15, 1990, 183 SCRA 182, 186.
[35] G.R. No. 147427, February 7, 2005, 450 SCRA 535.
[36] Supra note 35, at 548-549.
[37] 1997 Rules of Civil Procedure, Rule 65, Sec. 1.
[38] Madrigal Transport, Inc. v. Lapanday Holdings Corporation, G.R. No. 156067, August 11,
2004, 436 SCRA 123, 127.
[39] Madriaga v. Court of Appeals, G.R. No. 142001, July 14, 2005; Martillano v. Court of Appeals,
G.R. No. 148277, June 29, 2004; Heirs of Lourdes Padilla v. Court of Appeals, 469 Phil. 196, 204 (2004);
Metropolitan Manila Development Authority v. JANCOM Environmental Corp., 425 Phil. 961, 974 (2002);
Uy Chua v. Court of Appeals, 398 Phil. 17, 30 (2000).
[41] Id. at 34.
[43] G.R. No. 114698, July 3, 1995, 245 SCRA 561
[44] G.R. No. 100701, 28 March 2001, 355 SCRA 489, 508.
[45] G. R. No. 147420, June 10, 2004, 431 SCRA 633, 641-642.
[46] See Trans-Asia Phils. Employees Association v. National Labor Relations Commission, G. R. No.
118289, December 13, 1999, 320 SCRA 547.
[47] Supra note 43.
[48] Supra note 44.
[49] Supra note 45.
[50] 1987 Constitution, Article II, Sec. 10.
[51] 1987 Constitution, Article II, Sec. 18.
[52] Lawin Security Services, Inc. v. National Labor Relations Commission, 339 Phil. 330 (1997);
Sosito v. Aguinaldo Development Corporation, No. L-48926, December 14, 1987, 156 SCRA 392, 396.
Pasted from <http://sc.judiciary.gov.ph/jurisprudence/2007/october2007/157775.htm>

Finality and Execution of Awards
11:57 PM

Indophil Textile Mill Workers Union vs. Calica (1992)
11:57 PM
Note: Case already discussed in Corpo but here, focus on the Court agreeing with the findings of the VA
G.R. No. 96490 February 3, 1992

INDOPHIL TEXTILE MILL WORKERS UNION-PTGWO, petitioner,
vs.
VOLUNTARY ARBITRATOR TEODORICO P. CALICA and INDOPHIL TEXTILE MILLS, INC.,
respondents.
Romeo C. Lagman for petitioner.
Borreta, Gutierrez & Leogardo for respondent Indophil Textile Mills, Inc.
MEDIALDEA, J.:
This is a petition for certiorari seeking the nullification of the award issued by the respondent
Voluntary Arbitrator Teodorico P. Calica dated December 8, 1990 finding that Section 1 (c),
Article I of the Collective Bargaining Agreement between Indophil Textile Mills, Inc. and Indophil
Textile Mill Workers Union-PTGWO does not extend to the employees of Indophil Acrylic
Manufacturing Corporation as an extension or expansion of Indophil Textile Mills, Incorporated.
Petitioner Indophil Textile Mill Workers Union-PTGWO is a legitimate labor organization duly
registered with the Department of Labor and Employment and the exclusive bargaining agent of
all the rank-and-file employees of Indophil Textile Mills, Incorporated. Respondent Teodorico P.
Calica is impleaded in his official capacity as the Voluntary Arbitrator of the National Conciliation
and Mediation Board of the Department of Labor and Employment, while private respondent
Indophil Textile Mills, Inc. is a corporation engaged in the manufacture, sale and export of yarns
of various counts and kinds and of materials of kindred character and has its plants at Barrio
Lambakin. Marilao, Bulacan.
In April, 1987, petitioner Indophil Textile Mill Workers Union-PTGWO and private respondent
Indophil Textile Mills, Inc. executed a collective bargaining agreement effective from April 1,
1987 to March 31, 1990.
On November 3, 1967 Indophil Acrylic Manufacturing Corporation was formed and registered
with the Securities and Exchange Commission. Subsequently, Acrylic applied for registration
with the Board of Investments for incentives under the 1987 Omnibus Investments Code. The
application was approved on a preferred non-pioneer status.
In 1988, Acrylic became operational and hired workers according to its own criteria and
standards. Sometime in July, 1989, the workers of Acrylic unionized and a duly certified
collective bargaining agreement was executed.
In 1990 or a year after the workers of Acrylic have been unionized and a CBA executed, the
petitioner union claimed that the plant facilities built and set up by Acrylic should be considered
as an extension or expansion of the facilities of private respondent Company pursuant to
Section 1(c), Article I of the CBA, to wit,.
c) This Agreement shall apply to the Company's plant facilities and installations and to any extension and
expansion thereat. (Rollo, p.4)
In other words, it is the petitioner's contention that Acrylic is part of the Indophil bargaining unit.
The petitioner's contention was opposed by private respondent which submits that it is a
juridical entity separate and distinct from Acrylic.
The existing impasse led the petitioner and private respondent to enter into a submission
agreement on September 6, 1990. The parties jointly requested the public respondent to act as
voluntary arbitrator in the resolution of the pending labor dispute pertaining to the proper
interpretation of the CBA provision.
After the parties submitted their respective position papers and replies, the public respondent
Voluntary Arbitrator rendered its award on December 8, 1990, the dispositive portion of which
provides as follows:
PREMISES CONSIDERED, it would be a strained interpretation and application of the questioned CBA
provision if we would extend to the employees of Acrylic the coverage clause of Indophil Textile Mills
CBA. Wherefore, an award is made to the effect that the proper interpretation and application of Sec. l,

CBA. Wherefore, an award is made to the effect that the proper interpretation and application of Sec. l,
(c), Art. I, of the 1987 CBA do (sic) not extend to the employees of Acrylic as an extension or expansion
of Indophil Textile Mills, Inc. (Rollo, p.21)
Hence, this petition raising four (4) issues, to wit:
1. WHETHER OR NOT THE RESPONDENT ARBITRATOR ERRED IN INTERPRE TING SECTION 1(c),
ART I OF THE CBA BETWEEN PETITIONER UNION AND RESPONDENT COMPANY.
2. WHETHER OR NOT INDOPHIL ACRYLIC IS A SEPARATE AND DISTINCT ENTITY FROM
RESPONDENT COMPANY FOR PURPOSES OF UNION REPRESENTATION.
3. WHETHER OR NOT THE RESPONDENT ARBITRATOR GRAVELY ABUSED HIS DISCRETION
AMOUNTING TO LACK OR IN EXCESS OF HIS JURISDICTION.
4. WHETHER OR NOT THE RESPONDENT ARBITRATOR VIOLATED PETITIONER UNION'S
CARDINAL PRIMARY RIGHT TO DUE PROCESS. (Rollo, pp. 6-7)
The central issue submitted for arbitration is whether or not the operations in Indophil Acrylic
Corporation are an extension or expansion of private respondent Company. Corollary to the
aforementioned issue is the question of whether or not the rank-and-file employees working at
Indophil Acrylic should be recognized as part of, and/or within the scope of the bargaining unit.
Petitioner maintains that public respondent Arbitrator gravely erred in interpreting Section l(c),
Article I of the CBA in its literal meaning without taking cognizance of the facts adduced that the
creation of the aforesaid Indophil Acrylic is but a devise of respondent Company to evade the
application of the CBA between petitioner Union and respondent Company.
Petitioner stresses that the articles of incorporation of the two corporations establish that the two
entities are engaged in the same kind of business, which is the manufacture and sale of yarns
of various counts and kinds and of other materials of kindred character or nature.
Contrary to petitioner's assertion, the public respondent through the Solicitor General argues
that the Indophil Acrylic Manufacturing Corporation is not an alter ego or an adjunct or business
conduit of private respondent because it has a separate legitimate business purpose. In
addition, the Solicitor General alleges that the primary purpose of private respondent is to
engage in the business of manufacturing yarns of various counts and kinds and textiles. On the
other hand, the primary purpose of Indophil Acrylic is to manufacture, buy, sell at wholesale
basis, barter, import, export and otherwise deal in yarns of various counts and kinds. Hence,
unlike private respondent, Indophil Acrylic cannot manufacture textiles while private respondent
cannot buy or import yarns.
Furthermore, petitioner emphasizes that the two corporations have practically the same
incorporators, directors and officers. In fact, of the total stock subscription of Indophil Acrylic,
P1,749,970.00 which represents seventy percent (70%) of the total subscription of
P2,500,000.00 was subscribed to by respondent Company.
On this point, private respondent cited the case of Diatagon Labor Federation v. Ople, G.R. No.
L-44493-94, December 3, 1980, 10l SCRA 534, which ruled that two corporations cannot be
treated as a single bargaining unit even if their businesses are related. It submits that the fact
that there are as many bargaining units as there are companies in a conglomeration of
companies is a positive proof that a corporation is endowed with a legal personality distinctly its
own, independent and separate from other corporations (see Rollo, pp. 160-161).
Petitioner notes that the foregoing evidence sufficiently establish that Acrylic is but an extension
or expansion of private respondent, to wit:
(a) the two corporations have their physical plants, offices and facilities situated in the same compound,
at Barrio Lambakin, Marilao, Bulacan;
(b) many of private respondent's own machineries, such as dyeing machines, reeling, boiler, Kamitsus
among others, were transferred to and are now installed and being used in the Acrylic plant;
(c) the services of a number of units, departments or sections of private respondent are provided to
Acrylic; and
(d) the employees of private respondent are the same persons manning and servicing the units of Acrylic.
(see Rollo, pp. 12-13)
Private respondent insists that the existence of a bonafide business relationship between Acrylic
and private respondent is not a proof of being a single corporate entity because the services
which are supposedly provided by it to Acrylic are auxiliary services or activities which are not
really essential in the actual production of Acrylic. It also pointed out that the essential services
are discharged exclusively by Acrylic personnel under the control and supervision of Acrylic
managers and supervisors.
In sum, petitioner insists that the public respondent committed grave abuse of discretion
amounting to lack or in excess of jurisdiction in erroneously interpreting the CBA provision and
in failing to disregard the corporate entity of Acrylic.

Time and again, We stress that the decisions of voluntary arbitrators are to be given the highest
respect and a certain measure of finality, but this is not a hard and fast rule, it does not preclude
judicial review thereof where want of jurisdiction, grave abuse of discretion, violation of due
process, denial of substantial justice, or erroneous interpretation of the law were brought to our
attention. (see Ocampo, et al. v. National Labor Relations Commission, G.R. No. 81677, 25 July
1990, First Division Minute Resolution citing Oceanic Bic Division (FFW) v. Romero, G.R. No.
L-43890, July 16, 1984, 130 SCRA 392)
It should be emphasized that in rendering the subject arbitral award, the voluntary arbitrator
Teodorico Calica, a professor of the U.P. Asian Labor Education Center, now the Institute for
Industrial Relations, found that the existing law and jurisprudence on the matter, supported the
private respondent's contentions. Contrary to petitioner's assertion, public respondent cited facts
and the law upon which he based the award. Hence, public respondent did not abuse his
discretion.
Under the doctrine of piercing the veil of corporate entity, when valid grounds therefore exist,
the legal fiction that a corporation is an entity with a juridical personality separate and distinct
from its members or stockholders may be disregarded. In such cases, the corporation will be
considered as a mere association of persons. The members or stockholders of the corporation
will be considered as the corporation, that is liability will attach directly to the officers and
stockholders. The doctrine applies when the corporate fiction is used to defeat public
convenience, justify wrong, protect fraud, or defend crime, or when it is made as a shield to
confuse the legitimate issues, or where a corporation is the mere alter ego or business conduit
of a person, or where the corporation is so organized and controlled and its affairs are so
conducted as to make it merely an instrumentality, agency, conduit or adjunct of another
corporation. (Umali et al. v. Court of Appeals, G.R. No. 89561, September 13, 1990, 189 SCRA
529, 542)
In the case at bar, petitioner seeks to pierce the veil of corporate entity of Acrylic, alleging that
the creation of the corporation is a devise to evade the application of the CBA between
petitioner Union and private respondent Company. While we do not discount the possibility of
the similarities of the businesses of private respondent and Acrylic, neither are we inclined to
apply the doctrine invoked by petitioner in granting the relief sought. The fact that the
businesses of private respondent and Acrylic are related, that some of the employees of the
private respondent are the same persons manning and providing for auxilliary services to the
units of Acrylic, and that the physical plants, offices and facilities are situated in the same
compound, it is our considered opinion that these facts are not sufficient to justify the piercing of
the corporate veil of Acrylic.
In the same case of Umali, et al. v. Court of Appeals (supra), We already emphasized that "the
legal corporate entity is disregarded only if it is sought to hold the officers and stockholders
directly liable for a corporate debt or obligation." In the instant case, petitioner does not seek to
impose a claim against the members of the Acrylic.
Furthermore, We already ruled in the case of Diatagon Labor Federation Local 110 of the
ULGWP v. Ople (supra) that it is grave abuse of discretion to treat two companies as a single
bargaining unit when these companies are indubitably distinct entities with separate juridical
personalities.
Hence, the Acrylic not being an extension or expansion of private respondent, the rank-and-file
employees working at Acrylic should not be recognized as part of, and/or within the scope of the
petitioner, as the bargaining representative of private respondent.
All premises considered, the Court is convinced that the public respondent Voluntary Arbitrator
did not commit grave abuse of discretion in its interpretation of Section l(c), Article I of the CBA
that the Acrylic is not an extension or expansion of private respondent.
ACCORDINGLY, the petition is DENIED and the award of the respondent Voluntary Arbitrator
are hereby AFFIRMED.
SO ORDERED.
Narvasa, C.J., Cruz and Grino-Aquino, JJ., concur.

PLDT vs. Montemayor (1990)
11:59 PM
G.R. No. 88626 October 12, 1990

PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, petitioner,
vs.
VOLUNTARY ARBITRATOR ALBERTO MONTEMAYOR, MA. EMMA J. TOTESORA,
MIRICAR A. MARCOS and MA. LOURDES U. MACABENTA, respondents.
David T. Paradero and Nicanor G. Nuevas for petitioner.
Antonio C. Azarcon for private respondents.
REGALADO, J.:
This petition for certiorari impugns the resolution dated February 14, 1989 of Voluntary
Arbitrator Alberto Montemayor, and his order dated May 12, 1989 denying petitioner's motion for
the reconsideration thereof, in the case entitled "Re: Voluntary Arbitration of the Complaints of
Ma. Emma J. Totesora, Miricar A. Marcos and Maria Lourdes U. Macabenta."
The factual backdrop of the case is summarized by the Solicitor General, which summary we
quote with approval, thus:
The case at bar concerns the complaints of three Traffic Operators of petitioner Philippine Long Distance
Telephone Company at its Davao Exchange. Herein private respondents Ma. Emma J. Totesora and
Miricar A. Marcos were regular employees who were dismissed for allegedly placing free long distance
calls from Davao to Manila. The employment of private respondent Maria Lourdes U. Macabenta,
allegedly on probationary status, was terminated on the ground that she failed to meet the minimum
requirements for permanent employment.
As regular Traffic Operators at petitioner's Davao Office, it was the main function of respondents Totesora
and Marcos to process long distance calls. It appears that, on different dates, said respondents were
caught passing free long distance calls to Manila. Asked to explain, Ms. Totesora stated that it was not
altogether a free call; that she just allowed the parties to talk a little longer without timing the entire call.
For her part, Ms. Marcos admitted placing a free call to her brot(h)er in Manila whom she had not heard of
for some time. Finding their explanations unsatisfactory, petitioner company terminated their services.
With respect to respondent Macabenta, petitioner claimed that she was employed by the Company
effective June 2, 1986 as probationary Traffic Operator at its Davao Exchange; that her probationary
status was for three month; that Ms. Macabenta failed to meet the minimum requirement for
regularization; that as a result thereof, her employment was terminated effective June 17, 1986. Ms.
Macabenta, on the other hand, claimed that she worked continuously for petitioner from April 1985 to
August 18, 1986, and that, consequently, she should have been regularized long before. Hence, her
termination from the service was illegal.
The Union to which the dismissed employees belong and petitioner company agreed in writing to submit
their dispute to voluntary arbitration and be bound by the decision of the Voluntary Arbitrator. 1
After hearing, Voluntary Arbitrator Montemayor issued the assailed resolution which reads as
follows:
A. — On the issue of the validity of the dismissal of Ma. Emma Totesora and Ms. Miricar Marcos in my
personal observation based on the records submitted, I found Ms. Totesora and Ms. Marcos to have
violated company regulations. However, it is my opinion, that outright dismissal is too drastic for a first
offense. I recommended, instead, a transfer of assignment in the company. This arrangement, I believe,
is a good compromise considering that while the company is for outright dismissal of the employees
concerned, the union is asking for the return of the said employees to their original positions.
B. — On the legality of the termination of the probationary employment of Ms. Maria Lourdes Macabenta
cannot understand why the company waited for a year before they decided that Ms. Macabenta should
undergo probationary employment. The records showed that she was employed since April 1985 and yet
she did not undergo probationary employment until June 2, 1986. I also noted that during her employment
for that period there were no serious complaints about her performance. Personally, I find the delay of the
probation period unusual. Because of this dilemma I believe that justice and fair play can only he attained
by retaining Ms. Macabenta as an employee but not necessarily as a traffic operator. 2
Petitioner's motion for reconsideration having been denied, the instant petition was filed with the
following assignment of errors:
I
Respondent Atty. Montemayor committed a grave abuse of discretion when it (sic) ordered for the
reinstatement of respondents Totesora and Marcos who committed acts inimical to the interest of the

petitioner which were valid causes for their dismissal, and to the positions other than that from which they
were dismissed.
II
Respondent Atty. Montemayor committed a grave abuse of discretion when it (sic) considered respondent
Macabenta as a regular employee and ordered her reinstatement not to her former position. 3
Arbitrator Montemayor made a finding that private respondents Totesora and Marcos did violate
company regulations consisting of their acts of passing free calls. A finding was also made of
private respondent Macabenta being a regular employee. We are inclined not to disturb these
findings which are uncontroverted and supported by the evidence on record. Basic is the rule
that judicial review by this Court in labor cases does not go so far as to evaluate the sufficiency
of the evidence upon which the labor officer or office based his or its determination but are
limited to issues of jurisdiction or grave abuse of discretion. 4
The only issues, therefore, that are to be resolved in this petition are (1) whether or not there
was grave abuse of discretion on the part of public respondent in ordering the reinstatement of
private respondents, taking into consideration the aforementioned findings; and (2) whether or
not the resolution of public respondent is, first and foremost, subject to judicial review.
Apropos of the power of judicial review, while decisions of voluntary arbitrators are given the
Highest respect and accorded a certain measure of finality, this does not preclude the exercise
of judicial review over such decisions. 5 A voluntary arbitrator, by the nature of his functions,
acts in a quasi-judicial capacity. There is no reason why his decisions involving interpretations
of law should be beyond the Supreme Court's review. Administrative officials are presumed to
act in accordance with law and yet the Court does not hesitate to pass upon their work where a
question of law is involved or where there is a showing of abuse of authority or discretion in their
official acts. 6
In the case at bar, we hold that the voluntary arbitrator gravely abused his discretion in ordering
the reinstatement of private respondents Totesora and Marcos. Petitioner was legally justified in
dismissing the latter. Private respondents' conduct rendered them unworthy of the trust and
confidence demanded of them by their employer. Considering that an employer is entitled to
terminate the services of employees for just cause and acts of dishonesty have been held to be
sufficient grounds for dismissal, private respondents Totesora and Marcos did not have any
right to be reinstated. 7 The employer's obligation to give his workers just compensation and
treatment carries with it the corollary right to expect from the workers adequate work, diligence
and good conduct. 8
While, as a rule, the Supreme Court leans over backwards to help workers and employees
continue with their employment or to mitigate the penalties imposed on them, acts of dishonesty
in handling company property are a different matter. 9 As aptly pointed out by petitioner:
... Long distance call is the very lifeblood of the petitioner, there is no doubt about this. To fraudulently
and dishonestly deprive the petitioner of long distance calls, therefore, is not only clearly inimical to the
petitioner, but very destructive as well.
xxx xxx xxx
Petitioner agrees that there are times when outright dismissal is too drastic for a first offense. In fact,
petitioner's rules and regulations on certain offenses like tardiness, drinking, fighting, etc. provide
dismissal only on the second and third infraction. But there should be a distinction as to the nature of the
offense. On pet(t)y offenses as cited above, petitioner is one with Atty. Montemayor that dismissal is too
drastic for the first offense. But definitely not if the nature of the offense goes to the very heart and
essence of the company, as in the case at bar, and especially if the offender has shown propensity for
dishonesty.
Kindly please take note that Ms. Totesora when she committed the act for which she was dismissed was
only barely two (2) years after becoming a regular employee. On the other hand, Ms. Marcos was barely
a month a regular employee when she was caught passing (a) free long distance call. And to think that
these two were thoroughly drilled on Company procedures and regulations before being hired.
Furthermore, petitioner respectfully submits that Atty. Montemayor in effect is encouraging the petitioner's
traffic operators to defraud the petitioner of legitimate revenues by passing free long distance calls since
anyway they will not be, dismissed outright if they will be caught for the first time, assuming they will be
caught at all. This should not be allowed. 10
In the ultimate analysis, dismissal of a dishonest employee is in the best interest not only of
management but also of labor. As a measure of self-protection against acts inimical to its
interest, a company has the right to dismiss its erring employees. The law never intended to
impose unjust situations on either labor or management. 11
With respect to private respondent Macabenta's case, on the other hand, we hold that her
dismissal was not justified and, therefore, her reinstatement is in order. Her reinstatement
should, however, be to the position she was occupying before her dismissal. Having been

should, however, be to the position she was occupying before her dismissal. Having been
employed by petitioner for more than a year, she automatically became a regular employee
regardless of the fact that her status at the commencement of her employment was supposedly
that of a casual employee as claimed by petitioner.
Article 280 of the Labor Code is clear on the matter, to wit:
ART. 280. Regular and Casual Employment. — The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreements of the parties, an employment shall be deemed to
be regular where the employee has been engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer, except where the employment has been fixed for
a specific project or undertaking the completion or termination of which has been determined at the time
of the engagement of the employee or where the work or services to be performed is seasonal in nature
and the employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided,
That, any employee who has rendered at least one year of service, whether such service is continuous or
broken, shall be considered a regular employee with respect to the activity in which he is employed and
his employment shall continue while such activity exists (Emphasis supplied).
Besides, we believe that private respondent Macabenta is also circumstanced under the first
paragraph of the aforequoted provision. Being a traffic operator, she was assigned to perform
tasks which are necessary or desirable in the usual business or trade of petitioner company
which is engaged in the telecommunications industry. On both considerations, her employment
should, therefore, be deemed to be that of a regular employee.
WHEREFORE, the petition for certiorari is GRANTED in part in the sense that the directive of
the labor arbiter for the reinstatement of private respondents Totesora and Marcos is set aside,
and DENIED with respect to petitioner's complaint against private respondent Macabenta's
reinstatement. Petitioner is hereby ordered to reinstate private respondent Macabenta to her
former position or to a substantially equivalent position without loss of seniority rights, and to
pay her backwages not exceeding three (3) years without qualification or deduction conformably
with case law prevailing during the period involved in this case.
This judgment is immediately executory.
SO ORDERED.
Melencio-Herrera (Chairman), Padilla and Sarmiento, JJ., concur.
Paras, J., is on leave.
Footnotes
1 Rollo, 36-38.
2 Ibid., 38-39.
3 Ibid., 6.
4 A.M. Oreta & Co., Inc. vs. National Labor Relations Commission, et al., G.R. No. 74004, August 10, 1989; Special Events & Central
Shipping Office Workers Union vs. San Miguel Corporation, et al., 122 SCRA 557 (1983).
5 Blue Bar Coconut Phils., Inc. vs. Minister of Labor, et al., 174 SCRA 25 (1989); Oceanic Bic Division (FFW), et al. vs. Romero, etc., et al.,
130 SCRA 392 (1984); Mantrade/FMMC Division Employees and Workers Union, etc. vs. Bacungan, et al., 144 SCRA 510 (1986);
Continental Marble Corp., et al. vs. National Labor Relations Commission, et al., 161 SCRA 151 (1988).
6 Liberty Flour Mills Employees, et al. vs. Liberty Flour Mills, Inc., et al., G.R. Nos. 58768-70, December 29, 1989.
7 Auxilio, Jr. vs. National Labor Relations Commission, et al., G.R. No. 82189, August 2, 1990.
8 Coca-Cola Bottlers Philippines Incorporated vs. National Labor Relations Commission, et al., 172 SCRA 751 (1989).
9 Id.
10 Rollo, 81-82.
11 Coca-Cola Bottlers Philippines Incorporated vs. National Labor Relations Commission, et al., supra.

Maranaw Hotels and Resorts Corp vs. Court of Appeals (1992)
Monday, October 04, 2010
12:00 AM
G.R. NO. 103215 November 6, 1992
MARANAW HOTELS AND RESORTS CORPORATION (CENTURY PARK SHERATON
MANILA), petitioner,
vs.
COURT OF APPEALS, HON. SANTIAGO O. TAÑADA (Voluntary Arbitrator) and
GREGORIO GALE, respondents.
BELLOSILLO, J.:
For blurting out offensive remarks 1 against his supervisors in their absence but promptly
reported to them, private respondent Gregorio Gale, a roomboy at the five-star Century Park
Sheraton Manila owned and operated by petitioner Maranaw Hotels and Resorts Corporation,
was dismissed for "discourtesy and use of disrespectful and impolite language against a
superior which constitutes gross misconduct."
Gregorio Gale subsequently instituted a complaint for illegal dismissal which, conformably with
their collective bargaining agreement, was then submitted to retired Judge Santiago O. Tañada
for voluntary arbitration.
On 13 December 1989, after hearing and the submission of the evidence, position papers and
memoranda of the parties, Voluntary Arbitrator Tañada rendered a decision pertinent portions of
which read —
After going over the evidence adduced by the parties, the Arbitrator finds no evidence that there was
fighting, nor challenging to a fight, no assaulting nor intimidation of co-employees or supervisors within
the hotel premises. What was established as per evidence on record was more of discourtesy, and use of
disrespectful and impolite language uttered by complainant which falls under Section 2, Rule VI of the
Rules of the Hotel and carries the penalty of 7 days of suspension for first offense. The evidence shows it
was a first offense.
IN VIEW OF THE FOREGOING, the Arbitrator finds and so holds that complainant Gregorio Gale has
violated Section 2, Rule VI of the Rules of the Hotel and orders his suspension for a period of seven (7)
days. However, as per admission of the parties, Mr. Gale has already been dismissed. In case
complainant Mr. Gale has been out of his job as roomboy of the Hotel for more than that period of 7 days,
his immediate reinstatement is hereby ordered with right to collect his share in the service charge. 2
Its motion for reconsideration having been denied by the Voluntary Arbitrator, petitioner filed
before this Court a motion for extension of time to file a petition for certiorari, which We referred
to the Court of Appeals for resolution. On 24 October 1991, after taking cognizance of the case
and thereafter receiving the parties' respective memoranda, the appellate court 3 dismissed the
petition for lack of merit, 4 and on 4 December 1991 denied petitioner's motion for
reconsideration. 5 Hence, this petition for review alleging that respondent appellate court erred
in not imposing the penalty of dismissal upon private respondent considering that he was found
guilty of gross misconduct, and in allowing him to collect his share in the service charge.
The petition should have been dismissed outright for We see no reason to reverse the appellate
court in its finding that there was no grave abuse of discretion on the part of the Voluntary
Arbitrator.
As in the case of a labor arbiter, the conclusions of a voluntary arbitrator, when they are
sufficiently corroborated by the evidence on record, should similarly be respected by appellate
tribunals since he is also in a vantage position to assess and evaluate the credibility of the
contending parties.
We have also emphasized the rule that decisions of voluntary arbitrators are final and
unappealable except when there is want of jurisdiction, grave abuse of discretion, violation of
due process, denial of substantial justice, or erroneous interpretation of the law. 6 None of the
exceptions lie in the case before Us.
Indeed, the discharge of an employee who uttered unfelicitous remarks against his supervisors,
in general, for strictly enforcing company rules against union members, but who thereafter
apologized, is too harsh. We have held time and again that it is cruel to unjust to mete out the
drastic penalty of dismissal if it is not proximate to the gravity of misdeed. 7 The reason as We
concluded in Almira v. B.F. Goodrich Philippines, Inc. 8 is that —
(W)here a penalty less punitive would suffice, whatever missteps may be committed by labor ought not to
be visited with a consequence so severe. It is not only because of the law's concern for the workingman.

There is, in addition, his family to consider. Unemployment brings untold hardships and sorrows on those
dependent on the wage-earner. The misery and pain attendant on the loss of jobs then could be avoided
if there be acceptance of the view that under all circumstances of this case, petitioners should not be
deprived of their means of livelihood. Nor is this to condone what had been done by them . . . From the
strictly juridical standpoint, it cannot be too strongly stressed, to follow Davis in his masterly work,
Discretionary Justice, that where a decision may be made to rest on informed judgment rather than rigid
rules, all the equities of the case must be accorded their due weight. Finally, labor law determinations, to
quote from Bultmann, should be not only secundum rationem but also secundum caritatem.
Thus, in Foodmine, Incorporated v. NLRC 9 We ruled that granting that the unsubstantiated
claims of a co-employee that she was slapped on the cheek and thereafter her left breast
grabbed and pulled were true, the penalty of removal from employment was not commensurate
to the misconduct allegedly committed.
In Rubberworld (Phil.), Inc. v. NLRC 10 We said that assuming that private respondent posted
entries in the stock cards without counter-checking the actual movement status of the items in
the warehouse, thereby resulting in unmanageable inaccuracies in the data posted in the stock
cards, his dismissal was not justified as he did not appear to be an incorrigible offender nor did
his negligence cause serious damage to the company.
Then in PT&T v. NLRC 11 We held that even considering that there may have been valid
grounds for private respondent's discharge, the imposition of such supreme penalty would
certainly be very harsh and disproportionate to the infraction committed, specially since it was
his first offense.
The case at bar is akin to the aforementioned cases.
We do not agree with petitioner's submission that private respondent's reinstatement will not
conduce to industrial peace and harmony in the hotel due to strained relations. Simply, the
cases cited by petitioner are misplaced. We are not unmindful of the "strained relations" brought
about by the filing of the case and the underlying causes. Indeed, relations may have become
acrimonious and hostile. However, the doctrine of strained relations cannot be applied with
impunity lest We trifle with the rights of wage earners by authorizing management to
indiscriminately dismiss them and thereafter provide the employer with the convenient and
ready excuse not to reinstate them. On the contrary, We have to exercise extreme caution in
this regard. As the Court reasoned in Globe-Mackay Cable and Radio Corporation v. NLRC 12 —
Obviously, the principle of strained relations' cannot be applied indiscriminately. Otherwise, reinstatement
can never be possible simply because some hostility is invariably engendered between the parties as a
result of litigation. That is human nature.
Indeed, "strained relations" may be invoked only against employees whose positions demand
trust and confidence, or whose differences with their employer are of such nature or degree as
to preclude reinstatement. In the instant case, however, the relationship between private
respondent, a roomboy, and management was clearly on an impersonal level. 13 Gale did not
occupy such a sensitive position as would require complete trust and confidence, where
personal ill will would preclude his reinstatement. Hence, in Panday v. NLRC 14 We ruled that "[i]
f the respondent had been a laborer, clerk or other rank-and-file employee, there would be no
problem in ordering her reinstatement with facility." Neither is the enmity of such degree as to
prevent private respondent's reinstatement. 15
We do not concur with petitioner that private respondent is not entitled to his share in the
service charge. As pointed out by the Court of Appeals, that private respondent was entitled to
his share in the service charge collected during the period he was illegally dismissed finds
support in the provisions of their collective bargaining agreement. Hence, We will not disturb this
factual finding.
Interestingly, however, petitioner alleges that private respondent continued to receive his
monthly salary from his dismissal on 4 December 1987 to 15 January 1992, which amounted to
a total of P76,598.46, conformably with their agreement "concluded between the Hotel and the
Union so that the Union may withdraw its notice of strike from the Department of Labor and
Employment and not to go on strike," 16 notwithstanding the fact that shortly after his separation
he joined the Armed Forces of the Philippines from which he also received renumeration. This
allegation does not only remain unrefuted but is, in fact, implicitly admitted by private
respondent in his pleadings filed with respondent court. By his implied admission, private
respondent, thus, acknowledges that he received double compensation, which may also explain
why the Voluntary Arbitrator, after ordering the former's reinstatement, did not rule on the
payment of backwages. The matter of double compensation cannot be countenanced –– not
because We fault private respondent for not remaining idle during the pendency of his case —
but because he should not be allowed to unjustly enrich himself at the expense of petitioner who

but because he should not be allowed to unjustly enrich himself at the expense of petitioner who
continues to pay his salary despite his dismissal.
Thus, in PAL v. PALEA 17 We concluded that under the principle that no one should be
permitted to feather his nest to the disadvantage of another, and proceeding form the law's
traditional aversion to double payment, it is neither fair nor just that the reinstated workers who
have not rendered any service to the employer, who apparently dismissed them in good faith,
should receive relatively sizeable amounts in backwages, and at the same time keep the salary
and other monetary benefits they had earned elsewhere during their layoff which they could not
have obtained had they remained in the employ of their employer.
In Itogon-Suyoc Mines, Inc. v. Sangilo-Itogon Worker's Union, 18 We restated these
guidelines ––
First. To be deducted from the back wages accruing to each of the laborers to be reinstated is the total
amount of earnings obtained by him from other employment(s) from the date of reinstatement. Should the
laborer decide that it is preferable not to return to work, the deduction should be made up to the time
judgment becomes final. And these, for the reason that employees should not be permitted to enrich
themselves at the expense of their employer. Besides, there is the law's abhorrence for double
compensation.
Second. Likewise, in mitigation of the damages that the dismissed respondents are entitled to, account
should be taken of whether in the exercise of due diligence respondents might have obtained income
from suitable remunerative employment. We are prompted to give out this last reminder because it is
really unjust that a discharged employee should, with folded arms, remain inactive in the expectation that
a windfall would come to him. A contrary view would breed Idleness; it is conducive to lack of initiative on
the part of a laborer.
We reiterated the principle against unjust enrichment in East Asiatic Co., Ltd. v. CIR 19 –—
In other words, the just and equitable rule regarding the point under discussion is this: It is the obligation
of the employer to pay an illegally dismissed employee or worker the whole amount of the salaries or
wages, plus all other benefits and bonuses and general increases, to which he would have been normally
entitled had he not been dismissed and had not stopped working, but it is the right, on the other hand, of
the employer to deduct from the total of these, the amount equivalent to the salaries or wages the
employee or worker would have earned in his old employment on the corresponding days that he was
actually gainfully employed elsewhere with an equal or higher salary or wage, such that if his salary or
wage in his other employment was less, the employer may deduct only what has been actually earned.
Although the principle that no one should be allowed to enrich himself at the expense of another
has thus far endured, We have, however, modified the rule. In the course of time We have
adopted the policy of fixing the amount of backwages at a just and reasonable level without
qualification or deduction so as to free the employees from the burden of proving their earnings
during their layoffs and the employer from submitting counter proofs and thus obviate the twin
evils of idleness on the part of employees and attrition and delay by the employer in satisfying
the award. This practice has been hailed as a realistic, reasonable and mutually beneficial
solution. An award of backwages equivalent to three (3) years (where the case is not terminated
sooner) serves as the base figure, without qualification or deduction. 20
This is not to overlook the passage of R.A. 6715, amending among others Art. 279 of the Labor
Code, which now provides ––
Art. 279. Security of Tenure. — In cases of regular employment, the employer shall not terminate the
services of an employee except for 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 back wages, 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. (Emphasis supplied).
But as We resolved in Sealand Service, Inc. v. NLRC 21 —
[I]t may be mentioned in passing that the amendatory provision in R.A. 6715, which entitled an employee
who is unjustly dismissed from work to his full backwages inclusive of allowance, and to his other benefits
or their monetary equivalent computed from the time his compensation was withheld from him up to the
time of actual reinstatement has no application in the case at bar, said amendment having taken effect on
March 21, 1989, after the decision sought to be enforced in the case had become final and executory. We
have ruled in Lantion, et al. v. NLRC, et al., that said amendment has no retroactive application.
Perforce, except for Balasbas vs. NLRC, 22 We have refrained from awarding full backwages
unless the unlawful dismissal occurred on 21 March 1989 or thereafter.
And while We have continued applying the rule in New Manila Candy Workers Union (Naconwa-
Paflu) v. CIR 23 in some cases, e.g., Panday v. NLRC 24 where five (5) years' backwages were
decreed on account of employer's unfair labor practice and evident bad faith, the general rule
remains: where the illegal dismissal transpired before the effectivity of R.A. 6715, or before 21

March 1989, the award of backwages in favor of the dismissed employee is limited to three (3)
years without deduction or qualification. 25
In the case before Us, since the illegal dismissal of private respondent occurred on 4 December
1987, or before R.A. 6715 took effect on 21 March 1989, he is entitled only to three (3) years'
backwages, inclusive of all allowances and other benefits, without deducting any renumerations
he may have received as member of the Armed Forces of the Philippines, or from any other
employment, and not to his full wages from the time he was dismissed up to the present.
Certainly, private respondent cannot be allowed to receive salary from petitioner for the whole
duration that he was not working as roomboy by reason of his unjust dismissal, while at the
same time, draw compensation as member of the Armed Forces of the Philippines which would
not have been possible had he continued to work for petitioner; for that would be unjust
enrichment. Consequently, if private respondent already received more than what he is entitled
to in accordance herewith, he should reimburse petitioner such amount in excess of what is due
him; otherwise, petitioner should make good the corresponding deficiency.
WHEREFORE, except as herein above modified, the Decision of 24 October 1991 and the
Resolution of 4 December 1991 of respondent Court of Appeals are hereby AFFIRMED. No
costs.
SO ORDERED.
Cruz, Padilla and Griño-Aquino, JJ., concur.
Medialdea, J., is on leave.
Footnotes
1 "Buak a ng ina nila, lahat sila pasipsipan".
2 Rollo, p.102.
3 Fourteenth Division; Decision penned by Associate Justice Jesus M. Elbinias, and concurred in by
Associate Justices Gloria C. Paras (Chairman) and Fermin A. Martin, Jr.
4 Rollo, pp. 28-31.
5 Ibid., p. 46.
6 Liberty Flour Mills Employees v. Liberty Flour Mills, Inc., G.R. Nos. 58768-70, 29 December 1989, 180
SCRA 668, and the cases cited therein; Eternit Employees and Workers Union v. De Veyra, G.R. No.
50110, 21 September 1990, 189 SCRA 752; Icasiano v. Office of the President, No. L-49855, 15 May
1992.
7 See Villadolid v. Inciong, G.R. No. 52364, 25 March 1983; 121 SCRA 205, and similar cases.
8 No. L-34974, 25 July 1974; 58 SCRA 120, 131.
9 G.R. No. 84688, 20 August 1990;188 SCRA 748.
10 G.R. No. 75704, 19 July 1989; 175 SCRA 450.
11 G.R. No. 80600, 12 March 1990; 183 SCRA 451.
12 G.R. No. 82511, 3 March 1992; 206 SCRA 701, 712.
13 See Lucena v. Pan-Trade, G.R. No. 80998, 25 April 1989; 172 SCRA 733, 739.
14 G.R. No. 67664, 20 May 1992.
15 See Employees Association of the Philippine American Life Assurance Co. v. NLRC, G.R. No. 82976,
26 July 1991; 199 SCRA 628.
16 Petition, pp. 8, 16.
17 108 Phil. 1129.
18 No. L-24189, 30 August 1968; 24 SCRA 873, 887.
19 No. L-29068, 31 August 1971; 40 SCRA 521, 547-548.
20 As originally proposed by Mr. Justice Claudio Teehankee in his Separate Opinion in Mercury Drug
Co., Inc. v. CIR, No. L-23357, 30 April 1974, 56 SCRA 694, 710-711; Mariners Polytechnic School v.
Leogardo, G.R. No. 74271, 31 March 1989, 171 SCRA 597, citing Feati University Faculty Club (PAFLU)
v. Feati University, No. L-31503, 15 August 1974, 58 SCRA 395; Torillo v. Leogardo, G.R. No. 77205, 27
May 1991, 197 SCRA 471.
21 G.R. No. 90500, 5 October 1990; 190 SCRA 347, 353-354.
22 G.R. No. 85286, 24 August 1992.
23 No. L-29728, 30 October 1978; 86 SCRA 36.
24 See Note 13.
25 Icasiano v. Office of the President, See Note 5; Ranara v. NLRC, G.R. No. 100969, 14 August 1992,
among other cases.

Imperial Textile Mills Inc. vs. Sampang, spra
12:01 AM

Unicraft Industries vs. Court of Appeals (2002)
12:02 AM

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 134903 January 16, 2002
UNICRAFT INDUSTRIES INTERNATIONAL CORPORATION, ROBERT DINO, CRISTINA DINO and MICHAEL
LLOYD DINO, petitioners,
vs.
THE HON. COURT OF APPEALS, VOLUNTARY ARBITRATOR FLORANTE V. CALIPAY, DANILO ABARAO,
ROGIETO ABARAO, BENJAMIN AVENTURADO, BENIGNO BELARMINO, FELIX BRAZIL, RENATO BRIONES,
RECCIL ELCANA, ROLAND GERON, RICKY GIMENA, ROMEO INOC, NILIA MANDAWE, ANTONIO
MANGABON, AMELITO MONTELIN, MATIAS ONGOS, ARTURO ORTEGA, ADRIANO PALO, JR.,
BERNARDO RAMOS, WILMA RANILE, EDGAR RIVERA, RAFAEL RONDINA, ANILO ROSALES, DIVINA
ROSALES, ALONA SORTOÑES, VINCH TRUZ, WILSON VILLARTA, EMETERIO YBAS, ROMEO ABARAO,
WILFREDO ABARAO, EUGENIO ABING, JAIME AGUSTIN, RUBEN RONDINA, LORENA SORTOÑES,
respondents.
RESOL UTI ON
YNARES-SANTIAGO, J.:
On March 26, 2001, a Decision was rendered annulling the assailed resolutions of the Court of Appeals
as well as the decision of Voluntary Arbitrator Florante V. Calipay, and remanding the case to the
Voluntary Arbitrator for reception of evidence for petitioners.
Private respondents filed a Motion for Reconsideration1 of May 15, 2001, a Supplemental Motion for
Reconsideration2 on July 30, 2001 and a 2nd Supplemental Motion for Reconsideration3 on September 6,
2001. They argue, in sum, that petitioners were not deprived of due process considering that they were
able to submit their position paper and supporting evidence; and that their failure to present additional
evidence was through their own fault or inaction.1âwphi1.nêt
It should be stressed that the issue of whether or not petitioners were denied due process in the
proceedings before the voluntary arbitrator was laid to rest when the parties entered into a stipulation,
which the Court of Appeals approved on April 22, 1997, wherein they agreed to remand the case to the
voluntary arbitrator "so that the petitioners will be granted their day in court to prove their case." For
reference, the stipulation is again reproduced as follows:
STIPULATION
PARTIES, through their respective counsel, unto this Honorable Court, most respectfully stipulate:
1. Both parties desire to put an end to the litigation before this Honorable Court, and instead refer the
above-entitled case back to Voluntary Arbitrator Florante V. Calipay for further hearing under the
following terms and conditions:
a) The petitioners will put up a bond in the amount of P6.5 Million to be issued by the Visayan Surety &
Insurance Company or any other accredited bonding company acceptable to private respondents to
secure payment of the decision dated March 15, 1997 (Annex A of the Petition) rendered by Voluntary
Arbitrator Calipay.
b) The case will be referred back to Voluntary Arbitrator Calipay so that the petitioners will be granted
their day in court to prove their case, the hearing thereat to treat the following issues:
1. Whether or not the complainants mentioned in Exhibit J of the Decision really filed their complaints
before the NLRC;
2. Whether or not complainants were dismissed; if so, whether or not their dismissals were valid;
3. Whether or not complainants are entitled to separation pay, money claims, attorney's fees and
litigation costs specified in the decision, Annex A of the petition; and
4. Whether or not Robert Dino, Cristina Dino and Michael Dino can be held liable for the claims of

litigation costs specified in the decision, Annex A of the petition; and
4. Whether or not Robert Dino, Cristina Dino and Michael Dino can be held liable for the claims of
complainants.
WHEREFORE, premises considered, it is most respectfully prayed of this Honorable Court to approve the
foregoing Stipulation and to render a resolution in accordance therewith.4
The proceedings, however, were not continued because Voluntary Arbitrator Florante V. Calipay
declared that he has lost jurisdiction over the case when he rendered judgment therein.5
Worse, the Court of Appeals, in violation of the parties' aforesaid stipulation, issued on June 18, 1998 a
resolution ordering the partial execution of the decision of the voluntary arbitrator with respect to the
award of separation pay and attorney's fees. Petitioners assail the resolution ordering the partial
execution of the decision of the voluntary arbitrator arguing that the Court of Appeals deprived them of
their day in court when it disregarded their agreement with private respondents for the remand of the
case.
In our Decision, we ordered the remand of the case to the voluntary arbitrator for reception of evidence
for the petitioners. We ruled that the award of separation pay cannot be executed before trial is
terminated since to do so would be to preempt the proceedings before the voluntary arbitrator. It is
worth noting that the case filed was for illegal dismissal. The affirmance of the award of separation pay
would be tantamount to a judicial declaration that private respondents were indeed illegally dismissed.
WHEREFORE, the Motion for Reconsideration, the Supplemental Motion for Reconsideration, and the
2nd Supplemental Motion for Reconsideration are DENIEDfor lack of merit. This denial is FINAL.
SO ORDERED.
Kapunan, and Pardo, JJ., concur.
Puno, J., dissenting opinion
Davide, Jr., C.J., join J. Puno in his dissent.
Footnote
1 Rollo, pp. 668-684.
2
Ibid., pp. 730-734.
3
Ibid., pp. 762-769.
4
Records, pp. 125-126.
5
Ibid., pp. 131-141.
G.R. No. 134903 January 16, 2002
UNICRAFT INDUSTRIES INTERNATIONAL CORPORATION
vs.
THE HON. COURT OF APPEALS, ET AL.
DISSENTING OPINION
PUNO, J.:
Private respondents seek the reconsideration of the Court's Decision dated March 26, 2001 remanding
the case to Voluntary Arbitrator Florante V. Calipay for reception of evidence and further proceedings.
In the Decision sought to be reconsidered, the Court held that petitioners were deprived of due process
when the voluntary arbitrator rendered a ruling declaring that private respondents were illegally
dismissed without giving them an opportunity to present evidence. The ruling was grounded on the fact
that neither petitioners nor their counsel were able to attend the hearing before the voluntary
arbitrator set for March 3, 1997 at 3:00 o'clock in the afternoon because they received the notice
thereof only at 4:00 o'clock in the afternoon of the same date.
With due respect to the majority, I submit otherwise. A more prudent examination of the records would
reveal that petitioners were given ample opportunity to present their arguments and their supporting
evidence before the voluntary arbitrator but they refused to do so.
It appears that the complaints for illegal dismissal, underpayment/nonpayment of wages, overtime pay,
holiday pay, 13th month pay and service incentive leave were initially filed by private respondents before
the National Labor Relations Commission Regional Arbitration Branch VII (NLRC RAB), Cebu City in July
1995.1 In November 1995, after initial hearings, the parties submitted their position papers. Summary
hearing was held and the case was submitted for resolution. The parties were given ten (10) days to file
memoranda. On October 11, 1996, Labor Arbiter Dominador Almirante issued an Order referring the
case to the National Conciliation and Mediation Board (NCMB) for voluntary arbitration pursuant to
Policy Instruction No. 56 of the Secretary of Labor dated April 6, 1996.2
On December 19, 1996, Florante V. Calipay was designated as voluntary arbitrator upon agreement of

On December 19, 1996, Florante V. Calipay was designated as voluntary arbitrator upon agreement of
the parties.3
On December 27, 1996, Director Teodorico Yosores, Officer-in-Charge, NCMB Region VII, informed
Voluntary Arbitrator Calipay that he had been chosen by both parties as their voluntary arbitrator and
forwarded to him the pertinent forms.4
On January 9, 1997, petitioners filed a motion for re-selection of voluntary arbitrator which was heard
on January 17, 1997.5
On January 23, 1997, a hearing was conducted by Voluntary Arbitrator Calipay. Private respondents and
their counsel were present together with petitioners' counsel. Voluntary Arbitrator Calipay issued an
Order dated January 21, 1997 denying petitioners' motion for re-selection, defining the issues, and
requiring the parties to submit their respective position papers and evidence within fifteen (15) days or
up to February 7, 1997, thus:
"x x x x xx x xx
WHEREFORE, by virtue of the powers and duties vested upon me as voluntary arbitrator, I hereby order
both parties to submit their respective position papers and evidence, within fifteen (15) days from
today, treating the following issues:
a) whether or not the voluntary arbitrator had been validly selected by the parties and/or whether the
same arbitrator had validly assumed jurisdiction over the case?
b) whether or not the complaining workers were legally dismissed? If not, what are their rights and
remedies under the law?
Failure of any party to submit their position paper and/or evidence within the set period would (be)
tantamount to waiver of such party to present the same. The case shall then be considered submitted
for immediate resolution based on the (sic) what would thus far be submitted.
xxx x xx x x x."6
On February 10, 1997, the voluntary arbitrator issued an Order extending the period to submit their
position papers and evidence for ten (10) days or up to February 17, 1997, with a warning that it would
be the last extension. He again advised the parties that failure to submit the required position paper and
evidence within the set period would constitute a waiver. The Order read:
"During the last hearing, this Voluntary Arbitrator granted the parties fifteen (15) days to submit their
respective position papers and all evidence they wish to submit. This period ended on 7 February 1997.
In order to afford both parties adequate time and leeway, this Office extends such period for another
ten (10) days or up to 17 February 1997, Monday, to file the required pleadings and evidence. In order
for this arbitrator to comply with his legal duty for speedy proceedings, this shall be the last extension.
The parties are therefore advised that failure to comply with this order and/or failure (to) submit their
position paper and evidence on the set period shall constitute waiver to do so. No further evidence shall
be received after 17 February 1997. After the extended deadline, the arbitrator shall decide whether or
not clarificatory hearing or trial is necessary. If in his judgment, none is necessary, the case shall be
declared submitted for resolution. Otherwise, hearing shall be set, after which the case shall be
considered submitted for resolution."7
Private respondents filed their position paper and supporting evidence by mail within the given period.
Petitioners, however, failed to do so. Nonetheless, private respondents attached to their position
paper a copy of petitioners' position paper submitted in the proceedings before the NLRC RAB.8
On February 20, 1997, Voluntary Arbitrator Calipay conducted a hearing upon due notice to both
parties. Neither petitioners nor their counsel were present. On the other hand, counsel for private
respondents appeared and moved for early resolution of the case.9 Thus, Voluntary Arbitrator Calipay
issued an Order dated February 24, 1997 setting another hearing for March 3, 1997 and giving
petitioners up to said date within which to submit their position paper and supporting evidence if they
so desire. The Order stated:
"x x x x xx x xx
The respondents should have been in default already to submit any additional pleading or evidence, the
set deadline of 17 February 1997 having long elapsed. Besides, this Office already had a copy of their
position paper and evidence they earlier filed with the NLRC RAB VII. But in the interest of justice and
equity, this Office is giving respondents up to the last hearing to submit any if they so desire, which is set
on 3 March 1997 at 3:00 P.M. at the NCMB Region VII Office. After such last hearing, this case shall be

submitted for resolution without further delay pursuant to law.
xxx x xx x x x."10
During the hearing on March 3, 1997, private respondents and their counsel were present, but again,
neither petitioners nor their counsel appeared.
On March 15, 1997, the voluntary arbitrator rendered a Decision holding that private respondents were
illegally dismissed and awarding them backwages, separation pay, money claims and attorneys fees.11
From the foregoing, it is clear that petitioners were given reasonable opportunity to submit their
position paper and supporting evidence to the voluntary arbitrator. The first Order directing the
parties to file their respective position papers and evidence was issued on January 23, 1997 and they
were given fifteen (15) days within which to submit the same. On February 10, 1997, the first period
having lapsed, the voluntary arbitrator issued another Order extending the period for ten (10) days.
Petitioners, however, failed to comply with the Order within the extended period. The voluntary
arbitrator nonetheless gave petitioners another chance to submit their position paper and evidence
until March 3, 1997. Despite the two extensions, petitioners still failed to submit the required paper.
They did not even offer any explanation for their omission. In the Orders directing them to file their
position papers, the parties were warned that failure to submit the same within the given period would
be considered as waiver. Under these circumstances, petitioners cannot be considered as having been
denied due process. The essence of due process in administrative proceedings is simply an opportunity
to explain one's side or an opportunity to seek a reconsideration of an action or ruling complained of.12
The foregoing narration of the proceedings before the voluntary arbitrator clearly shows that petitioners
were given an opportunity to present their evidence but they refused to avail of this opportunity
without any legal reason. Due process is not violated where one is given the opportunity to be heard,
but chooses not to give his side.13
In truth, petitioners cannot complain that their position was never ventilated before the arbitrator. Prior
to the referral of the case to NCMB and to Voluntary Arbitrator Calipay, the parties had submitted their
position papers to the NLRC RAB which held a summary trial. The voluntary arbitrator was furnished a
copy of the position paper submitted by petitioners to the NLRC RAB in connection with the proceedings
therein, and the former considered said position paper in rendering his Decision. In their petition before
this Court, petitioners failed to show that they were actually prejudiced by the fact that they were not
able to file their position paper or attend the hearing before the voluntary arbitrator. No new issues
were raised before the voluntary arbitrator and the matters that need to be resolved have been
sufficiently threshed out in the proceedings before the NLRC RAB. Thus, the fundamental rule of due
process that mandates notice and an opportunity to be heard has been sufficiently met in this case.14
IN VIEW WHEREOF, I vote to GRANT the motion for reconsideration.1âwphi1.nêt
Footnote
1 CA Rollo, pp. 142-173.
2 CA Rollo, p. 40.
3 CA Rollo, p. 42.
4 CA Rollo, p. 43.
5 CA Rollo, p. 69.
6 CA Rollo, pp. 44-45.
7 CA Rollo, p. 46.
8 See Order issued by Voluntary Arbitrator Calipay dated February 24, 1997, CA Rollo, pp. 48-49.
9 Minutes of Hearing, see documents and files submitted to the CA by Voluntary Arbitrator Calipay, CA
Rollo, pp. 765 ff.

10 CA Rollo, pp. 48-49.
11 CA Rollo, pp. 33-39.
12 Aparente, Sr. vs. NLRC, 331 SCRA 82 (2000); St. Michael Academy vs. NLRC, 292 SCRA 478 (1998).
13 Caurdanetaan Piece Workers Union vs. Laguesma, 286 SCRA 401 (1998); Cindy and Linsy Garment vs.
NLRC, 284 SCRA 38 (1998).

14 See Paper Industries Corporation of the Philippines vs. Laguesma, 330 SCRA 295 (2000); Pepsi Cola
Products Philippines, Inc. vs. NLRC, 300 SCRA 66 (1998).



Sime Darby Pilipinas, Inc. vs. Magsalin
12:03 AM
G.R. No. 90426 December 15, 1989

SIME DARBY PILIPINAS, INC., petitioners,
vs.
DEPUTY ADMINISTRATOR BUENAVENTURA C. MAGSALIN as Voluntary Arbitrator and
the SIME DARBY EMPLOYEES ASSOCIATION, respondents.
Romulo, Mabanta, Buenaventura, Sayoc & De los Angeles for petitioner.
Cezar F. Maravilla, Jr. for private respondent.
FELICIANO, J.:
The Petition for certiorari before us assails the award of Voluntary Arbitrator Buenaventura
Magsalin dated 17 August 1989 which directed petitioner Sime Darby Pilipinas, Inc. (Sime
Darby) to pay the members of private respondent Sime Darby Employees Association (SDEA) a
performance bonus equivalent to seventy-five percent (75%) of their monthly basic pay for the
year 1988-1989.
On 13 June 1989, petitioner Sime Darby and private respondent SDEA executed a Collective
Bargaining Agreement (CBA) providing, among others, that:
Article X, Section 1. A performance bonus shall be granted, the amount of which [is] to be determined by
the Company depending on the return of [sic] capital investment as reflected in the annual financial
statement.
On 31 July 1989, the Sime Darby Salaried Employees Association- ALU (SDSEA-ALU) wrote
petitioner demanding the implementation of a provision Identical to the above contained in their
own CBA with petitioner. Subsequently, petitioner called both respondent SDEA and SDEA-ALU
to a meeting wherein the former explained that it was unable to grant the performance bonus
corresponding to the fiscal year 1988-1989 on the ground that the workers' performance during
said period did not justify the award of such bonus. On 27 July 1989, private respondent SDEA
filed with the National Conciliation and Mediation Board (NCMB) an urgent request for
preventive conciliation between private respondent and petitioner.
On 1 August 1989, the parties were called to a conciliation meeting and in such meeting, both
parties agreed to submit their dispute to voluntary arbitration. Their agreement to arbitrate
stated, among other things, that they were "submitting the issue of performance bonus to
voluntary arbitration" and that "the decision/award of the voluntary arbitrator shall be respected
and implemented by the parties as final and executory, in accordance with the law." 1
On 14 August 1989, petitioner filed its position paper which aimed to show that the performance
of the members of respondent union during the year was below the production goals or targets
set by Sime Darby for 1988-1989 and below previous years' levels for which reason the
performance bonus could not be granted. Petitioner there referred to the following performance
indicators: a) number of tires produced; b) degree of wastage of production materials; and c)
number of pounds of tires produced per man hour. On that same day, 14 August 1989,
petitioner manifested before the Voluntary Arbitrator that it would file a Reply to the union's
Position Paper submitted on 10 August 1989 not later than 18 August 1989.
However, before petitioner could submit its Reply to the union's Position Paper, the Voluntary
Arbitrator on 17 August 1989 issued an award which declared respondent union entitled to a
performance bonus equivalent to 75% of the monthly basic pay of its members. In that award,
the Voluntary Arbitrator held that a reading of the CBA provision on the performance bonus
would show that said provision was mandatory hence the only issue to be resolved was the
amount of performance bonus. The Voluntary Arbitrator further stated that petitioner company's
financial statements as of 30 June 1988 revealed retained earnings in the amount of P
324,370,372.32. From the foregoing, the Voluntary Arbitrator concluded that petitioner company
could well afford to give members of respondent union a substantial performance bonus. The
Voluntary Arbitrator also stated that there was evidence to show that the company has given
performance bonuses to its managerial and non-unionized employees as well as to monthly
paid workers of the year 1988-1989.
Petitioner filed a motion for reconsideration which motion was not entertained by the Voluntary
Arbitrator upon the ground that under the ruling of this Court in Solidbank v. Bureau of Labor

Arbitrator upon the ground that under the ruling of this Court in Solidbank v. Bureau of Labor
Relations, (G.R. No. 64926, promulgated 8 October 1984; unpublished) he, the Voluntary
Arbitrator, had automatically lost jurisdiction over the arbitration case upon the issuance of the
award.
In this Petition for Certiorari, petitioner mainly argues that respondent Voluntary Arbitrator
gravely abused his discretion in holding that the grant of performance bonus was mandatory
and that the only issue before him was the amount of the bonus. It is contended that since a
performance bonus is a "gift" based on the company's performance, the same is not justified
when the company's performance has been poor. Petitioner claims that during the fiscal year of
1988-1989, the company performed poorly as shown by the decline in tire production for the
said year as well as the increase of the rate of wastage of production materials, and also by the
decrease in the number of tires produced per man hour. Petitioner also argues that even if a
performance bonus were justified, the Voluntary Arbitrator gravely abused his discretion in
giving an award of 75% of the monthly basic rate without any evidence of the basis used in
arriving at such an award. It is insisted that under the relevant CBA provision, the company
determines the amount of the bonus if the same be justified. Petitioner also alleged that
respondent Arbitrator gravely erred when he based the award on the company's retained
earnings the level of which represents earnings accumulated during prior years and not merely
during the fiscal year 1988-1989.
On 8 November 1989, the Court temporarily restrained the enforcement of the Voluntary
Arbitrator's award to prevent the petition at bar becoming moot and academic.
We are not persuaded by petitioner's arguments.
One point needs to be stressed at the outset: the award of a Voluntary Arbitrator is final and
executory after ten (10) calendar days from receipt of the award by the parties. 2 There was a
time when the award of a Voluntary Arbitrator relating to money claims amounting to more than
P 100,000.00 or forty percent (40%) of the paid-up capital of the employer (whichever was
lower), could be appealed to the National Labor Relations Commission upon the grounds of (a)
abuse of discretion; or (b) gross incompetence, presumably of the arbitrator. 3 This is no longer
so today although, of course, certiorari will lie in appropriate cases. A petition for certiorari under
Rule 65 of the Revised Rules of Court will lie only where a grave abuse of discretion or an act
without or in excess of jurisdiction on the part of the Voluntary Arbitrator is clearly shown. It must
be borne in mind that the writ of certiorari is an extraordinary remedy and that certiorari
jurisdiction is not to be equated with appellate jurisdiction. In a special civil action of certiorari,
the Court will not engage in a review of the facts found nor even of the law as interpreted or
applied by the Arbitrator unless the supposed errors of fact or of law are so patent and gross
and prejudicial as to amount to a grave abuse of discretion or an excess de pouvoir on the part
of the Arbitrator. 4 The Labor Code and its Implementing Rules thus clearly reflect the important
public policy of encouraging recourse to voluntary arbitration and of shortening the arbitration
process by rendering the arbitral award non- appealable to the NLRC. The result is that a
voluntary arbitral award may be modified and set aside only upon the same grounds on which a
decision of the NLRC itself may be modified or set aside, by this Court.
Examination of the pleadings in the instant Petition shows that two (2) principal issues are
raised: The first is whether or not the Voluntary Arbitrator acted with grave abuse of discretion or
without or in excess of jurisdiction in passing upon both the question of whether or not a
performance bonus is to be granted by petitioner Sime Darby to the private respondents and the
further question of the amount thereof. The second is whether or not the award by the Arbitrator
of a performance bonus amounting to seventy five percent (75%) of the basic monthly salary of
members of private respondent union itself constituted a grave abuse of discretion or an act
without or in excess of jurisdiction. We consider these issues seriatim
1. In respect of the first issue, petitioner Sime Darby urges that the Arbitrator gravely abused his
discretion in passing upon not only the question of whether or not a performance bonus is to be
granted but also, in the affirmative case, the matter of the amount thereof. The position of
petitioner, to the extent we can understand it, is that the Arbitrator was authorized to determine
only the question of whether or not a performance bonus was to be granted, the second
question being reserved for determination by the employer Sime Darby. We noted earlier that in
their agreement to arbitrate, the parties submitted to the Voluntary Arbitrator "the issue of
performance bonus." The language of the agreement to arbitrate may be seen to be quite
cryptic. There is no indication at all that the parties to the arbitration agreement regarded "the
issue of performance bonus" as a two-tiered issue, only one tier of which was being submitted
to arbitration. Possibly, Sime Darby's counsel considered that issue as having dual aspects and

to arbitration. Possibly, Sime Darby's counsel considered that issue as having dual aspects and
intended in his own mind to submit only one of those aspects to the Arbitrator; if he did,
however, he failed to reflect his thinking and intent in the arbitration agreement.
It is thus essential to stress that the Voluntary Arbitrator had plenary jurisdiction and authority to
interpret the agreement to arbitrate and to determine the scope of his own authority subject
only, in a proper case, to the certiorari jurisdiction of this Court. The Arbitrator, as already
indicated, viewed his authority as embracing not merely the determination of the abstract
question of whether or not a performance bonus was to be granted but also, in the affirmative
case, the amount thereof. The Arbitrator said in his award:
At this juncture, it would not be amiss to emphasize to the parties that the matter of performance bonus
necessarily includes not only the determination of the existence of the right of the union to this benefit but
also the amount thereof. This conclusion arises from a perusal of the terms of the submission agreement
entered into by Sime Darby Pilipinas, Inc. and Sime Darby Employees Association which limited the
voluntary arbitration only with regard to submission of position papers of the parties, disposition and
rendition of the award. Nary (sic) a trace of qualification as to the sole issue of performance bonus may
be gleaned from a review of said agreement.
With that as a timely reminder, this Arbitrator now proceeds to resolve the issues herein submitted for
resolution. Without doubt, the Sime Darby Employees Association is entitled to performance bonus. This
conclusion arises from an analysis of the imperative terms of the CBA provision on production bonus,
hereinunder reproduced, to wit:
A performance bonus shall be granted the amount of which to be determined by the Company depending
on the return of capital investment as reflected in the annual financial statements. 5 (Emphasis supplied)
Analysis of the relevant provisions of the CBA between the parties and examination of the
record of the instant case lead us to the conclusion that the Arbitrator's reading of the scope of
his own authority must be sustained.
Article X, Section 1 of the CBA is, grammatically speaking, cast in mandatory terms: "A
performance bonus shall be granted ..." The CBA provision goes on, however, immediately to
say that the amount of the performance bonus "[is] to be determined by the Company." Thus,
notwithstanding the literal or grammatical tenor of Article X, Section 1, as a practical matter, only
the issue relating to the amount of the bonus to be declared appears important. Not much
reflection is needed to show that the critical issue is the scope of authority of the company to
determine the amount of any bonus to be granted. If the company's discretionary authority were
to be regarded as unlimited and if the company may declare in any event a merely nominal
bonus, the use of mandatory language in Article X, Section 1, would seem largely illusory and
cosmetic in effect. Alternatively, even if one were to disregard the use of "shall" rather than
"may" in Article X, Section 1, the question of whether or not a performance bonus is to be
granted, still cannot realistically be dissociated from the intensely practical issue of the amount
of the bonus to be granted. It is noteworthy that petitioner Sime Darby itself did not spend much
time discussing as an abstract question whether or not the grant of a performance bonus is per
se obligatory upon the company. Petitioner instead focused upon the production performance of
the company's employees as bearing upon the appropriateness of any amount of bonus.
Further, if petitioner Sime Darby's argument were to be taken seriously, one must conclude that
the parties to the arbitration agreement intended to refer only a theoretical and practically
meaningless issue to the Voluntary Arbitrator, a conclusion that we find thoroughly
unacceptable.
2. We turn then to the issue of whether or not the Voluntary Arbitrator gravely abused his
discretion or acted without or in excess of jurisdiction in awarding an amount equivalent to
seventy-five percent (75%) of the basic monthly pay of members of respondent union. Petitioner
Sime Darby contends that that award is devoid of factual basis. We understand this contention
to be that the Arbitrator did not apply the relevant CBA provision.
Once more, we are not persuaded by petitioner's contention.
Article X, Section 1 of the CBA does not in express terms identify whose performance is to
appraised in determining an appropriate amount to be awarded as performance bonus. The
Court considers that it is the performance of the company as a whole, and not merely the
production or manufacturing performance of its employees, which is relevant in that
determination. The CBA provision refers to the return on investment of the company (ROI). The
return on the stockholders' investment, as we understand it, relates basically to the net profits
shown by the company and therefore to many more factors than simply the extent to which
production targets were achieved or the rise and fall of the manufacturing efficiency ratios.
Among those factors would be the cost of production, the quality of the products, the cost of
money, the debt-equity ratio, the cost of sales, the level of taxes due and payable, the gross

money, the debt-equity ratio, the cost of sales, the level of taxes due and payable, the gross
revenues realized, and so forth.
We note upon the other hand, that petitioner's counsel failed to discuss at all before the
Voluntary Arbitrator the rate of return on stockholders' investment achieved by Sime Darby for
the year 1988- 1989; as earlier noted, counsel confined his argument and the evidence
submitted by him to the number of tires produced, the decrease in the rate of wastage of
manufacturing materials, and the productivity of the work force measured in terms of the
number of tires produced per man hour.
The Voluntary Arbitrator, upon the other hand, explicitly considered the net earnings of
petitioner Sime Darby in 1988 (P 100,000,000.00) and in the first semester of 1989 (P
95,377,507.00) as well as the increase in the company's retained earnings from P
265,729,826.00 in 1988 to P 324, 370,372.00 as of 30 June 1989. Thus, the Arbitrator impliedly
or indirectly took into account the return on stockholders' investment realized for the fiscal year
1988-1989. It should also be noted that the relevant CBA provision does not specify a minimum
rate of return on investment (ROI) which must be realized before any particular amount of bonus
may or should be declared by the company.
The Voluntary Arbitrator also took into account, again in an indirect manner, the performance of
Sime Darby's employees by referring in his award to "the total labor cost incurred by the
Company":
This Arbitrator, however, is well aware that any effort in this regard must be tempered and balanced as
against the need to sustain the continued viability of Sime Darby Pilipinas, Inc. in accordance with the
constitutional provision which recognizes the 'right of enterprise to reasonable returns on investment and
to expansion and growth.' Furthermore, any award to be rendered must likewise take into account the
total labor cost incurred by the Company. It should not merely be confined to those pertaining to the
members of the Sime Darby Employees Association but necessarily include that which shall be paid and
granted to all other employees of Sime Darby this year. 6 (Emphasis supplied)
On balance, we believe and so hold that the award of the Voluntary Arbitrator of a bonus
amounting to seventy-five percent (75%) of the basic monthly salary cannot be said to be
merely arbitrary or capricious or to constitute an excess de pouvoir.
The remaining assertions of petitioner Sime Darby relating to denial of procedural due process
by the Voluntary Arbitrator, consisting of failure to wait for petitioner's announced Reply
(basically reiterative and amplificatory in nature) to the union's Position Paper and of alleged
failure to consider evidence submitted by petitioner, do not require extended consideration; they
are evidently bereft of merit.
WHEREFORE, the Petition for Certiorari is DISMISSED for lack of merit. The Temporary
Restraining Order issued on 8 November 1989 is hereby LIFTED. This Decision is immediately
executory. Costs against petitioner.
SO ORDERED.
Fernan, C.J., Gutierrez, Jr., Bidin and Cortes, JJ., concur.
Footnotes
1 Annex "B" of the Petition, Rollo p. 29; emphasis supplied.
2 Article 262-A, Labor Code, as amended by Republic Act No. 6715.
3 Section 5, Rule XI of Book No. V, Rules Implementing the Labor Code.
4 It is in this sense that Oceanic Bic Division (FFW) v. Romero, 130 SCRA 392 (1984) and Mantrade/FMMC Division Employees and
Workers Union v. Bacungan, 144 SCRA 510 (1986) are to be understood.
5 Rollo, p. 27.
6 Rollo, p. 28.

Ludo Case, Supra
12:04 AM

Ramoran vs. Jardine CMG Life Insurance (2000)
12:08 AM
G.R. No. 131943 February 22, 2000
VIRGINIA G. RAMORAN, petitioner,
vs.
JARDINE CMG LIFE INSURANCE COMPANY, INC., respondent.
DE LEON, JR., J.:
Before us is a petition for review on certiorari of the twin resolutions of the Court of Appeals1 dated
August 27, 19972 and December 22, 19973, which upheld the decision of the Panel of Voluntary
Arbitrators to dismiss petitioner Virginia G. Ramoran whom they found guilty of falsifying her overtime
authorization slips in violation of Rule No. 32 of the Company Rules and Regulations issued by
respondent Jardine CMG Life Insurance Company, Inc. (hereafter, "Jardine").
The facts are:
Petitioner Ramoran started working with Jardine on June 6, 1976 as an accounting clerk. She rose thru
the ranks and held the position of junior accountant in 1994. Antonio Robles, then Manager of the
Accounting Department of respondent Jardine, was her immediate supervisor.4
On December 7, 1993,5 the Human Resources Development (hereafter, "HRD") of Jardine, received from
petitioner an overtime (OT) authorization slip dated December 6, 1993, covering her alleged overtime
work on November 16, 17, 18, 22, 23 and 24, 1993.6 Jardine paid petitioner overtime pay for the said
days as included in the payroll for the period of December 1-15, 1993.7
On December 15, 1993,8 the HRD received an OT authorization slip dated December 14, 1993, prepared
by petitioner, covering the overtime work allegedly rendered by her on December 13 and 14, 1993.9 The
HRD paid petitioner overtime pay for the two (2) days, as included in the next payroll covering the
period of December 16-31, 1993.10
It is a company rule of respondent Jardine that an OT authorization slip must pertain to only one (1) date
when the overtime was rendered. The OT authorization slip must also contain the following instructions:
(1) that the department supervisor must forward the OT authorization slip to the guard on duty not later
than 5:00 o'clock in the afternoon of the working day before the authorized overtime; (2) that the guard
on duty in turn is required to transmit the OT authorization slip to the HRD not later than 9:00 o'clock in
the morning of the following day; and (3) that no payment for OT work may be made unless the OT
authorization slip is properly accomplished.
On December 18, 1993, Yolanda S. Carreon, HRD Clerk, together with Amelia F. Castillo, HRD Assistant,
in the course of preparing and post-auditing payroll payments, noticed some irregularities in the
overtime slips, dated December 6 and December 14, 1993, submitted by petitioner.11
The OT authorization slip, dated December 6, 1993, covered alleged overtime work on six (6) days,
November 16, 17, 18, 22, 23, and 24, 1993, as appearing from the entries under the headings "Overtime
Date" and "Actual Time". Said slip was prepared only on December 6, 1993 and signed by the security
guard on December 7, 1993, or long after the stated days on which petitioner had supposedly worked
overtime.12
The OT authorization slip dated December 14, 1993, covered the alleged overtime work for two (2) days
on December 13 and 14, 1993, as appearing from the entries under the heading "Overtime Date" and
"Department", "Name", and Actual Time". Said OT slip appeared to have been tampered with. In the
declared overtime dates of "December 13 and 14, 1993", the words "13 &" as well as the caret mark "^"
indicated the mere addition of "13 &" to the basic entry "December 14, 1993". Moreover, the entries
"Roderick Paat" of the "Admin. (Department)" for the purpose "To file BPI Checks" "from 5:00 to 9:00
(p.m.)" had been cancelled or crossed out without the verifying initials of the approving Department
Head. Below such cancellation, petitioner entered the date "Dec. 13/93" and "Dec. 14/93" under the
heading "Dept.," and filled out the corresponding blanks for "Name", "Reason" and "Authorized Time"
to cover her purported overtime work on December 13 and 14, 1993.13
The matter was brought to the attention of Ms. Aida N. Hornilla, HRD Supervisor, who in turn called the
attention of Norman T. Tamayo, HRD Manager.14
In a Memorandum dated January 4, 1994, Tamayo called the attention of Robles who approved

petitioner's OT authorization slips.15
On February 1, 1994, respondent Jardine conducted an administrative investigation concerning
petitioner. Present were petitioner herself, Ms. Hornilla, Tamayo, Robles, Rommel Muñoz, President of
the Jardine CMG Life Union (hereafter, "Jardine union"), and Ms. Ma. Teresa Luague, Secretary of the
Jardine union.16
During the said proceedings, Tamayo opened the discussion by emphasizing the purpose of the meeting,
that is, to clarify issues regarding the overtime rendered by petitioner as recorded in her OT
authorization slips dated December 6 and 14, 1993.1âwphi1.nêt
Petitioner stated that she had no intention of rendering overtime. She just wanted to catch up with
work backlog caused by her serving a previous penalty of suspension and, for that reason, she did not
immediately file her OT authorization slips and was only prompted to submit the same when she was
reminded by the HRD for the purpose of completing documentation.
On the other hand, Robles, petitioner's immediate supervisor, consistently denied having signed and
approved petitioner's irregular OT authorization slips. He maintained that he did not authorize
petitioner to render overtime work on those questioned dates and that petitioner's OT authorization slip
dated December 14, 1993 had erasures which do not bear his initials.17
On February 8, 1994, the administrative investigation continued. It was attended by petitioner, Robles,
Tamayo, Ms. Hornilla, Muñoz, Ms. Luague and a certain E.J. Dela Cruz, of the Jardine union. The
proceedings were recorded in the minutes of the said meeting.18
On April 4, 1994, petitioner was terminated from employment for violation of Rule 32 of the Company
Rules and Regulations penalizing with dismissal, the offense of "falsification of personnel, medical and
other company records" in pursuit of personal gain.19
On May 5, 1994, the Jardine union filed with the National Conciliation and Mediation Board (NCMB), a
Notice of Strike, docketed as NCMB Case No. NS-05-232-94, raising as one of the issues, the alleged
illegal termination of petitioner's employment.20 Several conciliation hearing was conducted by the
NCMB but the parties were unable to resolve their differences.
On July 6, 1994, the Jardine union staged a strike.21
On July 8, 1994, respondent Jardine filed a complaint with the Arbitration Board of the National Labor
Relations Commission (NLRC) where it was docketed as NLRC NCR Case No. 07-05244-94. Respondent
prayed that the strike staged by the Jardine union be declared illegal and that the individual respondents
named in the complaint be ordered dismissed for having knowingly participated in the illegal strike.
In the meantime, respondent Jardine filed a complaint22 on July 19, 1994 against petitioner with the
Provincial Prosecution Office of Rizal for violation of Article 172 in relation to Article 171, paragraphs 2
and 6 of the Revised Penal Code.
On July 22, 1994, respondent and the Jardine union entered into a Compromise Agreement23 whereby it
was resolved, among others, that the legality of the termination of petitioner's employment should be
decided by a panel of voluntary arbitrators.
On August 19, 1994, Labor Arbiter Yulo rendered a decision24 dismissing NLRC NCR Case No.
07-05244-94 on the basis of the said Compromise Agreement.
On December 29, 1994, 2nd Asst. Prosecutor Bautista issued a Memorandum25 for Rizal Provincial
Prosecutor Mauro Castro, recommending that petitioner be indicted for the crime of falsification of
private document on two (2) counts. Two (2) separate informations which were accordingly filed against
petitioner were docketed as Criminal Cases Nos. 163751 and 163752 and subsequently raffled to Branch
61 of the Metropolitan Trial Court.26 On arraignment, petitioner pleaded not guilty to both charges.
On March 6, 1995, respondent and the Jardine union signed a Submission Agreement whereby they
agreed to subject the issue of whether or not petitioner's employment was terminated for cause and in
accordance with due process, to voluntary arbitration.27
On May 24, 1995, the first arbitration conference 28 was held. Respondent and the Jardine union,
representing petitioner, agreed on the composition of the Panel of Voluntary Arbitrators which includes
Atty. Sixto A. Martinez, Jr. as Chairman; Efren P. Aranzamendez, representing the Jardine union; and
Atty. Josephus B. Jimenez, representing respondent.
On June 6, 1995, the second arbitration conference was held. Muñoz, President of the Jardine union,
represented the petitioner. At the said conference, the parties agreed that they would simultaneously
file their respective position papers. They likewise agreed that the case shall be deemed submitted on
the basis of their position papers and their reply.29

the basis of their position papers and their reply.29
On June 28, 1995 and August 14, 1995, respondent Jardine and petitioner respectively filed their
position papers.30
In the meantime, trial on the merits in Criminal Cases Nos. 163751 and 163752 started on August 29,
1995 and concluded on January 15, 1996.31
On December 28, 1995, the Panel of Voluntary Arbitrators rendered a decision of even date, upholding
the termination of petitioner's employment and denying her claim for moral and exemplary damages.32
On May 14, 1996, Judge Maximo Contreras, Presiding Judge of Branch 61 of the Metropolitan Trial Court
of Makati City, rendered a decision convicting petitioner in Criminal Case No. 163751 but acquitting her
in Criminal Case No. 163752 because her alleged guilt was not satisfactorily shown.33
Petitioner questioned her conviction in Criminal Case No. 163752 before the Regional Trial Court of
Makati City which subsequently rendered a decision reversing petitioner's conviction.34
Believing that the decision of the Panel of Voluntary Arbitrators may now be overturned following her
acquittal in the two criminal cases filed against her, petitioner filed with the Court of Appeals, a Petition
for Certiorari under Rule 65 of the Revised Rules of Court assailing said decision.
But on August 27, 1997, the Court of Appeals rebuffed petitioner with a resolution denying due course
to her petition.35
On September 18, 1997, petitioner filed a motion for reconsideration which the Court of Appeals denied
on December 22, 1997.36
Petitioner raised the following assignment of errors:
I THE RULING OF THE HONORABLE COURT OF APPEALS IN ITS RESOLUTION DATED AUGUST 27, 1997
THAT THE PETITION FOR REVIEW UNDER RULE 65 OF THE REVISED RULES OF COURT IS NOT THE PROPER
REMEDY IS NOT IN ACCORD WITH THE DECISIONS OF THE HONORABLE SUPREME COURT IN CASES
WHERE THE RIGHT TO APPEAL IS LOST DUE TO THE GROSS NEGLIGENCE OF COUNSEL.
II THE HONORABLE COURT OF APPEALS DEPARTED FROM THE ACCEPTED AND USUAL COURSE OF
JUDICIAL PROCEEDINGS IN DECIDING THE CASE ON ITS MERITS WITHOUT REQUIRING THE
RESPONDENTS TO COMMENT ON THE PETITION FOR REVIEW UNDER RULE 65 OF THE REVISED RULES OF
COURT.
III THE HONORABLE COURT OF APPEALS DISREGARDED THE FUNDAMENTAL REQUIREMENT OF
INTEGRITY, INDEPENDENCE AND IMPARTIALITY ON THE PART OF THE PANEL OF VOLUNTARY
ARBITRATORS WHO IN PERFORMING QUASI-JUDICIAL FUNCTIONS SHOULD BE BOUND BY THE CODE OF
JUDICIAL CONDUCT.
IV THE HONORABLE COURT OF APPEALS PLACED MORE IMPORTANCE ON TECHNICALITIES THAN
CONSIDERATION OF JUSTICE AND EQUITY WHICH ARE THE ULTIMATE ENDS OF THE RULES OF
PROCEDURE.31
The petition lacks merit.
First. Entrenched is the rule that findings of facts of quasi-judicial agencies are accorded great respect
and, at times, even finality, if supported by substantial evidence.38 Thus the Court of Appeals ruled:
The lifeblood, as it were, of this petition, hinges on the sole issue, here phrased: is an employee, who
has been dismissed by his employee due to loss of trust, entitled to reinstatement upon his acquittal in a
criminal action? The question is not at all new, having been addressed in a number of cases . . . .
xxx x xx xxx
The petition calls for the substitution of the trial court's judgment over that of the panel of voluntary
arbitrators. After assaying RAMORAN'S argument, the Court believes that it is only proper to observe
the principle enunciated in Maranaw Hotels and Resorts Corporation v. Court of Appeals (G.R. No.
103215, 215 SCRA 501 [1992]), that is, conclusions of voluntary arbitrator (or a panel as in this case)
when they are sufficiently corroborated by the evidence on record, should similarly be respected by
appellate tribunals. On this score, the respondent panel found that:
First, in the series of events that complainant herself admitted to have done was the punching of her
time card for November 16, 17, 18, 22, 23 & 24, 1993 indicating her alleged overtime work performed
which was inconsistent with her claim that "at first I was not decided whether I would secure
authorization for the overtime work. However, when Ms. Yolanda S. Carreon, an HRD clerk, reminded
me to submit the required OT slip, I decided to apply for overtime authorization after all, I really

rendered overtime work in order to make up for the time lost during my 5-day suspension".
Secondly, it is very apparent that complainant purposely submitted initially one overtime work on
December 6, 1994 for the regular and overtime work on November 16 and after it was signed by Robles,
complainant added the figures 17, 18, 22, 23 & 24, 1993. The initial entries of "Virginia Ramoran to work
on Bank Reconciliation from 5:00 TO 8:00", which is the authorized time and 5:00 to 7:45 for the actual
time was the legitimate entry. We gave credence to the "slash mark" of Robles appearing in Annex 1 of
respondent (sic) position paper indicating that the only entry of OT authorization slip dated December 6,
1993 was for November 16, 1993 and the overtime for November 17, 18, 22, 23 & 24, 1993 only
represent the actual time, the complainant having failed to indicate the authorized time. It must be
noted that the authorized time must be indicated in the overtime authorization for the purpose of
establishing and limiting the basis of overtime to be performed by an employee subject to the approval
of the supervisor. We found that this procedure required before an employee can go on overtime is
universally adopted by companies and corporations in the Philippines.
The overtime authorization slip for alleged overtime work of complainant on December 13 and 14, 1993
was in reality the overtime authorization slip of Mr. Roderick Paat for December 14, 1993. Mr. Roderick
Paat filled up the first column by indicating his name, the reason for the overtime which is to file BPI
checks with an authorized time from 5:00 to 8:00. Complainant subsequently entered her alleged
overtime work on December 13, 1993 and after the same was signed by Mr. Robles entered her alleged
overtime on the December 14, 1993 which as shown in Annex 3 was written over the "slash mark" of
Mr. Robles. In as much as the overtime date of December 14, 1993 was already written by the
complainant on the column for the overtime date, she added the figure 13 by intercalating the same
before the figure 14, 1993. Roderick Paat [sic] overtime was only for December 14, 1993. Complainant
had the reason to cancel the entry for Roderick Paat to make the same conform to the overtime
authorization slip that covers two overtime dates, December 13 &14, 1993.
The acts of the complainant established by the documentary evidence submitted by the parties resulted
in the payment to the complainant [sic] the total amount of P1,483.03.
That the panel reached the conclusion it did is a product of evidentiary standard before quasi-judicial
bodies. Dismissal on the basis of loss of trust and confidence calls for substantial evidence only . . .
defined as the amount of relevant evidence which a reasonable mind might accept as adequate to
justify a conclusion . . . . It does not demand proof beyond reasonable doubt of the employee's
misconduct. . . . As pointed out by the panel, the petitioner submitted the case for decision without any
evidence, documentary or testimonial, other than her own allegations, adopting only as her proof the
overtime authorization slips involved. It should be noted that the panel did not have the benefit of
examining the other evidence apparently adduced by RAMORAN in the criminal prosecution and there is
no showing that the evidence in the latter proceeding was ever introduced before the panel. The
voluntary arbitrators, therefore, cannot be faulted for so deciding based on the evidence made available
to them. It cannot even be said that they disregarded the result of the criminal proceedings, for the
judgment of acquittal came after they had rendered the decision. Be that as it may, even if the trial
court found the same documentary evidence to be inadequate to sustain Ramoran's conviction, by no
means does it prevent the panel from considering the evidence sufficient to warrant dismissal, inasmuch
as:
(t)he fact that the employee has been absolved in a criminal prosecution involving said misconduct does
not preclude the employer from attempting to prove the same before the labor arbiter or the latter
from accepting that evidence as sufficient foundation for a finding of lawful termination from
employment. . . .
As it is, errors in the appreciation of evidence cannot be reviewed by certiorari. . . . The petitioner has
palpably failed to show that the panel, by so doing, gravely abused its discretion, a prime requirement
for a writ of certiorari to issue. This should necessitate the outright dismissal of the petition.39
There is utterly no basis to depart from the foregoing disquisition of the Court of Appeals.
Second. Petitioner contends that the appellate court committed error when it decided the case on the
merits without requiring the Panel of Voluntary Administrators to comment on the petition. But such
failure does not result per se in a sanction similar to defaults in the trial courts since the appellate court
may just decide the case on the basis of the records before it.40
Third. Petitioner claims that she was deprived of her right to due process of law because of the
composition and actuations of the Panel of Voluntary Arbitrators.

composition and actuations of the Panel of Voluntary Arbitrators.
We disagree.
The essence of due process is to be found in the reasonable opportunity to be heard and submit any
evidence one may have in support of one's defense.41 Due process does not necessarily require
conducting an actual hearing but simply giving the party concerned due notice and affording an
opportunity or right to be heard.
In the instant case, petitioner was apprised of the charges against her. During the administrative
investigation scheduled on February 1 and 8, 1994, petitioner attended and was given an opportunity to
give her side. She consented to resorting to voluntary arbitration and participated in the selection of
arbitrators. The labor union, of which petitioner is a member and which represented the petitioner,
nominated Atty. Aranzamendez; respondent Jardine nominated Atty. Jimenez, and these two arbitrators
chose Atty. Martinez as the chairman of the Panel of Voluntary Arbitrators. Petitioner submitted herself
to the jurisdiction of the Panel of Voluntary Arbitrators, by presenting her evidence and sought
affirmative relief therein; hence, she cannot now validly question the latter's jurisdiction.42 It is an
undesirable practice for a party, after encountering an adverse judgment, to complain and question the
proceedings where she had submitted her own evidence and claimed affirmative relief.43
Petitioner now expresses her doubt on the competence, probity and independence of the said Panel of
Voluntary Arbitrators. She claims that respondent Jardine nominated Atty. Martinez as chairman
knowing him to be a subordinate of Atty. Jimenez in the Legal Department of San Miguel Corporation
where they both worked. Atty. Jimenez, as the Assistant General Counsel, actually outranked Atty.
Martinez who was only an Associate Legal Counsel. Petitioner is implying that respondent Jardine
nominated Atty. Martinez to the position of chairman of the panel so that his boss, Atty. Jimenez, who
represented Jardine, may easily influence the decision of the panel.
Unfortunately, petitioner offers no evidence to prove her accusation. This Court has time and again
stressed that allegations must be proven by sufficient evidence. Mere allegation is not evidence.44 As
observed by the appellate court and we quote:
This relationship, gleaned by petitioner's present counsel from casual conversation with fellow
practitioners, is admittedly uncorroborated. From this set of facts, petitioner makes the sweeping
conclusion that the panel is "in cahoots" with JARDINE, discounting the possibility that Atty. Jimenez and
Atty. Martinez did concur on the resolution of the case. Without need of overstatement, this cannot be
countenanced.45
Finally, there is no basis to mitigate petitioner's liability inasmuch as this is not the first time that
petitioner was charged with falsification by respondent Jardine. She had in fact earlier served a five (5)-
day suspension from November 8-13, 1993 for admittedly tampering with the entries in Official Receipt
No. 1013 issued by Limited Vision Center on July 7, 1993, in support of her application for the optical
loan she had obtained from respondent Jardine.46 Petitioner made it appear in the said official receipt
that she had paid P6,980.00 for two (2) pairs of Rodenstoch Eyeglasses when the truth was, as admitted
by her, the official receipts pertained to her purchase of contact lens solution from Limited Vision
Center, for which she only paid P100.00.47 Under its company rules, respondent Jardine was, strictly
speaking, entitled to dismiss petitioner on that ground. However, due to petitioner's voluntary
admission of the offense and for humanitarian reasons, she was only given a five (5)-day suspension. In
a memorandum, respondent Jardine warned the petitioner that "any future violation of the same
nature, irrespective of the time frame [sic] that it is repeated or committed, would result in the
imposition of the maximum penalty of dismissal."48 As aptly remarked by the appellate court "the seeds
of mistrust had been sown, awaiting only the proper occasion for it to grow and fester." Petitioner, thus,
had only herself to blame when she was finally dismissed, for cause, by respondent Jardine for the
reason that she falsified her subject overtime authorization slips dated December 6 and 14, 1993 in
violation of the Company Rules and Regulations.
WHEREFORE, the Petition is hereby DENIED. No pronouncement as to costs.1âwphi1.nêt
SO ORDERED.
Bellosillo, Mendoza and Quisumbing, JJ., concur.
Buena, J., on leave.
Footnotes
1 Special Twelfth Division composed of Associate Justices Hector L. Hofileña, Romeo J. Callejo and
Artemio G. Tuquero.

Artemio G. Tuquero.
2
In CA G.R. Sp. No. 42397 and penned by Associate Justice Holifeña, Rollo, pp. 40-49.
3 Rollo, pp. 51-56.
4
Petition dated February 21, 1998, p. 3; Rollo, p. 11.
5
Sub-annex "10" of Annex "1" of respondent's Comment; id., p. 143.
6
Sub-annex "1" of Annex "1", supra, id., p. 129.
7
Sub-annex "2", id., p. 130.
8
See Note No. 5.
9 Sub-annex "3" of Annex "1" of respondent's Comment; Rollo, p. 131.
10 Sub-annex "4" of Annex "1", supra, id., p. 132.
11 See Note No. 5, supra at p. 144.
12 Ibid.
13
See Note No. 5, supra at pp. 144-145.
14 Id., pp. 145-146.
15
Sub-annex "5" of Annex "1" of respondent's Comment; Rollo, pp. 133-134.
16 Sub-annex "6" of Annex "1", supra, id., p. 135.
17 Id., pp. 135-136.
18 Sub-annex "7" of Annex "1" of respondent's Comment; Rollo, p. 138.
19
Respondent's Comment, p. 7; id, p. 91.
20 Sub-annex "9" of Annex "1" of respondent's Comment; id, p. 140.
21
See note 19, supra at p. 92.
22 Docketed as I.S. No. 94-6926.
23
Sub-annex "12" of Annex "1" of respondent's Comment; Rollo, pp. 168-169.
24 Sub-annex "13" of Annex "1", supra, id., pp. 170-172.
25
Sub-annex "14", id., pp. 173-174.
26
Rollo, pp. 175-176.
27
28 Ibid.
29
Petition, supra, pp. 5-6; id., pp. 13-14.
30 Id., p. 6; Rollo, p. 14.
31 Ibid.
32 Respondent's Comment, p. 11; Rollo, p. 95.
33
34 Petition, supra, p. 8; id., p. 16.
35 Id., p. 9; id., p. 17.
36 Annex "B" of Petition, supra, Rollo, pp. 51-56.
37 Petition, supra, p. 10; Rollo, p. 18.
38 Triple Eight Integrated Services, Inc. v. NLRC, 299 SCRA 608, 614 (1998).
39 Rollo, pp. 44-46.
40
Regalado, Florenz D, Remedial Law Compendium, Vol. 1, 1997 Ed., pp. 554-555.
41 Oil and Natural Gas Commission v. Court of Appeals, 293 SCRA 26, 46 (1998).
42 Hospicio de San Jose de Barili v. NLRC, 164 SCRA 516, 523 (1988).
43 Pimping v. Commission on Election, 140 SCRA 192, 216 (1985).
44 Coronel v. Court of Appeals, 263 SCRA 15, 35 (1996).
45 Resolution dated December 22, 1997, Rollo, p. 55.
46 Rollo, p. 157.
47
Record from the Court of Appeals, p. 43.
48 See Note No. 46.

Revised Guidelines in the Accreditation and Delisting of Voluntary
Arbitrators
12:10 AM
Note: sir's guidelines is as of 1999. there's a 2005 amendment

12:18 AM

THE STATE OF PHILIPPINE VOLUNTARY ARBITRATION*
Hans Leo J. Cacdac**

Teresita E. Audea***
Executive Summary
Industrial peace depends upon mutual trust and respect between labor and management, and requires
constructive relations to enhance cooperation and downplay confrontation. Because of the socio-political-
economic impact of a labor-management dispute, no less than the 1987 Constitution has established the
principle of shared responsibility and given preference to voluntary modes of settling disputes.
The National Conciliation and Mediation Board (NCMB) is mandated to administer the voluntary
arbitration program pursuant to the Labor Code. The Board has engaged in nationwide activities to
promote voluntary arbitration as the “better alternative” in labor dispute settlement.
This study presents the historical background, current constitutional and statutory framework, and the
track record of the voluntary arbitration program from 1988 to June 2005. The following findings and
recommendations have been identified:
• Heightened promotional efforts towards program acceptability. Voluntary arbitration made progress
when the awareness campaign in the early 1990s was at its peak. The tri-media campaign during
this period can be revived.
At the plant level, programs must be promoted and strengthened with the assistance of NCMB
facilitators and trainers.
• Strong budget support. This requires congressional appropriations for the Special Voluntary
Arbitration Fund (SVAF).
• Speed and quality of VA decisions. Knowledge and skills upgrading or retooling of VAs could
improve the speedy and quality of decisions or awards. It took 171 days for a VA to decide a case
from the date of filing and 51 days from date of submission for decision. While these findings fare
better than the compulsory arbitration record, there is still room for improvement. There is also a
21% appeal rate and 85% affirmance rate, suggesting the high quality of decisions. The VA
accreditation system must also be upgraded to improve the track record.
There must be simple, updated, and streamlined voluntary arbitration procedures, especially in the
matter of execution of decisions and awards.

THE STATE OF PHILIPPINE VOLUNTARY ARBITRATION
Hans Leo J. Cacdac

Teresita E. Audea
I. Introduction
II. Emergence of the Voluntary Arbitration Program
III. The Constitutional Framework on Voluntary Arbitration
IV. The Statutory Framework under the Labor Code
V. The State of Voluntary Arbitration
a. Promotional Efforts
b. Submission of cases
c. Origin of voluntary arbitration cases
d. Issues submitted to voluntary arbitration
e. Merits of the system
VI. Survey of Jurisprudence
a. Nature of a Voluntary Arbitrator

b. Finality of Judgment
c. Areas of Jurisdiction
d. Plenary Jurisdiction to Interpret
e. Due Process
f. Major VA Rulings
VII. Findings and Recommendations
THE STATE OF PHILIPPINE VOLUNTARY ARBITRATION
Hans Leo J. Cacdac

Teresita E. Audea
I. Introduction
Industrial peace depends upon mutual trust and respect between labor and management, and requires
constructive relations to enhance cooperation and downplay confrontation.
Because of the socio-political-economic impact of a labor-management dispute, government has the

responsibility to undertake the following: 1) enact and enforce labor laws and regulations; and 2) promote
the shared responsibility of workers and employers to voluntarily settle labor disputes. To fulfill these
mandates, the Department of Labor and Employment (DOLE) is tasked with the primary responsibility of
ensuring the maintenance of industrial peace by promoting harmonious, equitable, and stable employment
relations.
The National Conciliation and Mediation Board (NCMB) is mandated to administer the

The National Conciliation and Mediation Board (NCMB) is mandated to administer the
voluntary arbitration program pursuant to the Labor Code. The Board has engaged in nationwide
activities to promote voluntary arbitration as the “better alternative” in labor dispute settlement.
A five-year plan conceptualized during the first year of operations was implemented in order to
address the problems identified by the Tripartite Review Committee on Labor Relations created
in early 1988, which included, among others, the accreditation and training of voluntary
arbitrators and institutionalization of procedural guidelines in the conduct of voluntary
arbitration proceedings.
Support from various social partners was obtained in the succeeding years. The association of
voluntary arbitrators now known as the Philippine Association on Voluntary Arbitration (PAVA)
was institutionalized.
A huge amount of resources were utilized for a tri-media campaign to ensure an effective
nationwide awareness program. Other information, education, and communication materials
were produced and published to provide the public not only with basic information, but also with
an update on trends and developments in labor relations. Various other mechanisms included the
signing of a memorandum of agreement with institutions such as the Office of the Solicitor
General (OSG), Integrated Bar of the Philippines (IBP), Department of Justice (DOJ), prominent
colleges and schools of law, major federations and labor centers, employer associations and a
host of others.
The program took off in its early years. There were signs of acceptance as manifested by the increase in
the number of cases submitted to arbitration until 1996. Beginning 1997, however, there was a dramatic
decline in the submission of cases, from a decrease of 5% in 1997 to a 26% drop in 1999. From 2000 to
2002, submission of cases reached a plateau, averaging 212 per year. Beginning 2003, cases were below
the 200 mark: 175 in 2003 and 152 in 2004. The cases for the first half of 2005 are 3% lower compared to
the 75 cases submitted for the same period last year.
The decline in VA cases needs to be addressed. There is a need to conduct a deeper diagnosis of
the problems underlying the system. Through effective assessment and evaluation of the real
situation, appropriate courses of actions can be proposed.
Hence, this study.
The paper is divided into five parts. The first part delves into the historical evolution of voluntary
arbitration. The paper traced the changes that the voluntary arbitration program went through in
different periods, until the existing framework in the prevailing labor relations system.
The second part focuses on the constitutional and Labor Code framework of the system.
The third part reports on the current state of voluntary arbitration, including efforts to make the
system a viable option in dispute settlement.
The fourth segment deals with a survey of jurisprudence on voluntary arbitration.
Lastly, the state of voluntary arbitration and jurisprudence survey yielded findings and
recommendations that can make the program more responsive and a significant component of the
alternative dispute resolution system.
II.Emergence of Voluntary Arbitration

A. SOCIO-CULTURAL ROOTS
The concept of voluntary arbitration is not new. Long before our great ancestor Datu Lapu-lapu engaged
the Spanish Conquistadores in the historic battle of Mactan, our forefathers were already resorting to
“voluntary arbitration” in resolving tribal conflicts.[1] Disputes involving properties and even personal
relationships were threshed out with a chosen respected third party, usually an elder, who hears the
arguments of both parties, establishes facts, and resolves the dispute. The respected elder then issues an

arguments of both parties, establishes facts, and resolves the dispute. The respected elder then issues an
opinion taken as judgment by those concerned. The parties, often without rancor, dutifully abide by the
decision and lay to rest the dispute with finality.
B. ACT 4055 (1933)[2]
In the early days of American rule, there was no law on labor relations. Relations between labor and
capital and servant and master were governed by the pertinent provisions of the old Civil Code (Articles
1583 to 1587, regulating to a very limited extent the relationship between master and domestic servant)
and the Code of Commerce (Articles 283 to 302, regulating also to a very limited extent the relationship
between an employer and his employees).[3] While formation of unions was not prohibited, the American
administration discouraged the existence of unions and labor organizations for fear that they would be a
breeding ground for subversion and rebellion.
President Manuel L. Quezon advocated social justice, especially when the country was faced with serious
problems in the cigar and cigarette factories in Manila and agrarian unrest in Central Luzon.[4] Laws
were passed to alleviate the plight of the working class. One important piece of legislation was Act 4055
promulgated on 27 February 1933, which made conciliation, mediation and voluntary arbitration part
of State policy to resolve controversies between landlords and tenants, and between employers and
employees.[5] The law tasked the Department of Justice to have such number of special mediators
available from time to time to handle disputes.[6]
Under this statute, the Director of Labor could call upon the mediators of the Department of Justice to
mediate and conciliate the dispute between the parties. When these efforts failed, the mediators and the
Director of Labor could persuade them to submit their dispute to voluntary arbitration.[7]
The Act also provided for a procedure in submitting disputes to voluntary arbitration, to wit:
Sec. 3. If the parties to a controversy should agree to submit voluntarily to arbitration, a board of three
persons shall be chosen in the following: one of the special mediators provided for in section one, one
who shall be the chairman, shall be designated by the Secretary of Justice; one shall be named by the
landlord or employer directly interested, and one by the tenants or employees or laborers or labor
organization to which the tenants or employees or laborers directly interested belong, of if they belong
to more than one, by all such labor organizations. In the event that the tenants or employees or laborers
engaged in any given controversy are not members of a labor organization, such tenants or employees
or laborers may select a committee which shall have the right to choose one arbitrator[8].
The agreement to arbitrate in the Act mirrored the American model of arbitration, stipulating that the
agreement should be in writing; should state specifically the questions submitted to the board of VAs for
decision; and should stipulate that arbitration shall be under the provision of Act. Such an agreement
should be signed by accredited representatives of the landlord or employer and of the tenants, employees,
or laborers. [9] The decision of the voluntary arbitrator could be appealed to the Court of First
Instance,[10] and then to the Supreme Court.[11]
The set-up was voluntary because the conciliation, mediation and voluntary arbitration services were
merely an offer on the part of government authorities.[12]
It bears noting, however, that many of the laws passed during the period were good on paper, but never
really implemented. The members of the big capitalist class, most of them Americans, openly opposed the
passage and implementation of these laws.[13]
C. 1935 CONSTITUTION
The social justice program of President Quezon was embedded in the 1935 Constitution, which states that
“. . . the promotion of social justice to insure the well-being and economic security of the people must be
a concern of the State.”[14] This policy was manifested in Section 6, Article XIV, specifying the role of
the State in regulating the relations of landowner and tenant, and labor and capital. The “afford protection
to labor” clause provided:

to labor” clause provided:
The state shall afford protection to labor, especially to working women and minors, regulating the
relations between landowner and tenant, and between labor and capital in industry and agriculture. The
State may provide for compulsory arbitration.
D. COMMONWEALTH ACT 103 (1936)[15]
Pursuant to 1935 Constitution, the legislature passed the first labor relations law of the Philippines,
Commonwealth Act 103, which established compulsory arbitration as the principal mode of dispute
settlement. This law provided for the creation of the Court of Industrial Relations (CIR), with the power
to compulsorily arbitrate all labor disputes.[16]
The functions of the CIR were defined under Section 4, Chapter II of CA 103, as follows:
Sec. 4. Strikes and Lockouts. - The Court shall take cognizance for purposes of prevention, arbitration,
decision and settlement, of any industrial or agricultural dispute causing or likely to cause a strike or lockout,
arising from differences as regards wages, shares or compensation, hours of labor or conditions of tenancy or
employment, between employers and employees, laborers tenants or farm laborers, provided that the number
of employees, laborer or tenants or farm-laborers involved exceeds thirty, and such industrial or agricultural
dispute is submitted to the Court by the Secretary of Labor or by any or both of the parties to the controversy
and certified by the Secretary of Labor as existing and proper to be dealt with by the Court for the sake of
public interest. . .
Commonwealth Act 103 was the State‟s direct response to the increasing number of workers‟ struggles,
particularly the mounting of insurgency in the rice haciendas and sugar plantations.[17]
The statute was silent on voluntary arbitration, though it gave implied recognition to conciliation and
mediation, to wit:
Sec. 4. … The Court shall, before hearing the dispute and in the course of such hearing, endeavor to
reconcile the parties and induce them to settle the dispute by amicable agreement. If any agreement as to the
whole or any part of the dispute is arrived at by the parties, a memorandum of its terms shall be made in
writing, signed and acknowledged by the parties thereto before the Judge of the Court or any official acting in
his behalf and authorized to administer oaths or acknowledgements, or before a notary public. The
memorandum shall be filed in the office of the Clerk of the Court, and unless otherwise ordered by the Court,
shall as between the parties to the agreement, have the same effect, and be deemed to be, a decision or
award.[18]
Suffice it to state that the CIR record was dismal. Delay in settling labor disputes further aggravated the
dissatisfaction of the workers over their conditions, as the law could not contain both organized and
spontaneous strikes.[19] The adjudicatory system suffered from protracted delays in the disposition of
cases, which led to the clogging of case dockets.
E. REPUBLIC ACT 875 (1953)[20]
Legislators realized that the compulsory arbitration system could not settle all labor-management
disputes. Hence, they reviewed the Philippine industrial relations system in relation to various national
policies. ILO Convention No. 98[21] and the reported successes of the American labor relations system
were considered. Congress agreed to adopt the policy that lasting peace is achieved when parties are able
to directly work out the terms of settlement of the dispute by themselves,[22] or through a mutually
selected third-party neutral.
Congress enacted Republic Act 875, otherwise known as the Magna Carta of Labor or the Industrial
Peace Act of 1953. This new piece of legislation shifted the emphasis of labor relations policy from
compulsory arbitration to collective bargaining.
Collective bargaining was meant to eliminate the causes of industrial unrest,[23] as well as promote
sound, stable industrial peace and the advancement of the general welfare, health and safety and the best
interests of employers and employees.[24] The law also advanced the importance of settlement of issues
through conciliation and mediation, as an extension of collective bargaining,[25] along with expeditious

through conciliation and mediation, as an extension of collective bargaining,[25] along with expeditious
methods of collective bargaining.[26] Two emphasized aspects were the making of the agreement or
contract negotiations,[27] and maintenance of the agreement through grievance handling.[28] Section 16
read:
Sec. 16. Administration of Agreement and Handling of Grievances. - The parties to collective bargaining
agreement shall endeavor to include in their agreement provisions to insure mutual observance of the terms
and stipulations of the agreement and to establish machinery for the adjustment of grievances, including
question that may arise from the application or interpretation of the collective agreement ore from day -to-day
relationships in the establishment.[29]
As RA 875 recognized the workers‟ right to strike, the conciliation service[30] was tasked to conduct
labor-management conferences[31] and establish an Advisory Labor-Management Council[32] to
promote industrial peace and voluntary adjustment of disputes.
The collective bargaining framework restricted the compulsory arbitration powers of the Court of
Industrial Relations, as it was divested of vast powers to set wages, hours of work, rates of pay, other
terms and conditions of employment or regulation of relations between employers and employees, except
in disputes involving industries indispensable to the national interest.[33]
Implicit in the law is the recognition that real industrial peace cannot be achieved by compulsion of law,
and that sound and stable industrial relations must rest on a voluntary and bilateral basis. Thus, it upheld
the principle of voluntarism and broadened the base of industrial democratic structures.
With an expanding industrial sector, hundreds of new unions with respective collective bargaining
agreements (CBAs) were registered in the 1950s and 1960s. A free collective bargaining system was
institutionalized.
F. PRESIDENTIAL DECREE NO. 21 (1972)[34]
With the advent of Martial Law, serious attempts were made to establish voluntary arbitration in
Philippine labor relations policy. To cushion the impact of the strike ban in “vital industries”, Presidential
Decree No. 21 was issued creating the three-man National Labor Relations Commission, which exercised
original jurisdiction over all labor disputes.
More importantly, P.D. 21 emphasized voluntary arbitration, to wit:
1) The grievance procedure installed as a mandatory initial stage in the settlement of disputes;[35]
2) Before assuming jurisdiction over any issue, dispute or grievance, the Commission shall give the
parties a chance to submit the controversy to a voluntary arbitrator;[36]
3) All collective bargaining agreements shall have a provision designating a voluntary arbitrator to
decide on all disputes arising from the interpretation and implementation thereof;[37] and
4) The clearance requirement for dismissal and termination of employees with at least one year of
service.[38]
The mandatory grievance procedure and voluntary arbitration became the established mode of dispute
settlement. This policy arose out of the virtual ban on all strikes by virtue of General Order No. 5. Then
President Ferdinand Marcos must have felt the need to arrest the workers‟ apprehension that martial law
would violate or diminish their rights, and that protection and promotion of their interests would be
diluted. Voluntary arbitration was thus highlighted as a mode of dispute settlement under Presidential
Decree No. 21, to indicate that the workers and employers still have the means to directly participate in
the resolution of their controversies. Hence, the policy of promoting collective bargaining was maintained
within the framework of compulsory arbitration. This helped provide the momentum for the speedy
disposition of labor cases.[39]
Other developments encouraged the private sector to join hands with the government in promoting
voluntary arbitration, culminating in the formation of two associations, namely the Arbitration
Association of the Philippines (AAP) and the Philippine Academy of Professional Arbitrators
(PAPA).[40]

(PAPA).[40]
The tripartite committee on arbitration headed by then Minister of Labor and Employment Blas F. Ople
also conducted a twelve-day seminar on voluntary arbitration. Immediately thereafter, Department Order
No. 12 was issued containing a list of some 112 accredited voluntary arbitrators (later expanded to 202).
The rules governing voluntary arbitration were also issued to serve as guidelines in the conduct of
voluntary arbitration proceedings.
G. 1973 CONSTITUTION
The 1973 Constitution enshrined a state policy on labor arbitration, which emphasized, among others, the
right to self-organization and collective bargaining and the authority of the State to provide for
compulsory arbitration. Thus, Section 9, Art. II on the Declaration and Principles and State Policies,
stated:
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.
The State shall assure the rights of workers to self-organization, collective bargaining, security of tenure, and
just and humane conditions of work. The State may provide for compulsory arbitration.
With the experience under Presidential Decree 21 indicating effectiveness and usefulness of voluntary
arbitration, there was no reason to depart from the policy and law on labor arbitration.[41]
H. PRESIDENTIAL DECREE 442 (1974)[42]
Proceeding from the mandate of the 1973 Constitution, the 1974 Labor Code integrated free collective
bargaining, voluntary arbitration and compulsory arbitration.
Book V of the Labor Code on Labor relations included the following significant provisions:
• Primacy of free collective bargaining;

• Free trade unionism as an agent of democracy, social justice and development;
• Parties shall include in the collective agreement an adequate administrative machinery for the
expeditious settlement of labor disputes and to ensure mutual observance of the terms and
conditions thereof;
• A broader scope and coverage of disputes to include disciplinary actions and termination cases of
workers covered by a CBA;
• Parties shall thresh out all disputes and grievances arising from the interpretation and
implementation of CBA in accordance with the grievance procedure provided in the CBA, and any
unsettled grievances shall be submitted to voluntary arbitration;
• Advance designation of arbitrator/s or a selection procedure provision in the CBA;
• The Labor Arbiter or the BLR shall not entertain such disputes cognizable by grievance procedure
and voluntary arbitration; and
• Voluntary Arbitration awards or decisions are final, executory and inappealable.
The voluntary arbitration program of the Department of Labor and Employment suffered an acceptability
problem. Most labor relations practitioners opted to submit their cases to compulsory arbitration or to
include grievable and arbitrable issues in notices of strikes, despite the professed advantages of voluntary
arbitration.
In 1978, then Bureau of Labor Relations (BLR) Director Carmelo C. Noriel noted that only 3 percent of
the total number of cases cognizable by voluntary arbitrators were brought to voluntary arbitration, with
the rest submitted to compulsory arbitration.
Labor legislation reflects the desire of the State to protect workers‟ rights and uphold speedy labor justice.
Though government desired to prove the efficacy of voluntary modes of settling disputes over
confrontational approaches between labor and management, state policies issued one after another in span

confrontational approaches between labor and management, state policies issued one after another in span
of months may have been detrimental to the voluntary arbitration program. Such a vacillating approach
may have confused the public and undermined program acceptability.
The table below summarizes the amendments to the grievance machinery and voluntary arbitration
provisions during this period.
Legislation/ Amendments
Issuance
Grievance Machinery Voluntary Arbitration
PD 442 Art. 309. All disputes, grievances or matters Art. 310. Disputes, grievances or matters not
(1 May arising from the interpretation and settled through the grievance procedure shall be
1974) implementation of collective agreement shall be referred to and decided or settled through the
threshed out in accordance with the grievance prescribed voluntary arbitration procedure in the
procedure. CBA.
Every CBA shall designate in advance an

arbitrator or panel of arbitrators or include a
provision in making the selection of such
arbitrator or panel of arbitrators definite and
certain when the need arises.
The arbitrator or panel of arbitrators shall have

exclusive and original jurisdiction over all
disputes, grievances or matters arising from the
implementation or interpretation of a CBA after
going through the grievance procedure.
The Labor Arbiter or the Bureau shall not

entertain such disputes, grievances or matters.
Voluntary Arbitration awards or decisions shall

be final inappealable and executory.
PD 570-A Renumbered as Art. 311. Provisions maintained. Renumbered as Art. 312. First two paragraphs
(1 Nov maintained.
1974)
Inserted the following new provisions:
However, voluntary arbitration awards or
decisions on money claims involving an amount
exceeding P100 Thousand or 40% of the paid up
capital of respondent employer, whichever is
lower, may be appealed to the NLRC on the
following grounds: a) abuse of discretion; and b)
gross incompetence (Art. 312)
Presidential Totally banned strikes but encouraged trade

Decree 823 unionism and collective bargaining within the
(3 Nov framework of compulsory and voluntary
1975) arbitration. (Sec. 1)
Where disputes have not been resolved by the

Regional offices, BLR, NLRC and voluntary
arbitrators, within the reglamentary period, the
Secretary of Labor shall assume jurisdiction and
summarily decide such dispute which poses an
emergency or is critical to the national interest …
(Sec. 10)
PD 850 Presidential Decree 850 transferred the Art. 262 is amended:

(16 Dec jurisdiction of termination disputes to the All disputes, grievances and matters referred to in
1975) the immediately preceding Article which are not

1975) Regional Directors and removed from the the immediately preceding Article which are not
original and exclusive jurisdiction of grievance settled through the grievance procedure provided
machinery and voluntary arbitrators, termination in the CBA shall be referred for voluntary
cases in companies where there are existing arbitration prescribed in said agreement.
collective bargaining agreements.
Every CBA shall designate in advance an
Art. 261 is amended: arbitrator … from the list provided by the Bureau
Except as otherwise provided in paragraph (b) of of definite and certain when the need arises. Such
Article 267 of this Code, all disputes, grievances arbitrator shall have exclusive and original
or matters arising from the implementation or jurisdiction to hear and decide disputes,
interpretation of a collective agreement shall be grievances or matters arising from the
threshed out in accordance with the grievance implementation or interpretation of a CBA which
procedure provided for in such agreement. have gone through the grievance procedure.
(underscoring supplied)
Art. 267(b). With or without collective
agreement, no employer may shut down his The Labor Arbiter or the Bureau shall not
establishment or dismiss or terminate the entertain such disputes, grievances or matters and
employment of employees with at least one year any decision of the Labor Arbiter or the Bureau
of service during the last 2 years, whether such concerning such dispute shall be null and void as
service is continuous or broken, without prior in excess of jurisdiction.
written authority issued in accordance with such
rules and regulation as the Secretary of Labor Voluntary Arbitration awards or decisions shall
may promulgate. be final inappealable and executory. However,
voluntary arbitration awards or decisions on
money claims involving an amount exceeding
P100 Thousand or 40% of the paid up capital of
respondent employer, whichever is lower, may be
appealed to the Commission on the ground abuse
of discretion or gross incompetence (Art. 262)
Policy Termination cases with or without CBA are

Instructions now placed under the jurisdiction of the
No. 14 (23 Regional Director. Preventive Mediation cases,
April 1976) now cognizable for the first time, are also placed
under the Regional Director.
Policy Clarifications on the following were issued:

Instructions Interest Disputes
No. 28 Termination cases Parties may submit to voluntary arbitration in
(1 Sept 1) Encourage submission of the case to the ff:
1977) voluntary arbitration if: • Deadlocks in collective bargaining where
a) There is an opposition to an application for conciliation fails
clearance to terminate or suspend an employee • In cases involving an amount in excess of
filed, P100,000.00 or 40% of the paid-up capital of
b) the Regional Director finds that the case the employer, if expressly and clearly so
does not suit summary investigation or indicated in the agreement of the parties
c) the case involves intricate questions of law
2) The Regional Director shall certify the case All other disputes
to the NLRC May be brought to voluntary arbitration, upon
a) if the parties indicate preference for agreement of the parties. (underscoring
compulsory arbitration or supplied)
b) if they refuse or fail to submit the case to
Policy Establishment of grievance machinery in Voluntary arbitration shall be used to settle

Instruction private educational institutions • disputes involving interpretations and
No. 26 • By agreement of labor and management if applications of administrative rules and
(07 June there is a union; regulations, provisions of existing CBAs, laws
1977) • By management after consultation with the and regulations and
employees, if there is no union. • Such other disputes upon agreement of the
parties

PD 1691 Art. 262 is Amended
(1 May All disputes, grievances or matters arising from
1980) the implementation or interpretation of collective
bargaining agreements, including all matters
concerning disciplinary action imposed or to be
imposed on members of the contracting union ,
shall be threshed out in accordance with the
grievance procedure provided in such agreement.
Where there is no collective bargaining
agreement and in cases where the grievance as
provided therein does not apply, all such matters
should be subject to conciliation and arbitration
as provided elsewhere in this Code.
Batas Art. 262 was amended: Art. 263 was amended:

Pambansa
Bilang 130 Whenever a grievance arises from the All grievances referred to in the immediately
(21 August interpretation or implementation of a collective preceding Article which are not settled through
1981) agreement, including disciplinary actions the grievance procedure provided in the collective
imposed on members of the bargaining unit, the agreement shall be referred to voluntary
employer and the bargaining representative shall arbitration prescribed in said agreement:
meet to adjust the grievance. Where there is no Provided, that termination disputes shall be
collective agreement and the grievance procedure governed by Art. 278 of this Code, as amended,
as provided herein does not apply, grievances unless the parties agree to submit them to
shall be subject to negotiation, to conciliation or voluntary arbitration.
arbitration as provided elsewhere in this Code.
(Art. 262) Every CBA shall designate in advance an
arbitrator . . . chosen by the parties or include
provisions on the procedure for the selection of
such arbitrator or panel or panel of arbitrators.
The Ministry shall compile a list of qualified
arbitrate and make the same available to parties .
Such arbitrator shall have exclusive and original
jurisdiction to hear and decide all unsettled
grievances referred to in the immediately
preceding paragraph.
Voluntary Arbitration awards or decisions shall

be final inappealable and executory.
I. THE 1987 CONSTITUTION
The best aspirational statement pertaining to sound labor-management relations is lodged in Section 3,
Article XIII (Social Justice and Human Rights) of the 1987 Constitution, which states:
The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote
full employment and equality of employment opportunities for all.
It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and
peaceful concerted activities, including the right to strike in accordance with law. They shall be entitled to
security of tenure, humane conditions of work, and a living wage. They shall also participate in policy and
decision-making processes affecting their rights and benefits as may be provided by law.
The State shall promote the principle of shared responsibility between workers and employers and the
preferential use of voluntary modes in settling disputes , including conciliation, and shall enforce their mutual
compliance therewith to foster industrial peace.
The State shall regulate the relations between workers and employers, recognizing the right of labor to its just
share in the fruits of production and the right of enterprises to reasonable returns to investments, and to
expansion and growth. (underscoring supplied)
Taking into consideration Filipino cultural values and usual modes of conduct when confronted with
disunities and disagreements, the 1987 Constitution expressly acknowledges conciliation as a key mode
of settling labor disputes.

of settling labor disputes.
Section 3, Article XIII are the declared State policies on labor which established the constitutional
framework for labor administration and labor relations in the Philippines. The constitutional provision
likewise provides a new policy framework for the development of a more cooperative labor relations
policy that balances the rights of workers and employers, most notably through the principle of shared
responsibility. The provision also recognizes the right of labor to its just share in the fruits of production
and the right of the enterprise to the reasonable returns on investments and expansion and growth.
The state policies likewise stress the preferential use of voluntary modes in settling labor disputes. The
objective is to prevent strikes and confrontation by creating a cooperative labor relations climate that will
render the use of naked economic warfare unnecessary, with direct or bilateral negotiations between the
parties as the preferred mode of settling workplace disputes.
J. REPUBLIC ACT 6715 (1989)[43]
Republic Act No. 6715, otherwise known as the Herrera-Veloso Law, amended the Labor Code and
declared the following thrusts in labor relations:
. . . to promote and emphasize the primacy of free collective bargaining and negotiations, including voluntary
arbitration, mediation and conciliation, as modes of settling labor or industrial disputes” and . . . to provide an
adequate administrative machinery for the expeditious settlement of labor or industrial disputes. [44]
In line with the constitutional mandate, the law made collective bargaining and voluntary arbitration the
centerpiece of labor relations. It also strengthened the voluntary arbitration framework in terms of
jurisdiction, the final and executory nature of a decision/award, and the creation of a Special Voluntary
Arbitration Fund (SVAF) from where arbitration fees are subsidized.
There was a shift from compulsory to voluntary arbitration in line with the principle of shared
responsibility between workers and employers and the preferential use of voluntary modes of settling
disputes. The parties are expected to settle disputes through the extensive use of negotiations, grievance
machinery consultations, and labor management cooperation, conciliation and voluntary arbitration.
The law provides for the mandatory use of the grievance machinery (GM) as a prerequisite step to
voluntary arbitration of disputes arising from CBA interpretation and implementation and those arising
from enforcement and interpretation of company policies. [45]
Other features of the law include:
• Mandatory submission of unresolved grievances to voluntary arbitration within seven (7) days
from the submission to the last step of the grievance machinery; [46]
• Ordinary CBA violations are treated as grievances; [47]
• Clear authority of the DOLE adjudicatory agencies and officials to dispose grievances filed before
them and refer the same to the GM or VA;[48]
• Concurrent jurisdiction of voluntary arbitrators over ULPs and bargaining deadlocks, upon
agreement of the parties;[49]
• Clear authority of voluntary arbitrators to conciliate; [50]
• Mandatory provisions to decide within twenty (20) days from submission of the dispute voluntary
arbitration, unless parties agree otherwise;[51]
• Authority to issue a writ of execution on the part of arbitrators; [52]
• Concurrent jurisdiction of voluntary arbitrators over national interest cases, upon submission by
the parties;[53] and
• CBA registration fee of P1,000 shall accrue to the Special Voluntary Arbitration Fund. [54]
Legislation and policy after the promulgation of RA 6715 dealt with the expansion and elaboration of
jurisdiction of voluntary arbitrators. After all, voluntary arbitration needs to keep pace with the changing
world and to continuously evolve into a more responsive system capable of resolving even the most
complex labor disputes. These laws and policy thrusts have been summarized as follows:
Legislation/Issuance Amendment/ Development

Legislation/Issuance Amendment/ Development
Republic Act 6727 Wage Distortions arising from Wage Orders
(9 June 1989)
Republic Act 6971 Interpretation or Implementation of Productivity Incentive Program (Sec. 9)
(22 November 1990)
Policy Instruction Termination disputes filed at the NLRC which are not processed at the grievance procedure
No. 56
(6 April 1993)
Free Legal Aid and Establishment of NCMB Guidelines to govern administration of the Free Legal Aid
Voluntary Program and extending the benefits of voluntary arbitration to the non -unionized and
Arbitration Services unorganized sector.
Program (1993)
The program caters to cases which are normally submitted to the NLRC such as those
involving individual workers (dismissals, money claims, etc)
Department Order Amended the Implementing Rules of Book V of the Labor Code, as amended
No. 09-97 (1 May • Included a provision for the establishment of a grievance machinery;
1997) • Provided for the creation of a grievance committee in the absence of an applicable
provision in the CBA; and
• Provided a default grievance procedure in case of absence of specific provision in the
CBA.
Amended Standard Section 29. Dispute Settlement Procedures
Terms and In cases of claims and disputes arising from this employment, the parties covered by a
Conditions collective bargaining agreement shall submit the claim or dispute to the original and
Governing the exclusive jurisdiction of the voluntary arbitrator or panel of arbitrators. If the parties are not
Employment of covered by a collective bargaining agreement, the parties at their option submit the claim or
Filipino Seafarers dispute to either the original and exclusive jurisdiction of the National Labor Relations
on Board Ocean- Commission (NLRC), pursuant to Republic Act (RA) 8042 otherwise known as the Migrant
Going Vessels workers and Overseas Filipinos Act of 1995 or to the original and exclusive jurisdiction of
(2000) the voluntary arbitrator or panel of arbitrators. If there is no provision as to the accredited
voluntary arbitrators of the National Conciliation and Mediation Board of the Department of
Labor and Employment.
Department Order Consolidated the provisions of RAs 6715, 6727 and 6971 on the jurisdiction of voluntary
No. 40-03 (17 arbitration with the inclusion of the mechanism known as the principle of notice to arbitrate.
February 2003)
III. The Constitutional Framework on Voluntary Arbitration
The 1935 Constitution The 1973 Constitution The 1987 Constitution

The state shall afford protection . . . The State shall assure The state shall promote the principle of
to labor, especially to working the rights of workers to shared responsibility between the
women and minors, regulating self-organization, workers and the employers and the
the relations between landowner collective bargaining, preferential use of voluntary modes in
and tenant, and between labor security of tenure, and just settling disputes including conciliation,
and capital in industry and and humane conditions of and shall enforce their mutual
agriculture. The State may work. The State may compliance therewith to foster
provide for compulsory provide for compulsory industrial peace. (Sec. 3, Art. XIII Social
arbitration. (Sec. 6, Art. XIV) arbitration. Justice provisions on Labor)
(underscoring supplied) (Section 9, Art. II, (underscoring supplied)
Declaration of Principles
and State Policies)
The 1987 Constitution expressly prioritizes voluntary modes of settling disputes, with the provision on
compulsory arbitration omitted for the first time.
During 2 August 1986 deliberations in the Constitutional Commission, Commissioner Ma Teresa F.

Nieva explained that in all of the public hearings held by the Committee on Social Justice, labor and
management groups were very firm in ruling out compulsory arbitration. The partners felt they should be

management groups were very firm in ruling out compulsory arbitration. The partners felt they should be
left free without government interference in deciding labor disputes.[55] Commissioner Monsod further
explained that this did not mean that the function of the State in regulating relations between labor and
management would not apply when he stated: “The State is always there but the settlement of disputes
should be made to the extent possible and to all the rights available to labor and management. Therefore,
it should be through voluntary means and the rights available to labor should be given, such as the right to
strike”.[56]
Commissioner Felicitas S. Aquino specified the procedure envisioned by the Committee on voluntary
modes of dispute settlement:
First, the primary focus of settling labor and management conflict is through the voluntary modes of settling
disputes. We first avail of the grievance procedures that are usually provided in the collective bargaining agreement.
In the absence of a CBA, they are usually provided in the internal rules and regulations of the company. Then we
avail of the conciliation proceedings, which is part and parcel of the voluntary modes of settling disputes usually
under the guidance of the Ministry of Labor.
In the 1973 Constitution, there is a specific proviso for compulsory arbitration. As has been previously
cited by the Committee Chairman, there is an overwhelming reaction against a specific mandate for compulsory
arbitration. Even the management sector is very reluctant in reinstating the same formula in this Constitution, such
that we attempted to incorporate in the committee report the phrase “promote voluntary modes of settling disputes”,
the idea is to focus primarily on the voluntary modes of settling disputes rather than to preempt the procedures of
settling management and labor conflict through compulsory arbitration. We very well know that the effect of
compulsory arbitration is that any labor-management conflict is immediately certified by the National Labor
Relations Commission, and that if there is an impending strike, automatically, by compulsory mandate of the law
and upon the certification, the strike would have to be lifted. Both labor and management are in confluence in terms
of their position that all disputes should first be approached by exhausting voluntary modes. This does not preclude,
however, Congress from providing for statutory implementation of other modes of settling disputes.[57]
It is clear that “dropping of compulsory arbitration” was a reiteration of the genuine and firm commitment
of the State to encourage and reinforce collective bargaining and voluntary modes of settling labor
disputes. The Committee intended to delete the provision on compulsory arbitration to facilitate
harmonization of interests, provided that the express provision on voluntary modes does not exclude the
right of the State to provide for compulsory arbitration in situations where it may be warranted, such as
when there is a threat to national interest and welfare. Commissioner Aquino explained that the
reservation for compulsory arbitration and the power of the government to intervene should lie only as a
last resort when free collective and voluntary modes shall have been exhausted and proven unavailing in
settling labor disputes.[58]
In order to carry out the mandate of the 1987 Constitution, specific responses were undertaken by the
government to promote the primacy of voluntary modes of dispute settlement. These responses consisted
of the following:
1) Creation of the National Conciliation and Mediation Board (NCMB) under Executive Order No. 126
dated 30 January 1987 to promote voluntary arbitration;
2) Establishment of the Tripartite Voluntary Arbitration Advisory Council (TVAAC), attached to the
NCMB to provide policy advice on matters pertaining to promotion of voluntary arbitration;
3) Improvement of the legal framework for voluntary arbitration through the passage of Republic Act
No. 6715 on March 1989, which introduced significant amendments to the Labor Code pertaining to
grievance settlement and voluntary arbitration;
4) Administration of a Special Voluntary Arbitration Fund (SVAF) to subsidize the costs of voluntary
arbitration and finance operations of the TVAAC, the training and education of voluntary arbitrators, and
the development of a comprehensive voluntary arbitration program.
IV. The Statutory Framework under the Labor Code

A. JURISDICTIONS OF VOLUNTARY ARBITRATORS

Republic Act 6715 amended the Labor Code and expanded the original and exclusive jurisdiction of
voluntary arbitrators to include unresolved grievances arising from the interpretation and enforcement of
personnel policy.
1. First Area
Article 261 of the Labor Code provides the exclusive and original jurisdiction of voluntary arbitrators
over the following:
1) All unresolved grievances arising from the interpretation or implementation of the collective
bargaining agreement;
2) Those arising from the interpretation or enforcement of company personnel policies, as referred to in
Art. 260; and
3) Violations of the collective bargaining agreement which are not gross in character.
The first group refers to grievances arising from CBA interpretation and implementation, which is the
traditional domain of voluntary arbitrators.
The second group of grievances refer to company personnel policies. According to Senator Ernesto
Herrera, the implementation of company personnel policies is one of the causes of labor-management
“irritance”, and should therefore be the proper subject of the grievance machinery.[59] This contemplates
situations where workers are not satisfied with the decision of management in the implementation of its
policies, in which case workers have recourse to file a grievance. Moreover, this also contemplates a
situation where there is an actual disciplinary action pursuant to these personnel policies before it
becomes an arbitrable grievance.[60]
Senator Herrera also explained that there is a labor-management council apart from the grievance
machinery. In most cases, employers will always submit to the labor management council if they would
like to adopt certain personnel policies in order to avoid problems in the implementation of these
policies.[61] He explained:
What will happen is that we will have these two schemes: the labor management council which is normally,
more of a preventive measure and we have the grievance machinery, when there is already the occurrence of
a grievance that they can thresh out their problems.
The third group of grievances refer to ordinary violations of CBAs. The provision is categorical in stating
that CBA violations, except those gross in character, shall no longer be treated as unfair labor practices,
but as grievances under the CBA. “Gross CBA violations” would mean flagrant and/or malicious refusal
to comply with the economic provisions of the CBA.
During deliberations on then Senate Bill 530, Senator Angara said that the “purpose of the amendment is
to really concentrate to defining what is gross violation of the collective agreement”. The principle behind
the whole provision is “to give an expanded jurisdiction to voluntary arbitrators so that any violation of
the CBA, if not gross, will be subject to arbitration rather than industrial strike.”[62]
It was clarified that gross violations of the CBA to be unfair labor practices must be flagrant and/or
malicious non-compliance with economic benefits, such as wage increase provisions in agreements.
Violations involving non-economic benefits do not fall under Articles 248 and 249 and are therefore
cognizable under the grievance machinery. [63]
The intention of the provision is to speed up processing of grievances and increase resort to bilateral
mechanisms and promote industrial peace. The legislators realized the prevailing practice of labor and
management to bypass voluntary arbitration as the last step in the grievance procedure, and instead bring
their unresolved grievances directly to labor arbiters through a complaint or to conciliator-mediators
through a notice of strike or lockout. Senator Herrera explained that it normally takes six months to one
year to settle a dispute arising from misinterpretation of CBAs.[64]
That‟s why dito... gross violation, otherwise panay ang strike. Iyan ang purpose diyan eh. Pag hindi mo
inilagay ang gross violation lang, eh iyong ULP ground for strike iyan eh. Panay ang strike, kahit it is an

inilagay ang gross violation lang, eh iyong ULP ground for strike iyan eh. Panay ang strike, kahit it is an
honest minsinterpretation of the CBA. Pero noon naman, siguradong non -payment of economic benefits,
gross talaga iyon.[65]
If grievance handling and voluntary arbitration are made efficiently and effectively functional, potential
strike cases could ease up. The usual practice of adding unresolved grievances to fan an already volatile
strike situation is negated by directing the parties‟ attention to the grievance machinery and voluntary
arbitration as better alternatives to industrial action.
2. Second Area
Article 262 relates to the jurisdiction of voluntary arbitrators, upon agreement of the parties, to hear and
decide all other issues including unfair labor practice and collective bargaining deadlocks.
The intention of the framers is to provide a clear opportunity for settlement. If parties will agree to settle
and discuss the issues through voluntary arbitration, then they should not be denied such an opportunity,
even if the case has commenced compulsory arbitration proceedings. Hence, any issue can be submitted
to voluntary arbitration for as long as the parties agree and are willing to provide the chance to resolve the
dispute through voluntary means.
Under this set-up, the parties may agree to submit any or all kinds of disputes to voluntary arbitration.
This includes cases under the jurisdiction of the NLRC and disputes involving industries indispensable to
the national interest under the Secretary of Labor and Employment‟s assumption and certification power
pursuant to Article 263 (g).
B. VOLUNTARY ARBITRATION PROCEDURES
Department Order No. 40-03, signed in 17 February 2003, amended the Rules Implementing Book V of
the Labor Code.
Significant amendments of the Department Order include:
1) The remedies to deal with refusal to comply with the contractual commitments to submit to voluntary
arbitration;
2) Reducing time resolution by eliminating the option to file a motion for reconsideration;
3) Sanctions for arbitrators who cannot comply with the mandated or agreed upon period within which
to render a decision; and
4) The NCMB as repository of case records.
During the 7th National Convention on Voluntary Arbitration held in 2002, the issue on parties‟ refusal to
submit to voluntary arbitration despite the existence of a CBA provision was heavily deliberated.
Department Order No. 40-03 presents a solution through a notice to arbitrate issued by a willing party to
the other party to the CBA. The NCMB can now appoint a voluntary arbitrator when one party refuses to
comply with their contractual commitments in the CBA.
To reduce time resolution of cases, the new Department Order removes the option for parties to file a
motion for reconsideration of a voluntary arbitration decision. This renders voluntary arbitration decisions
and awards to be final and immediately executory.
Relative to periods of disposition, the new rules now provide a sanction for arbitrators who cannot render
decisions within the twenty (20) calendar day period stipulated in the Labor Code. The sanctions shall be
governed by the existing guidelines on delisting, last issued in 1999 by the Tripartite Voluntary
Arbitration Advisory Council (TVAAC). Should the sanction be delisting, it shall be unlawful for the
voluntary arbitrator not to turn over the records of the case to the NCMB for further disposition or
assignment to another voluntary arbitrator.
The new rules attempt to address problems relative to the execution of decisions, orders and awards of
voluntary arbitrators who become incapacitated, have died or become unavailable for any reason. The
new rules made clear that in such situations, motions for execution shall be lodged before the Labor

new rules made clear that in such situations, motions for execution shall be lodged before the Labor
Arbiter.
The new rules also require all voluntary arbitrators to oblige parties to copy furnish the NCMB with
copies of all pleadings submitted relative to a voluntary arbitration case, and to turn over the entire
records of the case to the NCMB for record keeping, after satisfaction of the final arbitral award.
V. The State of Voluntary Arbitration

A. PROMOTIONAL EFFORTS
The National Conciliation and Mediation Board, in consultation with the Tripartite Voluntary Arbitration
Council, formulated a multi-pronged approach that sought to increase the acceptability of voluntary
arbitration to the parties. Since 1988, various efforts were undertaken by the Board. Its components may
be summarized below, with particular themes obtaining for each period.
1988: Period of Assessment

An assessment of the state of voluntary arbitration through a survey was undertaken, which
confirmed the conclusions of the Tripartite Review Committee on Labor Relations on factors
hindering the use of voluntary arbitration, to wit:
• Lack of awareness
• Delays in case disposition
• Problems in the enforcement of arbitral awards
• Lack of competent and trustworthy arbitrators
• The year saw 74 cases, mostly handled by DOLE officials.
1989: Laying the Foundation

The legal framework of voluntary arbitration was strengthened with the passage of RA 6715.
Towards achieving a broad consensus, a National Tripartite Conference Workshop and regional
conferences were held resulting in inputs and the adoption of the following:
• Draft Rules implementing RA 6715

• Guidelines in the conduct of VA proceedings
• System for Accreditation of Arbitrators
• Code of Ethics of Accredited Voluntary Arbitrators
• Five-Year Plan on Voluntary Arbitration
1) Accreditation of 111 PAPA and AAP members and individual applicants
2) Conducted four (4) Institutes on Grievance Settlement and Voluntary Arbitration,
resulting in the accreditation of 284 arbitrators
3) Developed and produced information materials like the VA Journal, Basic Documents
and the VA Primer
• Voluntary arbitration cases grew to 116.
1990: Strengthening the System and Generating Awareness

The First National Convention of Voluntary Arbitrators was held, which paved the way for the
formation of a single national association of arbitrators. Various measures were proposed to
strengthen voluntary arbitration:
• Tri-media campaign
• Networking with other sectors
• Distribution of directory of accredited voluntary arbitrators (AVAs)
Amendments on jurisdiction in relation to termination cases
•
• Amendments on jurisdiction in relation to termination cases
• Conduct of an in-depth study for voluntary arbitrators
• Eighty-nine (89) new voluntary arbitrators accredited
• Voluntary arbitration cases numbered 136.
1991: Generating More Awareness

The important activities undertaken for the year were:
• Tri-media campaign
• Incorporation of PAVA, Inc.
• Conduct of 25 area-wide seminars and 5 advocacy training seminars
• Establishment of VA Centers in Cebu, Davao, and Manila
• Holding of 2nd National Convention of AVAs
• Seven (7) arbitrators were accredited, while cases rose to 166.
1992: Continuing Campaign for Awareness

Tri-media campaign cut short by election period
• Completion of Professional Development Program for AVAs by Development Academy of the
Philippines.
• Consultation with various sectors (labor group, employer group, maritime industry leaders) on
use of voluntary arbitration
• Holding of Regional Convention in Baguio City
• Conduct of 18 area-wide seminars and 12 advocacy trainings
• Signing of the first Concord on Voluntary Arbitration
• MOA between the DOLE and the Office of the Solicitor General was forged, which formalized
representations made by OSG to defend decisions of voluntary arbitrators before the Supreme
Court
• Two (2) additional arbitrators were accredited.
• Voluntary arbitration cases down to 137.
1993: Further Strengthening the Campaign for Awareness

Continuing tri-media campaign
• Launching of the Free Legal Aid and Voluntary Arbitration Services Program (FLAVAS)
• Conduct of 17 area-wide seminars and 19 advocacy training seminars
• Holding of Visayas-Mindanao Convention on Voluntary Arbitration in Davao City
• Issuance of Policy Instruction No. 56, which clarified the jurisdiction of voluntary arbitrators and labor
arbiters over termination cases
• A second accord on voluntary arbitration was signed with CLAMOR, PAVA, DOLE-NMYC and
Apparel and the Textile Industry Board
• Conduct of two (2) specialized trainings benefiting 69 newly accredited VAs
• Establishment of local chapters of PAVA in different regional branches
• Holding of Pre-Accreditation Trainings in coordination with the UP Law Center, which accredited
149 new AVAs
• Voluntary arbitration cases rose to 250.
1994: Strengthening the Campaign for Awareness

Conduct of 11 area-wide seminars and 17 advocacy trainings
• Regular meetings with voluntary arbitrators and VA advocates nationwide
• Operationalization of the FLAVAS program
• Implementation of Policy Instruction No. 56
• Holding of the 3rd National Convention of AVAs in OSHC
• Launching of the Search for Outstanding Voluntary Arbitrators
• Accredited 36 VAs

• Accredited 36 VAs
• Voluntary arbitration rose to 289.
1995: Refocusing Thrusts
• Institutionalization of voluntary arbitration in the public sector through the conduct of seminar-
workshops in coordination with the Civil Service Commission
• Conduct of week-long activities to celebrate voluntary arbitration week, January 25-31, 1995,
which culminated in the awarding of 10 Outstanding Voluntary Arbitrators
• Training Program for Non-Lawyer AVAs in joint sponsorship with AAFLI, now the American
Center for International Labor Solidarity (ACILS)
• Review of policies on accreditation and de-listing of AVAs, guidelines in the charges of fees,
expedited VA procedures
• Drafting of VA Bill incorporating proposed amendments to the Labor Code
• Promulgation of the Luzon Development Bank case, equating decisions of Voluntary Arbitrators
with those of RTC judges, thus giving the Court of Appeals concurrent appellate jurisdiction with
the Supreme Court.
• Conduct of 34 area-wide seminars and 15 VA advocacy trainings
• Change of direction of promotional activities, focusing attention on strengthening grievance
machineries
• Accreditation of 331 new AVAs
1996:Strengthening participation of AVAs in Policy-Making Processes

Held the 4th National Convention of Accredited Voluntary Arbitrators at Apo View Hotel, Davao City
• TVAAC approved the following guidelines:
1) Guidelines for accreditation and de-listing of AVAs
2) Guidelines on expedited voluntary arbitration proceedings
3) Revised guidelines on the processing and payment of subsidy entitlement
4) Revised guidelines on FLAVAS subsidy
• Forged Memoranda of Agreement with the OSG to reaffirm its role in defending VA decisions and
created a Task Force to represent AVAs before the Court of Appeals and the Supreme Court; and with the
NLRC to strengthen tie-ups with the sheriff in executing decisions of AVAs
• Conducted 14 professionalization training seminars for voluntary arbitrators in 10 regional branches of
the NCMB
• Active involvement and participation of voluntary arbitrators in VA-related activities
1997: Active Involvement of PAVA in NCMB promotional activities
• Launching of PAVA Foundation, Inc. as the financial arm of PAVA, Inc.
• Establishment of NAVA as a research and training extension program of the PAVA
• Launching of the 2nd Search for Outstanding Voluntary Arbitrators
• Conducted 4 professionalization training programs for AVAs
• Conducted 5 training seminars on VA advocacy in joint sponsorship with AAFLI and TUCP
• Documentation of successful grievance machineries
• Very active involvement of PAVA in NCMB activities
• Voluntary arbitration cases dropped to 288.
1998: Enhancing the Acceptability of Voluntary Arbitration

Conducted consultation meetings among various sectors, collating views on how to further enhance
acceptability of voluntary arbitration.
• Holding of the 5th National Convention on Voluntary Arbitration at Sugarland Hotel, Bacolod City
• Conducted 116 orientation programs and 66 skills training seminars
• Voluntary arbitration cases dropped further to 276.
1999: Refocusing on Plant-Level Mechanisms

The promotional efforts of the NCMB emphasized effective grievance handling
Focused more on LMC facilitation and grievance machinery operationalization processes
• Focused more on LMC facilitation and grievance machinery operationalization processes
• Greater focus on grievance settlement programs on dispute prone companies
• Establishments requiring greater involvement of conciliator-mediators identified
• Greater focus on organizational analysis to ensure proper intervention/ assistance in grievance
settlement mechanisms or LMC facilitation
• Strengthened links with PAVA in order to generate the interest of AVAs and innovate programs on
voluntary arbitration
• Forged MOA with the maritime sector to institutionalize voluntary arbitration in the maritime industry
• Conducted pre-accreditation training among maritime experts and voluntary arbitrators who would like to
specialize in maritime disputes
• The TVAAC revised the guidelines on:
1. The Processing and Payment of Subsidy Entitlement
2. Expedited Voluntary Arbitration Proceedings
3. Accreditation and De-accreditation of Voluntary Arbitrators
2000: Operationalization and Strengthening of Grievance Machineries (GMs)

Operationalization and enhancement processes were implemented
• Targeted reduction in the incidence of ULP cases in establishments with CBAs through proper
functioning grievance machineries
• For identified non-functioning GMs, intervention by way of orientation and training
• For functioning GMs in need of assistance, intervention will be in the form of strengthening or
enhancing effectiveness
• Held the 6th National Convention on Voluntary Arbitration in Cebu City
• Held post-accreditation activities for newly accredited maritime arbitrators
• Voluntary arbitration cases rose slightly to 212.
2001: Continuing Strategy to Strengthen Plant-level Mechanisms

• Forged MOA with Subic Bay Metropolitan Authority (SBMA)
• Held LMC-VA Facilitators‟ Training
2002: Back to Basics

• Streamlining of voluntary arbitration procedures
• Renewing close ties with networks, including the proposal to explore accreditation of trainings on VA by
the Supreme Court (similar to the IBP continuing legal education program)
• Held the 7th National Convention on Voluntary Arbitration at Holiday Inn, Manila
• Cleansing the roll of AVAs to address problems relative to inactivity and disinterests, more importantly
delays in disposition of cases
• Strengthen coordination with NLRC, as well as PAVA in the facilitation of case referrals from compulsory
arbitration to voluntary arbitration
• Implementation of NCMB Guidelines on the Execution of VA Awards and Decisions
• Finalized the Survey on Grievance Machinery
• Developed the training module on Grievance Settlement
2003: Rationalizing the Labor Dispute Resolution System

• Issuance of Department Order No. 40-03
• Implementation of the Survey on Grievance Machinery
• Held the Trainers‟ Training on LMC-Grievance settlement to pilot-test the Standardized Training
Module on Grievance Settlement
• Revision of the Rules of Procedures or Procedural Guidelines in the Conduct of VA Proceedings to
include amendments in DO 40-03
• Trimming down the list of active AVAs
• Strengthening ties with TVAAC, PAVA, NAVA, local VA associations, OSG, NLRC, POEA, etc.
•

• Voluntary Arbitration cases down to 175.
2004: More emphasis on effective plant-level grievance handling and promotion of cooperative
and other non-adversarial schemes
Finalized the Revised Guidelines in the Conduct of Voluntary Arbitration Proceedings
• Strengthened roles of conciliator-mediators in the promotion of the three program areas of the
NCMB
• Strengthened labor education programs involving the National Academy on Voluntary
Arbitration
• Forged MOA with the DILG
• Strengthened partnerships with local associations
• Plant-level activities focused on LMC facilitation and GM operationalization processes
• Voluntary Arbitration cases down further to 152.
2005: Strengthening Voluntary Arbitration as an integral part of ADR

Expansion of the coverage of promotional activities to the unorganized sector
• Improvement of existing systems and procedures on voluntary arbitration
• Full implementation of “notice to arbitrate”
• Re-tooling of Voluntary Arbitrators
• Improvement of training modules and strategies
• Re-tooling of NCMB facilitators
• Accreditation of new arbitrators
• Renewing and re-affirming the commitment of long-time arbitrators
• Voluntary arbitration cases as of June at 73.
B. SUBMISSION OF CASES TO VOLUNTARY ARBITRATION
Since the NCMB‟s administration of the voluntary arbitration program, total cases submitted reached
3,581 or an average of 200 cases per year. From the dismal observation in 1978[66] that only
approximately 3% of cases processed through voluntary arbitration were eventually resolved, or from
only 229 cases compiled by the Bureau of Labor Relations in 8 years,[67] a turnaround occurred since the
NCMB administered the VA program. Cases increased from 74 in 1988 to as high as 304 cases in 1996.
Like the filing of notices of strikes/lockouts and the number of unions and CBAs registered, there was a
downward trend in voluntary arbitration cases beginning 1997. A sharp decrease of 26% was registered in
1999, as it stabilized to an average of 212 cases per year until 2002. Beginning 2003, cases submitted
were below the 200 mark: 175 in 2003 and 152 last year. For the first half of 2005, VA case submission
was only at 73, or three percent lower than the 75 cases submitted for the same period last year.
Fig. 1. Number of VA Cases (1988-June 2005)
Table 1. Summary of VA Cases Submitted and Disposed

1988-June 2005

A number of factors can explain this trend in VA case submission. The trend is reflective of external
developments, in addition to the promotional efforts exerted by the NCMB as well as the support obtained
from the government and other stakeholders.
1988-1994
The first six years of program administration were marked by massive awareness-raising and institution-
building activities. The voluntary arbitration program was like a baby out of the womb showered with
much attention and care. The program was given all the support from top to bottom. Indeed, a favorable
policy and legal climate was mandated by no less than the Constitution.
Republic Act 6715 also provided all the supplements and nourishments that made voluntary arbitration a
healthy infant. There was the special voluntary arbitration fund to finance the tri-media campaign,
exposing the beauty of grievance handling and voluntary arbitration.
There was also an abundance of information materials, from directories to pamphlets. Everyone was
curious to see what the program was all about. A number of labor and management practitioners and other
stakeholders gave the program a chance, as they became “godparents” and fervent supporters. The
organizations involved were the International Labour Organisation (ILO), American Center for
International Labor Solidarity (ACILS, formerly the Asian American Free Labor Institute or AAFLI), the
Employers Confederation of the Philippines (ECOP), Philippine Chamber of Commerce and Industry
(PCCI) and labor federations (TUCP, LACC, PDMP and other labor centers).
New voluntary arbitrators were trained and accredited under a centralized screening and training and
development process. The roster was filled with arbitrators of competence and integrity.
During this period, the VA program faced challenges as well. In the election year of 1992, many
endorsers and supporters of the program were politicians (Senator Ernesto Herrera, Congressman Alberto
Veloso, Senator Blaas Ople, then DOLE Secretary Ruben Torres). Hence, the tri-media campaign was cut
short and limitations were imposed upon the use of the budget, as part of the austerity measures of the
government. Institution-building activities were a little less compared to previous years. Thereafter, case
submission rose to a high of 250 in 1993. The NCMB continued to reap the fruits of earlier vigorous
awareness campaign strategies. This was also the time when new programs were launched, such as the
Free Legal Aid and Voluntary Arbitration Services Program (FLAVAS), which involved disputes from
the organized and unorganized sectors. Policy Instruction No. 56 was also issued to clarify the jurisdiction
of voluntary arbitrators in termination disputes.
A crucial development in 1994 necessitated the NCMB to plan anew. There was no Special Voluntary
Arbitration Fund (SVAF) appropriated to the NCMB due to stringent and stricter policies at the
Department of Budget and Management. The P15 Million Special Voluntary Arbitration Fund provided
for in Art. 277(f) of the Labor Code, as amended, was just an authority to appropriate,[68] leaving no
actual source of funds. Congress will still have to determine how much can be appropriated for the

actual source of funds. Congress will still have to determine how much can be appropriated for the
purpose.
The SVAF was introduced by RA 6715 to help parties defray the costs of VA proceedings. It was also
intended to provide continuing education and training for employees, employers and voluntary arbitrators.
The SVAF was not a special fund. It was a part of the regular appropriations of the NCMB, which was
provided as a supplemental budget. This provision was provided in RA 6715 to give authority to
Congress to set aside funds for the administration of the program.
For the SVAF, Congress appropriated P3.9 Million in 1989, P3.9 Million in 1990, P15 Million each in
1991, 1992 and 1993. Beginning 1994, there were no supplemental appropriations on SVAF provided to
NCMB. Although these appropriations were provided, actual amounts released to the NCMB were
smaller than appropriations. Table 2 provides the detailed breakdown of these appropriations to NCMB.
Table 2. Summary of NCMB Budget and Utilization (In Thousands)

1988-2004
YEAR GAS STO SVAF RBs TOTAL UTILIZATION % UTILIZED SVAF/ VA % VA SUBSIDY
UTILIZATION
UTILIZED
1989 528 379 50 7,349 8,306 8,212 99% 44 88%

1990 835 329 2,774 6,842 10,780 9,382 87% 2,733 99% 14
1991 752 254 13,417 4,447 18,870 17,074 90% 10,497 78% 37
1992 1,246 603 12,321 5,155 19,325 18,156 94% 11,363 92% 204
1993 1,278 615 13,096 5,039 20,028 12,585 63% 5,806 44% 402
1994 3,823 9,172 13,256 26,251 19,650 75% 8,698 33% 575
1995 5,976 10,538 15,281 31,795 30,433 96% 13,899 44% 972
1996 5,826 7,917 19,967 33,710 33,568 100% 13,230 39% 1,430
1997 7,075 7,496 24,567 39,138 33,424 85% 11,056 28% 1,557
1998 6,913 7,455 19,107 33,475 28,537 85% 9,092 27% 1,062
1999 7,156 7,424 31,496 46,076 32,667 66% 8,907 3% 1,330
2000 8,378 7,556 30,142 46,076 32,990 72% 8,244 18% 1,072
2001 6,549 4,082 27,983 38,614 36,813 95% 6,928 18% 1,192
2002 5,145 3,020 23,523 31,688 31,072 98% 6,499 21% 1,129
2003 4,774 2,617 20,843 28,234 28,234 100% 6,331 22% 978
2004 5,158 3,022 23,776 31,956 30,482 95% 6,776 21% 846
The DBM required that to be entitled to the SVAF, the NCMB must be able to meet, if not surpass, the
projections set for its critical indicators. The measure of success for the voluntary arbitration program was
therefore anchored on the number of voluntary arbitration cases facilitated or monitored. Although the
numbers were improving, accomplishments were so minimal to meet the projections.
These developments required the NCMB to undergo re-assessment of strategies to address gaps and
concerns about the program.
1995-1998
The next four years (1995-1998) were a time to refocus policy thrusts. The NCMB went through a series
of consultations among the Regional Branch Directors to redirect thrusts, considering that the number of
cases handled under the program was not a good indicator of success. Other means to measure program
impact were employed. The NCMB re-directed its promotional emphasis to making the grievance

impact were employed. The NCMB re-directed its promotional emphasis to making the grievance
machinery work, considering fewer cases submitted to voluntary arbitration could mean the existence of
functional grievance machineries. Among the strategies identified were the following:
1. Increasing the advocates of functioning grievance machineries and voluntary arbitration by

involving actual players in grievance handling. Hence, associations of voluntary arbitration
advocates were formed in all regional branches.
2. Decentralizing the accreditation of arbitrators to the regional branches to include labor-management
practitioners (HR and IR practitioners). The purpose was to involve key players in the processing of
grievances at the workplace.
3. Voluntary arbitrators were involved in program planning and implementation, thereby making them
a significant part of the drive to further strengthen voluntary arbitration.
The strategy seemed to work at first, because cases surged as high as 304 in 1996. Also, the NCMB was
also able to document a number of functioning GMs. The SVAF, however, was not appropriated and the
budget for the voluntary arbitration program was deemed incorporated into the regular appropriations of
the NCMB.
To augment budget deficiency in voluntary arbitration, the NCMB submitted a special budget to the
DBM to utilize CBA fees collections for the purpose of setting up three (3) Voluntary Arbitration
Centers, one each for Luzon, Visayas, and Mindanao. VA Centers served as multi-purpose venues for
arbitrators to hold meetings and conferences. Books and copies of the Supreme Court Reports Annotated
(SCRA) were provided to assist the arbitrators in writing their decisions. Moreover, additional temporary
staff members were hired to man these centers and provide administrative assistance to voluntary
arbitrators.
Three hundred thirty-one (331) new voluntary arbitrators were added to the roster of arbitrators under a
decentralized accreditation system. The Regional Branch Directors were authorized to select prospective
arbitrators and conduct pre-accreditation trainings. This increased the number of voluntary arbitrators to
970.
Another important development for voluntary arbitration in this period was the promulgation of the Luzon
Development Bank case in October 1996,[69] equating the decisions of voluntary arbitrators with those
rendered by the RTC Judges, thus giving the Court of Appeals concurrent appellate jurisdiction with the
Supreme Court. This installed a new level of adjudication in the voluntary arbitration process.
1999 to present
From 1999 to 2000, case submission reached a plateau with 200 cases. The NCMB went back to basics in
terms of strengthening plant-level bipartite mechanisms. Programs for the wider use of the grievance
machinery as a voluntary mode of settling disputes were pursued. After all, effective grievance
machineries translate into fewer cases that go into formal dispute settlement systems. The policy shift
involving effective grievance handling and less case handling contributed to good workplace relations.
Plant-level dispute resolution mechanisms were strengthened, thus preventing labor disputes from
escalating into notices of strike/lockout or actual strikes/lockouts.
Since 2001, the Board assisted in the operationalization of 1,343 grievance machineries and the
enhancement and strengthening of 1,681 others, to increase the number of functioning grievance
machineries and maximizing the use of voluntary arbitration as the last step in the grievance procedure.
Figure 2 shows the number of grievance machineries made functional and enhanced from 2001 to June
2005.
Figure 2. Number of Grievance Machineries Operationalized and Enhanced

2001 to June 2005

C. SOURCES OF VOLUNTARY ARBITRATION CASES
The Labor Code directs the adoption of provisions in all collective bargaining agreements pertaining to
the establishment of a grievance machinery, including an arbitration clause for the adjustment and
resolution of grievances arising from the application of the collective bargaining agreement and company
personnel policies. Voluntary arbitration is the terminal step in every unsuccessful grievance proceeding.
Despite these provisions, however, it is common to come across cases brought for conciliation without the
benefit of the issues being discussed at the grievance machinery. It is therefore not surprising to see that
most voluntary arbitration cases (60%) from 1988 to June 2005 were the result of conciliation
proceedings. On the other hand, direct submission or those submitted to arbitration by the parties
themselves only accounted for 27%. The situation is indicative of the need to make full use of the
grievance machinery, and to submit unresolved grievances to voluntary arbitration as called for by CBAs
and the Labor Code.
Case referrals from the NLRC numbered 301 or 8% of all sources. This did not include cases settled at the
level of the NCMB technical personnel, with FLAVAS as an alternative source of VA cases. From its
operationalization in 1993, a total of 164 FLAVAS cases were submitted to voluntary arbitration.
Table 3. Origin of VA Cases
Figure 3. Trends in the Sources of VA Cases

1988-June 2005

1) Direct Submission to Voluntary Arbitration
This is the ideal process through which parties from organized establishments submit their unresolved
grievances to a voluntary arbitrator or panel of voluntary arbitrators named/designated in the CBA or
chosen through an agreed selection procedure.
• In case of failure by parties to select an arbitrator, NCMB assistance may be sought. The
NCMB through its Regional Branches help the parties select an arbitrator using the procedure
prescribed in the CBA or through an agreed process.
• Prior to Department Order No. 40-03, submission to voluntary arbitration cannot prosper in
instances when one party refuses to submit to VA despite the existence of a voluntary arbitration
clause in the CBA. Department Order No. 40-03 made these arbitration clauses operational by
providing a mechanism for a “notice to arbitrate,” to be served by the willing party upon the other.
NCMB Directors can now appoint a voluntary arbitrator in case one party, for some reason, refuses
to comply with their contractual commitments in the CBA.
2) Submission through Conciliation-Mediation Cases
If some of the issues identified and validated during the conciliation-mediation conference involved CBA
or personnel policy enforcement and interpretation, these issues shall be deleted from the list of strikeable
issues. For settlement purposes, they are treated as subjects of preventive mediation, but if no settlement
is reached and there is a need for decision to resolve the issues, the conciliator-mediator is directed to
facilitate submission of the case to voluntary arbitration.
3) Submission through the NLRC
Should a case arise out of the interpretation or implementation of the CBA and company personnel
policies, labor arbiters have been directed under NLRC Memorandum Circular No. 02-03, series of 2001,
to dispose of the case by referring the same to the grievance machinery or voluntary arbitration as may be
provided in said agreements. This issuance invokes Policy Instruction No. 56, issued by then Secretary
Nieves Confesor in 1993. P.I. 56 laid the following rules:
a. Termination cases arising in or resulting from the interpretation and implementation of

collective bargaining agreements and interpretation and enforcement of company personnel policies
which were initially processed at the various steps of the plant-level Grievance Procedures under
the parties collective bargaining agreements fall within the original and exclusive jurisdiction of the
voluntary arbitrator pursuant to Article 217 (c) and Article 261 of the Labor Code.
b. Said cases, if filed before a Labor Arbiter, shall be dismissed by the Labor Arbiter for lack of
jurisdiction and referred to the concerned NCMB Regional Branch for appropriate action towards
an expeditious selection by the parties of voluntary arbitrator or panel of arbitrators based on the
procedures agreed upon in the CBA.
4) Submission through FLAVAS
The Free Legal Aid and Voluntary Arbitration Services or FLAVAS Program of the NCMB provides free
legal aid and VA-related assistance to workers belonging to organized and non-organized establishments.
Those assisted usually do not have sufficient funds to pay the costs of arbitration proceedings.

Those assisted usually do not have sufficient funds to pay the costs of arbitration proceedings.
D. ISSUES SUBMITTED TO VOLUNTARY ARBITRATION
Table 4 is a summary of issues submitted to voluntary arbitration from 1988 to June 2005.
Majority of the cases (51%) involve the interpretation and enforcement of company personnel policies.
Legislators correctly pointed out that company personnel policy comprise most of the issues brought to
grievance proceedings, which include disciplinary actions and dismissal cases.
Table 4. Issues Involved in VA Cases (1988-June 2005)
E. MERITS OF VOLUNTARY ARBITRATION
The advocates of voluntary arbitration envisioned the system to grow and develop into a mechanism
which characterizes the voluntary nature of labor dispute settlement. This is a process derived from the
mutual trust and respect of the parties not only because the Constitution or the Labor Code says so, but
because there are practical reasons to make such an unequivocal choice. The challenge that voluntary
arbitration faces today is how to shed off the “compulsion” tendency and clothe it with practical
advantages inherent in the system.
1) Compatible with the free collective bargaining system
The process is more attuned to Philippine culture, which prefers a peaceful mode of dispute resolution
through the help of a mutually-respected third party. As a mode of dispute settlement, it is compatible and
consistent with the private character of collective bargaining. In fact, a grievance machinery with
voluntary arbitration as the terminal step is the “judicial system” of every collective bargaining
agreement.
Indeed, the collective bargaining process does not end with the conclusion of a CBA. It continues as a
day-to-day process of implementing the CBA in accordance with the intent of the parties. Collective
bargaining calls for the mutual adjustment of grievances by the parties, should differences arise in
contract interpretation and implementation. Thus, without an efficient grievance procedure and voluntary
arbitration system, the contract can be reduced to a mere scrap of paper, instead of being a source of
stability in the relationship between contracting parties. It may become a very rich source of complaints,
grievances and irritants.[70]
There has also been a trend with companies and unions resorting to voluntary arbitration more than once.
In sales parlance, they are “repeat orders” indicating customer satisfaction. But there has been a slight
downtrend in these “repeat orders”, revealing either an emerging distaste for voluntary arbitration or a
renewed capability to effectively handle plant level grievances by labor and management.
Table 5. List of Companies Repeatedly Submitting Cases

Table 5. List of Companies Repeatedly Submitting Cases
to Voluntary Arbitration
2) Non-litigious, Non-adversarial, non-technical nature of proceedings
The process is a better alternative to the long and litigious process of compulsory arbitration, because it is
not difficult to find a competent voluntary arbitrator who can resolve the dispute and have the expertise,
time, and reputation for fairness.
Compared to litigation, the very private character of VA renders proceedings before the arbitrator less
technical in nature.
The method of selecting voluntary arbitrators places the arbitrator in a good position to succeed in
conciliating their differences. Should s/he fail, the arbitrator can also speed up proceedings by conducting
informal hearings and satisfy the due process requirement without being saddled by strict observance of
the rules obtaining in regular courts.
3) Speedy labor justice
Because the arbitrator is a private person, s/he has the time to attend to the case and adopt procedures that
would not allow unnecessary delay and dilatory tactics like resetting and postponement of hearings.
On the average, it takes 51 days to decide a voluntary arbitration case from the date of case submission
for decision. The entire duration of a voluntary arbitration proceeding is computed at an average of 171
days or nearly 6 months. There are isolated instances of very long pending cases, which are not the norm
in the resolution of VA cases. Generally, more voluntary arbitrators are exerting best efforts to
expeditiously resolve their respective cases.
Table 6. Average Duration to Decide VA Cases

It is worthy to note that the years involving quicker disposition of cases (1995-1997) corresponded to the
highest number of cases submitted to voluntary arbitration.
4) Final and Executory Character of VA Decisions
Voluntary arbitration decisions are final and executory after 10 calendar days from receipt of the copy of
decision by the parties, and shall not be subject to a motion for reconsideration.[71]
The Luzon Development Bank case in 1995, however, negated concepts of “finality” and
“inappealability” when the award or decision of the Voluntary Arbitrator was equated with that of a
decision by the Regional Trial Court. Henceforth, in a petition for certiorari, the Court of Appeals was
deemed to have concurrent jurisdiction with the Supreme Court. While this ruling may unduly prolong
the process of voluntary arbitration, it has been argued that the process will in fact expedite resolution of
higher court review cases, since there are more divisions in the Court of Appeals to resolve VA cases.
This presupposes that decisions of the Court of Appeals in such cases will no longer be appealed to the
Supreme Court.
The Revised Procedural Guidelines in the Conduct of VA Proceedings provide that the filing of a petition
for certiorari with the Court of Appeals or the Supreme Court shall not stay the execution of the decision,
unless a temporary restraining order or an injunction is issued by the Court of Appeals or the Supreme
Court pending resolution of such petition.[72]
5) Fair and Impartial decisions
The test of a good voluntary arbitration award is unqualified acceptance by the parties to the case.
Acceptance can be inferred when no appeal is taken by either party during the prescribed ten calendar
days following the release of the voluntary arbitrator‟s decision. This also means that the plaintiff and
defendant agree to comply with the terms of the award without waiting for the coercive writ of execution.
A motion for reconsideration filed during that period detracts from the acceptability of the award and
diminishes its efficacy as a good arbitral award judgment.[73]
There are, however, a number of commentators who believe that real test of a good award is its
affirmation by the Court of Appeals or the Supreme Court. Out of 2,921 voluntary arbitration decisions
reported to the NCMB since 1988, only 600 or 21% were brought for review to the Court of Appeals and
the Supreme Court. Forty-five (45) or 11% have been reversed while a huge number (356 or 85%) have
been affirmed.
Table 7. No. of Cases Brought for Review at the Court of Appeals

and the Supreme Court (1988-2005)
1988-2005 %
No. of Ca s es Decided by the Arbitrators 2,921
No. of Cases Appealed 600 21%
No. of Ca s es Resolved by the Courts 421
Affirmation 356 85%
Reversal 45 11%
Wi thdrawn 12 2%
Ami ca bly Settled/Remanded to a rbitrator 8 2%
Pending 179

Pending 179
According to Khan, the voluntary arbitrator must be conscious that his/her decision may be appealed.
Fraud, abuse of discretion, excess or lack of jurisdiction, and an erroneous application of the law or
established precedents are the usual grounds. The conscientious and knowledgeable arbitrator has to steer
clear of this procedural minefield to ensure respect and obedience to the decision. The voluntary arbitrator
will then ensure that the decision or award becomes final and executory and that appeal will become a
futile exercise.
6) Economical
Considering expediency in the disposition of voluntary arbitration cases, the VA option is less costly than
compulsory arbitration and a strike or lockout.
A nagging issue often raised regarding voluntary arbitration is the matter on costs. Legislative
deliberations leading to RA 6715 indicated two reasons why VA failed in the 1970s and mid-1980s: (1)
workers did not want to resort to voluntary arbitration because they cannot afford to pay the costs; and (2)
delay in voluntary arbitration cases. In Senate Bill 360 (later incorporated with House of Representatives
version to become RA 6715), there was an abandoned proposal to have government shoulder the costs of
voluntary arbitration.[74]
a. The Special Voluntary Arbitration Fund
Congress tried to remedy the problem by setting aside a P15 million a year Special Voluntary Arbitration
Fund (SVAF), basically intended to help the parties defray the costs of voluntary arbitration, including
voluntary arbitration fees, and to provide a continuing professionalization program for arbitrators, labor,
management, and the general public. Also, in order that the SVAF need not always to depend on regular
appropriations of Congress, the law included a provision stating that fees assessed and collected from
every CBA registered shall accrue to the SVAF for the effective and efficient administration of the
voluntary arbitration fund.
b. Voluntary Arbitration Fees
Currently, there is no fixed standard on arbitration fees and costs generally vary. In some cases, fees are
viewed as exorbitant, but others saw no need to fix arbitration fees. As a general rule, this matter is left to
the agreement of the parties taking into account the peculiarities of each case. In the absence of an
agreement, the arbitration subsidy being provided by the Board serves as a guide in fixing fees. In many
cases, the guidelines on voluntary arbitration fees for subsidy purposes becomes the final arbitrator‟s fee:
P10,000 for simple issues of CBA interpretation and implementation, dismissal cases, and issues of
interpretation and enforcement of company personnel policies, and P15,000 for bargaining deadlock
issues and cases with combination of issues.
For a few arbitrators whose professional standing is long established and highly respected, their fees
could be higher especially if the case is complex and the amount involved is significant.
For those who cannot afford arbitrator‟s fees, the Special Voluntary Arbitration Fund, as provided under
RA 6715, is available. Since 1990, 1,718 cases were subsidized with a total of P13.2Million.
Table 8. VA Cases Subsidized by SVAF (1990-June 2005)

Figure 4. Trends in the Availment of SVAF Subsidy
1990 to June 2005
VI. Survey of Jurisprudence

A. NATURE OF A VOLUNTARY ARBITRATOR
The Supreme Court has declared that a voluntary arbitrator by the nature of her functions acts in a quasi-
judicial capacity.[75] As such, she is a means by which government acts, or by which a certain
government act or function is performed. The voluntary arbitrator performs a state function pursuant to a
governmental power delegated to her under the provisions of the Labor Code. In one case the Court
applied the Arbitration Law[76] by analogy and equated the award or decision of a voluntary arbitrator
with that of the regional trial court,[77] though it must be emphasized that VAs are not part of a
government unit or are not labor department personnel.[78]
B. FINALITY OF JUDGMENT
The nature of a voluntary arbitrator‟s functions determined whether her decisions should be subjected to
the power of judicial review. At first blush, Article 262-A of the Labor Code appears to place a VA
decision beyond the reach of judicial authority, when it states that the award or decision of a voluntary
arbitrator shall be final and executory after ten (10) calendar days from receipt of the copy of the award or
decision by the parties.
In Oceanic Bic Division (FFW) v. Romero,[79] however, the Court through Mr. Justice Gutierrez held:
Inspite of statutory provisions making “final” the decisions of certain administrative agencies,
we have taken cognizance of petitions questioning these decisions where want of jurisdiction, grave
abuse of discretion, violation of due process, denial of substantial justice, or erroneous interpretation of
the law were brought to our attention.
Prior to 1995, the mode of appeal from the decision of a voluntary arbitrator was generally known to be
the extraordinary Rule 65 petition for certiorari.[80] But by virtue of the Supreme Court ruling in Luzon
Development Bank v. Association of Luzon Development Bank Employees,[81] the Court through Mme.
Justice Romero ruled that the Court of Appeals had concurrent jurisdiction over an appeal from such a
decision. Hence, a petition questioning a VA decision or award was ordered remanded to the Court of
Appeals for proper disposition.[82]

Under the 1997 Rules of Civil Procedure, VA awards, judgments, final orders or resolutions of “voluntary
arbitrators authorized by law” are appealable to the Court of Appeals through a petition for review under
Rule 43.
While Section 2 of Rule 43 states that appeals under the rule shall not apply to judgments or final orders
issued under the Labor Code of the Philippines, the Court through Mr. Justice Kapunan in Alcantara v.
Court of Appeals[83] relied on the Luzon Development Bank assertion that this exception clause applies
when the legislative intent is to have decisions directly reviewed by the Supreme Court.[84]
A wrong mode of appeal (such as a Rule 65 petition for certiorari) may cause the VA decision or award to
be final, thereby authorizing the VA to issue a writ of execution.[85] In addition, Section 12 of Rule 43
states that the appeal shall not stay the award, judgment, final order or resolution sought to be reviewed
unless the Court of Appeals shall direct otherwise upon such terms as it may deem just.
A VA decision or award becomes final despite a dissenting opinion irregularly issued by one panel
member. The Court held that a dissenting opinion is not binding on the parties as it is a mere expression
of the individual view of the dissenting member. What matters is the decision of the majority of members
in a panel of VAs.[86]
Notwithstanding the reach of judicial review, decisions of VAs are afforded highest respect and as a
general rule must be accorded a certain measure of finality,[87] as long as they are supported by
substantial evidence.[88]
C. AREAS OF JURISDICTION
The dilemma of overlapping jurisdiction between voluntary arbitrators and labor arbiters has not escaped
the Court‟s attention. At the outset, submission agreements to voluntarily arbitrate under Article 262
easily preempt any case falling within a labor arbiter‟s jurisdiction under Article 217.[89] This “rule of
preemption” applies even if the parties bypass the CBA grievance procedure,[90] or in a case of a
dismissed employee who initially waived the grievance procedure, filed a case with the NLRC, and had a
change of heart and signed a submission agreement to voluntary arbitrate with her former employer.[91]
The difficulty lies in the knots entangling areas of “original and exclusive jurisdiction” claimed by two
quasi-judicial entities – termination disputes and money claims under Article 217 and disputes involving
interpretation and implementation of CBAs and company personnel policies under Article 261.
For money claims, the Court has ruled that voluntary arbitrators have original and exclusive jurisdiction
over money claims arising from the interpretation or implementation of the collective bargaining
agreement and those arising from the interpretation or enforcement of company personnel policies.[92]
In Sanyo Philippines Workers Union-PSSLU v. Cañizares,[93] the Court through Mr. Justice Medialdea
held that illegal dismissal cases arising out of the enforcement of union security clauses are not within the
jurisdiction of the voluntary arbitrator. Justice Medialdea maintained that only disputes involving the
union and the company shall be referred to the grievance machinery or voluntary arbitrators, considering
Article 260 pertains to a grievance machinery and voluntary arbitration mechanism in a CBA involving
the “parties” to such an agreement. Since the union and company have come to an agreement regarding
the dismissal under the union security clause of the CBA, no grievance existed between the parties to the
CBA that could be elevated to voluntary arbitration. Such a dispute should be settled by an impartial
body, which was the NLRC.
In San Miguel Corp. v. NLRC (San Miguel 1),[94] the Court resolved a case involving union officers who
were dismissed on the ground of redundancy. More than three months after their dismissal, the union
officers filed a case for illegal dismissal and unfair labor practice before the NLRC. The company filed a
motion to dismiss the complaint, alleging that the labor arbiter must defer consideration of the complaint
until after the parties have gone through the grievance procedure in the CBA.[95]
The Court through Mr. Justice Hermosisima held that the labor arbiter had jurisdiction over this case,

The Court through Mr. Justice Hermosisima held that the labor arbiter had jurisdiction over this case,
based on the following findings:
• No agreement between SMC and the union that would state in unequivocal language that they
conform to the submission of termination disputes and unfair practices to voluntary arbitration. [96]
• The CBA provisions on job security could have activated the grievance machinery, but a request for
reconsideration or review of a management decision to dismiss was required. No such request for
reconsideration or review was made by the union. [97]
• Discharges due to redundancy can hardly be considered as a company personnel policy, and
therefore need not be subject to the grievance machinery or voluntary arbitration. [98]
The Court likewise held that exoneration of the employer from the ULP charge will not necessarily
remove the case from NLRC jurisdiction, considering jurisdiction over the subject matter is determined
by the allegations in the complaint.[99]
In Vivero v. Court of Appeals,[100] the Court passed upon an illegal dismissal case filed by a seaman
against a shipping company and the manning agency. The seaman was a member of the Associated
Marine Officers and Seamen‟s Union of the Philippines (AMOSUP), which had a CBA with the
respondents that outlined a grievance procedure that culminated in voluntary arbitration.
The case was filed by the seaman before the Philippine Overseas Employment Administration (POEA),
but the case was later referred to the NLRC for adjudication.[101] The labor arbiter dismissed the case
for want of jurisdiction, invoking the grievance and voluntary arbitration mechanisms in the CBA.
On appeal, the Commission Proper reversed the labor arbiter and ruled that the seaman had exhausted his
remedy by submitting his case to the AMOSUP grievance committee. Considering, however, he could not
obtain any settlement in that committee, he ventilated his case before the POEA (subsequently the
NLRC).
The Court through Mr. Justice Bellosillo ruled in favor of NLRC jurisdiction, based on the following
reasons:
• Citing San Miguel 1, the Court pointed out that the need for an express stipulation in the CBA that
illegal termination disputes should be resolved by a voluntary arbitrator, since the same fall within
the special class of disputes that are generally within the exclusive original jurisdiction of labor
arbiters by express provision of law. [102]
• While the parties did agree to make termination disputes the proper subject of voluntary arbitration,
such submission remains discretionary upon the parties. A perusal of the CBA provisions shows
that the provisions on job security state that disciplinary cases may be referred by the Master to the
grievance machinery. This indicated an intention of the parties to reserve the right to submit the
illegal termination dispute to the jurisdiction of the labor arbiter. [103]
• When parties have validly agreed on a procedure for resolving grievances and to submit a dispute to
voluntary arbitration then that procedure should be strictly observed. [104]
The Court also had occasion to discuss the applicability of Policy Instruction No. 56. Justice Bellosillo
did not apply this executive pronouncement because the case was a termination dispute, and did not
involve the application, implementation, or enforcement of company personnel policies. In addition, it
was pointed out that the matter of Policy Instruction No. 56 was never raised in their positions papers or
their motion to dismiss.[105]
The Court also faulted the union for not informing the seaman of his option to settle the case through
voluntary arbitration immediately after grievance proceedings failed. On the other hand, the shipping
company and the manning agency should have timely invoked the CBA provision requiring the referral of
their unresolved dispute to voluntary arbitration. The respondents also waited for nine months to move for
the dismissal of the case before the POEA for lack of jurisdiction. Hence, respondents were deemed to

the dismissal of the case before the POEA for lack of jurisdiction. Hence, respondents were deemed to
have waived their right to question the procedure commenced by the complainant seaman. Both the union
and the respondents were responsible for selecting an impartial arbitrator or for convening an arbitration
committee, but neither made a move towards this end.[106]
Despite a seemingly ambivalent position relative to Policy Instruction No. 56, the Court could have
alluded to this issuance in San Miguel Corporation v. NLRC (San Miguel 2).[107] In this case, Justice
Purisima dismissed the notice of strike filed by a union after it abandoned the third step in the grievance
process involving redundancy dismissals. The Court ordered labor and management to complete the third
level of the grievance procedure and proceed with voluntary arbitration if necessary.[108] While the
decision was silent on P.I. 56, there was clear adherence to require further processing of a termination
dispute at the grievance level.
In other cases, the Court proclaimed that union failure to object to an employee‟s termination or
retirement did not place the dispute within VA jurisdiction, despite a grievance and voluntary arbitration
mechanism in the CBA.[109] On the other hand, where the NLRC dismissed a case and referred a matter
to the company grievance procedure, failure of the company to activate such a mechanism entitled the
employee to re-seek recourse with the NLRC.[110]
In a case before the United States Court of Appeals (11th Circuit),[111] however, a suit for damages on
account of negligence and unseaworthiness under American law (a boiler explosion in a ship in the Port
of Miami killed 6 and injured 4 Filipino seafarers) and filed before a U.S. district court was dismissed.
The Court affirmed voluntary arbitration clauses in the POEA-approved employment agreements, which
resulted in the selection of a VA by the NCMB.
Finally, within the framework of company personnel policies as defined in San Miguel 1, the Court in
Union of Nestlé Workers Cagayan de Oro Factory v. Nestlé Philippines, Inc.[112] ruled that a company
drug abuse policy is a company personnel policy. Hence, disputes arising out of such a policy fall within
the jurisdiction of the voluntary arbitrator.
D. PLENARY JURISDICTION TO INTERPRET
Generally, an arbitrator is expected to decide only those questions expressly delineated by a submission
agreement. Nevertheless, in at least two cases the Supreme Court tackled the extent of a voluntary
arbitrator‟s authority to resolve entwined issues in a dispute.
In Sime Darby Pilipinas, Inc. v. Magsalin,[113] the Court ruled that resolution of whether a performance
bonus should be granted necessarily included determination of the bonus amount. Justice Feliciano
explained that the since the CBA provision in question required payment of a performance bonus, “only
the issue relating to the amount of the bonus to be declared appears important.” He further asserted:
… the question of whether or not a performance bonus is to be granted, still cannot be realistically be
dissociated from the intensely practical issue of the amount of the bonus to be granted … Further, if
petitioner Sime Darby‟s argument were to be taken seriously, one must conclude that the parties to the
arbitration agreement intended to refer only a theoretical and practically meaningless issue to the
Voluntary Arbitrator, a conclusion that we find thoroughly unacceptable.[114]
In Ludo & Luym Corporation v. Saornido,[115] the Court through Mr. Justice Quisumbing held that the
issue of employee regularization is two-tiered. He expounded:
While the submission agreement mentioned only the determination of the date of regularization, law
and jurisprudence give the voluntary arbitrator enough leeway of authority as well as adequate
prerogative to accomplish the reason for which the law on voluntary arbitration was created – speedy
labor justice. It bears stressing that the underlying reason why this case arose is to settle, once and for
all, the ultimate question of whether respondent employees are entitled to higher benefits. To require
them to file another action for payment of such benefits would certainly undermine labor proceedings
and contravene the constitutional mandate providing full protection to labor.[116]
Both cases allowed the Supreme Court to apply basic procedural tenets of expediency and non-splitting of
causes of action in quasi-judicial proceedings conducted by a voluntary arbitrator.

causes of action in quasi-judicial proceedings conducted by a voluntary arbitrator.
E. DUE PROCESS
The essence of due process is to be found in the reasonable opportunity to be heard and submit any
evidence one may have in support of one‟s defense.[117] In the context of voluntary arbitration
proceedings, this means compliance with the requirement of procedural due process as outlined in the
Procedural Guidelines in the Conduct of Voluntary Arbitration Proceedings.
In Unicraft Industries International Corporation v. Court of Appeals,[118] the Court through Mme.
Justice Ynares-Santiago nullified voluntary arbitration proceedings and remanded the case to the VA for
reception of evidence. There was a failure to comply with the requirement to conduct an arbitration
hearing under the guidelines, when it became clear that the aggrieved party received the notice of hearing
only one hour after the supposed hearing. Justice Ynares-Santiago asserted that a decision or judgment is
fatally defective if rendered in violation of a party-litigant‟s right to due process.[119]
On motion for reconsideration, the Court maintained deprivation of due process even if the parties
submitted a position paper and supporting evidence. Justice Ynares-Santiago pointed out that the parties
themselves signed stipulation before the Court of Appeals and resolved to give the aggrieved “their day in
court” before the voluntary arbitrator.[120]
In Ramoran v. Jardine CMG Life Insurance Company, Inc.,[121] the Court held that questions regarding
the composition and actuations of the panel of voluntary arbitrators must be supported by sufficient
evidence. After having been afforded due process, a party cannot validly question the panel‟s jurisdiction
after encountering an adverse judgment.[122]
F. MAJOR VA RULINGS
Aside from the aforementioned rulings on performance bonus and regularization benefit determination,
the Supreme Court has also upheld voluntary arbitrators in key rulings, to wit:
• The fact that businesses are related, that some employees of one company are the same persons
manning and providing auxiliary services to another, and that the physical plants, offices, facilities
are situated in the same compound were not sufficient to justify the application of the doctrine of
piercing the veil of corporate entity. [123]
• CBA “next of kin” provisions allowing nomination of a third degree collateral relative due to the
fact that the employee‟s children are still minors. [124]
• Invalidating a dismissal on the ground of insubordination, where the employee‟s behavior did not
constitute a “wrongful and perverse attitude”, considering his honest belief that the memorandum
regulating the hours of union office use was unlawful. [125]
• Payment of emergency cost of living allowance mandated by a wage order despite a CBA wage
increase, pursuant to the creditability provision in the agreement. [126]
• Validity of a DOLE issuance mandating 200% premium pay for 2 unworked regular holidays
(Araw ng Kagitingan and Maundy Thursday) falling on the same day. [127]
• Validity of a certain company policy prohibiting an employee from having a relationship with an
employee of a competitor company. [128]
• Valid payment of relocation allowance under the CBA. [129]
• Valid withdrawal of certain company benefits. [130]
• Denial of company argument that 13th month, 14th month and financial assistance benefits were

• Denial of company argument that 13th month, 14th month and financial assistance benefits were
subject to deductions or pro-rating, or that these were dependent upon the company‟s financial
standing.[131]
• Provision of grant-in aid for teachers on study leave, based on a CBA provision. [132]
VII. Findings and Recommendations

1. All promotional efforts exerted by the NCMB were aimed at increasing acceptability of voluntary
arbitration. There are various factors that can be given further attention so that these objectives may be
attained:
1.1. Development and sustenance of a comprehensive awareness-raising and institution/capability-

building program
Voluntary arbitration made progress at the time when the awareness campaign was at its peak. The
tri-media campaign was very helpful in informing the public about the merits of the program. Hence, the
NCMB should work out a comprehensive development plan relative to the promotion of grievance
settlement and voluntary arbitration. These plans must be on a continuing basis.
Success, however, depends on effective program design and implementation strategies. The design
must consider national and plant level approaches.
Thus, it is significant for the comprehensive plan to have strong budget support. The Special
Voluntary Arbitration Fund as contemplated under RA 6715 must be made available. The NCMB should
explore means on how the “authority to appropriate” funds for voluntary arbitration can materialize.
1.1.1. At the national level, a media campaign must be sustained. Production of IEC materials and
brochures on voluntary arbitration should be resumed, and the NCMB website should be improved
to include significant information on voluntary arbitration that would stimulate the interest of the
parties to try and avail of the system.
The tri-media campaign should make capital out of the fairness and impartiality of VA
decisions. The low appeal rate (21%) and high affirmation rate (85%) in the Court of Appeals
and the Supreme Court speak well of the quality of VA decisions.
1.1.2. At the plant-level, the following should be undertaken to make the program effective and
efficient:
○ Strengthen the competence of NCMB facilitators
○ Improve training designs and modules to include latest trends and best practices
1.2. Voluntary arbitration skills have to be continuously upgraded.
1.2.1. The NCMB has yet to upgrade the accreditation system of voluntary arbitrators that will
ensure commitment of the best persons available. This is to avoid the experience of accrediting
VAs without passing through a rigid screening and training process.
1.2.2. The NCMB has to maintain a corps of competent and trustworthy arbitrators so that
voluntary arbitration can live on expediency, fairness, economy, and finality.
○ Provision of a continuing and coherent capability-building and retooling program for

arbitrators
○ Development of a system for ensuring discipline among the ranks of arbitrators

○ Development of an incentives and award program for arbitrators with exemplary
performance
1.2.3. The NCMB needs to maintain simple, updated and streamlined voluntary arbitration
procedures, especially in the matter of execution of decisions and awards.
The voluntary arbitration procedural guidelines were first prepared in 1989, and revised
only in 2005. There should be a rules review initiative on a periodic basis.
2. The voluntary arbitration program relies largely on the strength of the legal framework and support
from the government, unions, and management.
Despite constitutional preference for voluntary modes of dispute settlement, labor and
management have mainly resorted to compulsory arbitration. Since 1989, Congress has failed to enact
more elaborate measures to pursue the primacy of voluntary arbitration as a mode of dispute settlement.
While the Herrera-Veloso Law provided for a P15 Million Special Voluntary Arbitration Fund, it
was just an authority to appropriate. The funding still fully depends upon Congress. Since 1993, funds for
the program have been deemed incorporated in NCMB regular appropriations, a bleak proposition
considering the NCMB budget dipped in the last two years.
Hence, the NCMB should strengthen participation in legislative undertaking to impress upon the
lawmakers the needs of the voluntary arbitration program.
3. Voluntary arbitration has to sustain its merits
3.1. Speedy labor justice
Voluntary arbitration is a speedy mode of dispute settlement because it is less legalistic and less
technical in nature. The average duration to dispose VA cases is less than six months (171 days) from the
time of submission to voluntary arbitration. While this pace proves faster than periods of disposition in
compulsory arbitration cases, there definitely is still room for improvement. After all, VAs generally have
control of the proceedings. If s/he wants it expedited, s/he can discuss it with the parties, because
voluntary arbitration does not follow the technical rules of law. The procedure is flexible, because the
parties and the VA can always agree on the ground rules.
3.2. Economy
Early settlement of cases means lesser costs to the parties. Hence, the arbitrator should ensure that a
labor dispute is resolved at the earliest time possible. This can happen with a corps of committed
and competent arbitrators. In fact, the original intention of the framers of RA 6715 relative to the
SVAF were to be observed, voluntary arbitration is cost-free. But the provision on SVAF became
an authority to appropriate, and therefore voluntary arbitration has to wait for Congress year-in and
year-out to appropriate funds for the Special Voluntary Arbitration Fund.
4. Survey of Jurisprudence
4.1. That VA decisions are subject to judicial review is well-entrenched, but the final and executory
character of such decisions is still a key feature of the VA program. Hence, the revised VA guidelines
emphasize that decisions or awards may be executed unless stayed by a temporary restraining order or
writ of preliminary or permanent injunction from the Court of Appeals or Supreme Court. This is a policy
that must be consistently implemented.
4.2. The Supreme Court is yet to categorically define the legal efficacy of Policy Instruction No. 56. A
DOLE policy affirming Policy Instruction No. 56 could help. The standing Memorandum Circular 02-03,
series of 2001, issued by the former NLRC Chairman invoked P.I. 56 in NLRC cases, but the legal and
administrative efficacy of this document should be the subject of further study.

administrative efficacy of this document should be the subject of further study.
4.3. The Supreme Court carefully studied the intent of the parties with regard to submission of cases to
grievance and voluntary arbitration mechanisms. The NCMB could develop a standard “agreement to
arbitrate” clause that specifically enumerate types of disputes subjected voluntary arbitration. Adoption of
this standard clause may render NTAs (notices to arbitrate) more viable to the parties.
4.4. The Star Cruises ruling from the U.S. Circuit Court of Appeals may favor voluntary arbitration of
disputes involving sea-based OFWs.The effect of this ruling can be clarified in a policy issuance
involving all relevant government agencies.
4.5. In various cases, the Supreme Court noted the lack of interest to implement an agreement to
arbitrate clause on the part of either the employer or union party to the CBA. This bolsters the need for a
renewed tri-media advocacy campaign for the VA program. Tripartite mechanisms under the auspices of
the BLR and the NCMB could also play a pivotal role in this regard.
4.6. With the rising contribution of VA rulings to labor jurisprudence, continuing education and skills
retooling or upgrading programs for VAs should be pursued.
* Presented in the Roundtable Research Conference sponsored by the Department of Labor and
Employment Institute for Labor Studies (DOLE-ILS) on 27 July 2005.
** Executive Director, DOLE-National Conciliation Mediation Board (NCMB), Manila, Philippines.
*** Chief Labor and Employment Officer, Voluntary Arbitration Division, DOLE-NCMB.
[1] Torres, Ruben D. 1989, Speech as Undersecretary of Labor and Employment delivered during the
Institute on Grievance Settlement and Voluntary Arbitration, Bacolod City.
[2] Act 4055, Approved on 27 February 1933: An Act Providing for Mediation, Conciliation and
Arbitration in Controversies between Landlords and Tenants and Between Employers and Employees,
and For Other Purposes.
[3] Francisco, Vicente J. 1949,The Law Governing Labor Disputes in the Philippines, Manila, p. 244.
[4] Cagaanan, Jovito. 2001, A Compendium on Labor Relations, Manila, p.1.
[5] Francisco, op.cit. p. 245.
[6] Section 1, Act 4055.
[7] Sec. 2. Whenever a controversy concerning wages, hours of labor, or conditions of tenancy or employment
between landlords and tenants or between an employer and his employees or laborers, or a strike or lockout shall
arise, or is imminent and likely to disturb the public peace and order, one or more of the special mediators
provided for in section one of this Act shall, when the Director or Labor, should deem advisable to terminate his
intervention in accordance with subsection (d) of section two thousand fifty-nine-of the Revised Administrative
Code, and at his own request or when so ordered by the Governor General, put themselves in communication with
the parties to such controversy with all practicable expedition and shall be their best efforts, by mediation and
conciliation to amicably settle the same; and if such efforts to bring about an amicable adjustment through
mediation and conciliation shall be unsuccessful, the said special mediators shall at once endeavor to induce the
parties to submit their controversy to arbitration in accordance with the provisions of this Act.

[11] Section 10, Act 4055.
[12] Confesor, Nieves R. 1980, Voluntary Arbitration as a Mode of Dispute Settlement, Unpublished
Thesis, Graduate School of Business, Ateneo de Manila University, Manila, p.59.
[13] Cunanan, Jose Pepz, 1986, Evolution of Labour Legislation in Asia, downloaded from
<www.daga.dhs.org> .
[14] Section 5, Article II, Declaration of Principles, 1935 Constitution.
[15] Commonwealth Act 103, Approved on 29 October 1936: An Act to Afford Protection of Labor by
Creating a Court of Industrial Relations Empowered to Fix Minimum Wages for Laborers and Maximum
Rentals to be Paid by Tenants, and to Enforce Compulsory Arbitration between Employees or Landlords,

Rentals to be Paid by Tenants, and to Enforce Compulsory Arbitration between Employees or Landlords,
and Employees or Tenants, Respectively; and By Prescribing Penalties for the Violation of Its Orders.
[16] Eduvala, George and Torres, Ruben, 1977, “Labor Relations Policy and the Labor Movement”,
Philippine Labor Review, Manila, p.4.
[17] Ibid.
[18] Par. 2, Section 4, Chapter II, Commonwealth Act 103.
[19] Atienza, Alfonso C. 2000, Voluntary Arbitration and Collective Bargaining in the Philippines, p.3.
[20] Republic Act 875, Approved on 17 June 1953: An Act to Promote Industrial Peace and For Other
Purposes.
[21] Relates to the Application of the Principles of the Right to Organize and to Bargain Collectively.
[22] Explanatory Note of House Bill No. 825 which later became RA 875.
[23] Section 1(a), Republic Act 875.
[24] Section 1(b), Republic Act 875.
[25] Section 1(c), Republic Act 875.
[26] Section 1(d), Republic Act 875.
[27] Section 13, Republic Act 875.
[29] Ibid.
[34] Presidential Decree No. 21, Approved on 14 October 1972: Creating a National Labor Relations
Commission and For Other Purposes.
[35] Section 3, Presidential Decree No. 21.
[39] Noriel, Carmelo T. 1988, “Voluntary and Compulsory Arbitration of Labour Disputes in the
Philippines”, A Survey of the Current Situation in ASEAN, ILO-Switzerland, p.35.
[40] Atienza, op. cit.
[41] Noriel, op cit. p.35.
[42] Presidential Decree 442, Approved on 1 May 1974, A Decree Instituting a Labor Code, Thereby
Revising and Consolidating Labor and Social Laws to Afford Protection to Labor, Promote Employment
and Human Resources Development and Insure Industrial Peace Based on Social Justice.
[43] Republic Act 6715, Approved on March 21, 1989: An Act To Extent Protection To Labor, Strengthen
The Constitutional Rights Of Workers To Self-Organization, Collective Bargaining And Peaceful Concerted
Activities, Foster Industrial Peace And Harmony, Promote The Preferential Use Of Voluntary Modes Of
Settling Labor Disputes, And Reorganize The National Labor Relations Commission, Amending For These
Purposes Certain Provisions Of Presidential Decree No. 442, As Amended, Otherwise Known As The
Labor Code Of The Philippines, Appropriating Funds Therefor And For Other Purposes.
[44] Articles 211(a) and (e), Republic Act 6715.
[45] Art. 260, Republic Act 6715.
[46] Art. 260, par. 2, Republic Act 6715.
[49] Art. 262, Republic Act 6715.
[50] Art. 262-A, par. 1, Republic Act 6715
[51] Art. 262-A, par. 3, Republic Act 6715.
[52] Art. 262-A par. 5, Republic Act 6715.
[53] Art. 263 (h), Republic Act 6715.
[54] Art. 277 (f), Republic Act 6715.
[55] Record of the Constitutional Commission, Volume 2, p. 609.
[56] Ibid.

[58] Ibid., p. 667.
[59] Interpellations on Senate Bill 530, Record of the Senate, Vol. I. No. 163-A, p. 5640.
[60] Ibid., p. 5641
[61] Ibid.
[62] Committee Amendments on Senate Bill 530, Record of the Senate Vol. I, No. 165., p. 5714.
[63] Joint Congressional Conference Committee Report on Senate Bill 530 and House Bill 11524, 15
December 1988, p. 83.
[64] Senate Proceedings on Senate Bill 530, June 2-3, 1988, p. 2195.
[65] Joint Congressional Conference Committee Report, op. cit. p. 83.
[66] Noriel, op. cit. p. 39.
[67] Ibid.
[68] Joint Congressional Conference Committee on SN 530 & HB 11524, December 14, 1988, p.2-4.
[69] Infra note 81.

[70] Laguesma, Bienvenido E., 1995. Speech during the 2nd Seminar Workshop on Voluntary Arbitration
in the Public Sector, Calamba, Laguna.
[71] Sec. 7, Rule XIX, Department Order No. 40-03.
[72] Sec. 6, Rule VIII, Revised Procedural Guidelines in the Conduct of VA Proceedings.
[73] Khan, Ismael G. Jr. 1996, “Seven Qualities of a Good Arbitration Award”, PAVA Journal, Vol. 1, No.1.
[74] Conference Committee on Labor on Senate Bill 360, 23 April 1988.
[75] Oceanic Bic Division (FFW) v. Romero, No. L-43890, 16 July 1984, 130 SCRA 392, 400.
[76] Republic Act No. 876.
[77] Luzon Development Bank v. Association of Luzon Development Bank Employees, G.R. No. 120319, 6
October 1995, 249 SCRA 162, 169-70.
[78] Ludo & Luym Corporation v. Saornido, G.R. No. 140960, 20 January 2003, 395 SCRA 451, 458.
[80] Sime Darby Pilipinas v. Magsalin, G.R. No. 90426, 15 December 1989, 180 SCRA 177, 182.
[81] Supra note 77.
[82] Id. at 171.
[83] G.R. No. 143397, 6 August 2002, 386 SCRA 370, 379-80.
[84] Justice Kapunan cited that portion of the ratio decidendi in Luzon Development Bank that stated:
“Nor will it run counter to the legislative intendment that decisions of the NLRC be reviewable directly
by the Supreme Court …” Suffice it to state that Luzon Development Bank preceded the landmark ruling
in St. Martin Funeral Home v. NLRC, G.R. No. 130866, 16 September 1998, 295 SCRA 494, where the
Court en banc found no statutory basis for direct appeals from NLRC decisions to the Supreme Court.
[85] Manila Midtown Hotel v. Borromeo, G.R. No. 138305, 22 September 2004.
[86] Coca-Cola Bottlers Philippines, Inc. Sales Force Union-PTGWO-Balais v. Coca-Cola Bottlers
Philippines, Inc., G.R. No. 155651, 28 July 2005. In the questioned VA panel decision, the dissenting
member noted his intention to file a separate opinion. The separate dissenting opinion was issued
almost two months after receipt of the decision.
[87] Oceanic Bic Division (FFW) v. Romero, supra note 75, at 399; Mantrade/FMMC Division Employees
and Workers Union v. Bacungan, No. L-48437, 30 September 1986, 144 SCRA 510, 513.
[88] Continental Marble Corp. v. NLRC, No. L-43825, 9 May 1988, 161 SCRA 151, 157.
[89] San Jose v. NLRC, G.R. No. 121227, 17 August 1998, 294 SCRA 336, 349.
[90] Central Pangasinan Electric Cooperative, Inc. v. Macaraeg, G.R. No. 145800, 22 January 2003, 395
SCRA 720.
[91] Apalisok v. Radio Philippines Network Radio Station DYKC, G.R. No. 138094, 29 May 2003, 403 SCRA
238.
[92] San Jose v. NLRC, supra note 89, at 348-49, involving CBA retirement benefits.
[93] G.R. No. 101619, 8 July 1992, 211 SCRA 361, 372-73.
[94] G.R. No. 108001, 15 March 1996, 255 SCRA 133.
[95] The CBA provided that “wages, hours of work, conditions of employment and/or employer-
employee relations shall be settled by arbitration.” Id. at 136.
[96] Id. at 137.

employee relations shall be settled by arbitration.” Id. at 136.
[96] Id. at 137.
[97] Id. at 138.
[98] The Court, citing Azucena, defined company personnel policies as “guiding principles stated in
broad, long-range terms that express the philosophy or beliefs of an organization’s top authority
regarding personnel matters. They deal with matters affecting efficiency and well being of employees
and include, among others, the procedure in the administration of wages, benefits, promotions, transfer
and other personnel movements which are usually not spelled out in the collective agreement. The
usual source of grievances are the rules and regulations governing disciplinary actions.” Id. at 140.
[99] Id. at 143.
[100] G.R. No. 138938, 24 October 2000, 344 SCRA 268.
[101] Under Executive Order No. 247, series of 1987, the POEA had jurisdiction over illegal dismissal
cases involving overseas Filipino workers. Such jurisdiction was later transferred to the NLRC by virtue of
the Migrant Workers and Overseas Filipinos Act of 1995 (Republic Act No. 8042).
[102] San Miguel v. NLRC (San Miguel 1), supra note 94, at 279.
[103] Id. at 279-80.
[104] Id. at 281.
[105] Id. at 282.
[106] Id. at 283.
[107] G.R. No. 99266, 2 March 1999, 304 SCRA 1.
[108] Id. at 10.
[109] Pantranco North Express v. NLRC, G.R. No. 95940, 24 July 1996, 259 SCRA 161; Maneja v. NLRC, G.R. No.
124013, 5 June 1998, 290 SCRA 603; Atlas Farms Inc. v. NLRC, G.R. No. 142244, 18 November 2002, 392 SCRA 128.
[110] Atlas Farms Inc. v. NLRC, G.R. No. 142244, 18 November 2002, 392 SCRA 128.
[111] Bautista v. Star Cruises, No. 03-15884, 18 January 2005
[112] G.R. No. 148303, 17 October 2002, 391 SCRA 204.
[113] Supra note 80.
[114] Id. at 184-85.
[116] Id. at 458-59.
[117] Ramoran v. Jardine CMG Life Insurance Company, Inc., G.R. No. 131943, 22 February 2000, 326
SCRA 208, 220.
[118] G.R. No. 134903, 26 March 2001, 355 SCRA 233.
[119] Id. at 242-43.
[120] G.R. No. 134903, 16 January 2002, 373 SCRA 504, 506.
[122] Id. at 220-21.
[123] Indophil Textile Mill Workers Union v. Calica, G.R. No. 96490, 3 February 1992, 205 SCRA 697.
[124] Kimberly Clark Philippines v. Lorredo, G.R. No. 103090, 21 September 1993, 226 SCRA 639.
[125] Alcantara v. Court of Appeals, supra note 83.
[126] Mindanao Steel Corporation v. Minsteel Free Workers Organization (MINFREWO-NFL) Cagayan de
Oro, G.R. No. 130693, 4 March 2004, 424 SCRA 614.
[127] Asian Transmission Corporation v. Court of Appeals, G.R. No. 144664, 15 March 2004, 425 SCRA
478.
[128] Duncan Association of Detailman-PTGWO v. Glaxo Wellcome Philippines, G.R. No. 162994, 17
September 2004.
[129] Babcock-Hitachi (Phils.), Inc. v. Babcock-Hitachi (Phils.), Inc. Makati Employees Union (BHPIMEU),
G.R. No. 156260, 10 March 2005.
[130] American Wire and Cable Daily Rated Employees Union v. American Wire and Cable Co., Inc., G.R.
No. 155059, 29 April 2005.
[131] Honda Phils, Inc. v. Samahan ng Malayang Manggagawa Sa Honda, G.R. No. 145561, 15 June 2005.
[132] Holy Cross of Davao College, Inc. v. Holy Cross of Davao Faculty Union-KAMAPI, G.R. No. 156098,
27 June 2005.
Download in MS Word format - Download

Download in MS Word format - Download
Pasted from <http://ncmb.ph/News/Articles/VAPaper.htm>

D.O.L.E. CIRCULAR No. 1 - AIDA
12:19 AM

DEPARTMENT OF LABOR AND EMPLOYMENT
Intramuros, Manila
D.O.L.E. CIRCULAR No. 1
Series of 2006
ADMINISTRATIVE INTERVENTION FOR DISPUTE AVOIDANCE
In line with the objectives of the Republic Act No. 9285, Executive Order No. 523 dated 07 April 2006,
and the mandate of the Department of Labor and Employment to promote industrial peace, this
administrative procedure for the voluntary settlement of labor disputes is hereby established.
1. Either or both the employer and the certified collective bargaining agent (or the representative of the
employees where there is no certified bargaining agent) may voluntarily bring to the Office of the
Secretary of Labor and Employment, through a REQUEST FOR INTERVENTION, any potential or ongoing
dispute defined below.
A potential or ongoing dispute refers to:
a. a live and active dispute;
b. that may lead to a strike or lockout or to massive labor unrest; and
c. is not the subject of any complaint or notice of strike or lockout at the time a REQUEST FOR
INTERVENTION is made.
This recourse is separate from the established dispute resolution modes of mediation, conciliation and
arbitration under the Labor Code, and is an alternative to other voluntary modes of dispute resolution
such as the voluntary submission of a dispute to the Regional Director for mediation, to the National
Conciliation and Mediation Board (NCMB) for preventive mediation, or to the intervention of a regional
or local tripartite peace council for the same purpose.
2. All REQUESTS shall be in writing and filed with the Office of the Secretary. A REQUEST shall state:
a. the name and address of the employer;
b. the name of the certified bargaining agent, or the employee representative duly designated in writing
by a majority of the employees where there is no collective bargaining agent;
c. the number of employees affected by the potential or ongoing dispute; and
d. a brief description of the potential or ongoing dispute.
3. Upon receipt of the REQUEST, the Office of the Secretary shall forthwith notify the parties and invite
them for conference.
The conference for REQUESTS coming from the National Capital Region, Regions III, IV-A or IV-B shall be
held at the Office of the Secretary of Labor and Employment unless the Secretary otherwise directs. The
conference for REQUESTS coming from the other regions shall be conducted by the Regional Director for
the Secretary.
4. The Office of the Secretary or the Regional director, in the proper case, shall proceed to intervene
after the parties shall have manifested that;
a. they voluntarily submit their potential or ongoing dispute to intervention by the Office of the
Secretary of Labor and Employment;
b. there is no pending notice of strike or lockout or any related complaint in relation with their potential
or ongoing dispute;
c. they shall refrain from any strike or lockout or any form of work stoppage or from filing any related
complaint while the Secretary's intervention is in effect; and
d. they shall abide by the agreement reached, whose terms may be enforced through the appropriate
writs issued by the Secretary of Labor and Employment.
All agreements settling the dispute shall be in writing and signed by the parties as well as the official
who mediated the dispute.
5. The parties and officials or employees of the Department of Labor and Employment who took part in
the intervention proceedings shall not testify in any court or body regarding the disclosures,

the intervention proceedings shall not testify in any court or body regarding the disclosures,
submissions or positions made by the parties in these proceedings.
6. If the intervention fails, either or both parties may avail themselves of the remedies provided under
the Labor Code. Alternatively, the parties may submit their dispute to the Office of the Secretary for
Such voluntary arbitration shall be limited to the issues defined in the parties' submission to voluntary
arbitration agreement and shall be decided on the basis of the parties' position papers and submitted
evidence.
The Office of the Secretary shall resolve the dispute within sixty (60) days from the parties' submission
of the dispute for resolution.
7. This circular shall take effect fifteen (15) days after publication in a newspaper of general publication.
Done in the City of Manila, Philippines, 11 August 2006.
(Sgd.) ARTURO D. BRION

Secretary

q=cache:AEIVrHPYqOQJ:ncmb.ph/Publications/DOLE/AIDA.htm+DOLE+Circular+No.+1
+Administrative+intervention+for+Dispute+Avoidance&cd=2&hl=tl&ct=clnk&gl=ph&client=firefox-a>

DOLE Department Order No. 83-07
12:20 AM
Sorry i can't find it. :(

Labor Arb Compilation of Cases - Compiled by Cha Mendoza

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Labor Arb Compilation of Cases - Compiled by Cha Mendoza

Uploaded by

Copyright:

Available Formats

Preliminaries

Thursday, July 01, 2004

II. Labor Code

boss, chief, manager Page 1

1. Section 3, Article XIII, 1987 Constitution

The State shall promote

2. Labor Code Policy

boss, chief, manager Page 2

Art. 277. Miscellaneous provisions.

boss, chief, manager Page 3

PHIL. AIRLINES V NLRC (PALEA)

Republic of the Philippines

G.R. No. 85985 August 13, 1993

boss, chief, manager Page 4

boss, chief, manager Page 5

boss, chief, manager Page 6

boss, chief, manager Page 7

boss, chief, manager Page 8

G.R. No. L-53515 February 8, 1989

boss, chief, manager Page 9

Pasted from <http://www.lawphil.net/judjuris/juri1989/feb1989/gr_l53515_1989.html>

boss, chief, manager Page 10

GTE Directories Corp. v. GTE Directories Corp. Employees Union (1991)

G.R. No. 76219 May 27, 1991

boss, chief, manager Page 11

boss, chief, manager Page 12

boss, chief, manager Page 13

boss, chief, manager Page 14

boss, chief, manager Page 15

Pasted from <http://www.lawphil.net/judjuris/juri1991/may1991/gr_76219_1991.html>

boss, chief, manager Page 16

Republic of the Philippines

G.R. No. 127598 January 27, 1999

boss, chief, manager Page 17

boss, chief, manager Page 18

boss, chief, manager Page 19

boss, chief, manager Page 20

boss, chief, manager Page 21

boss, chief, manager Page 22

boss, chief, manager Page 23

boss, chief, manager Page 24

boss, chief, manager Page 25

Based on the above-quoted table, specifically under the column "RANK-AND-FILE," it is

boss, chief, manager Page 26

boss, chief, manager Page 27

boss, chief, manager Page 28

boss, chief, manager Page 29

boss, chief, manager Page 30

boss, chief, manager Page 31

boss, chief, manager Page 32

boss, chief, manager Page 33

boss, chief, manager Page 34

boss, chief, manager Page 35

Pasted from <http://www.lawphil.net/judjuris/juri1999/jan1999/gr_127598_1999.html>

boss, chief, manager Page 36

San Miguel Corp. Employees Union-PTGWO v. Bersamira (1990)

SAN MIGUEL EMPLOYEES UNION V BERSAMIRA

Re: ER Functions and ULP (p30 of Outline)

Disposition Petition is GRANTED.

G.R. No. 87700 June 13, 1990

boss, chief, manager Page 37

boss, chief, manager Page 38

boss, chief, manager Page 39