Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION

G.R. No. 97092 July 27, 1992

PEPSI-COLA SALES AND ADVERTISING UNION, petitioner,
vs.
HON. SECRETARY OF LABOR and ROBERTO
ALISASIS, respondents.

NARVASA, C.J.:
In its Decision in G.R. No. 80587 (Wenphil Corporation v. NLRC),
promulgated on February 8, 1989, 1 this Court 2laid down the doctrine
governing an illegal dismissal case where the employee satisfactorily
establishes that his employment was terminated without due process
i.e., without written notice to him of the charges against him and
without according him opportunity to defend himself personally or
through a representative but the employer nevertheless proves the
existence of just cause for the employee's dismissal. The controlling
principle in such a case is that since the employee's dismissal was for
just cause, he is entitled neither to reinstatement or back wages nor
separation pay or salaries for the unexpired portion of his contract,
being entitled only to the salaries earned up to the last day of
employment; at the same time, however, as a general proposition, the
employer is obliged, on account of its failure to comply with the
requirements of due process in terminating the services of the
employee, to pay damages to the latter fixed at P1,000.00, a sum
deemed adequate for the purpose.
This doctrine, which has since been reaffirmed by this Court, 3 applies
in the case at bar, in resolution of the issue of whether or not the
private respondent, Roberto Alisasis, may be considered to have been
dismissed for just cause within the meaning of the charter papers
organizing and governing a mutual aid program of which he was a
participant.
From 1964 until sometime about 1985, Alisasis was an employee of
the Pepsi-Cola Bottling Co., Inc. and later, of the Pepsi-Cola Products
(Philippines) Inc., after the latter had bought out the former. 4 He was
also a member of the labor organization of all regular route and truck
salesmen and truck helpers of the company the Pepsi Cola Sales &
Advertising Union (PSAU) from June 1, 1965 up to the termination
of his employment in 1985. 5 As a member of the PSAU, he was also a
participant in the "Mutual Aid Plan" set up by said union sometime in
1980. During the entire period of his employment, there were regularly
deducted from his wages the amounts corresponding to union dues as
well as contributions to the fund of the Mutual Aid Plan. 6
On May 7, 1986, Alisasis filed with the NLRC Arbitration Branch,
Capital Region, Manila, a complaint for illegal dismissal against PepsiCola, Inc. 7 This resulted in a judgment by the Labor Arbiter dated
January 25, 1988 declaring him to have been illegally dismissed and
ordering the employer to reinstate him "to his former position without
loss of seniority rights and with full backwages for one (1) year from
the time he was not allowed to report for
work . . ." 8 The judgment was subsequently affirmed with modification.
by the Fourth Division of the NLRC dated December 29,
1989, 9 disposing of the appeal as follows: 10
In view therefore of the foregoing considerations,
the decision appealed from is hereby modified in
the sense that the order for respondent to
reinstate complainant is hereby set aside. The rest
of the decision shall stand.

The deletion of the relief of reinstatement was justified by the NLRC in

the following manner: 11
Certainly, with the actuations of complainant,
respondent had ample reason or enough basis
then to lose trust and confidence in him.
Complainant, being a salesman, should be
considered to have occupied a position of
responsibility so that, if respondent had lost trust
and confidence in him, the former could validly
and legally terminate the services of the latter
(Lamaan Trading, Inc. vs. Leodegario, Jr., G.R.
73245, September 30, 1986).
However, although there was valid and lawful
cause in the dismissal of complainant by
respondent, the manner in which it was effected
was not in accordance with law. Complainant was
not given written notice by respondent but was
only verbally advised, thru its Field Sales
Manager, sometime in May 1985 that he should
not report for work anymore, obviously, because
there was a charge against him. And this is what
makes the dismissal of complainant arbitrary and
illegal for failure to comply with the notice
requirement under Batas Pambansa Blg. 130 on
termination of employees.
Ordinarily, when the dismissal of an employee is
declared unjustified or illegal, he is entitled to
reinstatement and backwages (Art. 279 of the
Labor Code). However, in the instant
case, considering that respondent had already lost
trust and confidence in complainant which is
founded on a reasonable ground, as discussed
earlier, there is no point in requiring respondent to
reinstate complainant to his former position. To do
so would be tantamount to compelling the
management to employ someone whom it can no
longer trust, which is oppressive.
It appears that both Alisasis and Pepsi-Cola, Inc. accepted the NLRC's
verdict and complied therewith; that Pepsi-Cola gave Alisasis back
wages for one (1) year; and that, Alisasis issued the corresponding
quitclaim and considered himself separated from his employment.
Alisasis thereafter asked his labor organization, PSAU, to pay
him monetary benefits in accordance with Section 3, Article X of the
"Amended By-Laws of the Mutual Aid Plan of the Pepsi-Cola Sales &
Advertising Union (U.O.E.F.), 12 in an amount equal to "One (P1.00)
Peso per year of service multiplied by the number of member(s) . .
." 13 PSAU demurred, invoking in its turn Section 1, Article XII of the
same amended by-laws, declaring as disqualified from any entitlement
to the PLAN and . . (from any) Benefit or return of contributions . .
under any circumstances," inter alia, "(a)ny member dismissed for
cause." 14
Alisasis thereupon filed a complaint against the union, PSAU, with
the Med Arbitration Unit, National Capital Region, Department of Labor
and Employment, to compel the latter to pay him his claimed
benefits. 15 The principal defenses alleged by PSAU were that Alisasis
was disqualified to claim any benefits under the Mutual Aid
Plan, supra; and that the Med-Arbiter had no original jurisdiction over
the case since Alisasis' claim for financial assistance was not among
the cases cognizable by Med-Arbiters under the law "such as
representation cases, internal union and inter-union disputes . . (or) a
violation of the union's constitution and by-laws and the rights and
conditions of membership in a labor organization." 16 After due
proceedings, the Med-Arbiter promulgated an Order on April 16, 1990,
ruling that he had jurisdiction and "ordering respondent . . (PSAU) to
pay complainant Roberto Alisasis . . his claim for financial assistance
under the Mutual Aid Fund of the union." PSAU appealed to the
Secretary of Labor and Employment who, by Resolution dated July 25,
1990, denied the appeal but reduced the Med-Arbiter's award from
P18,669.00 to P17,886.00. 17 Nullification of the Med-Arbiter's Order of

April 16, 1990 and the respondent Secretary's Resolution of July 25,
1990 is the prayer sought by the petitioner in the special civil action
of certiorari at bar.
Resolving first the issue of whether or not the case at bar is within the
original jurisdiction of the Med-Arbiter of the Bureau of Labor Relations,
the Court holds that it is.
The jurisdiction of the Bureau of Labor Relations and its Divisions is
set forth in the first paragraph of Article 226 of the Labor Code, as
amended, viz.:
Art. 226. Bureau of Labor Relations. The
Bureau of Labor Relations and the Labor
Relations Divisions in the regional offices of the
Department of Labor shall have original and
exclusive authority to act, at their own initiative or
upon request of either or both parties, on all interunion and intra-union conflicts, and all disputes,
grievances or problems arising from or affecting
labor management relations in all workplaces
whether agricultural or non-agricultural, except
those arising from the implementation or
interpretation of collective bargaining agreements
which shall be the subject of grievance procedure
and/or voluntary arbitration.

management to employ someone whom it can no longer trust, which is

oppressive."
It was merely "the manner in which such a dismissal from employment
was effected . . (that was deemed as) not in accordance with law,
(there having been) failure to comply with the notice requirement under
Batas Pambansa Blg. 130 on termination of employees." That
imperfection is, however, a circumstance quite distinct from the
existence of what the NLRC has clearly and expressly conceded to be
a "valid and lawful cause in the dismissal of complainant by
respondent." And this is precisely the reason why, as already pointed
out, the NLRC declined to accord to Alisasis all the remedies or reliefs
usually attendant upon an illegal termination of employment e.g.,
reinstatement, award of damages although requiring payment by
the employer of the sum of P1,000.00 simply on account of its failure
"to comply with the notice requirement under Batas Pambansa Blg.
130 on termination of employees." The situation is on all fours with that
in the Wenphil Corporation Case, 19 cited in this opinion's opening
paragraph, in which the following pronouncements, among others,
were made:
Thus in the present case, where the private
respondent, who appears to be of violent temper,
caused trouble during office hours and even defied
his superiors as they tried to pacify him, should not
be rewarded with re-employment and back wages.
It may encourage him to do even worse and will
render a mockery of the rules of discipline that
employees are required to observe. Under the
circumstances the dismissal of the private
respondent for just cause should be maintained.
He has no right to return to his former employer.

xxx xxx xxx

It is evident that the case at bar does not concern a dispute, grievance
or problem "arising from or affecting labor-management relations." So,
if it is to be deemed as coming within the Med-Arbiter's jurisdiction, it
will have to be as either an "intra-union" or "inter-union" conflict.
No definition is given by law of these precise terms, "intra-union and
inter-union conflicts." It is known, however, that "intra-" and "inter-" are
both combining forms, prefixes the first, "intra-," meaning "within,
inside of [intramural, intravenous];" and the other, "inter-, denoting "1.
between or among: the second element is singular in form [interstate]
2. with or on each other (or one another), together, mutual, reciprocal,
mutually, or reciprocally [interact]." 18 An intra-union conflict would
therefore refer to a conflict within or inside a labor union conflict would
therefore refer to a conflict within or inside a labor union, and an interunion controversy or dispute, one occurring or carried on between or
among unions. In this sense, the controversy between Alisasis and his
union, PSAU respecting the former's rights under the latter's "Mutual
Aid Plan" would be an intra-union conflict under Article 226 of the
Labor Code and hence, within the exclusive, original jurisdiction of the
Med-Arbiter of the Bureau of Labor Relations whose decision, it may
additionally be mentioned, is appealable to the Secretary of Labor.
Certainly, said controversy is not one of those within the jurisdiction of
the Labor Arbiters in accordance with Article 217 of the Code, it not
being an unfair labor practice case, or a termination dispute, or one
involving wages, rates of pay, hours of work and other terms and
conditions of employment (which is "accompanied with a claim for
reinstatement"), or one for damages arising from the employeremployee relations, or one for a violation of Article 264 of the Code, or
any other claim arising from employer-employee relations, or from the
interpretation or implementation of a collective bargaining agreement
or of company personnel policies.
The second issue relates to the character of Alisasis' dismissal from
employment. The Court holds that Alisasis had indeed been
"dismissed for cause." His employer had established this factual
proposition by competent evidence to the satisfaction of both the Labor
Arbiter and the National Labor Relations Commission. In the Latter's
view, and in its own words, "Certainly, with the actuations of
complainant, . . (Alisasis' employer) had ample reason or enough basis
to lose trust and confidence in him . . . considering that (said employer)
had already lost trust and confidence in complainant which is founded
on a reasonable ground, as discussed earlier, (and therefore) there is
no point in requiring respondent to reinstate complainant to his former
position . . (as to) do so would be tantamount to compelling the

However, the petitioner (employer) must

nevertheless be held to account for failure to
extend to private respondent his right to an
investigation before causing his dismissal. . .
Thus, it must be imposed a sanction for its failure
to give a formal notice and conduct an
investigation as required by law before dismissing
. . (respondent) from employment. Considering the
circumstances of this casepetitioner (employer)
must indemnify the private respondent (employee)
the amount of P1,000.00. The measure of this
award depends on the facts of each case and the
gravity of the omission committed by the
employer.
The petitioner union (PSAU) was therefore quite justified in considering
Alisasis as a "member dismissed for cause," and hence disqualified
under its amended by-laws to claim any "Benefit or return of
contributions . . under any circumstances, . . ." The ruling to the
contrary of the Med-Arbiter and the Secretary of Labor and
Employment must thus be set aside as tainted with grave abuse of
discretion.
WHEREFORE, the petition is granted and the writ of certiorari prayed
for issued, NULLIFYING and SETTING ASIDE the challenged Order of
the Med-Arbiter dated April 16, 1990 and the Resolution of the
respondent Secretary of Labor and Employment dated July 25, 1990,
and DIRECTING THE DISMISSAL of Alisasis' complaint in NLRC
Case No. NCR-Od-M-90-01-037, without pronouncement as to costs.
SO ORDERED.
Padilla, Regalado and Nocon, JJ., concur.
Paras, J., Retired as of July 4, 1992.

Footnotes

1 170 SCRA 69.

2 First Division, per Gancayco, J ., who has since
retired.
3 SEE Seahorse Maritime Corp. v. NLRC, 173
SCRA 390 (1980); Kwikway Engineering Works v.
NLRC, 195 SCRA 526 (1991).
4 Rollo, pp. 37-38.
5 Id., pp. 25, 32-33.
6 Id., pp. 25, 55.
7 Docketed as NLRC NCR Case No. 5-1794-86.

G.R. Nos. 81852-53 March 5, 1993

ILAW AT BUKLOD NG MANGGAGAWA (IBM), petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER
MANUEL P. ASUNCION, ABUNDIO IBASCO, ANTONIO
MAGSIPOC, CARLOS VILLARANTE and BIENVENIDO
RAMIREZ, respondents.
Potenciano A. Flores, Jr. for the petitioner.
Gilbert P. Lorenzo for respondents A. Ibasco and A. Magsipoc.
Renato Ramos for respondent Carlos Villarante.

8 Rollo, p. 37.
9 Id., pp. 37-44.
10 Emphasis supplied.
11 Rollo, pp. 42-43 Emphasis supplied.

MELO, J.:
Before us is a petition for certiorari seeking the annulment of the order
dated February 4, 1987, of respondent Labor Arbiter, the decision
dated May 29, 1987 rendered by said respondent, and the resolutions
dated October 12, 1987, and January 11, 1988, of the respondent
National Labor Relations Commission.

12 Id., pp. 45-54.

The relevant facts as established by the record are as follows:
13 Id., p. 51.
14 Id., p. 52.
15 The complaint was filed on January 17, 1990,
and was docketed as Case No. NCR-Od-M-90-01037.
16 Rollo, p. 6.
17 Id., p. 26, Annex D, petition.
18 Webster's New World Dictionary of the
American Language, Second College Edition.
Webster's Third New International Dictionary,
1968 ed., describes "inter-" as a "prefix . . .
(signifying) 1: between, among, in the midst
[intermediate] [interspace] 2: mutual, reciprocal
[intermarry] [intermesh] [interrelation] [interwine] 3:
between or among the parts of [intercostal]
[interdental] 4: carried on between [intercollegiate]
[intercommunication] [international] 5: occurring
between: intervening [interglacial] [intertidal] 6:
shared by or derived from two or more
[interdepartmental] [interfaith] 7: between the limits
of: within [intertropical] "intra" as another prefex
meaning 1a: within esp. in adjectives formed
from adjectives [intraglacial] [intravaginal]
[intracellular] [intra-European] [intracosmical] . . . ."
19 170 SCRA 69, 76; emphasis and parenthetical
insertions supplied. The doctrine has since been
applied to other cases: SEE footnote 3, supra.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION

Petitioner, a duly-registered labor union, is the sole and exclusive

bargaining representative of all daily-paid workers of the Metro Manila
plants of San Miguel Corporation, hereinafter referred to as SMC.
On December 3, 1986, petitioner and SMB entered into a
Memorandum of Agreement on Collective Bargaining Agreement
(CBA). The National Council of petitioner called a general meeting on
December 7, 1986 for the ratification of the CBA. On the morning of
December 7, 1986, the National Council held a special meeting
wherein the members present unanimously passed "Resolusyon Blg.
265, Serye 1986" (Annex G, Petition, p. 52, Rollo). It was agreed at
said meeting to submit the resolution to the general membership for
approval.
Two thousand two hundred forty three (2,243) members attended the
general meeting. Said Resolusyon Blg. 265 was submitted to the
general assembly for approval. Two Thousand one hundred seven
(2,107) members voted in favor and thirty six (36) voted against the
resolution. In said general membership meeting the 1986 CBA was
ratified by the members.
Under said resolution, each member of the union was assessed
P1,098.00 to be deducted from the lump sum of P10,980.00 which
each employee was to receive under the CBA. Private respondents
protested the deduction and refused to sign the authorization slip for
the deduction. Petitioner passed a resolution on January 6, 1987,
(Annex 9, Private Respondents' Comment, p. 169, Rollo) expelling
private respondents from the union. SMB held in trust the amount of
P1,098.00 pertaining to each private respondent.
On January 8, 1987, private respondents Antonio Magsipoc and
Abundio Ibasco filed a complaint (Annex I, Petition, p. 59, Rollo)
docketed as NLRC-NCR Case No. 1-092-87, before the Arbitration
Branch, National Capital Region, National Labor Relations
Commission for illegal and exorbitant deduction and illegal expulsion
from the union. In February, 1987, a similar complaint docketed as
NLRC Case No. 00-02-00731-87 was filed by private respondents
Carlos Villarante and Bienvenido Ramirez.
On January 29, 1987, petitioner filed a motion to dismiss (Annex A,
Petition, pp. 34-35, Rollo) Case No. 1-092-87 on the ground of lack of

jurisdiction of NLRC. On February 4, 1987, respondent Labor Arbiter

Manuel Asuncion issued an order (Annex B, Petition, pp. 36-37, Rollo)
denying the motion to dismiss. It appears that the two cases were
consolidated, and respondent Labor Arbiter proceeded to take
cognizance of the cases and directed the parties to file their position
papers. Only private respondents filed their position paper with
petitioner continuing to refuse to submit to the jurisdiction of the Labor
Arbiter.
On May 29, 1987, respondent Labor Arbiter rendered a decision
(Annex C, Petition, pp. 39-43, Rollo) finding the questioned
assessment illegal and ordering petitioner and SMB to return the
amount of P1,098.00 to each of private respondents; declaring the
expulsion of private respondents from the union null and void; and
ordering petitioner to desist from expelling the members who objected
to the deduction of the questioned assessment from their CBA
differentials.
Petitioner seasonably filed a notice of appeal (Annex K, Petition, p.
61, Rollo) with respondent National Labor Relations Commission. On
October 12, 1987, the NLRC issued a resolution (Annex D, Petition,
pp. 44-46, Rollo) affirming the decision of respondent Labor Arbiter
and dismissing the appeal. Petitioner filed a motion for reconsideration
but the same was denied in a resolution dated January 11, 1988.
(Annex E, Petition, p. 47, Rollo).
Hence, the instant recourse under the following assigned errors:
1. The NLRC committed reversible error in
assuming jurisdiction over the person of petitioner
union;
2. The NLRC committed a reversible error in
assuming jurisdiction over the nature of the action;

Division in the regional offices of the Department

of Labor shall have original and exclusive authority
to act, at their own initiative or upon request of
either or both parties, on all
inter-union and intra-union conflicts, and all
disputes, grievances or problems arising from or
affecting labor-management relations in all work
places whether agricultural or non-agricultural,
except those arising from the implementation or
interpretation of collective bargaining agreements
which shall be subject of grievance procedure
and/or voluntary arbitration.
Unquestionably, therefore, NLRC Case No. 1-092-87 and Case No.
00-02-00731-87, the subject of which is an intra-union dispute, fall
under the original and exclusive jurisdiction of the Bureau of Labor
Relations, and respondent Labor Arbiter and NLRC have no
jurisdiction over said cases.
In view of the foregoing conclusion, there is no further need to discuss
the other errors assigned by petitioner.
WHEREFORE, the order dated February 4, 1987 issued by
respondent Labor Arbiter, the decision rendered on May 29, 1987, by
said respondent, the resolution dated October 12, 1987, of respondent
NLRC affirming the decision of respondent Labor Arbiter and the
resolution dated January 11, 1988, of respondent NLRC are hereby
ANNULLED and SET ASIDE. Respondent Labor Arbiter is hereby
ordered to dismiss NLRC Case No. 1-072-87 and NLRC Case No. 0002-00731-87, without prejudice to private respondents' filing the same
with the Bureau of Labor Relations.
SO ORDERED.
Feliciano, Bidin, Davide, Jr. and Romero, JJ., concur.

3. The NLRC committed reversible error in

declaring the sum from which the special
assessment is made, is a wage, that it is a
deduction from a wage and that it is an attorney's
fee. (pp. 12-13, Rollo)
The second assigned error raising as it does the central issue of
jurisdiction, attention must be focused on the same. It is fundamental
that jurisdiction over the subject matter is conferred by law (Tijam vs.
Sibonghanoy, 23 SCRA 29 [1968]) and is determined by the
allegations of the complaint, irrespective of whether or not the plaintiff
is entitled to recover upon all or some of the claims asserted therein
(Serrano vs. Muoz (Hi) Motors, Inc., 21 SCRA 1085 [1967]).
A perusal of the complaint (Annex I, Petition, p. 59, Rollo) clearly
shows that the subject-matter concerns: (a) the assessment and
deduction of 10% from private respondents' CBA differential pay which
were denounced by private respondents as illegal and exorbitant and
made against their will, and (b) private respondents' expulsion from the
union. The assessment and deduction of 10% from each employee's
differential pay were imposed by petitioner through Resolusyon Blg.
265 and the expulsion was adopted by petitioner through Resolusyon
Blg. 15, dated January 6, 1987, both of which were denounced by
private respondents as illegal and violative of their rights as union
members. Clearly this is an intra-union dispute a dispute between a
labor union and its members. "Internal Union Dispute" includes all
disputes or grievances arising from any violation of or disagreement
over any provision of the constitution and by-laws of a union, including
any violation of the rights and conditions of union membership
provided for in the Code (Book V, Rule I, Section l(a), Omnibus Rules
Implementing The Labor Code).
Article 226 of the Labor Code of the Philippines vests on the Bureau of
Labor Relations and the Labor Relations Divisions jurisdiction to act on
all inter-union or intra-union conflicts. Said Article thus provides:
Art. 226. Bureau of Labor Relations The Bureau
of Labor Relations and the Labor Relations

Gutierrez, Jr., J., is on leave.

Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-41106 September 22, 1977
LITEX EMPLOYEES ASSOCIATION, petitioner,
vs.
GEORGE A. EDUVALA, in his capacity as Officer-in-Charge,
BUREAU OF LABOR RELATIONS Departmentof Labor and
FEDERATION OF FREE WORKERS (F.F.W.), respondents.
Esteban M. Mendoza for petitioner.
F. F. Bonifacio, Jr. for respondent FFW.
Acting Solicitor General Hugo E. Gutierrez, Jr., Assistant Solicitor
General Reynato S. Puno and Solicitor Romeo C. de la Cruz for
respondent George A. Eduvala, etc.

FERNANDO, J.:
In this and certiorari and prohibition proceeding, what is sought to be
nullified is an Order of respondent George A. Eduvala, the then Officerin-Charge of the Bureau of Labor Relations, requiring that a
memorandumm election be held among the members of the Litex
Employees Association, petioner labor union, to ascertain their wishes

as to their wishes as to their affiliation with respondent Federation of

Free Workers. It is the contention of petitioner Union that there is no
statutory authorization for the holding of such a referendum election.
That is the decisive issue in this comtroversy. In support of the
competence of respondent public official, Article 226 of the Present
Labor Code is cited. It reads thus: "The Bureau of Labor Relations and
the Labor Relations Division in the the regional offices of the Labor
shall have and exclusive authority to act, at their own initiation or upon
request of either or both parties, on all inter-union and intra-union
conflicts, and disputes, grievances of probe arising from or affecting
labor-management relations in all workplaces, whether natural or nonagricultural, except those arising from the implementation or
interpretation of collective bargaining agreements which shall be the
subject of grievance Procedure and/or voluntary arbitration." 1 The
comment of the then Acting Solicitor General, now Associate Justice of
the Court of Appeal, Hugo E. Gutierrez, Jr., treated as the
answer, 2 maintained that the wording of the above provision sustains
the authority thus challenged. There is considerable persuasiveness to
such a view. It would be an unduly restrictive interpretation them if a
negative answer were Seven to the question posed. It would be
oblivious to the basic end and aim of the pant Labor Code to confer on
the Department of Labor and its bereaus the competence to pass upon
and decide labor controversies and thus minimize judicial intervention.
There is no legal basis for nullifying such order.
This later dispute originated from a petition of respondent Federation of
Free Workers filed with the Bureau of labor Relations against petitioner
labor Union to hold a referendum among the members of the union for
the of determining whether they desired to be affiliated with such
Federation. It was alleged that a "great majority" of the members of the
union desired such affiliaion, but that its President, a certain Johnny de
Leon, was opposed. The contention of petitioner Union acting through
its counsel was that only about 700 out of more than 2,200 employees
of the company had manifested their desire to affliate with the
Federation and that a substantial number of such had since then
repudiated their signatures. It also raised the point that what was
sought was a certification election which was not proper as there was a
certified collective bargaining agreement between the union and the
company. The Compulsory Arbitrator, after a careful study of the
pleadings, reached the conclusion that the truth of the matter could
best be assertained by a referendum election. Respondent as Officerin-Charge of the Bureau of labor Relations affirmed. Hence this petition
directed to this Court, as a jurisdictional question is raised.
The petition, as noted at the outset, lacks merit.
1. Article 226 of the New Labor Code cannot be misread to signify that
the authority conferred on the Secretary of labor and the officials of the
Department is limited in character. On the contrary, even a cursory
reading thereof readily yields the conclusion that in the interest of
industrial peace and for the promotion of the salutary constitutional
objectives of social justice and protection to labor, the competence of
the governmental entrusted with supervision over disputes involving
employers and employees as well as "inter-union and intra-union
conflicts," is broad and expensive. Thereby its purpose becomes
crystal-clear. As is quite readily discernible where it concerns the
promotion of social and economy rights, the active participation in the
implementation of the codal objective is entrusted to the executive
department. There is no support for any allegation of jurisdictional
infirmity, considering that the language employed is well-nigh inclusive
with the stress on its "and exclusive authority to act." If it were
otherwise, its policy might be rendered futile. That is to run counter to a
basic postulate in the canons of statutory interpretation. Learned Hand
referred to it as the proliferation of purpose. As was emphatecally
asserted by Justice Frankfurter: "The generating consideration is that
legislation is more than composition. It is an active instrument of
government which, for purposes of interpretation, means that laws
have ends to be achieved. It is in this connection that Holmes said,
'words are flexible.' Again it was Holmes, the last judge to give quarter
to loose thinking or vague yearning, who said that 'the general purpose
is a more is a more important aid to the meaning than any rule which
grammar or formal logic may lay down.' And it was Holmes who chided
courts for being apt to err by sticking too closely to the words of a law
when those words import a policy that goes beyond them." 3 What is
intended by the framers of code or statute is not to be frustrated. Even
on the assumption that by some strained or literal reading of the

employed, a doubt can be raised as to its scope, the 'immitation should

not be at war with the end sought to be attained. It cannot be denied
that if through an ingenious argumentation, limits may be set on a
statutory power which should not be there, there would be a failure to
effectuate the statutory purpose and policy. That kind of approach in
statutory construction has never recommended itself. 4
2. Nor has petitioner made out a case of grave abuse of since the
matter involved is a dispute as to whether or not the members of
petitioner labor union had decided, contrary to the wishes of its
president, to join respondent Federation. What better way could there
be of ascertaining the truth there than to hold the referendum election.
The guarantee of fairness as to whether there is accuracy depends on
the impartiality and neutrality of the Bureau of Labor Relations. There
is nothing in petitioner's submission to indicate that such would not be
the case. Under such circumstances then, petitioner labor union could
not be held to allege that there was an abuse, much less a grave
abuse, of the discretionary authority vested in such office. It suffices to
take note of how often this Court, after a careful consideration of the
issue involved, had rejected such a contention in certification cases,
analogous, if not similar in character. Invariably, the imputation that the
holding of an election for the purpose of determining with exactitude
the wishes of the employees concerned as amounting to arbitrary
exercise exercise of a power had been rejected. 5
WHEREFORE, the petition for certiorari is dismissed. This decision is
immediately executory.
Barredo, Concepcion Jr. and Santos, JJ., concur.

Separate Opinions
ANTONIO, J., concurring:
The respondent public officer has sufficient authority, under the labor
Code, to conduct the referendum aforementioned.
AQUINO, J., concur:
Because the instant case was rendered moot by the 1975 petition of
FFW for a certification election among the employees and workers of
Lirag Textile Mills, Inc. If a certification election will be held, a
referendum is not necessary.

Separate Opinions
ANTONIO, J., concurring:
The respondent public officer has sufficient authority, under the labor
Code, to conduct the referendum aforementioned.
AQUINO, J., concur:
Because the instant case was rendered moot by the 1975 petition of
FFW for a certification election among the employees and workers of
Lirag Textile Mills, Inc. If a certification election will be held, a
referendum is not necessary.
Footnotes
1 Article 226 of the New Labor Code (1974).

2 He was assisted by Assistant Solicitor General

Reynato S. Puno and Solicitor Romeo C. de la
Cruz.
3 Frankfurter, Of Law and Men, 59-60 (1965).
4 Cf. Ty Sue v. Hord 12 Phil, 485 (1909); United
States v. Toribio, 11-D Phil. 85 (1910); Riera v.
Palmaroli, 40 Phil. 105 (1919): Commissioner of
Customs v. Caltex Phil., Inc., 106 Phil. 829 (1959);
Sarcos v. Castillo, L- 29755, Jan. 31, 1969, 26
SCRA 853; Automotive Parts & Equipment Co.,
Inc. v. Lingad, L-26406, Oct. 31, 1969, 30 SCRA
248-1 Lopez v. Commissioner of Customs, L28235, Jan. 30,1971, 37 SCRA 327; Matabuena v.
Cervantes, L-28771, March 31, 1971, 38 SCRA
284; Republic Flour Mills v. Commissioner of
Customs, L. 28463, May 31, 1971, 39 SCRA 269;
Lozano v. Romero, L-33245, Sept. 30, 1971, 41
SCRA 247; Caltex Filipino Managers and
Supervisors Association v. Court of Industrial
Relations, L-30623-33, April 11, 1972, 44 SCRA
350.
5 Cf. United Employees Union v. Gelmart
Industries v. Noriel, 67 SCRA 267; Philippine
Association of Free Labor Unions v. Bureau of
Labor Relations, 69 SCRA 132 (1976); Federacion
Obrera v. Noriel, 72 SCRA 24 (1976); U. E.
Automotive Employees and Workers Union-Trade
Unions of the Philippines and Allied Services v.
Noriel, 74 SCRA 72 (1976); Philippine Labor
Alliance Council v. Bureau of Labor Relations, L41288, Jan. 31, 1977; Today's Knitting Free
Workers Union v. Noriel, L-45057, Feb. 28, 1977;
Benguet Exploration Miner's 4575, June 20, 1977;
Rowell Labor Union v. Ople, L-42270, July 29,
1977.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION

G.R. No. 96821 December 9, 1994

LA TONDEA WORKERS UNION, petitioner,
vs.
THE HONORABLE SECRETARY OF LABOR AND EMPLOYMENT,
and HON. PURA FERRER-CALLEJA, in her capacity as Director,
Bureau of Labor Relations, respondents.
Amorito V. Canete for petitioner.

MENDOZA, J.:
This is a petition for certiorari to set aside orders and the decision of
respondent Director of the Bureau of Labor Relations (BLR) and
Secretary of Labor and Employment in BLR-AE-8-18-89, finding
Ramon de la Cruz and Norma Marin, president and treasurer
respectively of petitioner La Tondea Worker's Union (LTWU),
accountable for union funds in the amount of P367,553.00.
Petitioner LTWU is a duly registered labor organization. For more that
thirty years it was bargaining agent of the rank-and-file workers of La

Tondea Inc. at its Tondo Plant. On May 31, 1989 it lost in a

certification election to the Ilaw at Buklod ng Manggagawa (IBM).
It appears that, on March 14, 1989, about 200, out of 1,015 members
of petitioner, petitioned the National Capital Region Office of the
Department of Labor and Employment (hereafter referred to as DOLENCR) for an audit or examination of the funds and financial records of
the union. Accordingly an audit was ordered and, on April 17, 1989, the
acting auditing examiner of the DOLE-NCR, Nepomuceno Leao II,
submitted a report finding Ramon de la Cruz and Norma Marin
accountable for P367,553.00 for union dues remitted by La Tondea
Inc. to LTWU.
De la Cruz and Marin appealed to then DOLE Secretary Franklin
Drilon, complaining that they had not been heard before the report was
made. The case was indorsed to the respondent Director of the Bureau
of Labor Relations, who, on August 7, 1989, directed the DOLE-NCR
to forward to the BLR the records of the case.
In her order dated September 29, 1989, the respondent BLR Director
found that indeed De la Cruz and Marin had not been heard before
they were held liable for union funds. For this reason she set aside the
findings and recommendations of the DOLE-NCR and ordered another
audit/examination to be conducted. The dispositive portion of her order
stated:
WHEREFORE, premises considered, the
findings/recommendations of the National Capital
Region contained in the letter of NCR Director
Luna C. Piezas to Teodoro Monleon, et al.
petitioners, dated 11 May 1989 are hereby set
aside.
Accordingly, the Labor Relations and Reporting
Division (LRRD), this Bureau is hereby directed to
conduct an audit/examination of the books of
accounts and other financial records of La
Tondea Workers Union (LTWU) for the period of
1986 to February 1989.
SO ORDERED.
Petitioner moved for a reconsideration of the order insofar as it ordered
an audit/examination of books of accounts and financial records. It
argued that certain requirements of Art. 274 of the Labor Code, as
amended by R.A. 6715, must first be complied with before an
audit/examination could be ordered, to wit: (1) there must be a sworn
written complaint, (2) it must be supported by at least 20% of the total
membership of the union and (3) it must not have been conducted
during the freedom period nor within the 30 days immediately
preceding the date of election of union officials.
Petitioner's motion was denied by the BLR in a resolution dated
December 1, 1989. Ramon de la Cruz, Danilo Manrique, Arturo
Bautista and Norma Marin were ordered to submit "all financial records
and related documents of the union for the period 1986 to February
1989 within ten (10) days from receipt of this order."
The union, through its new president, Danilo Manrique, again moved
for a reconsideration, this time raising a jurisdictional question: That
under Art. 274 of the Labor Code, as amended by Republic Act No.
6715, the power to order an examination of the books of accounts and
financial activities of a union is vested in the Secretary of Labor and
Employment or his representative and the BLR can not be considered
the Secretary's representative. In its order of January 22, 1990,
however, the BLR denied petitioner's motion, even as it reiterated its
previous order of December 1, 1989, with warning that if the records
and documents required were not produced within five days petitioner
would be deemed to have waived the right to present its evidence.
The union filed a petition for review of the orders of December 1, 1989
and January 22, 1990 to the DOLE Secretary. But the BLR proceeded
with its examination, and, as the union officers refused to comply with

its orders, the BLR based the audit/examination on the certification of

the company. In an order dated July 5, 1990, the BLR found the union
officers personally accountable and liable for the total amount of
P367,553.00, which La Tondea Inc. certified it had remitted to LTWU
as union dues.
The Secretary of Labor and Employment did not act on the petition for
review of the union. Instead, he referred the petition to the BLR which
denied the petition for having become moot and academic. The
dispositive portion of its order, dated November 21, 1990, states:
WHEREFORE, premises considered, the petition
for review is denied for lack of merit. The Order of
this Bureau dated 5 July 1990 issued in the
exercise of its appellate jurisdiction over
audit/examination case heard before the Regional
Office, this Department, is hereby affirmed in toto.
Hence this petition, alleging grave abuse of discretion by respondent
Secretary of Labor and Employment and Director of the Bureau of
Labor Relations. Petitioner alleges several grounds which raise the
following issues:
1. Whether under the law the power to examine
the books of accounts of petitioner is vested in the
Secretary of Labor and Employment or in the
Bureau of Labor Relations.
2. If it is vested in the Secretary of Labor and
Employment, whether the power was not
delegated by him in this case to the Bureau of
Labor Relations.
3. Whether the examination of petitioner's books
was validly ordered despite the fact that the
requirements of Art. 274 of the Labor Code had
not been complied with.
4. Whether the union officers were properly held
accountable for union funds.
With regard to the first issue, the petitioner cites Art. 274 of the Labor
Code and Rule VIII-A of the implementing rules, in support of its
contention that the BLR had no authority to conduct an examination of
the books of the LTWU and that such authority is vested solely in the
Secretary of Labor or his duly authorized representative. These
provision state:
Art. 274. Visitorial Powers. The Secretary of
Labor and Employment or his duly authorized
representative is hereby empowered to inquire into
the financial activities of legitimate labor
organizations upon the filing of a complaint under
oath and duly supported by the written consent of
at least twenty (20%) percent of the total
membership of the labor organization concerned
and to examine their books of accounts and other
records to determine compliance or noncompliance with the law and to prosecute any
violations of the law and the union constitutions
and
by-laws; Provided, that such inquiry or
examination shall not be conducted during the
sixty (60) day freedom period nor within the thirty
(30) days immediately preceding the date of
election of union officials.
Rule VIII-A
VISITORIAL POWER

Sec. 1. Exercise of visitorial power. The

Secretary of Labor and Employment or his duly
authorized representative shall inquire into the
financial activities of any legitimate labor
organization and examine their books of accounts
and other records to determine compliance with
the law and the organization, constitution and bylaws, upon the filing of a complaint under oath and
duly supported by the written consent of at least
20% of the total membership of the labor
organization concerned.
Sec. 2. Period of inquiry or examination. No
inquiry or examination of the financial activities
and books of accounts as well as other records of
any legitimate labor organization mentioned in the
preceding section shall be conducted during the
60 day freedom period nor within 30 days
immediately preceding the date of election of
union officials.
The petitioner argues that although Art. 274 authorizes the Secretary
to delegate the examination of accounts to a representative, the BLR
Director cannot be considered a duly authorized representative
because the power to examine the books of accounts of a union has
already been delegated to union account officers pursuant to the
implementing rules, Rule 1, sec. 1(ff) which provides:
"Union Accounts Examiners" are officials of the
Bureau or the Industrial Relations Division in the
Regional Office empowered to audit books of
accounts of the union.
On the other hand, the public respondents contend that union accounts
examiners are actually officials of the BLR because the word "Bureau"
in sec.
1(ff) refers to the Bureau of Labor Relations. At any rate, they contend
that by endorsing the case to the BLR, the Secretary of Labor and
Employment clearly designated the BLR to act on his behalf.
Respondent's contention is well taken. The "union accounts examiners
of the Bureau" mentioned in Rule 1, sec. 1(ff) of the implementing rules
as having the power to audit the books of accounts of unions are
actually officials of the BLR because the word "Bureau" is defined in
Rule 1, sec. 1(b) of the same rules as the Bureau of Labor Relations.
Anyway, the delegation of authority to union accounts examiners in
Rule 1, sec. 1(ff) is not exclusive. By indorsing the case to the BLR, the
Secretary of Labor and Employment must be presumed to have
authorized the BLR to act on his behalf. As already stated, the
Secretary made two indorsements: first, when he referred to the BLR
the letter dated July 27, 1989 of Ramon de la Cruz and Norma Marin
seeking the annulment of the audit report of the DOLE NCR, and
second, on September 4, 1990 when, instead of acting on the petition
for review of the union, he indorsed it to the BLR.
Independently of any delegation, the BLR had power of its own to
conduct the examination of accounts in this case. Book IV, Title VII,
Chapter 4, sec. 16 of the Administrative Code of 1987 provides:
Sec. 16. Bureau of Labor Relations. The
Bureau of Labor Relations shall set policies,
standards, and procedures on the registration and
supervision of legitimate labor union activities
including denial, cancellation and revocation of
labor union permits. It shall also set policies,
standards, and procedure relating to collective
bargaining agreements, and the examination of
financial records of accounts of labor
organizations to determine compliance with
relevant laws.

The Bureau shall also provide proper orientation to

workers on their rights and privileges under
existing laws and regulations, and develop
schemes and project for the improvement of the
standards of living of workers and their families.
The Labor Code, as amended by RA 6715, likewise authorizes the
BLR to decide intra-union disputes. This includes the examinations of
accounts. Thus, Art. 226 of the Code provides:
Art. 226. Bureau of Labor Relations. The
Bureau of Labor Relations and the Labor
Relations Divisions in the regional offices of the
Department of Labor shall have original and
exclusive authority to act, at their own initiative or
upon request of either or both parties, on all
inter-union and intra-union conflicts, and all
disputes, grievances or problems arising from or
affecting labor-management relations in all
workplaces whether agricultural or nonagricultural, except those arising from the
implementation or interpretation of collective
bargaining agreements which shall be the subject
of grievance procedure and/or voluntary
arbitration.
The Bureau shall have fifteen (15) working days to
act on labor cases before it, subject to extension
by agreement of the parties.
Petitioner's contention that the intra-union dispute mentioned in this
provision does not include the examination of accounts of the union
because it contemplates intra-union conflicts affecting labormanagement relations is untenable. Conflicts affecting labormanagement relations are apart from
intra-union conflicts, as is apparent from the text of Art. 226.
This brings us to the second question, whether the examination of
accounts in this case is valid considering that it was not initiated
through a sworn written complaint by at least 20% of the total
membership of the LTWU. As already stated, the case arose from a
letter written by 200, out of a total membership force of 1,015 of the
LTWU. These represented 19.70% of the total membership of the
union, just a little less than the required number.
The requirements referred to were inserted in Art. 274 by way of an
amendment by R.A. 6715 which took effect on March 21, 1989. On the
other hand, the letter of the union members petitioning for an
examination of the financial records of the union was made on March
14, 1989, i.e., seven days before the effectivity of the amendments. At
the time the letter was made, Art. 274 merely provided:
Art. 274. Visitorial power. The Secretary of
Labor or his duly authorized representative is
hereby empowered to inquire, from time to time,
into the financial activities of legitimate labor
organizations and to examine their books of
accounts and other records to determine
compliance or non-compliance with the law and to
prosecute any violations of the law and the union
constitution and by-laws.
The validity of the request for examination of union accounts must be
determined as of the time of its filing. Hence we hold that the request
of the 200 union members in this case was validly made and conferred
jurisdiction on the DOLE-NCR to conduct the examination of the books
of accounts of the petitioners.
It is indeed true that, in setting aside the audit report of the DOLENCR, the BLR cited the fact that the examination of accounts had been
made within the so-called "freedom period." But as the BLR pointed
out in its order dated September 29, 1989, the ban on examination or
audit of union funds within 60 days of the expiration of the collective

bargaining agreement had been a policy of the Department of Labor

and Employment even before R.A. 6715 took effect. There is,
therefore, nothing inconsistent in holding that the examination of
accounts by the DOLE-NCR as void for having been conducted within
the freedom period and saying now that since the letter requesting
such an examination was made before the effectivity of R.A. 6715, the
requirements of sworn written complaint and support of at least 20% of
the total membership of the union do not apply.
The examination subsequently ordered by the BLR, although made
after the effectivity of R.A. 6715, was validly conducted because it was
simply a continuation of proceedings already began in the DOLE-NCR.
As a matter of fact the petitioners, in elevating the matter to the
Secretary of Labor, specifically requested that their letter be treated as
a motion for reconsideration or as an appeal from the audit report of
the DOLE-NCR.
Finally, it is claimed that petitioners Ramon de la Cruz and Norma
Marin were denied due process by the BLR. As already shown,
however, they were given every opportunity to defend themselves,
including a warning that if they persisted in their refusal to submit the
books of accounts of the union they would be considered to have
waived the right to present their evidence. As they did not heed the
warning, we think the BLR was justified in using, as basis of its
examination, the certification of La Tondea, Inc. as to the amount
remitted by it to the LTWU as union dues. This, at any rate, is a factual
matter and the rule is that the findings of facts of administrative
agencies, when supported by substantial evidence, will not be
disturbed.
WHEREFORE, the petition for certiorari is DISMISSED.
SO ORDERED.
Narvasa, C.J., Regalado and Puno, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-48192 March 30, 1979
ARSENIO REYES, R. ZINGAPAN E. SERRANO, P. SISON, L.
MENDOZA, F. PEREZ, O. CRUZ, E. BAUTISTA, H. ANGCIANGCO,
G. SANTOS, R. PINEDA, J. LLENAS, R. VALDEZEO, C. HERNAL,
S. TRIPOLI, D. TRINE, P. MAGAT, N. NATAGOC, J. SASIS AND
CRISPA-FLORO WORKERS' ASSN., petitioners,
vs.
THE HONORABLE BLAS OPLE, CARMELO C. NORIEL and
ROMEO A. YOUNG, and NAFLU, respondents.
B. R. de Luna & Associates for petitioners.
Office of the Solicitor General for respondents.

TEEHANKEE, J.:
The Court finds without merit the protest of petitioners against the
holding and results of the certification election held in December, 1977
whereby the National Federation of Labor Unions (NAFLU) was
certified as the sole and exclusive bargaining agent of the workers with
the employer P. Floro & Sons, Inc. and therefore dismisses the petition
at bar.
The individual petitioners, as alleged in their petition, were declared the
duly elected officers of the union Crispa Floro Workers Association

(CFWA) in a "much delayed election of union officers on August 9,

1977" the outcome of which "was finally determined" only on
November 22, 1977, due to an intra-union dispute among the workersmembers aspiring to the leadership of the union (CFWA) which then
was officially affiliated with the 'Trade Unions of the Philippines and
Allied Services (TUPAS)
On September 1, 1977, however, upon petition of the CFWA-TUPAS
(at the instance of petitioners' opponents), the Bureau of Labor
Relations caged for a certification election at the employer company,
P. Floro & Sons, Inc. Many pre-election conferences in the months of
September to November, 1977 were held and all interested unions
were allowed to intervene and the lists of voters-workers were agreed
upon. The certification election was held on December 6, 1977 with no
union emerging with a clear majority, as follows:
1)
NAFLU.....................................................................
554
2) CRISPA FLORO WORKERS ASSOCIATIONTUPAS....................................................................
.................................. 1
3) FEDERATION OF FREE WORKERS
(FFW)....... 524
4) NATIONAL UNION OF GARMENT, TEXTILE,
CORDAGE & ALLIED WORKERS OF THE PHIL.
(GATCORD)............................................................
................................ 2
5) PLUM FEDERATION OF INDUSTRIAL &
AGRARIAN
WORKERS..............................................................
............................... 136
6) NO
UNION............................................................. 7
7)
SPOILED.................................................................
29
TOTAL....................................................................
1,253
Petitioners Reyes, et al under CFWA which they had disaffiliated from
TUPAS and the PLUM both filed protests to set aside the election
results. In the questioned Resolution of December 12, 1977,
respondent Bureau of Labor Relations Director Carmelo C. Noriel
dismissed the protests holding insofar as petitioners Reyes, et al. were
concerned that their move to disaffiliate from the mother federation
(TUPAS) had not been formalized beforehand, that they could not
utilize just the name of Crispa Floro Workers Association which was
not registered by itself and did not have the required personality of a
labor organization and that they and their supporters could have duly
intervened in the elections "still under aegis of the CFWA-TUPAS", as
follows:
Anent Reyes et als assertion of grave abuse of
discretion, the same may have been given
credence, if they have been possessed of the
action on their move to intervene was a tacit
recognition of the fact that Reyes et als group, in
utilizing the name of Crispa Floro Workers
Association was not yet possessed of the
personality of a legitimate labor organization. This
is so, as officially, Crispa Floro Workers
Association is still an affiliate of the Trade Unions
of the Philippines and Allied Services (TUPAS),

one of the intervenors in the instant case. Their

move to disaffiliate from the mother federation was
sad to state, never formalized before him What is
appellant from the record of this case, is an
unfortunate intra-union squabble among two sets
of officers, one group headed by Reyes, et al and
another group of defeated officers, the one
advocating disaffiliation from the mother federation
and the other eventually supporting the other
intervenor unions in this case Officially therefore,
as there is no formal disaffiliation made, the herein
aggrupation which is shown to be just a set of
newly elected officers without any noticeable union
members supporting them, could have only
intervened still under the aegis of the Crispa Floro
Worker's Association-TUPAS. To have
procrastinated on the holding of the certification
election by mere reason of this unfortunate
incident that happened in one of the intervenor
unions, would have equally deprived the others of
their legitimate right to represent the already
restive workers at the aforementioned corporation.
This Office chose the latter alternative. It could not
have done otherwise. 1
Respondent Noriel accordingly ordered the holding of a runoff election
on December 14, 1977 between the two unions that had gathered the
top two places at which the NAFLU emerged with 664 votes as the
winner of an absolute majority of the 1,253 votes cast (with FFW
receiving 566 votes and 23 votes declared spoiled) and was
subsequently certified on December 20, 1977 as the exclusive
bargaining representative of all the workers of the employer company.
Hence, this petition filed on May 5, 1978 after petitioners had failed to
obtain reconsideration from respondents Noriel and Ople as Secretary
(now Minister) of Labor
The correctness of respondents' questioned actions was confirmed at
the hearing held by the Court on March 2, 1979 and respondents
cannot be held to have acted with grave abuse of discretion.
Petitioners were well aware of the calling of the certification election for
determining the union chosen by the workers themselves to represent
them as their bargaining representative but limited themselves to
sending letters to the Bureau of Labor Relations, one on November 23,
1977 alleging for "leave to intervene and that "pending resolution of our
intervention, may we request that this issue be deferred" and another
letter on November 28, 1977 alleging that they had disaffiliated CFWA
from the mother federation TUPAS. Respondents had properly ruled
that disaffiliated from TUPAS, CFWA had no personality not having
been duly registered as such. The certification of July 25, 1978 to this
effect issued by the Bureau of Labor Relations and submitted by the
Solicitor General on behalf of respondents public officials clearly bears
this out, thus:
This is to certify that based on the records of this
office, CRISPA-FLORO WORKERS
ASSOCIATION is not a registers, labor
organization. However, CRISPA-FLORO
WORKERS ASSOCIATION-TUPAS was
registered in this Office on 14 February 1974 and
was issued Registration Certificates No.(Fed.-404)
7184-IP-129. 2
That the elections were held peacefully and orderly is not questioned
by petitioners. The Court has consistently favored and upheld the
holding of certification elections for the workers themselves to elect the
union that the majority may choose as their bargaining representative
or if they wish, to vote that there be no union. Their plea that another
certification election be held at which they may duly take part would be
but a futile exercise in the light of the results which were highlighted by
the lack of any noticeable support for them by the rank and file, as well
as by their admission at the hearing that the winner and certified union,
the NAFLU, enjoys the workers' full support, having signed up more
than a thousand of them as members.

ACCORDINGLY, the petition is dismissed and the restraining order

issued on May 17, 1978 is lifted effective immediately. No costs.
Makasiar, Fernandez, Guerrero, De Castro, and Melencio-Herrera, JJ.,
concur.

#Footnotes
1 Rollo, p. 23.

at Authorization," and "Listahan ng mga Dumalo sa Pangkalahatang

Pulong at mga Sumang-ayon at Nagratipika sa Saligang Batas" were
not executed under oath and certified by the union secretary and
attested to by the union president as required by Section 235 of the
Labor Code7 in relation to Section 1, Rule VI of Department Order
(D.O.) No. 9, series of 1997. The union registration was, thus, fatally
defective.
The Med-Arbiter further held that the list of membership of petitioner
union consisted of 12 batchman, mill operator and leadman who
performed supervisory functions. Under Article 245 of the Labor Code,
said supervisory employees are prohibited from joining petitioner union
which seeks to represent the rank-and-file employees of respondent
company.

2 Rollo, p. 78.
Republic of the Philippines
SUPREME COURT
Manila

As a result, not being a legitimate labor organization, petitioner union

has no right to file a petition for certification election for the purpose of
collective bargaining.
Department of Labor and Employments Ruling

FIRST DIVISION
G.R. No. 169717

March 16, 2011

SAMAHANG MANGGAGAWA SA CHARTER CHEMICAL

SOLIDARITY OF UNIONS IN THE PHILIPPINES FOR
EMPOWERMENT AND REFORMS (SMCC-SUPER), ZACARRIAS
JERRY VICTORIO-Union President,Petitioner,
vs.
CHARTER CHEMICAL and COATING CORPORATION, Respondent.
DECISION
DEL CASTILLO, J.:
The right to file a petition for certification election is accorded to a labor
organization provided that it complies with the requirements of law for
proper registration. The inclusion of supervisory employees in a labor
organization seeking to represent the bargaining unit of rank-and-file
employees does not divest it of its status as a legitimate labor
organization. We apply these principles to this case.
This Petition for Review on Certiorari seeks to reverse and set aside
the Court of Appeals March 15, 2005 Decision1 in CA-G.R. SP No.
58203, which annulled and set aside the January 13, 2000 Decision2 of
the Department of Labor and Employment (DOLE) in OS-A-6-53-99
(NCR-OD-M-9902-019) and the September 16, 2005
Resolution3 denying petitioner unions motion for reconsideration.
Factual Antecedents
On February 19, 1999, Samahang Manggagawa sa Charter Chemical
Solidarity of Unions in the Philippines for Empowerment and Reforms
(petitioner union) filed a petition for certification election among the
regular rank-and-file employees of Charter Chemical and Coating
Corporation (respondent company) with the Mediation Arbitration Unit
of the DOLE, National Capital Region.
On April 14, 1999, respondent company filed an Answer with Motion to
Dismiss4 on the ground that petitioner union is not a legitimate labor
organization because of (1) failure to comply with the documentation
requirements set by law, and (2) the inclusion of supervisory
employees within petitioner union.5

On July 16, 1999, the DOLE initially issued a Decision8 in favor of

respondent company dismissing petitioner unions appeal on the
ground that the latters petition for certification election was filed out of
time. Although the DOLE ruled, contrary to the findings of the MedArbiter, that the charter certificate need not be verified and that there
was no independent evidence presented to establish respondent
companys claim that some members of petitioner union were holding
supervisory positions, the DOLE sustained the dismissal of the petition
for certification after it took judicial notice that another
union, i.e., Pinag-isang Lakas Manggagawa sa Charter Chemical and
Coating Corporation, previously filed a petition for certification election
on January 16, 1998. The Decision granting the said petition became
final and executory on September 16, 1998 and was remanded for
immediate implementation. Under Section 7, Rule XI of D.O. No. 9,
series of 1997, a motion for intervention involving a certification
election in an unorganized establishment should be filed prior to the
finality of the decision calling for a certification election. Considering
that petitioner union filed its petition only on February 14, 1999, the
same was filed out of time.
On motion for reconsideration, however, the DOLE reversed its earlier
ruling. In its January 13, 2000 Decision, the DOLE found that a review
of the records indicates that no certification election was previously
conducted in respondent company. On the contrary, the prior
certification election filed by Pinag-isang Lakas Manggagawa sa
Charter Chemical and Coating Corporation was, likewise, denied by
the Med-Arbiter and, on appeal, was dismissed by the DOLE for being
filed out of time. Hence, there was no obstacle to the grant of petitioner
unions petition for certification election, viz:
WHEREFORE, the motion for reconsideration is
hereby GRANTED and the decision of this Office dated 16 July 1999
is MODIFIED to allow the certification election among the regular rankand-file employees of Charter Chemical and Coating Corporation with
the following choices:
1. Samahang Manggagawa sa Charter Chemical-Solidarity
of Unions in the Philippines for Empowerment and Reform
(SMCC-SUPER); and
2. No Union.
Let the records of this case be remanded to the Regional Office of
origin for the immediate conduct of a certification election, subject to
the usual pre-election conference.

Med-Arbiters Ruling
SO DECIDED.9
On April 30, 1999, Med-Arbiter Tomas F. Falconitin issued a
Decision6 dismissing the petition for certification election. The MedArbiter ruled that petitioner union is not a legitimate labor organization
because the Charter Certificate, "Sama-samang Pahayag ng Pagsapi

Court of Appeals Ruling

On March 15, 2005, the CA promulgated the assailed Decision, viz:

WHEREFORE, the petition is hereby GRANTED. The assailed

Decision and Resolution dated January 13, 2000 and February 17,
2000 are hereby [ANNULLED] and SET ASIDE.
SO ORDERED.10
In nullifying the decision of the DOLE, the appellate court gave
credence to the findings of the Med-Arbiter that petitioner union failed
to comply with the documentation requirements under the Labor Code.
It, likewise, upheld the Med-Arbiters finding that petitioner union
consisted of both rank-and-file and supervisory employees. Moreover,
the CA held that the issues as to the legitimacy of petitioner union may
be attacked collaterally in a petition for certification election and the
infirmity in the membership of petitioner union cannot be remedied
through the exclusion-inclusion proceedings in a pre-election
conference pursuant to the ruling in Toyota Motor Philippines v. Toyota
Motor Philippines Corporation Labor Union.11 Thus, considering that
petitioner union is not a legitimate labor organization, it has no legal
right to file a petition for certification election.

Finally, the legal personality of petitioner union cannot be collaterally

attacked but may be questioned only in an independent petition for
cancellation pursuant to Section 5, Rule V, Book IV of the Rules to
Implement the Labor Code and the doctrine enunciated in Tagaytay
Highlands International Golf Club Incoprorated v. Tagaytay Highlands
Empoyees Union-PTGWO.13
Respondent Companys Arguments
Respondent company asserts that it cannot be precluded from
challenging the July 16, 1999 Decision of the DOLE. The said decision
did not attain finality because the DOLE subsequently reversed its
earlier ruling and, from this decision, respondent company timely filed
its motion for reconsideration.
On the issue of lack of verification of the charter certificate, respondent
company notes that Article 235 of the Labor Code and Section 1, Rule
VI of the Implementing Rules of Book V, as amended by D.O. No. 9,
series of 1997, expressly requires that the charter certificate be
certified under oath.

Issues
I
Whether x x x the Honorable Court of Appeals committed grave abuse
of discretion tantamount to lack of jurisdiction in granting the
respondent [companys] petition for certiorari (CA G.R. No. SP No.
58203) in spite of the fact that the issues subject of the respondent
company[s] petition was already settled with finality and barred from
being re-litigated.

It also contends that petitioner union is not a legitimate labor

organization because its composition is a mixture of supervisory and
rank-and-file employees in violation of Article 245 of the Labor Code.
Respondent company maintains that the ruling in Toyota Motor
Philippines vs. Toyota Motor Philippines Labor Union14 continues to be
good case law. Thus, the illegal composition of petitioner union nullifies
its legal personality to file the subject petition for certification election
and its legal personality may be collaterally attacked in the
proceedings for a petition for certification election as was done here.
Our Ruling

II
Whether x x x the Honorable Court of Appeals committed grave abuse
of discretion tantamount to lack of jurisdiction in holding that the
alleged mixture of rank-and-file and supervisory employee[s] of
petitioner [unions] membership is [a] ground for the cancellation of
petitioner [unions] legal personality and dismissal of [the] petition for
certification election.
III
Whether x x x the Honorable Court of Appeals committed grave abuse
of discretion tantamount to lack of jurisdiction in holding that the
alleged failure to certify under oath the local charter certificate issued
by its mother federation and list of the union membership attending the
organizational meeting [is a ground] for the cancellation of petitioner
[unions] legal personality as a labor organization and for the dismissal
of the petition for certification election.12
Petitioner Unions Arguments
Petitioner union claims that the litigation of the issue as to its legal
personality to file the subject petition for certification election is barred
by the July 16, 1999 Decision of the DOLE. In this decision, the DOLE
ruled that petitioner union complied with all the documentation
requirements and that there was no independent evidence presented
to prove an illegal mixture of supervisory and rank-and-file employees
in petitioner union. After the promulgation of this Decision, respondent
company did not move for reconsideration, thus, this issue must be
deemed settled.
Petitioner union further argues that the lack of verification of its charter
certificate and the alleged illegal composition of its membership are not
grounds for the dismissal of a petition for certification election under
Section 11, Rule XI of D.O. No. 9, series of 1997, as amended, nor are
they grounds for the cancellation of a unions registration under
Section 3, Rule VIII of said issuance. It contends that what is required
to be certified under oath by the local unions secretary or treasurer
and attested to by the local unions president are limited to the unions
constitution and by-laws, statement of the set of officers, and the books
of accounts.

The petition is meritorious.

The issue as to the legal personality of petitioner union is not barred by
the July 16, 1999 Decision of the DOLE.
A review of the records indicates that the issue as to petitioner unions
legal personality has been timely and consistently raised by
respondent company before the Med-Arbiter, DOLE, CA and now this
Court. In its July 16, 1999 Decision, the DOLE found that petitioner
union complied with the documentation requirements of the Labor
Code and that the evidence was insufficient to establish that there was
an illegal mixture of supervisory and rank-and-file employees in its
membership. Nonetheless, the petition for certification election was
dismissed on the ground that another union had previously filed a
petition for certification election seeking to represent the same
bargaining unit in respondent company.
Upon motion for reconsideration by petitioner union on January 13,
2000, the DOLE reversed its previous ruling. It upheld the right of
petitioner union to file the subject petition for certification election
because its previous decision was based on a mistaken appreciation of
facts.15 From this adverse decision, respondent company timely moved
for reconsideration by reiterating its previous arguments before the
Med-Arbiter that petitioner union has no legal personality to file the
subject petition for certification election.
The July 16, 1999 Decision of the DOLE, therefore, never attained
finality because the parties timely moved for reconsideration. The issue
then as to the legal personality of petitioner union to file the certification
election was properly raised before the DOLE, the appellate court and
now this Court.
The charter certificate need not be certified under oath by the local
unions secretary or treasurer and attested to by its president.
Preliminarily, we must note that Congress enacted Republic Act (R.A.)
No. 948116 which took effect on June 14, 2007.17 This law introduced
substantial amendments to the Labor Code. However, since the
operative facts in this case occurred in 1999, we shall decide the

issues under the pertinent legal provisions then in force (i.e., R.A. No.
6715,18 amending Book V of the Labor Code, and the rules and
regulations19 implementing R.A. No. 6715, as amended by D.O. No.
9,20

charter certificate,24 (2) the names of its officers, their addresses, and
its principal office,25 and (3) its constitution and by-laws26 the last two
requirements having been executed under oath by the proper union
officials as borne out by the records.

series of 1997) pursuant to our ruling in Republic v. Kawashima Textile

Mfg., Philippines, Inc.21

The mixture of rank-and-file and supervisory employees in petitioner

union does not nullify its legal personality as a legitimate labor
organization.

In the main, the CA ruled that petitioner union failed to comply with the
requisite documents for registration under Article 235 of the Labor
Code and its implementing rules. It agreed with the Med-Arbiter that
the Charter Certificate, Sama-samang Pahayag ng Pagsapi at
Authorization, and Listahan ng mga Dumalo sa Pangkalahatang
Pulong at mga Sumang-ayon at Nagratipika sa Saligang Batas were
not executed under oath. Thus, petitioner union cannot be accorded
the status of a legitimate labor organization.
We disagree.
The then prevailing Section 1, Rule VI of the Implementing Rules of
Book V, as amended by D.O. No. 9, series of 1997, provides:
Section 1. Chartering and creation of a local chapter A duly
registered federation or national union may directly create a
local/chapter by submitting to the Regional Office or to the Bureau two
(2) copies of the following:
(a) A charter certificate issued by the federation or national
union indicating the creation or establishment of the
local/chapter;
(b) The names of the local/chapters officers, their
addresses, and the principal office of the local/chapter; and
(c) The local/chapters constitution and by-laws provided that
where the local/chapters constitution and by-laws [are] the
same as [those] of the federation or national union, this fact
shall be indicated accordingly.
All the foregoing supporting requirements shall be certified under oath
by the Secretary or the Treasurer of the local/chapter and attested to
by its President.
As readily seen, the Sama-samang Pahayag ng Pagsapi at
Authorization and Listahan ng mga Dumalo sa Pangkalahatang Pulong
at mga Sumang-ayon at Nagratipika sa Saligang Batas are not among
the documents that need to be submitted to the Regional Office or
Bureau of Labor Relations in order to register a labor organization. As
to the charter certificate, the above-quoted rule indicates that it should
be executed under oath. Petitioner union concedes and the records
confirm that its charter certificate was not executed under oath.
However, in San Miguel Corporation (Mandaue Packaging Products
Plants) v. Mandaue Packing Products Plants-San Miguel Corporation
Monthlies Rank-and-File Union-FFW (MPPP-SMPP-SMAMRFUFFW),22 which was decided under the auspices of D.O. No. 9, Series of
1997, we ruled
In San Miguel Foods-Cebu B-Meg Feed Plant v. Hon. Laguesma, 331
Phil. 356 (1996), the Court ruled that it wasnot necessary for the
charter certificate to be certified and attested by the local/chapter
officers. Id. While this ruling was based on the interpretation of the
previous Implementing Rules provisions which were supplanted
by the 1997 amendments, we believe that the same doctrine
obtains in this case. Considering that the charter certificate is
prepared and issued by the national union and not the local/chapter, it
does not make sense to have the local/chapters officers x x
x certify or attest to a document which they had no hand in the
preparation of.23 (Emphasis supplied)
In accordance with this ruling, petitioner unions charter certificate need
not be executed under oath. Consequently, it validly acquired the
status of a legitimate labor organization upon submission of (1) its

The CA found that petitioner union has for its membership both rankand-file and supervisory employees. However, petitioner union sought
to represent the bargaining unit consisting of rank-and-file employees.
Under Article 24527 of the Labor Code, supervisory employees are not
eligible for membership in a labor organization of rank-and-file
employees. Thus, the appellate court ruled that petitioner union cannot
be considered a legitimate labor organization pursuant to Toyota Motor
Philippines v. Toyota Motor Philippines Corporation Labor
Union28(hereinafter Toyota).
Preliminarily, we note that petitioner union questions the factual
findings of the Med-Arbiter, as upheld by the appellate court, that 12 of
its members, consisting of batchman, mill operator and leadman, are
supervisory employees. However, petitioner union failed to present any
rebuttal evidence in the proceedings below after respondent company
submitted in evidence the job descriptions29 of the aforesaid
employees. The job descriptions indicate that the aforesaid employees
exercise recommendatory managerial actions which are not merely
routinary but require the use of independent judgment, hence, falling
within the definition of supervisory employees under Article 212(m)30 of
the Labor Code. For this reason, we are constrained to agree with the
Med-Arbiter, as upheld by the appellate court, that petitioner union
consisted of both rank-and-file and supervisory employees.
Nonetheless, the inclusion of the aforesaid supervisory employees in
petitioner union does not divest it of its status as a legitimate labor
organization. The appellate courts reliance on Toyota is misplaced in
view of this Courts subsequent ruling in Republic v. Kawashima
Textile Mfg., Philippines, Inc.31 (hereinafter Kawashima). InKawashima,
we explained at length how and why the Toyota doctrine no longer
holds sway under the altered state of the law and rules applicable to
this case, viz:
R.A. No. 6715 omitted specifying the exact effect any violation of
the prohibition [on the co-mingling of supervisory and rank-andfile employees] would bring about on the legitimacy of a labor
organization.
It was the Rules and Regulations Implementing R.A. No. 6715 (1989
Amended Omnibus Rules) which supplied the deficiency by introducing
the following amendment to Rule II (Registration of Unions):
"Sec. 1. Who may join unions. - x x x Supervisory employees and
security guards 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; Provided, that
those supervisory employees who are included in an existing rank-andfile bargaining unit, upon the effectivity of Republic Act No. 6715, shall
remain in that unit x x x. (Emphasis supplied) and Rule V
(Representation Cases and Internal-Union Conflicts) of the Omnibus
Rules, viz:
"Sec. 1. Where to file. - A petition for certification election may be filed
with the Regional Office which has jurisdiction over the principal office
of the employer. The petition shall be in writing and under oath.
Sec. 2. Who may file. - Any legitimate labor organization or the
employer, when requested to bargain collectively, may file the petition.
The petition, when filed by a legitimate labor organization, shall
contain, among others:
xxxx

(c) description of the bargaining unit which shall be the employer

unit unless circumstances otherwise require; and provided
further, that the appropriate bargaining unit of the rank-and-file
employees shall not include supervisory employees and/or
security guards. (Emphasis supplied)
By that provision, any questioned mingling will prevent an otherwise
legitimate and duly registered labor organization from exercising its
right to file a petition for certification election.
Thus, when the issue of the effect of mingling was brought to the fore
in Toyota, the Court, citing Article 245 of the Labor Code, as amended
by R.A. No. 6715, held:
"Clearly, based on this provision, a labor organization composed of
both rank-and-file and supervisory employees is no labor organization
at all. It cannot, for any guise or purpose, be a legitimate labor
organization. Not being one, an organization which carries a
mixture of rank-and-file and supervisory employees cannot
possess any of the rights of a legitimate labor organization,
including the right to file a petition for certification election for the
purpose of collective bargaining. It becomes necessary,
therefore, anterior to the granting of an order allowing a
certification election, to inquire into the composition of any labor
organization whenever the status of the labor organization is
challenged on the basis of Article 245 of the Labor Code.
xxxx
In the case at bar, as respondent union's membership list contains the
names of at least twenty-seven (27) supervisory employees in Level
Five positions, the union could not, prior to purging itself of its
supervisory employee members, attain the status of a legitimate labor
organization. Not being one, it cannot possess the requisite personality
to file a petition for certification election." (Emphasis supplied)
In Dunlop, in which the labor organization that filed a petition for
certification election was one for supervisory employees, but in which
the membership included rank-and-file employees, the Court reiterated
that such labor organization had no legal right to file a certification
election to represent a bargaining unit composed of supervisors for as
long as it counted rank-and-file employees among its members.
It should be emphasized that the petitions for certification election
involved in Toyota and Dunlop were filed on November 26, 1992 and
September 15, 1995, respectively; hence, the 1989 Rules was applied
in both cases.
But then, on June 21, 1997, the 1989 Amended Omnibus Rules was
further amended by Department Order No. 9, series of 1997 (1997
Amended Omnibus Rules). Specifically, the requirement under Sec.
2(c) of the 1989 Amended Omnibus Rules that the petition for
certification election indicate that the bargaining unit of rank-and-file
employees has not been mingled with supervisory employees was
removed. Instead, what the 1997 Amended Omnibus Rules requires is
a plain description of the bargaining unit, thus:
Rule XI
Certification Elections
xxxx
Sec. 4. Forms and contents of petition. - The petition shall be in writing
and under oath and shall contain, among others, the following: x x x (c)
The description of the bargaining unit.
In Pagpalain Haulers, Inc. v. Trajano, the Court had occasion to uphold
the validity of the 1997 Amended Omnibus Rules, although the specific
provision involved therein was only Sec. 1, Rule VI, to wit:

"Section. 1. Chartering and creation of a local/chapter.- A duly

registered federation or national union may directly create a
local/chapter by submitting to the Regional Office or to the Bureau two
(2) copies of the following: a) a charter certificate issued by the
federation or national union indicating the creation or establishment of
the local/chapter; (b) the names of the local/chapter's officers, their
addresses, and the principal office of the local/chapter; and (c) the
local/ chapter's constitution and by-laws; provided that where the
local/chapter's constitution and by-laws is the same as that of the
federation or national union, this fact shall be indicated accordingly.
All the foregoing supporting requirements shall be certified under oath
by the Secretary or the Treasurer of the local/chapter and attested to
by its President."
which does not require that, for its creation and registration, a local or
chapter submit a list of its members.
Then came Tagaytay Highlands Int'l. Golf Club, Inc. v. Tagaytay
Highlands Employees Union-PGTWO in which the core issue was
whether mingling affects the legitimacy of a labor organization and its
right to file a petition for certification election. This time, given the
altered legal milieu, the Court abandoned the view
in Toyota and Dunlopand reverted to its pronouncement in Lopez that
while there is a prohibition against the mingling of supervisory and
rank-and-file employees in one labor organization, the Labor Code
does not provide for the effects thereof. Thus, the Court held that after
a labor organization has been registered, it may exercise all the rights
and privileges of a legitimate labor organization. Any mingling between
supervisory and rank-and-file employees in its membership cannot
affect its legitimacy for that is not among the grounds for cancellation
of its registration, unless such mingling was brought about by
misrepresentation, false statement or fraud under Article 239 of the
Labor Code.
In San Miguel Corp. (Mandaue Packaging Products Plants) v.
Mandaue Packing Products Plants-San Miguel Packaging ProductsSan Miguel Corp. Monthlies Rank-and-File Union-FFW, the Court
explained that since the 1997 Amended Omnibus Rules does not
require a local or chapter to provide a list of its members, it would be
improper for the DOLE to deny recognition to said local or chapter on
account of any question pertaining to its individual members.
More to the point is Air Philippines Corporation v. Bureau of Labor
Relations, which involved a petition for cancellation of union
registration filed by the employer in 1999 against a rank-and-file labor
organization on the ground of mixed membership: the Court therein
reiterated its ruling in Tagaytay Highlands that the inclusion in a union
of disqualified employees is not among the grounds for cancellation,
unless such inclusion is due to misrepresentation, false statement or
fraud under the circumstances enumerated in Sections (a) and (c) of
Article 239 of the Labor Code.
All said, while the latest issuance is R.A. No. 9481, the 1997 Amended
Omnibus Rules, as interpreted by the Court in Tagaytay
Highlands, San Miguel and Air Philippines, had already set the tone for
it. Toyota and Dunlop no longer hold sway in the present altered state
of the law and the rules.32 [Underline supplied]
The applicable law and rules in the instant case are the same as those
in Kawashima because the present petition for certification election
was filed in 1999 when D.O. No. 9, series of 1997, was still in effect.
Hence, Kawashimaapplies with equal force here. As a result, petitioner
union was not divested of its status as a legitimate labor organization
even if some of its members were supervisory employees; it had the
right to file the subject petition for certification election.
The legal personality of petitioner union cannot be collaterally attacked
by respondent company in the certification election proceedings.
Petitioner union correctly argues that its legal personality cannot be
collaterally attacked in the certification election proceedings. As we
explained in Kawashima:

Except when it is requested to bargain collectively, an employer is a

mere bystander to any petition for certification election; such
proceeding is non-adversarial and merely investigative, for the purpose
thereof is to determine which organization will represent the employees
in their collective bargaining with the employer. The choice of their
representative is the exclusive concern of the employees; the employer
cannot have any partisan interest therein; it cannot interfere with, much
less oppose, the process by filing a motion to dismiss or an appeal
from it; not even a mere allegation that some employees participating
in a petition for certification election are actually managerial employees
will lend an employer legal personality to block the certification
election. The employer's only right in the proceeding is to be notified or
informed thereof.
The amendments to the Labor Code and its implementing rules have
buttressed that policy even more.33
WHEREFORE, the petition is GRANTED. The March 15, 2005
Decision and September 16, 2005 Resolution of the Court of Appeals
in CA-G.R. SP No. 58203 are REVERSED and SET ASIDE. The
January 13, 2000 Decision of the Department of Labor and
Employment in OS-A-6-53-99 (NCR-OD-M-9902-019)
is REINSTATED.

Id. at 215-220.

Id. at 40-50.

Presidential Decree No. 442, as amended.

Rollo, pp. 52-54.

Id. at 75.

10

Id. at 36.

11

335 Phil. 1045 (1997).

12

Rollo, pp. 12-13.

13

443 Phil. 841 (2003).

14

Supra note 11.

15

No pronouncement as to costs.
SO ORDERED.
MARIANO C. DEL CASTILLO
Associate Justice

Upon reconsideration, the DOLE noted that the other

union which allegedly filed a prior petition for certification
election was prevented from doing so because its petition for
certification election was filed out of time. Thus, there was no
obstacle to the conduct of a certification election in
respondent company.
16

"An Act Strengthening the Workers Constitutional Right to

Self-Organization, Amending for the Purpose Presidential
Decree No. 442, as Amended, Otherwise Known as the
Labor Code of the Philippines."

WE CONCUR:
RENATO C. CORONA
Chief Justice
Chairperson
PRESBITERO J. VELASCO, TERESITA J. LEONARDO-DE
JR.
CASTRO
Associate Justice
Associate Justice
JOSE PORTUGAL PEREZ
Associate Justice

17

Republic v. Kawashima Textile Mfg., Philippines, Inc., G.R.

No. 160352, July 23, 2008, 559 SCRA 386,396.
18

"An Act to Extend Protection to Labor, Strengthen the

Constitutional Rights of Workers to Self-Organization,
Collective Bargaining and Peaceful Concerted Activities, and
Foster Industrial Peace and Harmony." Effective March 21,
1989.
19

Approved on May 24, 1989.

20

Effective: June 21, 1997.

21

Supra note 17 at 396-397.

22

504 Phil. 376 (2005).

23

Id. at 400.

24

DOLE records, p. 51.

25

Id. at 43-44.

26

Id. at 25-40.

CERTIFICATION
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 had been reached in consultation before the case
was assigned to the writer of the opinion of the Courts Division.
RENATO C. CORONA
Chief Justice

Footnotes
1

Rollo, pp. 29-36; penned by Associate Justice Estela M.

Perlas-Bernabe and concurred in by Associate Justices Elvi
John S. Asuncion and Hakim S. Abdulwahid.
2

Id. at 74-75.

Id. at 38.

Id. at 214-223.

27

Article 245. Ineligibility of Managerial Employees to Join

Any Labor Organization; Right of Supervisory Employees.
x x x Supervisory employees shall not be eligible for
membership in the collective bargaining unit of the rank-andfile employees but may join, assist or form separate
collective bargaining units and/or legitimate labor
organizations of their own. x x x
28

Supra note 11.

29

Respondent company claimed that the batchman, mill

operator and leadman perform, among others, the following
functions:
Prepares, coordinates and supervises work
schedules and activities of subordinates or helpers
in their respective area of responsibility.
1. Recommends the reduction, increase, transfer
and number of employees assigned to them.
2. Sees to it that daily production schedules and
outputs are carried on time.
3. Coordinates with their respective managers the
needed raw materials and the quality of finished
products. (Rollo, p. 220)
30

Article 212(m) of the Labor Code, states in part:

"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. x x x"
31

Supra note 17.

32

Id. at 402-407.

33

Id. at 408.
Republic of the Philippines
SUPREME COURT
Manila

(a) An existing collective bargaining contract for four years (1954-1958)

between the Acoje Mining Company hereinafter designated as the
Mining Company and the Pelta; and
(b) The Court had, under investigation, an unfair labor practice
complaint (Case No. 255-ULP) wherein the Mining Company stood
charge with having assisted in the organization of the workers Union
and of controlling the same.
The Mining Company admitted the existence of the Bargaining
Agreement; but in view of the pronouncements of this Court in PLDT
Employees Union vs. Philippine Long Distance Telephone Co., 91
Phil., 424, 51 Off. Gaz., 4519, it submitted the question whether the
existence of said Agreement could prevent the certification election,
since there had been "no certification election held during the twelve
months prior to the date of the present request of the employees."
By its motion of December 22, 1954, the Pelta, reiterating the points
mentioned in its answer, prayed that the holding of certification election
be held in abeyance. The Workers Union opposed; but the Court
ordered suspension, because it "had invariably suspended the
proceedings in certification election cases until after the termination of
the unfair labor practice cases alleging company domination."
Having failed in a move to reconsider, the employees took the matter
to this Court. This time they were joined, as petitioners, by the Workers
Union.
There is no question that, months before the presentation of the
employee's petition for election, to be more specific, on May 19,
1954, the Pelta complained to the Industrial Court that the Mining
Company had organized a company-dominated labor association
called Acoje United Workers Union; that it had performed several acts
of discrimination against workers of the Pelta even as it favored
members of the Workers Union, openly encouraging and urging its
laborers to join the latter.

ACOJE MINES EMPLOYEES and ACOJE UNITED WORKERS

UNION, petitioners-appellants,
vs.
ACOJE LABOR UNION (PELTA) and ACOJE MINING
CO., respondents-appellees.

There is no assertion that such complaint was flimsy, or made in bad

faith or filed purposely to form the certification election. So, no reason
existed for the Industrial Court to depart from its established practice of
suspending the election proceeding. And this seems to be accepted
rule in the law of labor relations, the reason being, in the words of Mr.
Justice Montemayor, if there is a union dominated by the company, to
which some of the workers belong, an election among workers and
employees of the company would not reflect the true sentiment and
wishes of the said workers and employees because the votes of the
members of the dominated union would not be free."1

Alberto O. Villaraza for appellants.

Eulalio B. Garcia for appellee Labor Union (PELTA).
Perkins and Ponce Enrile for appellee Mining Company.

And we have held, through Mr. Justice J. B. L. Reyes, that such charge
of company domination is a prejudicial question that until decided, shall
suspend or bar proceedings for certification election." 2

BENGZON, J.:

Indeed, if as a result of the Pelta's complaint in Case No. 255-ULP, the

Workers Union should be ordered dissolved3 as a company-dominated
union, any election held in the meantime would be a waste of energy
and money to all parties concerned.

EN BANC
G.R. No. L-11273

November 21, 1958

This petition for review involves the suspension of proceedings for

certification election. There are decisions squarely in point.
In case No. 288-MC of the Court of Industrial Relations, 334
employees of the Acoje Mines Inc., signed and submitted to that court
in August 1955, a petition for certification election, alleging that for the
six hundred and twenty employees in the corporation, there were two
legitimate labor organizations, namely, the Acoje United Workers
Union hereinafter called Workers Union and the Acoje Labor
Union (Pelta) hereinafter called Pelta and that an election was
necessary to choose the true representative of the employees for
purposes of collective bargaining.
The workers Union manifested its willingness to submit to election.
On the other hand, the Pelta objected, alleging among other defenses:

Petitioners herein take the position that once a petition for certification
election is submitted and signed by at least 10 per cent (10%) of all the
workers in the bargaining unit, it is mandatory upon the Court to order
a certification election with no exceptions. They quote section 12 (c)
of Republic Act 875, which reads as follows:
SEC. 12 (c). In an instance where a petition is filed by at
least ten percent of the employees in the appropriate unit
requesting an election, it shall be mandatory on the Court to
order an election for the purpose of determining the
representative of the employees the appropriate bargaining
unit.
The above command to the Court is not so absolute as it may appear
at first glance. The statute itself expressly recognizes one exception:

when a certification election had occurred within one year.4 And the
judicial and administrative agencies have found two exceptions: where
there is an unexpired bargaining agreement not exceeding two
years5 and when there is a pending charge of company-domination of
one of the labor unions intending to participate in the election.6

vs.
BUREAU OF LABOR RELATIONS (BLR) and SOUTHERN
PHILIPPINES FEDERATION OF LABOR (SPFL), respondents,
PACIFIC CEMENT COMPANY, INC. (PACEMCO), employer.
Hustino E. Horculada for petitioner.

Anent the contention that the Industrial Court's order amounted to a

curtailment of the rights of the majority, it is enough to point out that
petitioners have not yet shown, in an election, that they constitute the
majority; and as indicated by the decisions, the suspension was
decreed and desired precisely for the purpose of insuring that the
wishes of the majority of the workers freely exercising the right to vote,
shall be expressed without interference by the employer, without the
hindrances affecting a company-dominated association.
Wherefore, the Industrial Court acted prudently and legally in ordering
the suspension upon the ground already mentioned. And thus the
necessity is obviated of passing on the issue whether the existing
bargaining agreement of four years was another obstacle to the
certification election. The Mining Company, it may be noted,
expressing its neutrality upon the two questions in debate, asked for a
declaration of the continued effectivity until February 1958 of its
agreement with the Pelta, should a certification election be approved in
this Court.
Inasmuch as we decline to direct the holding of such election, and as
February 1958 has already come and gone, we find it unnecessary to
make the declaration prayed for.
Accordingly the petition for review is denied, with costs against
petitioners.
Paras, C. J., Padilla, Montemayor, Bautista Angelo, Labrador,
Concepcion, Reyes, J. B. L. and Endencia, JJ.,concur.

Footnote
1

Manila Paper Mills Employees vs. Court of Industrial

Relations, supra., p. 10.

Alfonso S. Casurra for respondent PACEMCO.

Fuentes Law Office for respondent SPFL.

CRUZ, J.:
Will the direct certification of a labor union as the exclusive bargaining
agent of the workers preempt and preclude the calling of a certification
election on petition of another labor union in the same establishment?
The direct certification was obtained on Jane 6, 1986, by the petitioner
in this case, the National Association of Free Trade Unions (NAFLUTUCP), on the strength of its allegation, as confirmed by the medarbiter, that there was no other labor union requesting recognition as
representative of the workers in their negotiations with the
management of the Pacific Cement Co. (PACEMCO). 1 On June 20,
1986, however, and also within the freedom period, the Southern
Philippines Federation of Labor (SPFL), the private respondent herein,
filed a petition for certification election signed by 168 workers,
representing over 60% of the total number of rank-and-filers of the
company. 2 NAFTU, as forced intervenor, opposed the petition,
invoking its own earlier direct certification, but on August 11, 1986, the
med-arbiter who had granted the same reversed his previous order
and authorized the holding of the certification election. 3 On appeal, his
order was sustained by the Bureau of Labor Standards, which held that
the certification election was justified under the circumstances, adding
that the workers had the constitutional right to choose the labor union
to represent them in negotiating with the management. 4 Its motion for
reconsideration having been denied, the petitioner then came to this
Court to ask for the reversal of the resolution of the public respondent
dated October 24, 1986, on the ground that it was reached with grave
abuse of discretion correctible by writ of certiorari.
The original Article 257 of the Labor Code provided as follows:

Standard Cigarette Workers Union vs. Court of Industrial

Relations, 53 Off. Gaz., 5216.
3

Sec. 23 (d) Republic Act 875.

Sec. 12 (b) Republic Act 875.

Where in view of the nature of the business such term is

found to be reasonable. PLDT Employees Union vs. Phil.
Long Distance, supra.
6

Manila Paper Mills, supra. Standard Cigarette, supra.

Unless the same Union that charged the company with
unfair labor practice, insists in holding election despite
pendency of such charge.
Republic of the Philippines
SUPREME COURT
Manila

ART. 257. Procedure governing representation

issues. When a question concerning the
representation of employees is submitted to the
Ministry, a Med-Arbiter shall hear and decide such
controversy and certify to the parties in writing the
name of the labor organization that has been
designated or selected by the majority of the
workers in the appropriate bargaining unit as the
exclusive bargaining agent. If there is any
reasonable doubt as to which union the
employees have chosen as their representative for
the purpose of collective bargaining, the MedArbiter shall order an election by secret ballot to
be conducted by the Ministry to ascertain the
freely chosen representative of the employees
concerned, under such rules and regulations as
the Ministry may prescribe, at which election
representatives of the contending parties shall
have the right to act as inspectors. The labor union
receiving the majority of the valid votes cast shall
be certified as the exclusive bargaining
representative of the workers.

FIRST DIVISION
G.R. No. 77818 August 3, 1988
NATIONAL ASSOCIATION OF FREE TRADE UNIONS (NAFLUTUCP), petitioner,

The petitioner contends that having been directly certified by the medarbiter as the exclusive bargaining representative of the workers, it
cannot now be replaced through the certification election, which was
not validly called under the above provision. It stresses that the first
method of choosing such representation is by direct certification and,
once employed, can no longer be undone by the certification election

which, as the exception to the rule, should be applied only when there
is a reasonable doubt on the real choice of the laborers as their
negotiating agent. In the view of the petitioner, there is no such
reasonable doubt to justify reversal of the med-arbiter's order of June
6, 1986.
For its part, the private respondent invokes the support of the 168
workers who had signed the petition for certification election, including
some of those who had earlier supposedly manifested their confidence
in the petitioner union, and argues that such change of support
demonstrates the need for the holding of a certification election as
required by the said article. This election will erase once and for all the
reasonable doubt as to the real choice of the union that will represent
the workers in the negotiation of the new collective bargaining
agreement with PACEMCO, besides giving the workers the freedom to
which they are entitled in making this choice.
Assuming that the original provisions of Article 257 are still applicable
in this case, the Court inclines to the position taken by the private
respondent as more conformable to the language and spirit of the said
law. This rule precisely called for the holding of a certification election
whenever there appeared to be a reasonable doubt as to whether or
not the union directly certified had really been chosen by the majority
of the workers as their exclusive bargaining representative. Such was
the situation in the case at bar. Moreover, a certification election is a
more acceptable method than direct certification, which under the
provisions of the aforementioned article, should be resorted to only
where there was no doubt that the union so certified had the full or at
least the majority support of the workers.
In the instant case, we find that the manifestation made by most of the
workers in favor of NAFTU was later questioned on the ground that it
was obtained through the suspicious grant of a food subsidy to the
signatories. 5This was denied by the petitioner, which claimed that the
said manifestation was spontaneous and voluntary. At any rate,
whether true or not, the charge generated the reasonable doubt that
justified the med-arbiter in reversing his previous direct certification of
the petitioner and in authorizing the holding of a certification election
instead.
It is noteworthy that since this case arose in 1986, an important
change has been made in Article 257. By virtue of Executive Order No.
111, which became effective on March 4,1987, the direct certification
originally allowed in this article has apparently been discontinued as a
method of selecting the exclusive bargaining agent of the workers. This
amendment affirms the superiority of the certification election over the
direct certification which, assuming it was validly made in favor of the
petitioner in 1986, is no longer available to it now under the change in
the said provision. The new rule as amended by the executive order
now reads as follows:
ART. 256. Representation issues on organized
establishments. In organized establishments,
when a petition questioning the majority status of
the incumbent bargaining agent is filed before the
Ministry within the sixty-day period before the
expiration of the collective bargaining agreement,
the Med-Arbiter shall automatically order an
election by secret ballot to ascertain the will of the
employees in the appropriate bargaining unit. To
have a valid election, at least a majority of all
eligible voters in the unit must have cast their
votes. The labor union receiving the majority of the
valid votes cast shall be certified as the exclusive
bargaining agent of all the workers in the unit.
When an election which provides for three or more
choices results in no choice receiving a majority of
the valid cast, a run-off election shall be conducted
between the choices receiving the two highest
number of votes.

did not attend the pre-election conferences and did not participate in
the said election after its motion to reset it was denied. It now says the
election should not have been held because this petition was pending
with the Court, although we had not issued any restraining order. It
assumes too much, of course. In any event, after it was ascertained
that the SPFL had obtained 201 of the 212 votes cast at the
certification election, it was accordingly certified by the public
respondent as the exclusive bargaining agent of the workers. As such,
it thereafter negotiated and finally concluded a collective bargaining
agreement with PACEMCO on September 15, 1987, which contract is
now in force. 7 This is a fait accompli that has rendered this case moot
and academic.
It remains to stress, as we have repeatedly declared in earlier
decisions, that the certification election is the most democratic and
expeditious method by which the laborers can freely determine the
union that shall act as their representation in their dealings with the
establishment where they are working. Any union sure of the support
of the workers should have no reason to resist the holding of a
certification election where it can expect a vote of confidence from
them for its efforts and ability to improve their interests.
WHEREFORE, the petition is DISMISSED, with costs against the
petitioner.
SO ORDERED.
Narvasa, Gancayco, Grio-Aquino and Medialdea, JJ., concur.

Footnotes
1 Rollo, pp. 29-30.
2 Ibid., pp. 42-43.
3 Id., pp. 42-45.
4 Id., pp. 61-63.
5 Id., pp. 36-37.
6 Id., p. 161.
7 Id., pp. 116-130.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-51602 January 17, 1985
GEORGE & PETER LINES, INC., petitioner,
vs.
ASSOCIATED LABOR UNIONS (ALU) HON. CARMELO NORIEL,
DIRECTOR, BUREAU OF LABOR RELATIONS, MINISTRY OF
LABOR, respondents.
Manuel B. Pastrana for petitioner.
Gerardo E. Gestopa Jr. for private respondent.

Additionally, the record discloses that the certification election ordered

by the med-arbiter and sustained by the Bureau of Labor Relations
was actually held on March 9, 1987, resulting in the victory of private
respondent SPFL.6 Despite notices duly received by it, the petitioner

MELENCIO-HERRERA, J.:
Petitioner George and Peter Lines, Incorporated, is a domestic
corporation engaged in shipping, while respondent Associated Labor
Unions (ALU) is a legitimate labor organization duly registered with the
Ministry of Labor.
On July 6, 1978, a Petition for Direct Certification was filed by
respondent ALU with Region VII, Cebu City, of the Ministry of Labor,
praying that it be certified as the sole and exclusive bargaining
representative of all the rank and file employees of petitioner
corporation there being no labor union organized thereat.
Petitioner corporation OPPOSED the petition stating that respondent
Union does not represent the majority of the employees concerned;
and that more than 80% of the licensed and unlicensed crew of its
vessels claim that they are not members of any union and have no
desire to join any. It then filed on August 17, 1978, a Petition for
Certification Election to determine once and for all whether the
employees concerned wanted respondent ALU to be their sole
bargaining representative.
On August 25, 1978, the Med-Arbiter issued an Order directly certifying
respondent ALU as the sole and exclusive bargaining agent of the
licensed and unlicensed employees of petitioner corporation, opining
that the majority membership status of any union is determined before
or at the time of filing of the petition and not thereafter, otherwise, the
union can be ousted anytime.
Petitioner corporation moved for reconsideration alleging that the
employees concerned, consisting of about 80%, denied their
membership with respondent Union, and that a certification election
should be called in the interest of fairness and justice.
The entire records of the case were forwarded to the Director of the
Bureau of Labor Relations. On February 5, 1979, the BLR Director
modified the Order of August 25, 1978 by directing a certification
election among the rank and file employees of petitioner corporation.
Reconsideration sought by respondent Union was denied by the BLR
Director on May 31, 1979, on the ground that there exists a doubt
regarding the majority status of respondent ALU because of the
withdrawal of membership by the workers, and directing the Labor
Relations Division of the Regional Office of origin to hold a pre-election
conference, and to conduct the certification election.

80% of the employees concerned, retracting their membership from

said union, was submitted by them to the MOLE. Respondent Union
submits, however, that the employees were merely pressured by
management into withdrawing their membership. On the other hand,
petitioner corporation argues that the retraction by the employees cast
a serious doubt on the alleged majority representation of the Union. In
ultimately resolving the issue in the Union's favor, public respondent
held that the withdrawal of membership from the Union subsequent to
the filing of the petition for direct certification did not affect the same
nor did it divest it of its jurisdiction to take cognizance of the petition.
We find for petitioner.
The employees have the constitutional right to choose the labor
organization which it desires to join. 1 The exercise of such right would
be rendered nugatory and ineffectual if they would be denied the
opportunity to choose in a certification election, which is not a litigation,
but a mere investigation of a non-adversary character, 2the bargaining
unit to represent them. 3 The holding of a certification election is a
statutory policy that should not be circumvented. 4
As the right of respondent Union to represent the employees is
seriously put in doubt by the withdrawal of 80% of the membership,
which the Union claims to be involuntary, the best forum to determine if
there was, indeed, undue pressure exerted upon the employees to
retract their membership is in the certification election itself, wherein
they can freely express their choice in a secret ballot. 5 Certification
election is the best and most appropriate means of ascertaining the will
of the employees as to their choice of an exclusive bargaining
representative. 6 That there are no competing Unions involved should
not alter that principle, the freedom of choice by the employees being
the primordial consideration besides the fact that the employees can
still choose between ALU and No Union. Even if the withdrawals of the
employees concerned were submitted after the Petition for direct
certification had been filed, the doubt as to the majority representation
of the Union has arisen and it is best to determine the true sentiment of
the employees through a certification election. If respondent Union is
confident that it commands the majority of the workers, there is no
reason why it should object to the holding of a certification election.
WHEREFORE, the assailed Decision of August 17, 1979 is hereby
SET ASIDE. The Regional Office concerned of the Ministry of Labor
and Employment is hereby directed to cause the holding of a
certification election within thirty (30) days from notice.
SO ORDERED.

Respondent Union, in its Second Motion for Reconsideration, argued

that public respondent erred in finding its majority status doubtful as
the same was proven during the hearing of the case before the MedArbiter.
The BLR Director, in its questioned Decision of August 13, 1979,
reconsidered its Resolution of May 31, 1979, and directly certified
respondent ALU as the sole bargaining age it of all the rank and file
employees of petitioner corporation Thus, this Petition for certiorari
wherein petitioner seeks to set aside the said Decision, posing the
following issues.
(1) Did the Director of the Bureau of Labor
Relations of the Ministry of Labor commit grave
abuse of discretion by abruptly reversing his two
previous resolutions for the holding of a
certification election?

Teehankee (Chairman), Plana, Relova, Gutierrez, Jr. and De la

Fuente, JJ., concur.

Footnotes
1 FOITAF vs. Noriel 72 SCRA 24 [1976].
2 Air Line Pilots Association of the Philippines vs.
CIR, 76 SCRA 274 [1977].
3 NAMAWUMIF vs. Estrella, 87 SCRA 84 [1978].
4 ATU vs. Noriel 89 SCRA 264 [1979].

(2) Are petitioner's employees entitled to choose

their sole and exclusive bargaining representative
with petitioner thru a certification election? and
(3) Is petitioner entitled to file the petition for
certification election?
It is not disputed that after the filing of the petition for direct certification
by respondent Union, a written manifestation duly signed by about

5 FOITAF vs. Noriel, supra.

6 National Mines & Allied Workers Union vs. Luna,
83 SCRA 607 [1978]; Consolidated Farms. Inc.,
vs. Noriel, 84 SCRA 469 [1978].

Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. L-45323 February 20, 1989
PHILIPPINE ASSOCIATION OF FREE LABOR UNIONS (PAFLU)
LUZANO, petitioner,
vs.
HON. FRANCISCO L. ESTRELLA, Acting Director of the Bureau of
Labor Relations, and/or Chief of Labor Appeals Review Staff, and
ASSOCIATED LABOR UNIONS (ALU), respondents.
Salvador and Rola, Jr. for petitioner.
The Solicitor General for public respondent.

Nonetheless, on July 22, 1975, the Bureau

affirmed the Med-Arbiter's order, ruling that the
alleged contract could not bar the election
because at the time it was approved, a
representation question was pending resolution.
Pre-election conference was then ordered.
On October 22, 1975, ALU filed a motion for
clarification praying that PAFLU be excluded from
the list of unions to be voted on. On December 3,
1975, the Bureau passed upon the motion and
announced that no further motion shall be
entertained. On December 23, 1975, ALU
appealed to the Secretary of Labor. Directed to
treat the same as a motion to reconsider, the
Bureau dismissed the appeal on February 27,
1976.
Pursuant to the order, a certification election was
held on June 30, 1976 yielding the following
results:

Januario T. Seno for Associated Labor Unions.

RESOLUTION

FELICIANO, J.:
The present Petition for Certiorari, filed with this Court on 4 January
1977, is directed at the Resolution dated 16 December 1976 of the
Bureau of Labor Relations, in BLR Case No. 0314. That case
originated from a Petition for Certification Election (docketed as Case
No. 333-MC-CEBU) filed with the former Court of Industrial Relations,
Cebu Branch, by petitioner Philippine Association of Free Labor
Unions-Luzano ("PAFLU").
The facts are stated in the Resolution sought to be nullified:
On March 26, 1968, the Philippine Association of
Free Labor Unions (PAFLU) filed with the Court of
Industrial Relations a petition for certification
election at Visayan Glass Factory, Inc. The Cebu
Central Union of the Philippines (CCLUP) moved
to intervene. On the other hand, ALU moved to
dismiss on the ground that it had then a collective
agreement with the company which would expire
on May 31, 1968. The latter motion was denied.
The case, however, dragged on, and on May 20,
1968, ALU renewed the contract, this time expiring
on May 31, 1971. ALU again moved to dismiss the
petition. Even so, the case remained unresolved
and on November 25,1971, a new contract
expiring on May 31, 1974 was again concluded.

PAFLU 214 votes

ALU 75 votes
CCUP 3 votes
NO UNION 3 votes
On July 14, 1976, ALU filed an election protest
contending that the election was void because its
contract (i.e., the collective bargaining agreement
with the company) was allegedly ratified by the
employees and approved by the National Labor
Relations Commission on April 11, 1975, and
therefore barred the election held long after.
On October 7, 1976, this Bureau dismissed the
protest, standing firm on its previous orders. It
therefore certified PAFLU-Luzano as the exclusive
bargaining agent of the employees.
On November 9, 1976, ALU repaired to the
Secretary of Labor who, in turn, directed this
Office to consider the same as a motion for
reconsideration.
On 16 December 1976, however, public respondent Francisco L.
Estrella, then Acting Director of the Bureau of Labor Relations ("BLR"),
issued the assailed Resolution, 1 the dispositive portion of which read:
WHEREFORE, the election protest is hereby
sustained, and all previous orders of this Bureau in
this case are hereby set aside.
SO ORDERED.
The above conclusion was rationalized in the following terms:

On January 16,1975, the unresolved case was

transferred to this Office pursuant to the provisions
of the Labor Code. On March 3, 1975, the MedArbiter called a certification election.
On March 14,1975, ALU appealed to this Office
alleging that its contract of November 25, 1971 still
subsisted because of its automatic renewal
clause. On April 26, 1975, it filed a motion to
dismiss alleging that it had negotiated a new
contract on April 5,1975 which the National Labor
Relations Commission approved on April 11; the
contract would expire on April 4, 1979.

After thorough consideration of the issues raised

and the arguments adduced, this Office [is]
convinced that it should regard the protest with a
more sympathetic mind. Indeed, the contract
which ALU executed with the company was
approved by the National Labor Relations
Commission way back on April 11, 1975. That
approval already amounts to a certification by this
Bureau itself. It therefore bars a certification
election as would a certification by this Bureau of a
collective agreement in accordance with Article
230 of the Labor Code. For certainly, it would be
unwise for this Bureau to annul an official act of
the Commission. Yet, that would precisely be the
result if the Bureau certify PAFLU and throw open

once more the bargaining negotiations which were

already put to rest by the Commission when it
approved the contract concluded by ALU with the
company, from which the employees have since
drawn untold benefits without complaints. That an
election was held notwithstanding is quite
unfortunate because it was clearly a nullity from
the start. The Bureau should not compound its
error by attaching undeserved weight to the
results.

the benefits offered thereunder. In other words,

the fairness of the agreement has not here been
put in issue. What must be resolved, however, is
which union-petitioner PAFLU or private
respondent ALU-has the exclusive right to
represent the workers of the Visayan Glass
Factory, Inc. for the purpose of collective
bargaining with company management. In this
respect, the record clearly shows that the workers
of the company, in the certification election held on
30 June 1976, had chosen petitioner PAFLU to be
their bargaining representative. The will of the
workers having been unequivocally and freely
expressed, it is the duty of this Court, as well as of
all other agencies concerned, to give life and
meaning to rather than subvert that will.

The Resolution dated 16 December 1976 of the public respondent

Acting Director of the BLR must be set aside.
1. The Med-Arbiter was not in error in issuing an
order calling for a certification election at the
Visayan Glass Factory, Inc. Neither was the BLR
in error when, on 22 July 1975, it affirmed such
order of the Med-Arbiter. In this respect, Article
257 of the Labor Code (as it then stood) provides:
Art. 257. Requisites for certification election.-Any
petition for certification election filed by any
legitimate labor organization shall be supported by
the written consent of at least thirty percent (30%)
of all the employees in the bargaining unit. Upon
receipt and verification of such petition, it shall be
mandatory for the Bureau to conduct a certification
election for the purpose of determining the
representative of the employees in the appropriate
bargaining unit and certify the winner as the
exclusive collective bargaining representative of all
the employees in the unit. (Emphasis supplied)
It does not appear from the record of this case that the Petition for
Certification Election filed by petitioner PAFLU on 26 March 1968, did
not satisfy the requirements stated in the above provision. On the
contrary, the Med-Arbitrer found as a matter of fact that said petition
was supported by at least 30% of all company employees.
Consequently, it was mandatory upon the BLR to grant the petition
and, thereafter, to conduct certification elections at the Visayan Glass
Factory, Inc. 2
Private respondent ALU would, however, invoke the "contract bar rule"
and argue that the renegotiation on 5 April 1975 of a collective
bargaining agreement between private respondent ALU and the
company management rendered the certification election held at the
Visayan Glass Factory, Inc. on 30 June 1976 a nullity. The argument is
not persuasive. First of all, it is the 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. 3 It is
noteworthy that the BLR did not certify the 5 April 1975 collective
bargaining agreement here in question. Second, even assuming
(though merely arguendo) that approval of said agreement by the
NLRC on 11 April 1975 had the same effect as certification by the
BLR, nevertheless, such approval did not quash, as it were, petitioner
PAFLUs Petition for Certification Election which had then remained
pending with the BLR for more than seven (7) years, such petition
having been filed as early as March of 1968. To hold otherwise would
be to create an incentive for labor unions or employers to block the
expeditious disposition of petitions for certification elections which are,
after all, the mechanisms through which the choice of the workers of
their own representatives is ascertained.
2. It does not follow as a matter of course that
reversal of the BLR's Resolution of 16 December
1976 necessarily results in nullification of an
"official act" of the NLRC: the collective bargaining
agreement executed between private respondent
ALU and the company management in April of
1975 need not be disturbed, especially
considering that the substantive terms and
conditions thereof bad not once been assailed,
whether by labor or management, and that the
employees of the company had in fact availed of

It remains only to note that what the Court is here saying is that
petitioner PAFLU was entitled to be certified as the exclusive
bargaining representative of the employees at the Visayan Glass
Factory, Inc. as of December 1976. The Court is not informed of
developments concerning the representation of those employees after
12 August 1977, the date of the last pleading filed with the Court by the
parties in this case. This Resolution must therefore be regarded as
subject to such subsequent developments, e.g., a subsequent election
resulting in the certification of some other union as exclusive
bargaining representative of Visayan Glass employees.
ACCORDINGLY, the Petition for certiorari is GRANTED. The
Resolution dated 16 December 1976 of the Acting Director of the
Bureau of Labor Relations in BLR Case No. 00314, is hereby SET
ASIDE. This Resolution is immediately executory. No pronouncement
as to costs.
Fernan, C.J., Gutierrez, Jr., Bidin and Cortes, JJ., concur.

Footnotes
1 Id., pp. 72-73.
2 Article 257, Labor Code (1976 ed., supra).
National Organization of Trade Unions (NORTU)
v. Secretary of Labor 90 SCRA 463 (1979; and
Federacion Obrera de la Industria Tabaquera y
Otros Trabajadores de Filipinos (FOITAFAssociated Anglo American Chapter) v. Noriel, 72
SCRA 24 (1976).
3 Chrysler Philippines Labor Union (CPLU) v.
Estrella, 86 SCRA 338 (1978); Firestone Tire &
Rubber Company Employees Union v. Estrella, 81
SCRA 49 (1978); and Foamtex Labor UnionTupas v. Noriel,72 SCRA 371(1976).See Article
230 of the Labor Code (1976 Ed.). See also Book
V, Rule IX, Sec. 3 of the Rules and Regulations
Implementing the Labor Code (1976 ed.).
Republic of the Philippines
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.

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.

PURISIMA, J.:

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.

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 nostrike clause, with prayer for the issuance of a temporary restraining
order.
The antecedent facts are as follows:
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 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.
6

On December 21, 1990, petitioner SMC filed a complaint 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 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 illmotivated, 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 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.

LUZON MAGNOLIA SALES LABOR UNIONINDEPENDENT, respondents.

Siguion Reyna, Montecillo & Ongsiako for petitioner.
E.N.A. Cruz & Associates for private respondent.

SO ORDERED.
Romero and Gonzaga-Reyes, JJ., concur.
PUNO, J.:
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.

Petitioner San Miguel Corporation (SMC) prays that the Resolution

dated March 19, 1991 and the Order dated April 12, 1991 of public
respondent Undersecretary Bienvenido E. Laguesma declaring
respondent union as the sole and exclusive bargaining agent of all the
Magnolia sales personnel in northern Luzon be set aside for having
been issued in excess of jurisdiction and/or with grave abuse of
discretion.
On June 4, 1990, the North Luzon Magnolia Sales Labor Union
(respondent union for brevity) filed with the Department of Labor a
petition for certification election among all the regular sales personnel
of Magnolia Dairy Products in the North Luzon Sales Area. 1
Petitioner opposed the petition and questioned the appropriateness of
the bargaining unit sought to be represented by respondent union. It
claimed that its bargaining history in its sales offices, plants and
warehouses is to have a separate bargaining unit for each sales office.
The petition was heard on November 9, 1990 with petitioner
being represented by Atty. Alvin C. Batalla of the Siguion Reyna law
office. Atty. Batalla withdrew petitioner's opposition to a certification
election and agreed to consider all the sales offices in northern Luzon
as one bargaining unit. At the pre-election conference, the parties
agreed inter alia, on the date, time and place of the consent election.
Respondent union won the election held on November 24, 1990. In an
Order dated December 3, 1990, 2 Mediator-Arbiter Benalfre J. Galang
certified respondent union as the sole and exclusive bargaining agent
for all the regular sales personnel in all the sales offices of Magnolia
Dairy Products in the North Luzon Sales Area.
Petitioner appealed to the Secretary of Labor. It claimed that
Atty. Batalla was only authorized to agree to the holding of certification
elections subject to the following conditions: (1) there would only be
one general election; (2) in this general election, the individual sales
offices shall still comprise separate bargaining units. 3

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.

In a Resolution dated March 19, 1991, 4 public respondent, by authority

of the Secretary of Labor, denied SMC's appeal and affirmed the Order
of the Med- Arbiter.
Hence this petition for certiorari.

14 Dangan vs. NLRC et al., 127 SCRA 706, p. 713.

Petitioner claims that:
15 Complaint; Annex "A"; Rollo, p. 54.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION

THE HONORABLE UNDERSECRETARY

LAGUESMA ACTED WITH GRAVE ABUSE OF
DISCRETION WHEN HE IGNORED AND
TOTALLY DISREGARDED PETITIONER'S VALID
AND JUSTIFIABLE GROUNDS WHY THE
ERROR MADE IN GOOD FAITH BY
PETITIONER'S COUNSEL BE CORRECTED,
AND INSTEAD RULED:
A

G.R. No. 100485 September 21, 1994

SAN MIGUEL CORPORATION, petitioner,
vs.
THE HONORABLE BIENVENIDO E. LAGUESMA and NORTH

THAT PRIVATE
RESPONDENT IS "THE
SOLE AND EXCLUSIVE
BARGAINING AGENT FOR

ALL THE REGULAR SALES

OFFICES OF MAGNOLIA
DAIRY PRODUCTS, NORTH
LUZON SALES AREA",
COMPLETELY IGNORING
THE ESTABLISHED
BARGAINING HISTORY OF
PETITIONER SMC.
B
THAT PETITIONER IS
ESTOPPED FROM
QUESTIONING THE
"AGREEMENT" ENTERED
INTO AT THE HEARING ON
9 NOVEMBER 1990, IN
CONTRAVENTION OF THE
ESTABLISHED FACTS OF
THE CASE AND THE
APPLICABLE LAW ON THE
MATTER.
We find no merit in the petition.
The issues for resolution are: (1) whether or not respondent union
represents an appropriate bargaining unit, and (2) whether or not
petitioner is bound by its lawyer's act of agreeing to consider the sales
personnel in the north Luzon sales area as one bargaining unit.
Petitioner claims that in issuing the impugned Orders, public
respondent disregarded its collective bargaining history which is to
have a separate bargaining unit for each sales office. It insists that its
prior collective bargaining history is the most persuasive criterion in
determining the appropriateness of the collective bargaining unit.

Petitioner cannot insist that each of the sales office of Magnolia should
constitute only one bargaining unit. What greatly militates against this
position is the meager number of sales personnel in each of the
Magnolia sales office in northern Luzon. Even the bargaining unit
sought to be represented by respondent union in the entire north
Luzon sales area consists only of approximately
fifty-five (55) employees. 9 Surely, it would not be for the best interest
of these employees if they would further be fractionalized. The adage
"there is strength in number" is the very rationale underlying the
formation of a labor union.
Anent the second issue, petitioner claims that Atty. Batalla was merely
a substitute lawyer for Atty. Christine Ona, who got stranded in Legaspi
City. Atty. Batalla was allegedly unfamiliar with the collective
bargaining history of its establishment. Petitioner claims it should not
be bound by the mistake committed by its substitute lawyer.
We are not persuaded. As discussed earlier, the collective bargaining
history of a company is not decisive of what should comprise the
collective bargaining unit. Insofar as the alleged "mistake" of the
substitute lawyer is concerned, we find that this mistake was the direct
result of the negligence of petitioner's lawyers. It will be noted that Atty.
Ona was under the supervision of two (2) other lawyers, Attys. Jacinto
de la Rosa, Jr. and George C. Nograles. There is nothing in the
records to show that these two (2) counsels were likewise unavailable
at that time. Instead of deferring the hearing, petitioner's counsels
chose to proceed therewith. Indeed, prudence dictates that, in such
case, the lawyers allegedly actively involved in SMC's labor case
should have adequately and sufficiently briefed the substitute lawyer
with respect to the matters involved in the case and the specific limits
of his authority. Unfortunately, this was not done in this case. The
negligence of its lawyers binds petitioner. As held by this Court in the
case of Villa Rhecar Bus v. De la Cruz: 10
. . . As a general rule, a client is bound by the
mistakes of his counsel. Only when the application
of the general rule would result in serious
injustice should an exception thereto be called for.

There is no merit in the contention.

A bargaining unit is a "group of employees of a given employer,
comprised of all or less than all of the entire body of employees,
consistent with equity to the employer, indicate to be the best suited to
serve the reciprocal rights and duties of the parties under the collective
bargaining provisions of the law." 5
The fundamental factors in determining the appropriate collective
bargaining unit are: (1) the will of the employees (Globe Doctrine); 6 (2)
affinity and unity of the employees' interest, such as substantial
similarity of work and duties, or similarity of compensation and working
conditions (Substantial Mutual Interests Rule); (3) prior collective
bargaining history; and (4) similarity of employment status. 7
Contrary to petitioner's assertion, this Court has categorically ruled that
the existence of a prior collective bargaining history is neither decisive
nor conclusive in the determination of what constitutes an appropriate
bargaining unit. 8
Indeed, 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 perform.
In the case at bench, respondent union sought to represent the sales
personnel in the various Magnolia sales offices in northern Luzon.
There is similarity of employment status for only the regular sales
personnel in the north Luzon area are covered. They have the same
duties and responsibilities and substantially similar compensation and
working conditions. The commonality of interest among he sales
personnel in the north Luzon sales area cannot be gainsaid. In fact, in
the certification election held on November 24, 1990, the employees
concerned accepted respondent union as their exclusive bargaining
agent. Clearly, they have expressed their desire to be one.

In the case at bench, petitioner insists that each of the sales offices in
northern Luzon should be considered as a separate bargaining unit for
negotiations would be more expeditious. Petitioner obviously chooses
to follow the path of least resistance. It is not, however, the
convenience of the employer that constitutes the determinative factor
in forming an appropriate bargaining unit. Equally, if not more
important, is the interest of the employees. In choosing and crafting an
appropriate bargaining unit, extreme care should be taken to prevent
an employer from having any undue advantage over the employees'
bargaining representative. Our workers are weak enough and it is not
our social policy to further debilitate their bargaining representative.
In sum, we find that no arbitrariness or grave abuse of discretion can
be attributed to public respondents certification of respondent union as
the sole and exclusive bargaining agent of all the regular Magnolia
sales personnel of the north Luzon sales area.
WHEREFORE, premises considered, the challenged Resolution and
Order of public respondent are hereby AFFIRMED in toto, there being
no showing of grave abuse of discretion or lack of jurisdiction.
SO ORDERED.
Narvasa, C.J., Regalado and Mendoza, JJ., concur.
Padilla, J., took no part.

#Footnotes

1 The Magnolia North Luzon Sales Area covers

San Fernando, Pampanga, Cabanatuan City,

Olongapo City, Poro Point, La Union, Baguio City,

Dagupan City, Laoag City and Ilagan, Isabela.
2 Annex "K", Petition, Rollo, pp. 94-97.
3 See Appeal, Annex "L", Petition, Rollo, pp. 98103, at p. 101.
4 Annex "A", Petition, Rollo, pp. 30-36.
5 U.P. v. Ferre-Calleja, G.R. No. 96189, July 14,
1992, 211 SCRA 451; Belyca Corporation v.
Ferrer-Calleja, G.R. No. L-77395, November 29,
1988, 168 SCRA 184; both cases citing
Rothenberg in Labor Relations, at p. 482.
6 Mechanical Department Labor Union Sa
Philippine National Railways v. Court of Industrial
Relations, No. L-28223, August 30, 1968, 24
SCRA 925.
7 Rothenberg on Labor Relations, pp. 482-510.
8 Free Trade Unions v. Mainit Lumber
Development Company Workers Union,
G.R. No. 79526, December 21, 1990, 192 SCRA
598.
9 See Petition for Certification Election, Annex "C",
Petition, Rollo, at p. 39.
10 No. L-78936, January 7, 1988, 157 SCRA 13.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION

G.R. No. 111809 May 5, 1997

MINDANAO TERMINAL AND BROKERAGE SERVICE,
INC. petitioner,
vs.
HON. MA. NIEVES ROLDAN-CONFESSOR, in her capacity as
Secretary of Labor and Employment, and ASSOCIATED LABOR
UNIONS (ALU-TUCP), respondents.

MENDOZA, J.:
This is a petition for certiorari to set aside the order of respondent
Honorable Secretary of Labor and Employment, declaring (1) wage
increases granted by petitioner to its employees not creditable as
compliance by the company with future mandated wage increases; and
(2) the increases to be retroactive, in the case of the fourth year wage
increase, to August 1, 1992 to be implemented until July 31, 1993 and,
in the case of the fifth year wage increase, to August 1, 1993 to be
implemented until the expiration of the CBA on July 31, 1994.
Petitioner Mindanao Terminal and Brokerage Service, Inc., (hereafter
referred to as the Company) and respondent Associated Labor Unions,
(hereafter referred to as the Union) entered into a collective bargaining
agreement for a period of five (5) years, starting on August 1, 1989,
and ending July 31, 1994.

On the third year of the CBA on August 1, 1992, the Company and the
Union met to renegotiate the provisions of the CBA for the fourth and
fifth years. The parties, however, failed to resolve some of their
differences, as a result of which a deadlock developed.
On November 12, 1992, a formal notice of deadlock was sent to the
Company on the following issues: wages, vacation leave, sick leave,
hospitalization, optional retirement, 13th month pay and signing bonus.
On November 18, 1992, the Company announced a cost-cutting or
retrenchment program.
Charging unfair labor practice and citing the deadlock in the
negotiations, the Union filed, on December 3, 1992, a notice of strike
with the National Conciliation and Mediation Board (NCMB).
On December 18, 1992, as a result of a conference called by the
NCMB, the Union and the Company went back to the bargaining table
and agreed on the following provisions:
a. Wage Increase (Article V, Section 2, CBA)
P3.00/day for the fourth year of the CBA and
P3.00/day for the fifth year of the CBA;
b. Vacation and Sick Leaves (Article VII, Section
1(c), CBA) 1,100 hours of aggregate service
instead of the existing 1,500 hours within a year to
be entitled to leave benefits but subject to
reversion to the previous CBA if majority of the
gangs average eight (8) vessels a month;
c. Hospitalization (Article VIII, Section I, CBA)
Maximum aggregate of 1,100 hours instead of the
1,500 hours and up to be entitled to the benefit of
P2,500.00 with the lower brackets adjusted
accordingly but subject to reversion to the
previous CBA if majority of the gangs average
eight (8) vessels a month;
d. 13th Month Pay (Article XIII, Section 1, CBA)
Average of six (6) vessels instead of the existing
eight (8) vessels to be entitled to eleven (11) days
basic pay but subject to reversion to the previous
CBA if majority of the gangs average eight (8)
vessels a month;
e. Signing bonus; and
f. Seniority.
The agreement left only one issue for resolution of the parties, namely,
retirement. Even this issue was soon settled as the parties met before
the NCMB on January 14, 1993 and then agreed on an improved
Optional Retirement Clause by giving the employees the option to
retire after rendering eighteen (18) years of service instead of the
previous twenty (20) years, and granting the employees retirement
benefits equivalent to sixteen (16) days for every year of service. Thus,
as the Med-Arbiter noted in the record of the January 14, 1993
conference, "the issues raised by the notice of strike had been settled
and said notice is thus terminated."
But no sooner had he stated this than the Company claimed that the
wage increases which it had agreed to give to the employees should
be creditable as compliance with future mandated wage increases. In
addition, it maintained that such increases should not be retroactive.
Reacting to this development, the Union again filed a Notice of Strike
on January 28, 1993, with the NCMB. On March 7, 1993, the Union
staged a strike.

The NCMB tried to settle the issues of creditability and retroactivity,

calling for this purpose a conciliation conference on March 9, 1993. As
conciliation proved futile, the Company petitioned respondent
Secretary of Labor and Employment (hereafter Secretary of Labor) to
assume jurisdiction over the dispute. On March 10, 1993, respondent
assumed jurisdiction jurisdiction over the dispute and ordered the
parties to submit their respective position papers on the two
unresolved issues.
After submission by the parties of their position papers, the Secretary
of Labor issued an Order dated May 14, 1993, ordering the Company
and the Union to incorporate into their existing collective bargaining
agreement all improvements reached by them in the course of
renegotiations. The Secretary of Labor held that the wage increases
for the fourth and fifth years of the CBA were not to be credited as
compliance with future mandated increases. In addition, the fourth year
wage increase was to be retroactive to August 1992 and was to be
implemented until July 31, 1993, while the fifth year wage increase was
to take effect on August 1, 1993 until the expiration of the CBA. 1
On May 31, 1993, the Company sought reconsideration of the May 14,
1993 order. The motion was denied for lack of merit by the Secretary
of Labor in a resolution dated July 7, 1993. Hence, this petition
for certiorari, alleging grave abuse of discretion on the part of
respondent Secretary of Labor.
The petitioner contends that respondent erred in making the fourth
year wage increase retroactive to August 1, 1992. It denies the power
of the Secretary of Labor to decree retroaction of the wage increases,
as the respondent herself had stated in her order subject of this
petition, that it had been more than six (6) months since the expiration
of the third anniversary of the CBA and, therefore, the automatic
renewal clause of Art. 253-A of the Labor Code had no application.
Although petitioner originally opposed giving retroactive effect to their
agreement, it subsequently modified its stand and agreed that the
fourth year wage increase and the other provisions of the CBA be
made retroactive to the date the Secretary of Labor assumed
jurisdiction of the dispute on March 10, 1993.
The petition is without merit. Art. 253-A of the Labor Code reads:
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.
The respondent indeed stated in her order of May 14, 1993 that "this
case is clearly beyond the scope of the automatic renewal
clause," 2 but she also stated in the same order that "the parties have
reached an agreement on all the renegotiated provisions of the CBA"
on January 14, 1993, i.e., within six (6) months of the expiration of the
third year of the CBA.

The signing of the CBA is not determinative of the question whether

"the agreement was entered into within six months from the date of
expiry of the term of such other provisions as fixed in such collective
bargaining agreement" within the contemplation of Art. 253-A..
As already stated, on November 12, 1992, the Union sent the
Company a notice of deadlock in view of their inability to reconcile their
positions on the main issues, 3 particularly on wages. The Union filed a
notice of strike. However, on December 18, 1992, in a conference
called by the NCMB, the Union and the Company agreed on a number
of provisions of the CBA, including the provision on wage
increase, 4 leaving only the issue of retirement to be threshed out. In
time, this, too, was settled, so that in his record of the January 14,
1993 conference, the Med-Arbiter noted that "the issues raised by the
notice of strike had been settled and said notice is thus terminated." It
would therefore seem that at that point, there was already a meeting of
the minds of the parties, which was before the February 1993 end of
the six-month period provided in Art. 253-A.
The fact that no agreement was then signed is of no moment. Art. 253A refers merely to an "agreement" which, according to Black's Law
Dictionary is "a coming together of minds; the coming together in
accord of two minds on a given proposition." 5 This is similar to Art.
1305 of the Civil Code's definition of "contract" as "a meeting of minds
between two persons."
The two terms, "agreement" and "contract," are indeed similar,
although the former is broader than the latter because an agreement
may not have all the elements of a contract. As in the case of
contracts, however, agreements may be oral or written. 6 Hence, even
without any written evidence of the Collective Bargaining Agreement
made by the parties, a valid agreement existed in this case from the
moment the minds of the parties met on all matters they set out to
discuss. As Art. 1315 of the Civil Code states:
Contracts are perfected by mere consent, and
from that moment, the parties are bound not only
to the fulfillment of what has been expressly
stipulated but also to all the consequences which,
according to their nature, may be in keeping with
good faith, usage and law.
The Secretary of Labor found that "as early as January 14, 1993, well
within the six (6) month period provided by law, the Company and the
Union have perfected their agreement." 7 The claim of petitioner to the
contrary notwithstanding, this is a finding of an administrative agency
which, in the absence of evidence to the contrary, must be affirmed.
Moreover, the order of the Secretary of Labor may be considered in
the nature of an arbitral award, pursuant to Art. 263(g) of the Labor
Code, and, therefore, binding on the parties. After all, the Secretary of
Labor assumed jurisdiction over the dispute because petitioner asked
the Secretary of Labor to do so after the NCMB failed to make the
parties come to an agreement. It is also conceded that the industry in
which the petitioner is engaged is vital to the national interest. As
stated in the Order issued by the Secretary of Labor on March 10,
1993: 8
The services being provided by the Company
evidently reflect their indispensability to the normal
operations of the Davao City Pier where millions of
crates and boxes of goods are loaded and
unloaded monthly. The current disruption,
therefore, of the Company's services, if allowed to
continue, will cause serious prejudice and
damages to the agricultural exporters, the cargo
handlers, the vessel owners, the foreign buyers of
agricultural products and the entire business
sector in the area. These considerations and the
dispute's implications on the national economy
warrant the intervention by this Office to exercise
its power under Article 263(g) of the Labor Code,
as amended.

In St. Luke's Medical Center, Inc. v. Torres, 9 a deadlock also

developed during the CBA negotiations between
management and the union. The Secretary of Labor
assumed jurisdiction and ordered the retroaction of their
CBA to the date of expiration of the previous CBA. As in this
case, it was alleged that the Secretary of Labor gravely
abused his discretion in making his award retroactive. In
dismissing this contention this Court held:

4 Ibid.
5 BLACK'S LAW DICTIONARY 62 (5th ed., 1979).
6 Royal Lines, Inc. v. Court of Appeals, 143 SCRA
609 (1986).
7 Respondent's Comment, p. 8; Rollo, p. 109.

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.

8 Rollo, p. 53.
9 223 SCRA 779 (1993).
10 185 SCRA 50 (1990).

This case is controlled by the ruling in that case.

11 Respondent's Comment, p. 9.

With respect to the issue of the creditability of the fourth and fifth year
wage increases, the Court takes cognizance of the fact that the
question was raised by the Company only when the six-month period
was almost over and all that was left to be done by the parties was to
sign their agreement. Before that, the Company did not qualify its
position. It should have known that crediting of wage increases in the
CBA as compliance with future mandated increases is the exception
rather than the rule. For the general rule is that such increases are
over and above any increase that may be granted by law or wage
order. As held in Meycauayan College v. Drilon: 10

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION

G.R. No. 95013 September 21, 1994

Increments to the laborers' financial gratification,
be they in the form of salary increases or changes
in the salary scale are aimed at one thing
improvement of the economic predicament of the
laborers. As such they should be viewed in the
light of the States avowed policy to protect labor.
Thus, having entered into an agreement with its
employees, an employer may not be allowed to
renege on its obligation under a collective
bargaining agreement should, at the same time,
the law grant the employees the same or better
terms and conditions of employment. Employee
benefits derived from law are exclusive of benefits
arrived at through negotiation and agreement
unless otherwise provided by the agreement itself
or by law.
For making a belated issue of "creditability," petitioner is correctly said
to have "delay[ed] the agreement beyond the six (6) month period so
as to minimize its expenses to the detriment of its workers" and its
conduct to smack of "bad faith and [to run counter] to the good faith
required in Collective Bargaining." 11 If petitioner wanted to be given
credit for the wage increases in the event of future mandated wage
increases, it should have expressly stated its reservation during the
early part of the CBA negotiations.
WHEREFORE, the instant petition is hereby DISMISSED for lack of
merit.

TRADE UNIONS OF THE PHILIPPINES/FEBRUARY SIX

MOVEMENT TUPAS/FSM), petitioner,
vs.
HON BIENVENIDO LAGUESMA, TRANSUNION CORPORATIONGLASS DIVISION, AND INTEGRATED LABOR ORGANIZATION
(ILO-PHILIPPINES), respondents.
Alar, Comia, Manalo and Associates Law Offices for petitioner.
Arcaya & Associates for Transunion Corp.-Glass Division.
Francisco A. Mercado, Jr. for Integrated Labor Organization (ILOPhils.)

PUNO, J.:
Petitioner Trade Unions of the Philippines-February Six Movement
(TUPAS-FSM) seeks the reversal of theResolution, dated July 25,
1990, rendered by then Secretary of Labor and Employment Ruben D.
Torres, In OS-MA-A-5-167-90, which dismissed the petition for
certification election filed by petitioner TUPAS-FSM for being
prematurely filed. 1
The controlling facts, as culled from the records, are as follows:

SO ORDERED.
Regalado, Romero, Puno and Torres, Jr., JJ., concur.
Footnotes
1 Rollo, p. 28.
2 Id., p. 25.
3 Respondent's Comment, p. 2; Rollo, p. 103.

On March 23, 1990 TUPAS-FSM filed a petition for certification

election with the Regional Office No. IV of the Department of Labor
and Employment (DOLE), for the purpose of choosing a bargaining
representative for the rank-and-file employees of Transunion
Corporation's industrial plant, situated in Canlubang, Laguna, known
as the Transunion Corporation-Glassware Division. Petitioner had then
secured a Certification , dated
March 22, 1990, issued by Tomas B. Bautista, Jr., Director IV of DOLE
(Region IV), that "Transunion Corporation" has no existing collective
bargaining agreement with any labor organization. 2
It appears, however, that before the filing of said petition, or on
November 15, 1989, Integrated Labor Organization (ILO-Phils.) was

duly certified by DOLE as the sole and exclusive bargaining agent of

the rank-and-file employees of Transunion Corporation-Glassware
Division. 3 On November 28, 1989, a collective bargaining agreement
(CBA) was the forged between Transunion-Glassware Division and
ILO-Phils. covering the company's rank-and-file employees, The CBA,
with a five-year term from December 1, 1989 to December 1, 1994,
was ratified by a great majority of the rank-and -filers on December 8,
1989. 4 In the meantime, the President of ILO-PHILS died. An interunion conflict followed and the subject CBA was filed with DOLE, for
registration purposes, only on March 14, 1990, more or less, three (3)
months from its execution. Finally, on May 4, 1990, the Certification of
Registration was issued by DOLE through Regional Director Romeo A.
Young. 5
ILO-Phils., intervened in the certification election proceedings initiated
by TUPAS-FSM. It opposed the petition in view of the existing CBA
between ILO and the Transunion Corporation-Glassware Division. It
stresses that the petition for certification election should be entertained
only during the freedom period, or sixty day before the expiration of the
CBA. Med-Arbiter Orlando S. deal Cruz dismissed the petition on the
ground of prematurity.
TUPAS-FSM appealed contending: (1) that pursuant to Article 231 of
the Labor Code. CBAs shall be file with the Regional Office of the
DOLE within thirty (30) days from the date of signing thereof; (2) that
said requirement is mandatory, although it would not affect the
enforceability of the CBA as between the parties thereto; and (3) since
the CBA was filed outside the 30-day period specified under Article
231 of the Labor Code, the prohibition against certification election
under Article 232 of the same Code should not apply to third parties
such as petitioner.
As stated earlier, the Secretary of Labor and Employment affirmed the
impugned Order of the Med-Arbiter, ruling that the belated submission
of the CBA was excusable and that the requirement of the law was
substantially complied with upon the filing of a copy of the CBA prior to
the filing of the petition for certification election. TUPAS-FSM then filed
a motion for reconsideration, but it was also denied, Hence, this
petition for certiorari where petitioner alleged:
GRAVE ABUSE OF DISCRETION ON THE PART
OF THE PUBLIC RESPONDENTS AMOUNTING
TO LOSS OF JURISDICTION; and
THE RESOLUTION IS CONTRARY TO THE
FACTS AND THE LAW.
The petition lacks merit.
Petitioner raises both factual and legal issues in this present petition.
First, the factual issues. Relying on the March 22, 1990 Dole
Certification issued by Director Bautista, Jr., supra, petitioner insists
there was no existing CBA between Transunion Corporation and any
labor organization when it filed its petition for certification election on
March 23, 1990. To further strengthen its position, petitioner charges
that the filing of the CBA was antedated to march 14, 1990, to make it
appear that the same was already existing and filed before the filing of
the petition for certification election. Petitioner also claims that since
Article 231 of the Labor Code mandates DOLE to act on the CBA filed
in its office within Five (5) days from date of filing thereof, the subject
CBA was filed on April 30, 1990, or five (5) days before its registration
on May 4, 1990.
The argument deserves scant consideration. It is elementary that the
special civil action for certiorari under Rule 65 of the Revised Rules of
Court can be availed of to nullify or modify the proceedings before the
concerned tribunal, board, or officer exercising judicial functions who
has acted without or in excess of its jurisdiction or with grave abuse of
discretion and there is no appeal, nor any plain, speedy, and adequate
remedy in the ordinary course of law. This Court is not a trier of facts
and it is not its function to examine and evaluate the probative value of
all evidence presented to the concerned tribunal which formed the

basis of its impugned decision, resolution or order. 6 Following this

hoary rule, it is inappropriate to review the factual findings of the Medarbiter and the Secretary of Labor, regarding the date of filing of the
CBA on March 14, 1990 prior to the filing of the petition for certification
election; the company's voluntary recognition and DOLE's certification
of ILO-PHILS. as the sole and exclusive bargaining representative of
the rank-and-file employees of Transunion Corporation-Glassware
Division; and the subsequent registration of the CBA. They are binding
on this Court as they are supported by substantial evidence. In
contrast, petitioners bare allegation pertaining to the "antedating" of
the date of filing of the CBA is unsubstantiated and based purely on
conjectures.
It is crystal clear from the records that the rank-and- file employees of
private respondent's Glassware Division are, at present, represented
by ILO-PHILS. Hence, petitioner's reliance on the March 22, 1990
Certification issued by Director Bautista, Jr., is misplaced. The
existence and filing of their CBA was confirmed in a Certification, dated
April 24, 1990, issued by Director Romeo A. Young of DOLE-Region
IV. 7 The Certification of ILO-PHILS. "as thesole and exclusive
bargaining agent of the rank-and-file workers of Transunion-Glassware
Division," means it shall remain as such during the existence of the
CBA, to the exclusion of other labor organizations, including petitioner,
and no petition questioning the majority status of the incumbent
bargaining agent shall be entertained, nor shall certification election be
conducted, outside of the fifty-day freedom period immediately before
the expiry date of the five-year term of the CBA. 8
We now resolved the legal issue. Petitioner points out that the subject
CBA was filed beyond the 30-day period prescribed under Article 231
of the Labor Code. It also insists that under Article 232 of the Labor
Code, the prohibition on the filing of a petition for certification election
applies when the CBA had been duly registered and, in this case,
since the CBA was not registered in accordance with the Art. 231, the
prohibition will not apply. We disagree.
Article 231 an s232 of the Labor Code read:
Art. 231. Registry of unions and file of collective
agreements. - . . . .
Within thirty (30) days from the execution of a
Collective Bargaining Agreement, the parties shall
submit copies of the same directly to the Bureau
or the Regional Office of the Department of Labor
and Employment for registration accompanied with
verified proofs of its posting n two conspicuous
places in the place of work and ratification by the
majority of all the workers in the bargaining unit.
The Bureau or Regional Office shall act upon the
application for registration of such Collective
Bargaining Agreement within five (5) days from
receipts thereof. The Regional Office shall furnish
the Bureau with a copy of the Collective
Bargaining agreement within five (5) days form its
submission.
xxx xxx xxx
Art. 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 agreement affecting
the parties except under Articles 253, 253-A and
256 of this Code.
Corollary thereto, Article 253-A of the same Code reads:
Art. 253-A. 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 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. . . . .

"SO ORDERED."
4. Annex "C" of Petition; Rollo, p. 27; See also
Annexes "D" and "E", Comment (Transunion
Corporation-Glassware Division); Rollo, pp. 84-94.
5. Rollo, p. 27.

It appears that the procedural requirement of filing the CBA within 30

days from date of execution under Article 231 was not met. The
subject CBA was executed on November 28, 1989. It was ratified on
December 8, 1989, and then filed with DOLE for registration purposes
on March 14, 1990. Be that as it may, the delay in the filing of the CBA
was sufficiently explained, i.e., there was an inter-union conflict on who
would succeed to the presidency of ILO-PHILS. The CBA was
registered by the DOLE only on May 4, 1990. It would be injudicious
for us to assume, as what petitioner did, that the said CBA was filed
only on April 30, 1990, or five (5) days before its registration, on the
unsupported surmise that it was done to suit the law that enjoins
Regional Offices of Dole to act upon an application for registration of a
CBA within five (5) days from its receipt thereof. In the absence of any
substantial evidence that DOLE officials or personnel, in collusion with
private respondent, had antedated the filing date of the CBA, the
presumption on regularity in the performance of official functions hold.

6. Valdez, Jr., et al., v. Comelec. G.R. No. 85129,

January 31, 1989, En Banc, Minute Resolution.
7. Rollo, p. 112.
8. Article 253-A, Labor Code, as amended by RA
6715.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION

More importantly, non-compliance with the cited procedural

requirement should not adversely affect the substantive validity of the
CBA between ILO-PHILS and the Transunion Corporation-Glassware
Division covering the company's rank and file employees. A collective
bargaining agreement is more than a contract. It is highly impressed
with public interest for it is an essential instrument to promote industrial
peace. Hence, it bears the blessings not only of the employer and
employees concerned but even the Department of Labor and
Employment. To set it aside on technical grounds is not conducive to
the public good.

G.R. No. 102130 July 26, 1994

GOLDEN FARMS, INC., petitioner,
vs.
THE HONORABLE SECRETARY OF LABOR and THE
PROGRESSIVE FEDERATION OF LABOR, respondents.

IN VIEW WHEREOF, the impugned July 25, 1990 Resolution, and

August 23, 1990 Order of Secretary Ruben D. Torres and
Undersecretary Bienvenido E. Laguesma. respectively, in OS-MA-A-5167-90, is AFFIRMED in toto. Costs against petitioned.

J.V. Yap Law Office for petitioner.

SO ORDERED.

PUNO, J.:

Narvasa, C.J., Padilla, Regalado and Mendoza, JJ., concur.

The sole issue for resolution in this Petition for Certiorari with prayer for
the issuance of preliminary injunction and/or restraining order is
whether or not petitioner's monthly paid rank-and file employees can
constitute a bargaining unit separate from the existing bargaining unit
of its daily paid rank-and-file employees.

#Footnotes

1. Annex "A" of Petition; Rollo, p. 20; reiterated by

the Order dated August 23, 1990 denying
petitioners motion for reconsideration.

Petitioner Golden Farms, Inc., is a corporation engaged in the

production and marketing of bananas for export. On February 27,
1992, private respondent Progressive Federation of Labor (PFL) filed a
petition before the Med-Arbiter praying for the holding of a certification
election among the monthly paid office and technical rank-and-file
employees of petitioner Golden Farms.

2. Annex "B" to Petition; Rollo, p. 26.

3. The Order dated November 15, 1989 of MedArbiter Rolando S. dela Cruz, reads:
"O R D E R
"Considering PSSLUs (Philippine Social Security
Labor Union) manifestation during the conference
on July 27, 1989, that it is withdrawing from further
participation in this (petition for certification
election) case, and the Companys Manifestation
filed on October 13, 1989 stating, among others,
that it is voluntarily recognizing petitioner ILO as
the sole and exclusive bargaining agent of its
rank-and-file workers, let the Integrated Labor
Organization (ILO-PHILS.) be, as it is hereby
CERTIFIED as the sole and exclusive bargaining
agent of the rank-and-file workers of Transunion
Corporation-Glassware Division.

Petitioner moved to dismiss the petition on three (3) grounds. First,

respondent PFL failed to show that it was organized as a chapter
within petitioner's establishment. Second, there was already an
existing collective bargaining agreement between the rank-and-file
employees represented by the National Federation of Labor (NFL) and
petitioner. And third, the employees represented by PFL had allegedly
been disqualified by this Court from bargaining with management
in Golden Farms, Inc., vs. Honorable Director Pura Ferrer-Calleja, G.R.
No. 78755, July 19, 1989. 1
Respondent PFL opposed petitioner's Motion to Dismiss. It countered
that the monthly paid office and technical employees should be
allowed to form a separate bargaining unit because they were
expressly excluded from coverage in the Collecting Bargaining
Agreement (CBA) between petitioner and NFL. It also contended that
the case invoked by petitioner was inapplicable to the present case.

In its reply, petitioner argued that the monthly paid office and technical
employees should have joined the existing collective bargaining unit of
the rank-and-file employees if they are not manegerial employees.
On April 18, 1991, the Med-Arbiter granted the petition and ordered
that a certification election be conducted, viz:
WHEREFORE, premises considered, the present
petition filed by the Progressive Federation of
Labor, for certification election among the office
and technical employees of Golden Farms, Inc., is,
as it is hereby, GRANTED with the following
choices:
1. Progressive Federation of Labor (PFL);

In the case at bench, the evidence established that the monthly paid
rank-and-file employees of petitioner primarily perform administrative
or clerical work. In contradistinction, the petitioner's daily paid rankand-file employees mainly work in the cultivation of bananas in the
fields. It is crystal clear the monthly paid rank-and-file employees of
petitioner have very little in common with its daily paid rank-and-file
employees in terms of duties and obligations, working conditions,
salary rates, and skills. To be sure, the said monthly paid rank-and-file
employees have even been excluded from the bargaining unit of the
daily paid rank-and-file employees. This dissimilarity of interests
warrants the formation of a separate and distinct bargaining unit for the
monthly paid rank-and-file employees of the petitioner. To rule
otherwise would deny this distinct class of employees the right to selforganization for purposes of collective bargaining. Without the shield of
an organization, it will also expose them to the exploitations of
management. So we held in University of the Philippines vs. FerrerCalleja, 7 where we sanctioned the formation of two (2) separate
bargaining units within the establishment, viz:

2. No. union.
The designated representation officer is hereby
directed to call the parties to a pre-election
conference to thresh out the mechanics of the
election and to conduct and supervise the same
within twenty (20) days from receipt by the parties
of this Order. The "Masterlist of Office and
Technical Employees" shall be the basis in
determining the employees qualified to vote during
the certification election.
SO ORDERED. 2
Petitioner seasonably appealed to public respondent Secretary of
Labor. On August 6, 1991, respondent Secretary of Labor issued the
assailed Decision denying the appeal for lack of merit. 3 Petitioner filed
a Motion for Reconsideration but the same was also denied on
September 13, 1991.
Thus, this petition for certiorari interposing two (2) issues.
I
THE CREATION OF AN ADDITIONAL
BARGAINING UNIT FOR CERTAIN RANK AND
FILE EMPLOYEES WILL NOT ONLY SPLIT THE
EXISTING ONE BUT WILL ALSO NEGATE THE
PRINCIPLE OF RES JUDICATA.
II
THE PROGRESSIVE FEDERATION OF LABOR
BEING THE EXCLUSIVE BARGAINING AGENT
OF THE SUPERVISORY EMPLOYEES IS
DISQUALIFIED FROM REPRESENTING THE
OFFICE AND TECHNICAL EMPLOYEES.
The petition is devoid of merit.
The monthly paid office and technical rank-and-file employees of
petitioner Golden Farms enjoy the constitutional right to selforganization and collective bargaining. 4 A "bargaining unit" has been
defined as a group of employees of a given employer, comprised of all
or less than all of the entire body of employees, which the collective
interest of all the employees, consistent with equity to the employer,
indicate to be the best suited to serve the reciprocal rights and duties
of the parties under the collective bargaining provisions of the
law. 5 The community or mutuality of interest is therefore the essential
criterion in the grouping. "And this is so because 'the basic test of an
asserted bargaining unit's acceptability is whether or not it is
fundamentally the combination which will best assure to all employees
the exercise of their collective bargaining rights.' 6

[T]he dichotomy of interests, the dissimilarity in the

nature of the work and duties as well as in the
compensation and working conditions of the
academic and non-academic personnel dictate the
separation of these two categories of employees
for purposes of collective bargaining. The
formation of two separate bargaining units, the first
consisting of the rank-and-file non-academic
employees, and the second, of the rank-and-file
academic employees, is the set-up that will best
assure to all the employees the exercise of their
collective bargaining rights.
Petitioner next contends that these monthly paid office and technical
employees are managerial employees. They allegedly include those in
the accounting and personnel department, cashier, and other
employees holding positions with access to classified information.
We are not persuaded. Article 212, paragraph (m) of the Labor Code,
as amended, defines as managerial employee as follows:
"Managerial employee" is one who is vested with
power or prerogatives to lay down and execute
management policies and/or to hire, transfer,
suspend, lay-off, recall, discharge, assign or
discipline employees. Supervisory employees are
those who, in the interest of the employer,
effectively recommend such managerial actions if
the exercise of such authority is not merely
routinary or clerical in nature but requires the use
of independent judgment. All employees not falling
within any of the above definitions are considered
rank-and-file employees for purposes of this Book.
Given this definition, the monthly paid office and technical
employees, accountants, and cashiers of the petitioner are
not managerial employees for they do not participate in
policy-making but are given cut out policies to execute and
standard practices to observe. 8 In the main, the discharge of
their duties does not involve the use of independent
judgment. As factually found by the Med-Arbiter, to wit:
A perusal of the list of the office and technical
employees sought to be represented in the instant
case, with their corresponding designation does
not show that said Office and Technical
employees exercises supervisory or managerial
functions.
The office believes and so hold that the
employees whose names appear in the "Masterlist
of Office and Technical Employees" submitted
during the hearing are eligible to join/form a labor
organization of their own choice. 9

Our decision in Golden Farms, Inc., vs. Honorable Pura Ferrer-Calleja,

op. cit., does not pose any obstacle in holding a certification election
among petitioner's monthly paid rank-and-file employees. The issue
brought to fore in that case was totally different, i.e., whether or not
petitioner's confidential employees, considering the nature of their
work, should be included in the bargaining unit of the daily paid rankand-file employees. In the case at bench, the monthly paid rank-andfile employees of petitioner are being separated as a bargaining unit
from its daily paid rank-and-file employees, on the ground that they
have different interest to protect. The principle of res
judicata is, therefore, inapplicable.

10 Rollo, p. 121.
11 Philippine Telegraphic and Telephone Corp.,
vs. Laguesma, G.R. No. 101730, June 17, 1993,
223 SCRA 452.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION

The second assigned error which was not raised in the proceedings
below must necessarily fail. The alleged error involves a question of
fact which this Court cannot resolve. Petitioner submitted this
contention only in its Memorandum dated February 12, 1993. 10 In this
Memorandum, petitioner cited LRD Case No. OXI-UR-70 for Direct
Recognition/Certification Election. But even a side glance of the cited
case will reveal that it involves a petition for direct certification among
the rank-and-file office and technical employees of the Golden Farms
Inc., (not supervisory employees) under the House of Investment,
Ladislawa Village, Buhaning, Davao City filed by the National
Federation of Labor (not the respondent Progressive Federation of
Labor). The averment of petitioner is baseless and its recklessness
borders the contemptuous.
Finally, we note that it was petitioner company that filed the motion to
dismiss the petition for election. The general rule is that an employer
has no standing to question a certification election since this is the sole
concern of the workers. 11 Law and policy demand that employers take
a strick, hands-off stance in certification elections. The bargaining
representative of employees should be chosen free from any
extraneous influence of management. A labor bargaining
representative, to be effective, must owe its loyalty to the employees
alone and to no other.
WHEREFORE, the petition is DISMISSED for lack of merit. With costs
against petitioner.

G.R. Nos. 184903

October 10, 2012

DIGITAL TELECOMMUNICATIONS PHILIPPINES, INC., Petitioner,

vs.
DIGITEL EMPLOYEES UNION (DEU), ARCELO RAFAEL A.
ESPLANA, ALAN D. LICANDO, FELICITO C. ROMERO, JR.,
ARNOLD D. GONZALES, REYNEL FRANCISCO B. GARCIA,
ZOSIMO B. PERALTA, REGINO T. UNIDAD and JIM L.
JAVIER, Respondents.
DECISION
PEREZ, J.:
This treats of the petition for review filed by Digital
Telecommunications Philippines, Inc. (Digitel) assailing the 18 June
2008 Decision1 and 9 October 2008 Resolution of the Court of Appeals
10th Division in CA-G.R. SP No. 91719, which affirms the Order of the
Secretary of Labor and Employment directing Digitel to commence
Collective Bargaining Agreement (CBA) negotiations and in CA-G.R.
SP No. 94825, which declares the dismissal of affected Digitel
employees as illegal.
The facts, as borne by the records, follow.

SO ORDERED.
Narvasa, C.J., Padilla, Regalado and Mendoza, JJ. concur.

# Footnotes
1 Petition, Rollo, pp. 6-7.

By virtue of a certification election, Digitel Employees Union (Union)

became the exclusive bargaining agent of all rank and file employees
of Digitel in 1994. The Union and Digitel then commenced collective
bargaining negotiations which resulted in a bargaining deadlock. The
Union threatened to go on strike, but then Acting Labor Secretary
Bienvenido E. Laguesma assumed jurisdiction over the dispute and
eventually directed the parties to execute a CBA.2
However, no CBA was forged between Digitel and the Union. Some
Union members abandoned their employment with Digitel. The Union
later became dormant.

2 Med-Arbiter's Order, Rollo, pp. 31-32.

3 Id., p. 43.
4 1987 Constitution, Article XIII, Section3.
5 University of the Philippines vs. Ferrer-Calleja,
G.R. No. 96189, July 14, 1992, 211 SCRA 451;
citing Rothenberg on Labor Relations, 482, cited in
Fernandez & Quiazon, The Law of Labor
Relations, 1963 ed., p. 281.

Ten (10) years thereafter or on 28 September 2004, Digitel received

from Arceo Rafael A. Esplana (Esplana), who identified himself as
President of the Union, a letter containing the list of officers, CBA
proposals and ground rules.3 The officers were respondents Esplana,
Alan D. Licando (Vice-President), Felicito C. Romero, Jr. (Secretary),
Arnold D. Gonzales (Treasurer), Reynel Francisco B. Garcia (Auditor),
Zosimo B. Peralta (PRO), Regino T. Unidad (Sgt. at Arms), and Jim L.
Javier (Sgt. at Arms).
Digitel was reluctant to negotiate with the Union and demanded that
the latter show compliance with the provisions of the Unions
Constitution and By-laws on union membership and election of officers.

6 Supra., p. 467.
7 Supra., pp. 468-469.
8 Villuga vs. NLRC, G.R. No. 75038, August 23,
1993, 225 SCRA 537.
9 Rollo, pp. 30-31.

On 4 November 2004, Esplana and his group filed a case for

Preventive Mediation before the National Conciliation and Mediation
Board based on Digitels violation of the duty to bargain. On 25
November 2004, Esplana filed a notice of strike.
On 10 March 2005, then Labor Secretary Patricia A. Sto. Tomas
issued an Order4 assuming jurisdiction over the labor dispute.

During the pendency of the controversy, Digitel Service, Inc. (Digiserv),

a non-profit enterprise engaged in call center servicing, filed with the
Department of Labor and Employment (DOLE) an Establishment
Termination Report stating that it will cease its business operation. The
closure affected at least 100 employees, 42 of whom are members of
the herein respondent Union.
Alleging that the affected employees are its members and in reaction
to Digiservs action, Esplana and his group filed another Notice of
Strike for union busting, illegal lock-out, and violation of the assumption
order.
On 23 May 2005, the Secretary of Labor ordered the second notice of
strike subsumed by the previous Assumption Order.5

In accordance with the 13 July 2005 Order of the Secretary of Labor,

the unfair labor practice issue was certified for compulsory arbitration
before the NLRC, which, on 31 January 2006, rendered a Decision
dismissing the unfair labor practice charge against Digitel but declaring
the dismissal of the 13 employees of Digiserv as illegal and ordering
their reinstatement. The Union manifested that out of 42 employees,
only 13 remained, as most had already accepted separation pay. The
dispositive portion of the Decision reads:
WHEREFORE, premises considered, the charge of unfair labor
practice is hereby DISMISSED for lack of merit. However, the
dismissal of the remaining thirteen (13) affected employees is hereby
declared illegal and DIGITEL is hereby ORDERED to reinstate them to
their former position with full backwages up to the time they are
reinstated, computed as follows:

Meanwhile, on 14 March 2005, Digitel filed a petition with the Bureau

of Labor Relations (BLR) seeking cancellation of the Unions
registration on the following grounds: 1) failure to file the required
reports from 1994-2004; 2) misrepresentation of its alleged officers; 3)
membership of the Union is composed of rank and file, supervisory
and managerial employees; and 4) substantial number of union
members are not Digitel employees.6

x x x x.10

In a Decision dated 11 May 2005, the Regional Director of the DOLE

dismissed the petition for cancellation of union registration for lack of
merit. The Regional Director ruled that it does not have jurisdiction
over the issue of non-compliance with the reportorial requirements. He
also held that Digitel failed to adduce substantial evidence to prove
misrepresentation and the mixing of non-Digitel employees with the
Union. Finally, he declared that the inclusion of supervisory and
managerial employees with the rank and file employees is no longer a
ground for cancellation of the Unions certificate of registration.7

In view of this unfavorable decision, Digitel filed another petition on 9

June 2006 in CA-G.R. SP No. 94825 before the Court of Appeals,
challenging the above NLRC Decision and Resolution and arguing
mainly that Digiserv employees are not employees of Digitel.

The appeal filed by Digitel with the BLR was eventually dismissed for
lack of merit in a Resolution dated 9 March 2007, thereby affirming the
11 May 2005 Decision of the Regional Director.
CA-G.R. SP No. 91719
In an Order dated 13 July 2005, the Secretary of Labor directed Digitel
to commence the CBA negotiation with the Union. Thus:
WHEREFORE, all the foregoing premises considered, this Office
hereby orders:
1. DIGITEL to commence collective bargaining negotiation with DEU
without further delay; and,
2. The issue of unfair labor practice, consisting of union-busting, illegal
termination/lockout and violation of the assumption of jurisdiction,
specifically the return-to-work aspect of the 10 March 2005 and 03
June 2005 orders, be CERTIFIED for compulsory arbitration to the
NLRC.8
Digitel moved for reconsideration on the contention that the pendency
of the petition for cancellation of the Unions certificate of registration is
a prejudicial question that should first be settled before the DOLE
could order the parties to bargain collectively. On 19 August 2005, then
Acting Secretary Manuel G. Imson of DOLE denied the motion for
reconsideration, affirmed the 13 July 2005 Order and reiterated the
order directing parties to commence collective bargaining
negotiations.9

Upon motion for reconsideration filed by Digitel, four (4) affected

employees, namely Ma. Loreta Eser, Marites Jereza, Leonore Tuliao
and Aline G. Quillopras, were removed from entitlement to the awards
pursuant to the deed of quitclaim and release which they all signed. 11

Ruling of the Court of Appeals

On 18 June 2008, the Tenth Division of the Court of Appeals
consolidated the two petitions in CA-G.R. SP No. 91719 and CA-G.R.
SP No. 94825, and disposed as follows:
WHEREFORE, the petition in CA-G.R. SP No. 91719 is DISMISSED.
The July 13, 2005 Order and the August 19, 2005 Resolution of the
DOLE Secretary are AFFIRMED in toto. With costs.
The petition in CA-G.R. SP No. 94825 is partially GRANTED, with the
effect that the assailed dispositions must be MODIFIED, as follows:
1) In addition to the order directing reinstatement and payment of full
backwages to the nine (9) affected employees, Digital
Telecommunications Philippines, Inc. is furthered ORDERED, should
reinstatement is no longer feasible, to pay separation pay equivalent to
one (1) month pay, or one-half (1/2) month pay for every year of
service, whichever is higher.
2) The one hundred thousand (PhP 100,000.00) peso-fine imposed on
Digital Telecommunications Philippines, Inc. is DELETED. No costs.12
The Court of Appeals upheld the Secretary of Labors Order for Digitel
to commence CBA negotiations with the Union and emphasized that
the pendency of a petition for the cancellation of a unions registration
does not bar the holding of negotiations for a CBA. The Court of
Appeals sustained the finding that Digiserv is engaged in labor-only
contracting and that its employees are actually employees of Digitel.
Digitel filed a motion for reconsideration but was denied in a Resolution
dated 9 October 2008.
Hence, this petition for review on certiorari.

On 14 October 2005, Digitel filed a petition, docketed as CA-G.R. SP

No. 91719, before the Court of Appeals assailing the 13 July and 19
August 2005 Orders of the DOLE Secretary and attributing grave
abuse of discretion on the part of the DOLE Secretary for ordering
Digitel to commence bargaining negotiations with the Union despite the
pendency of the issue of union legitimacy.
CA-G.R. SP No. 94825

Digitel argues that the Court of Appeals seriously erred when it

condoned the act of the Secretary of Labor in issuing an assumption
order despite the pendency of an appeal on the issue of union
registration. Digitel maintains that it cannot be compelled to negotiate
with a union for purposes of collective bargaining when the very status
of the same as the exclusive bargaining agent is in question.

Digitel insists that had the Court of Appeals considered the nature of
the activities performed by Digiserv, it would reach the conclusion that
Digiserv is a legitimate contractor. To bolster its claim, Digitel asserts
that the affected employees are registered with the Social Security
System, Pag-ibig, Bureau of Internal Revenue and Philhealth with
Digiserv as their employer. Digitel further contends that assuming that
the affected Digiserv employees are employees of Digitel, they were
nevertheless validly dismissed on the ground of closure of a
department or a part of Digitels business operation.
The three issues raised in this petition are: 1) whether the Secretary of
Labor erred in issuing the assumption order despite the pendency of
the petition for cancellation of union registration; 2) whether Digiserv is
a legitimate contractor; and 3) whether there was a valid dismissal.
The pendency of a petition
for cancellation of union
registration does not preclude
collective bargaining.
The first issue raised by Digitel is not novel. It is well-settled that the
pendency of a petition for cancellation of union registration does not
preclude collective bargaining.
The 2005 case of Capitol Medical Center, Inc. v. Hon. Trajano13 is
apropos. The respondent union therein sent a letter to petitioner
requesting a negotiation of their CBA. Petitioner refused to bargain and
instead filed a petition for cancellation of the unions certificate of
registration. Petitioners refusal to bargain forced the union to file a
notice of strike. They eventually staged a strike. The Secretary of
Labor assumed jurisdiction over the labor dispute and ordered all
striking workers to return to work. Petitioner challenged said order by
contending that its petition for cancellation of unions certificate of
registration involves a prejudicial question that should first be settled
before the Secretary of Labor could order the parties to bargain
collectively. When the case eventually reached this Court, we agreed
with the Secretary of Labor that the pendency of a petition for
cancellation of union registration does not preclude collective
bargaining, thus:
That there is a pending cancellation proceeding against the respondent
Union is not a bar to set in motion the mechanics of collective
bargaining. If a certification election may still be ordered despite the
pendency of a petition to cancel the unions registration certificate
(National Union of Bank Employees vs. Minister of Labor, 110 SCRA
274), more so should the collective bargaining process continue
despite its pendency. We must emphasize that the majority status of
the respondent Union is not affected by the pendency of the Petition
for Cancellation pending against it. Unless its certificate of registration
and its status as the certified bargaining agent are revoked, the
Hospital is, by express provision of the law, duty bound to collectively
bargain with the Union.14
Trajano was reiterated in Legend International Resorts Limited v.
Kilusang Manggagawa ng Legenda (KML-Independent).15 Legend
International Resorts reiterated the rationale for allowing the
continuation of either a CBA process or a certification election even
during the pendency of proceedings for the cancellation of the unions
certificate of registration. Citing the cases of Association of Court of
Appeals Employees v. Ferrer- Calleja16 and Samahan ng Manggagawa
sa Pacific Plastic v. Hon. Laguesma,17 it was pointed out at the time of
the filing of the petition for certification election or a CBA process as
in the instant case the union still had the personality to file a petition
for certification or to ask for a CBA negotiation as in the present
case.
Digiserv is a labor-only contractor.
Labor-only contracting is expressly prohibited by our labor laws. Article
106 of the Labor Code defines labor-only contracting as "supplying
workers to an employer [who] does not have substantial capital or
investment in the form of tools, equipment, machineries, work
premises, among others, and the workers recruited and placed by such

person are performing activities which are directly related to the

principal business of such employer."
Section 5, Rule VIII-A, Book III of the Omnibus Rules Implementing the
Labor Code (Implementing Rules), as amended by Department Order
No. 18-02, expounds on the prohibition against labor-only contracting,
thus:
Section 5. Prohibition against labor-only contracting. Labor-only
contracting is hereby declared prohibited. For this purpose, labor-only
contracting shall refer to an arrangement where the contractor or
subcontractor merely recruits, supplies or places workers to perform a
job, work or service for a principal, and any of the following elements
are present:
i) The contractor or subcontractor does not have substantial capital or
investment which relates to the job, work or service to be performed
and the employees recruited, supplied or placed by such contractor or
subcontractor are performing activities which are directly related to the
main business of the principal; or
ii) The contractor does not exercise the right to control over the
performance of the work of the contractual employee.
The foregoing provisions shall be without prejudice to the application of
Article 248 (c) of the Labor Code, as amended.
xxxx
The "right to control" shall refer to the right reserved to the person for
whom, the services of the contractual workers are performed, to
determine not only the end to be achieved, but also the manner and
means to be used in reaching that end.
The law and its implementing rules allow contracting arrangements for
the performance of specific jobs, works or services. Indeed, it is
management prerogative to farm out any of its activities, regardless of
whether such activity is peripheral or core in nature. However, in order
for such outsourcing to be valid, it must be made to an independent
contractor because the current labor rules expressly prohibit labor-only
contracting.18
After an exhaustive review of the records, there is no showing that first,
Digiserv has substantial investment in the form of capital, equipment or
tools. Under the Implementing Rules, substantial capital or investment
refers to "capital stocks and subscribed capitalization in the case of
corporations, tools, equipment, implements, machineries and work
premises, actually and directly used by the contractor or subcontractor
in the performance or completion of the job, work or service contracted
out." The NLRC, as echoed by the Court of Appeals, did not find
substantial Digiservs authorized capital stock of One Million Pesos
(P 1,000,000.00). It pointed out that only Two Hundred Fifty Thousand
Pesos (P 250,000.00) of the authorized capital stock had been
subscribed and only Sixty-Two Thousand Five Hundred Pesos
(P 62,500.00) had been paid up. There was no increase in
capitalization for the last ten (10) years.19
Moreover, in the Amended Articles of Incorporation, as well as in the
General Information Sheets for the years 1994, 2001 and 2005, the
primary purpose of Digiserv is to provide manpower services. In PCI
Automation Center, Inc. v. National Labor Relations Commission, 20 the
Court made the following distinction: "the legitimate job contractor
provides services while the labor-only contractor provides only
manpower. The legitimate job contractor undertakes to perform a
specific job for the principal employer while the labor-only contractor
merely provides the personnel to work for the principal employer." The
services provided by employees of Digiserv are directly related to the
business of Digitel, as rationalized by the NLRC in this wise:
It is undisputed that as early as March 1994, the affected employees,
except for two, were already performing their job as Traffic Operator
which was later renamed as Customer Service Representative (CSR).

It is equally undisputed that all throughout their employment, their

function as CSR remains the same until they were terminated effective
May 30, 2005. Their long period of employment as such is an
indication that their job is directly related to the main business of
DIGITEL which is telecommunications. Because, if it was not, DIGITEL
would not have allowed them to render services as Customer Service
Representative for such a long period of time.21
Furthermore, Digiserv does not exercise control over the affected
employees. The NLRC highlighted the fact that Digiserv shared the
same Human Resources, Accounting, Audit and Legal Departments
with Digitel which manifested that it was Digitel who exercised control
over the performance of the affected employees. The NLRC also relied
on the letters of commendation, plaques of appreciation and
certification issued by Digitel to the Customer Service Representatives
as evidence of control.
Considering that Digiserv has been found to be engaged in labor-only
contracting, the dismissed employees are deemed employees of
Digitel.

to Esen thru the above named officers "In recognition of her seven (7)
years continuous and valuable contributions to the achievement of
Digitels organization objectives". It cannot be gainsaid that it is only
the employer that issues service award to its employees.22 (Emphasis
not supplied)
As a matter of fact, even before the incorporation of Digiserv, the
affected employees were already employed by Digitel as Traffic
Operators, later renamed as Customer Service Representatives.
As an alternative argument, Digitel maintains that the affected
employees were validly dismissed on the grounds of closure of
Digiserv, a department within Digitel.
In the recent case of Waterfront Cebu City Hotel v. Jimenez,23 we
referred to the closure of a department or division of a company as
retrenchment. The dismissed employees were undoubtedly retrenched
with the closure of Digiserv.
For a valid retrenchment, the following elements must be present:

Section 7 of the Implementing Rules holds that labor-only contracting

would give rise to: (1) the creation of an employer-employee
relationship between the principal and the employees of the contractor
or sub-contractor; and (2) the solidary liability of the principal and the
contractor to the employees in the event of any violation of the Labor
Code.
Accordingly, Digitel is considered the principal employer of respondent
employees.
The affected employees were
illegally dismissed.
In addition to finding that Digiserv is a labor-only contractor, records
teem with proof that its dismissed employees are in fact employees of
Digitel. The NLRC enumerated these evidences, thus:
That the remaining thirteen (13) affected employees are indeed
employees of DIGITEL is sufficiently established by the facts and
evidence on record.
It is undisputed that the remaining affected employees, except for two
(2), were already hired by DIGITEL even before the existence of
DIGISERV. (The other two (2) were hired after the existence of
DIGISERV). The UNION submitted a sample copy of their appointment
paper (Annex "A" of UNIONs Position Paper, Records, Vol. 1, p. 100)
showing that they were appointed on March 1, 1994, almost three (3)
months before DIGISERV came into existence on May 30, 1994
(Annex "B", Ibid, Records, Vol. 1, p. 101). On the other hand, not a
single appointment paper was submitted by DIGITEL showing that
these remaining affected employees were hired by DIGISERV.
It is equally undisputed that the remaining, affected employees
continuously held the position of Customer Service Representative,
which was earlier known as Traffic Operator, from the time they were
appointed on March 1, 1994 until they were terminated on May 30,
2005. The UNION alleges that these Customer Service
Representatives were under the Customer Service Division of
DIGITEL. The UNIONs allegation is correct. Sample of letter of
commendations issued to Customer Service Representatives
(Annexes "C" and "C-1" of UNIONs Position Paper, Records, p. 100
and 111) indeed show that DIGITEL has a Customer Service Division
which handles its Call Center operations.
Further, the Certificates issued to Customer Service Representative
likewise show that they are employees of DIGITEL (Annexes "C-5", "C6" - "C-7" of UNIONs Position Paper, Records, Vol. 1, pp. 115 to 117),
Take for example the "Service Award" issued to Ma. Loretta C. Esen,
one of the remaining affected employees (Annex "C-5", Supra). The
"Service Award" was signed by the officers of DIGITEL the VPCustomer Services Division, the VP-Human Resources Division and
the Group Head-Human Resources Division. It was issued by DIGITEL

(1) That retrenchment is reasonably necessary and likely to prevent

business losses which, if already incurred, are not merely de minimis,
but substantial, serious, actual and real, or if only expected, are
reasonably imminent as perceived objectively and in good faith by the
employer;
(2) That the employer served written notice both to the employees and
to the Department of Labor and Employment at least one month prior
to the intended date of retrenchment;
(3) That the employer pays the retrenched employees separation pay
equivalent to one (1) month pay or at least month pay for every year
of service, whichever is higher;
(4) That the employer exercises its prerogative to retrench employees
in good faith for the advancement of its interest and not to defeat or
circumvent the employees right to security of tenure; and
(5) That the employer used fair and reasonable criteria in ascertaining
who would be dismissed and who would be retained among the
employees, such as status, efficiency, seniority, physical fitness, age,
and financial hardship for certain workers.24
Only the first 3 elements of a valid retrenchment had been here
satisfied. Indeed, it is management prerogative to close a department
of the company. Digitels decision to outsource the call center
operation of the company is a valid reason to close down the
operations of a department under which the affected employees were
employed. Digitel cited the decline in the volume of transaction of
operator-assisted call services as supported by Financial Statements
for the years 2003 and 2004, during which Digiserv incurred a deficit
of P 163,624.00 and P164,055.00, respectively.25 All affected
employees working under Digiserv were served with individual notices
of termination. DOLE was likewise served with the corresponding
notice. All affected employees were offered separation pay. Only 9 out
of the 45 employees refused to accept the separation pay and chose to
contest their dismissal before this Court.
The fifth element regarding the criteria to be observed by Digitel clearly
does not apply because all employees under Digiserv were dismissed.
The instant case is all about the fourth element, that is, whether or not
the affected employees were dismissed in good faith. We find that
there was no good faith in the retrenchment.
Prior to the cessation of Digiservs operations, the Secretary of Labor
had issued the first assumption order to enjoin an impending strike.
When Digiserv effected the dismissal of the affected employees, the
Union filed another notice of strike. Significantly, the Secretary of Labor
ordered that the second notice of strike be subsumed by the previous
assumption order. Article 263(g) of the Labor Code provides:

When, in his opinion, there exists a labor dispute causing or likely to

cause a strike or lockout in an industry indispensable to the national
interest, the Secretary of Labor and Employment may assume
jurisdiction over the dispute and decide it or certify the same to the
Commission for compulsory arbitration. Such assumption or
certification shall have the effect of automatically enjoining the
intended or impending strike or lockout as specified in the assumption
or certification order. If one has already taken place at the time of
assumption or certification, all striking or locked out employees shall
immediately return to work and the employer shall immediately resume
operations and readmit all workers under the same terms and
conditions prevailing before the strike or lockout. The Secretary of
Labor and Employment or the Commission may seek the assistance of
law enforcement agencies to ensure the compliance with this provision
as well as with such orders as he may issue to enforce the same.
The effects of the assumption order issued by the Secretary of Labor
are two-fold. It enjoins an impending strike on the part of the
employees and orders the employer to maintain the status quo.
There is no doubt that Digitel defied the assumption order by abruptly
closing down Digiserv. The closure of a department is not illegal per
se. What makes it unlawful is when the closure is undertaken in bad
faith. In St. John Colleges, Inc. v. St. John Academy Faculty and
Employees Union,26 bad faith was evidenced by the timing of and
reasons for the closure and the timing of and reasons for the
subsequent opening. There, the collective bargaining negotiations
between St. John and the Union resulted in a bargaining deadlock that
led to the filing of a notice of strike. The labor dispute was referred to
the Secretary of Labor who assumed jurisdiction.
Pending resolution of the dispute, St. John closed the school
prompting the Union to file a complaint for illegal dismissal and unfair
labor practice. The Union members alleged that the closure of the high
school was done in bad faith in order to get rid of the Union and render
useless any decision of the SOLE on the CBA deadlocked issues. We
held that closure was done to defeat the affected employees security
of tenure, thus:
The determination of whether SJCI acted in bad faith depends on the
particular facts as established by the evidence on record. Bad faith is,
after all, an inference which must be drawn from the peculiar
circumstances of a case. The two decisive factors in determining
whether SJCI acted in bad faith are (1) the timing of, and reasons for
the closure of the high school, and (2) the timing of, and the reasons
for the subsequent opening of a college and elementary department,
and, ultimately, the reopening of the high school department by SJCI
after only one year from its closure.
Prior to the closure of the high school by SJCI, the parties agreed to
refer the 1997 CBA deadlock to the SOLE for assumption of
jurisdiction under Article 263 of the Labor Code. As a result, the strike
ended and classes resumed. After the SOLE assumed jurisdiction, it
required the parties to submit their respective position papers.
However, instead of filing its position paper, SJCI closed its high
school, allegedly because of the "irreconcilable differences between
the school management and the Academys Union particularly the
safety of our students and the financial aspect of the ongoing CBA
negotiations." Thereafter, SJCI moved to dismiss the pending labor
dispute with the SOLE contending that it had become moot because of
the closure. Nevertheless, a year after said closure, SJCI reopened its
high school and did not rehire the previously terminated employees.
Under these circumstances, it is not difficult to discern that the closure
was done to defeat the parties agreement to refer the labor dispute to
the SOLE; to unilaterally end the bargaining deadlock; to render
nugatory any decision of the SOLE; and to circumvent the Unions right
to collective bargaining and its members right to security of tenure. By
admitting that the closure was due to irreconcilable differences
between the Union and school management, specifically, the financial
aspect of the ongoing CBA negotiations, SJCI in effect admitted that it
wanted to end the bargaining deadlock and eliminate the problem of
dealing with the demands of the Union. This is precisely what the
Labor Code abhors and punishes as unfair labor practice since the net

effect is to defeat the Unions right to collective

bargaining.27 (Emphasis not supplied)
As in St. John, bad faith was manifested by the timing of the closure of
Digiserv and the rehiring of some employees to Interactive Technology
Solutions, Inc. (I-tech), a corporate arm of Digitel. The assumption
order directs employees to return to work, and the employer to
reinstate the employees. The existence of the assumption order should
have prompted Digitel to observe the status quo. Instead, Digitel
proceeded to close down Digiserv. The Secretary of Labor had to
subsume the second notice of strike in the assumption order. This
order notwithstanding, Digitel proceeded to dismiss the employees.
The timing of the creation of I-tech is dubious. It was incorporated on
18 January 2005 while the labor dispute within Digitel was pending. Itechs primary purpose was to provide call center/customer contact
service, the same service provided by Digiserv. It conducts its
business inside the Digitel office at 110 E. Rodriguez Jr. Avenue,
Bagumbayan, Quezon City. The former head of Digiserv, Ms. Teresa
Taniega, is also an officer of I-tech. Thus, when Digiserv was closed
down, some of the employees presumably non-union members were
rehired by I-tech.
Thus, the closure of Digiserv pending the existence of an assumption
order coupled with the creation of a new corporation performing similar
functions as Digiserv leaves no iota of doubt that the target of the
closure are the union member-employees. These factual
circumstances prove that Digitel terminated the services of the affected
employees to defeat their security of tenure. The termination of service
was not a valid retrenchment; it was an illegal dismissal of employees.
It needs to be mentioned too that the dismissal constitutes an unfair
labor practice under Article 248(c) of the Labor Code which refers to
contracting 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. At the height of the
labor dispute, occasioned by Digitels reluctance to negotiate with the
Union, I-tech was formed to provide, as it did provide, the same
services performed by Digiserv, the Union members nominal
employer.
Under Article 279 of the Labor Code, an illegally dismissed employee
is entitled to backwages and reinstatement. Where reinstatement is no
longer viable as an option, as in this case where Digiserv no longer
exists, separation pay equivalent to one (1) month salary, or one-half
(1/2) month pay for every year of service, whichever is higher, should
be awarded as an alternative.28 The payment of separation pay is in
addition to payment of backwages.29
Indeed, while we have found that the closure of Digiserv was
undertaken in bad faith, badges thereof evident in the timing of
Digiservs closure, hand in hand, with I-techs creation, the closure
remains a foregone conclusion. There is no finding, and the Union
makes no such assertion, that Digiserv and I-tech are one and the
same corporation. The timing of Digiservs closure and I-techs ensuing
creation is doubted, not the legitimacy of I-tech as a business process
outsourcing corporation providing both inbound and outbound services
to an expanded local and international clientele.30
The finding of unfair labor practice hinges on Digitels contracting-out
certain services performed by union member-employees to interfere
with, restrain or coerce them in the exercise of their right to selforganization.
We have no basis to direct reinstatement of the affected employees to
an ostensibly different corporation. The surrounding circumstance of
the creation of I-tech point to bad faith on the part of Digitel, as well as
constitutive of unfair labor practice in targeting the dismissal of the
union member-employees. However, this bad faith does not contradict,
much less negate, the impossibility of the employees reinstatement
because Digiserv has been closed and no longer exists.

Even if it is a possibility that I-tech, as though Digitel, can absorb the

dismissed union member-employees as I-tech was incorporated during
the time of the controversy with the same primary purpose as Digiserv,
we would be hard pressed to mandate the dismissed employees
reinstatement given the lapse of more than seven (7) years.
This length of time from the date the incident occurred to its
Resolution31 coupled with the demonstrated litigiousness of the
disputants: (1) with all sorts of allegations thrown by either party
against the other; (2) the two separate filings of a notice of strike by the
Union; (3) the Assumption Orders of the DOLE; (4) our own finding of
unfair labor practice by Digitel in targeting the union memberemployees, abundantly show that the relationship between Digitel and
the union member-employees is strained. Indeed, such discordance
between the parties can very well be a necessary consequence of the
protracted and branched out litigation. We adhere to the oft-quoted
doctrine that separation pay may avail in lieu of reinstatement if
reinstatement is no longer practical or in the best interest of the
parties.32

moral and exemplary damages in amount of P10,000.00

and P 5,000.00, respectively, to each of the thirteen (13) illegally
dismissed union-member employees.
Petitioner Digital Telecommunications Philippines, Inc. is ORDERED to
pay the affected employees backwages and separation pay equivalent
to one (1) month salary, or one-half (1/2) month pay for every year of
service, whichever is higher.
Let this case be REMANDED to the Labor Arbiter for the computation
of monetary claims due to the affected employees.
SO ORDERED.
JOSE PORTUGAL PEREZ
Associate Justice
WE CONCUR:

Under the doctrine of strained relations, the payment of separation pay

is considered an acceptable alternative to reinstatement when the
latter option is no longer desirable or viable. On one hand, such
payment liberates the employee from what could be a highly
oppressive work environment. On the other hand, it releases the
employer from the grossly unpalatable obligation of maintaining in its
employ a worker it could no longer trust.33
Finally, an illegally dismissed employee should be awarded moral and
exemplary damages as their dismissal was tainted with unfair labor
practice.34 Depending on the factual milieu, jurisprudence has awarded
varying amounts as moral and exemplary damages to illegally
dismissed employees when the dismissal is attended by bad faith or
fraud; or constitutes an act oppressive to labor; or is done in a manner
contrary to good morals, good customs or public policy; or if the
dismissal is effected in a wanton, oppressive or malevolent
manner.351wphi1
In Nueva Ecija I Electric Cooperative, Inc. (NEECO I) Employees
Association v. National Labor Relations Commission, we intoned:
Unfair labor practices violate the constitutional rights of workers and
employees to self-organization, are inimical to the legitimate interests
of both labor and management, including their right to bargain
collectively and otherwise deal with each other in an atmosphere of
freedom and mutual respect; and disrupt industrial peace and hinder
the promotion of healthy and stable labor-management relations. As
the conscience of the government, it is the Courts sworn duty to
ensure that none trifles with labor rights.36
We awarded moral damages in the amount of P 10,000.00 and
likewise awarded P 5,000.00 as exemplary damages for each
dismissed employee.
In the recent case of Purefoods Corporation v. Nagkakaisang
Samahang Manggagawa ng Purefoods Rank-and-File,37 we awarded
the aggregate amount of P 500,000.00 as moral and exemplary
damages to the illegally dismissed union member-employees which
exact number was undetermined.

ANTONIO T. CARPIO
Associate Justice
Chairperson
ARTURO D. BRION
Associate Justice

ESTELA M. PERLAS-BERNABE
Associate Justice
ATTESTATION
I attest that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer or the opinion
or the Court's Division.
ANTONIO T. CARPIO
Associate Justice
Chairperson
CERTIFICATION
Pursuant to Section 13, Article VIII or 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 or the opinion of the Court's Division.
MARIA LOURDES P.A. SERENO
Chief Justice

Footnotes
1

In the case at hand, with the Unions manifestation that only 13

employees remain as respondents, as most had already accepted
separation pay, and consistent with our finding that Digitel committed
an unfair labor practice in violation of the employees constitutional
right to self-organization, we deem it proper to award each of the
illegally dismissed union member-employees the amount
of P 10,000.00 and P 5,000.00 as moral and exemplary damages,
respectively.
WHEREFORE, the Petition is DENIED. The Decision of the Court of
Appeals in CA-G.R. SP No. 91719 isAFFIRMED, while the Decision in
CA-G.R. SP No. 94825 declaring the dismissal of affected union
member-employees as illegal is MODIFIED to include the payment of

MARIANO C. DEL CASTILLO

Associate Justice

Penned by Associate Justice Normandie B. Pizarro with

Associate Justices Josefina Guevara-Salonga and
Magdangal M. De Leon, concurring. Rollo, pp. 1042-1061.
2

Id. at 255-263.

Id. at 62-63.

Id. at 289-291.

Id. at 123-124.

Id. at 271-285.

Id. at 125-127.

32

Velasco v. National Labor Relations Commission, 525

Phil. 749, 761 (2006).
33

Id. at 154.

34

Purefoods Corporation v. Nagkakaisang Samahang

Manggagawa ng Puerfoods Rank-and-File, supra note 28 at
480; Quadra v. Court of Appeals, 529 Phil. 218, 224-225
(2006) citing Nueva Ecija I Electric Cooperative, Inc.
(NEECO I) Employees Association v. National Labor
Relations Commission, 380 Phil. 44, 57-58 (2000).

Id. at 183-184.

10

Id. at 590-594.

11

Id. at 624-632.

12

Id. at 1059-1060.

13

501 Phil. 144 (2005).

14

Id. at 150.

15

G.R. No. 169754, 23 February 2011, 644 SCRA 94, 106.

16

G.R. No. 94716, 15 November 1991, 203 SCRA 596.

17

334 Phil. 955 (1997).

Golden Ace Builders v. Talde, supra note 29 at 289-290.

35

Woodridge School v. Pe Benito, G.R. No. 160240, 29

October 2008, 570 SCRA 164, 186.
36

Supra note 34 at 57-58.

37

Supra note 28 at 481.

Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION

G.R. No. 182018

October 10, 2012

18

Aliviado v. Procter & Gamble Phils., Inc., G.R. No. 160506,

6 June 2011, 650 SCRA 400, 412-414.
19

Rollo, p. 582.

20

322 Phil. 536, 550 (1996).

21

Rollo, p. 583.

22

Id. at 587-588.

23

G.R. No. 174214, 13 June 2012.

24

Id.

25

Rollo, p. 707.

26

536 Phil. 631 (2006).

27

Id. at 645-646.

28

See Book VI, Rule 1, Section 4(b) of the Omnibus Rules

Implementing the Labor Code;
Purefoods Corporation v. Nagkakaisang Samahang
Manggagawa ng Purefoods Rank-and-File, G.R. No.
150896, 28 August 2008, 563 SCRA 471, 480-481.
29

Golden Ace Builders v. Talde, G.R. No. 187200, 5 May

2010, 620 SCRA 283, 288-289 citing Macasero v. Southern
Industrial Gases Philippines, G.R. No. 178524, 30 January
2009, 577 SCRA 500, 506-507.

NORKIS TRADING CORPORATION, Petitioner,

vs.
JOAQUIN BUENA VISTA, HENRY FABROA, RICARDO CAPE,
BERTULDO TULOD, WILLY DONDOY ANO and GLEN
VILLARASA, Respondents.
DECISION
REYES, J.:
Before us is a Petition for Review on Certiorari filed by petitioner Norkis
Trading Corporation (Norkis Trading) to assail the Decision1 dated May
7, 2007 and Resolution2 dated March 4, 2008 of the Court of Appeals
(CA) in CA-G.R. SP No. 84041.
The Facts
The petition stems from an amended complaint for illegal suspension,
illegal dismissal, unfair labor practice and other monetary claims filed
with the National Labor Relations Commission (NLRC) by herein
respondents Joaquin Buenavista (Buenavista), Henry Fabroa (Fabroa),
Ricardo Cape (Cape), Bertuldo Tulod (Tulod), Willy Dondoyano
(Dondoyano) and Glen Villariasa (Villariasa) against Norkis Trading
and Panaghiusa sa Kauswagan Multi-Purpose Cooperative (PASAKA).
The complaint was docketed as NLRC-RAB-VII Case No. 09-1402-99.
During the proceedings a quo, herein respondents submitted the
following averments:
The respondents were hired by Norkis Trading, a domestic corporation
engaged in the business of manufacturing and marketing of Yamaha
motorcycles and multi-purpose vehicles, on separate dates and for
various positions, particularly:

30

See http://www.bestjobsph.com/bt-empditechsolutions.htm. (visited 2 October 2012).

31

Panday v. National Labor Relations Commission, G.R. No.

67664, 20 May 1992, 209 SCRA 122, 126-127.

Name

Date of Hiring

Position

Joaquin
Buenavista

March 14, 1994

Operator

Henry Fabroa

January 5, 1993

Welder

Ricardo Cape

January 1993

Welder/Operator

Bertuldo Tulod

November 13,
1994

Welder/Assistant
Operator

Willy Dondoyano

January 1993

Welder

Glen Villariasa

February 1993

Welder3

Although they worked for Norkis Trading as skilled workers assigned in

the operation of industrial and welding machines owned and used by
Norkis Trading for its business, they were not treated as regular
employees by Norkis Trading. Instead, they were regarded by Norkis
Trading as members of PASAKA, a cooperative organized under the
Cooperative Code of the Philippines, and which was deemed an
independent contractor that merely deployed the respondents to
render services for Norkis Trading.4 The respondents nonetheless
believed that they were regular employees of Norkis Trading, citing in
their Position Paper5 the following circumstances that allegedly
characterized their employment with the company:
The work of the operators involves operating industrial machines, such
as, press machine, hydraulic machine, and spotweld machine. On the
other hand, the welders used the welding machines. The machines
used by complainants herein respondents in their work are all owned
by respondent Norkis Trading herein petitioner and these are installed
and located in the working area of the complainants inside the
companys premises.
The complainants produced steel crates which are exported directly by
respondent Norkis Trading to Japan. These crates are used as
containers of motorcycle machines and are shipped from Japan back
to respondent Norkis Trading.
The materials and supplies used by complainants in their work are
supplied by respondent Norkis Trading through Benjamin Gulbin, the
companys Stockman, upon the request of Tirso Maslog, a Leadman
also employed by respondent Norkis Trading.
Respondent Norkis Trading gave instructions and supervised the work
of complainants through Edwin Ponce and Kiven Alilin, who are both
Leadmen, and Rico Cabanas, who is the Production Supervisor, of the
former.
The salaries of complainants are paid inside the premises of
respondent Norkis Trading by Dalia Rojo and Belen Rubio, who are
also employees of the said company assigned at the accounting office.
Despite having served respondent Norkis Trading for many years and
performing the same functions as regular employees, complainants
were not accorded regular status. It was made to appear that
complainants are not employees of said company but that of
respondent PASAKA.6
Against the foregoing scenario, the respondents, together with several
other complainants,7 filed on June 9, 1999 with the Department of
Labor and Employment (DOLE) a complaint against Norkis Trading
and PASAKA for labor-only contracting and non-payment of minimum
wage and overtime pay. The complaint was docketed as LSED Case
No. RO700-9906-CI-CS-168.
The filing of the complaint for labor-only contracting allegedly led to the
suspension of the respondents membership with PASAKA. On July
22, 1999, they were served by PASAKA with memoranda charging
them with a violation of the rule against commission of acts injurious or
prejudicial to the interest or welfare of the cooperative. The
memoranda cited that the respondents filing of a case against Norkis
Trading had greatly prejudiced the interest and welfare of the
cooperative.8 In their answer9 to the memoranda, the respondents
explained that they merely wanted to be recognized as regular
employees of Norkis Trading. The case records include copies of the

memoranda sent to respondents Buenavista, Fabroa and

Dondoyano.10
On August 16, 1999, the respondents received another set of
memoranda from PASAKA, now charging them with the following
violations of the cooperatives rules and regulations: (1) serious
misconduct or willful disobedience of superiors instructions or orders;
(2) gross and habitual neglect of duties by abandoning work without
permission; (3) absences without filing leave of absence; and (4)
wasting time or loitering on companys time or leaving their post
temporarily without permission during office hours. 11 Copies of the
memoranda12 sent to Fabroa and Cape form part of the records.
On August 26, 1999, PASAKA informed the respondents of the
cooperatives decision to suspend them for fifteen (15) working days,
to be effective from September 1 to 21, 1999, for violation of PASAKA
rules.
The records include copies of the memoranda13 sent to Fabroa and
Cape. The suspension prompted the respondents to file with the NLRC
the complaint for illegal suspension against Norkis Trading and
PASAKA.
The 15-day suspension of the respondents was extended for another
period of 15 days, from September 22, 1999 to October 12,
1999.14 Copies of PASAKAs separate letters15 to Buenavista, Fabroa,
Cape and Dondoyano on the cooperatives decision to extend the
suspension form part of the records.
On October 13, 1999, the respondents were to report back to work but
during the hearing in their NLRC case, they were informed by PASAKA
that they would be transferred to Norkis Tradings sister company,
Porta Coeli Industrial Corporation (Porta Coeli), as washers of Multicab
vehicles.
The respondents opposed the transfer as it would allegedly result in a
change of employers, from Norkis Trading to Porta Coeli. The
respondents also believed that the transfer would result in a demotion
since from being skilled workers in Norkis Trading, they would be
reduced to being utility workers.These circumstances made the
respondents amend their complaint for illegal suspension, to include
the charges of unfair labor practice, illegal dismissal, damages and
attorneys fees.
For their part, both Norkis Trading and PASAKA claimed that the
respondents were not employees of Norkis Trading. They insisted that
the respondents were members of PASAKA, which served as an
independent contractor that merely supplied services to Norkis
International Co., Inc. (Norkis International) pursuant to a job
contract16 which PASAKA and Norkis International executed on
January 14, 1999 for 121,500 pieces of F/GF-Series Reinforcement
Production. After PASAKA received reports from its coordinator at
Norkis International of the respondents low efficiency and violation of
the cooperatives rules, and after giving said respondents the chance
to present their side, a penalty of suspension was imposed upon them
by the cooperative. The illegal suspension being complained of was
then not linked to the respondents employment, but to their
membership with PASAKA.
Norkis Trading stressed that the respondents were deployed by
PASAKA to Norkis International, a company that is entirely separate
and distinct from Norkis Trading.
The Ruling of the Labor Arbiter
On June 1, 2000, Labor Arbiter Jose G. Gutierrez (LA Gutierrez)
dismissed the complaint via a Decision17 with decretal portion that
reads:
WHEREFORE, the foregoing premises considered, judgment is hereby
rendered DISMISSING this case for lack of merit. Complainants herein
respondents are however directed to report back to respondent

PASAKA for work assignment within ten (10) days from receipt of this
decision. Likewise, respondent PASAKA is directed to accept the
complainants back for work.

The respondents informed the NLRC of Regional Director Balanags

Order by filing a Manifestation29 dated September 11, 2000, attaching
thereto a copy of the Order dated August 22, 2000.

SO ORDERED.18

It bears mentioning that Regional Director Balanags Order was later

affirmed by then DOLE Secretary Patricia Sto. Tomas (Sec. Sto.
Tomas) in her Orders dated February 7, 2002 and October 14,
2002.30 When the rulings of the DOLE Secretary were appealed before
the CA via the petitions for certiorari docketed as CA-G.R. SP No.
73880 and CA-G.R. SP No. 74619, the CA affirmed the Orders of the
DOLE Secretary.31 A motion for reconsideration of the CA decision was
denied in a Resolution32 dated October 9, 2007. The two petitions
docketed as G.R. Nos. 180078-79, which were brought before this
Court to question the CAs rulings, were later denied with finality by this
Court in the Resolutions dated December 5, 200733 and April 14,
2008.34

LA Gutierrez sustained the suspension imposed by PASAKA upon the

respondents, taking into account the offenses that the said
respondents were found to have committed. He likewise rejected the
respondents claim of illegal dismissal. He ruled that to begin with, the
respondents had failed to prove with convincing evidence that they
were dismissed from employment. The Decision reads in part:
Before the legality or illegality of a dismissal can be put in issue, the
fact of dismissal itself must, first, be clearly established. In the instant
case, We find that complainants herein respondents failed to prove
with convincing evidence the fact that they were dismissed from
employment. This observation is derived from their very own allegation
in their position paper. The first paragraph of page 5 of the
complainants position paper clearly shows that they were not yet
dismissed from their employment. The said paragraph states:
"Convinced that the company is bent on terminating their services,
complainants amended their complaint to include the charges of unfair
labor practice, illegal dismissal, damages and attorneys fees."
The truth, as the record would show is that, complainants were only
offered another post in order to save the contractual relations between
their cooperative and Norkis Trading as the latter finds the
complainants performance not satisfactory. The complainants took this
offer as a demotion amounting to dismissal. We do not however, agree
as their transfer to another post was only the best option available in
order to save the contractual relations between their cooperative
(PASAKA) and Norkis Trading.19

The Ruling of the NLRC

On April 18, 2002, the NLRC rendered its Decision35 affirming with
modification the decision of LA Gutierrez. It held that the respondents
were not illegally suspended from work, as it was their membership in
the cooperative that was suspended after they were found to have
violated the cooperatives rules and regulations. It also declared that
the respondents dismissal was not established by substantial
evidence. The NLRC however declared that the LA had no jurisdiction
over the dispute because the respondents were not employees, but
members of PASAKA. The suspension of the respondents as
members of PASAKA for alleged violation of the cooperatives rules
and regulations was not a labor dispute, but an intra-corporate
dispute.36 The complaint was also declared to have been filed against
the wrong party because the respondents were found by the NLRC to
have been deployed by PASAKA to Norkis International pursuant to a
job contract.
The dispositive portion of the NLRCs Decision reads:

The allegation of unfair labor practice and claim for monetary awards
were likewise rejected by the LA. Feeling aggrieved, the respondents
appealed from the decision of the LA to the NLRC.
In the meantime, DOLE Regional Director Melencio Q. Balanag
(Regional Director Balanag) issued on August 22, 2000 his Order20 in
LSED Case No. RO700-9906-CI-CS-168. Regional Director Balanag
ruled that PASAKA was engaged in labor-only contracting.21 The other
findings in his Order that are significant to this case are as follows: (1)
PASAKA had failed to prove that it had substantial capital; 22 (2) the
machineries, equipment and supplies used by the respondents in the
performance of their duties were all owned by Norkis Trading and not
by PASAKA;23 (3) the respondents membership with PASAKA as a
cooperative was inconsequential to their employment with Norkis
Trading;24 (4) Norkis Trading and PASAKA failed to prove that their
sub-contracting arrangements were covered by any of the conditions
set forth in Section 6 of Department Order No. 10, Series of 1997;25 (5)
Norkis Trading and PASAKA failed to dispute the respondents claim
that their work was supervised by leadmen and production supervisors
of Norkis Trading;26 and (6) Norkis Trading and PASAKA failed to
dispute the respondents allegation that their salaries were paid by
employees of Norkis Trading.27 Norkis Trading and PASAKA were then
declared solidarily liable for the monetary claims of therein
complainants, as provided in the dispositive portion of Regional
Director Balanags Order, to wit:
WHEREFORE, respondent PANAGHIUSA SA KAUSWAGAN
MULTIPURPOSE COOPERATIVEand/or NORKIS TRADING
CORPORATION are hereby ORDERED to pay solidarily the amount
ofTHREE HUNDRED THIRTEEN THOUSAND THREE HUNDRED
FIFTY-FOUR AND 50/100 ([P]313,354.50) PESOS, Philippine
Currency, within ten (10) calendar days from receipt hereof to herein
complainants x x x:
xxxx
SO ORDERED.28

WHEREFORE, the Decision dated June 1, 2000 of the Labor Arbiter is

AFFIRMED, with respect to the DISMISSAL of the complainants herein
respondents for lack of merit [sic], but deleting the portion directing the
complainants to report back to respondent PASAKA for work
assignment and to accept them back to work being an internal concern
of PASAKA.
SO ORDERED.37
The respondents motion for reconsideration was denied by the NLRC
in a Resolution38 dated December 18, 2003. Undaunted, the
respondents questioned the NLRCs rulings before the CA via a
petition for certiorari.
The Ruling of the CA
Finding merit in the petition for certiorari, the CA rendered its decision
reversing and setting aside the decision and resolution of the NLRC.
The dispositive portion of its Decision dated May 7, 2007 reads:
WHEREFORE, the petition is GRANTED. The assailed Decision and
Resolution of the NLRC, are hereby REVERSED and SET ASIDE, and
a new judgment is hereby rendered ordering the private respondents
to:
(1) Reinstate petitioners to their former positions without loss of
seniority rights, and to pay full backwages inclusive of allowances and
their other benefits or their monetary equivalent computed from the
time of illegal dismissal to the time of actual reinstatement; and
(2) Alternatively, if reinstatement is not possible, to pay full backwages
inclusive of other benefits or their monetary equivalent from the time of
illegal dismissal until the same is paid in full, and pay petitioners
separation pay equivalent to one months salary for every year of
service.

SO ORDERED.39

This Courts Ruling

The CA rejected the argument of PASAKA and Norkis Trading that by

virtue of a job contract executed on January 14, 1999, the respondents
were deployed to Norkis International and not to Norkis Trading. The
CA held:
We are not convinced. Private respondents among them, herein
petitioner own evidence belie their claim.
In its Comment, NORKIS TRADING attached the Payroll Registers
for PANAGHIUSA SA KAUSWAGAN (PASAKA) MULTIPURPOSE
COOPERATIVE-NICI Tin Plate covering the payroll periods "12/28/9801/07/99" and "01/08/99-01/14/99". Included among the payees therein
were the petitioners herein respondents. x x x Why were petitioners
included in said payrolls for said payroll periods when the supposed
Contract with NORKIS INTERNATIONAL was not yet executed?
Apparently, private respondents slipped. Thus, we hold that the much
ballyhooed January 14, 1999 Contract between PASAKA and NORKIS
INTERNATIONAL, is but a mere afterthought, a concoction designed
by private respondents to evade their obligations to
petitioners.40 (Citations omitted and emphasis supplied)
The CA also considered Regional Director Balanags finding in LSED
Case No. RO700-9906-CI-CS-168 that PASAKA was engaged in
labor-only contracting. In ruling that the respondents were illegally
dismissed, the CA held that Norkis Tradings refusal to accept the
respondents back to their former positions, offering them instead to
accept a new assignment as washers of vehicles in its sister company,
was a demotion that amounted to a constructive dismissal.
Norkis Tradings motion for reconsideration was denied by the CA in its
Resolution41 dated March 4, 2008. Hence, this petition.
The Present Petition
The petition is founded on the following grounds:
1) THE COURT OF APPEALS HAS DEPARTED FROM THE USUAL
COURSE OF JUDICIAL PROCEEDINGS WHEN IT MADE ITS OWN
FACTUAL FINDINGS AND DISREGARDED THE UNIFORM AND
CONSISTENT FACTUAL FINDINGS OF THE LABOR ARBITER AND
THE NLRC, WHICH MUST BE ACCORDED GREAT WEIGHT,
RESPECT AND EVEN FINALITY. IN SO DOING, THE COURT OF
APPEALS EXCEEDED ITS AUTHORITY ON CERTIORARI UNDER
RULE 65 OF THE RULES OF COURT BECAUSE SUCH FACTUAL
FINDINGS WERE BASED ON SPECULATIONS AND NOT ON
OTHER EVIDENCES [SIC] ON RECORD.
2) THE COURT OF APPEALS HAS DETERMINED A QUESTION OF
SUBSTANCE NOT IN ACCORD WITH LAW AND JURISPRUDENCE
IN RULING THAT THE NLRC COMMITTED GRAVE ABUSE OF
DISCRETION IN ALLEGEDLY IGNORING THE RULING OF THE
REGIONAL DIRECTOR.
3) THE COURT OF APPEALS HAS DETERMINED A QUESTION OF
SUBSTANCE NOT IN ACCORD WITH LAW AND JURISPRUDENCE
IN RULING THAT PETITIONER IS THE EMPLOYER OF
RESPONDENTS.
4) THE COURT OF APPEALS HAS DETERMINED A QUESTION OF
SUBSTANCE NOT IN ACCORD WITH LAW AND JURISPRUDENCE
IN RULING THAT THE RESPONDENTS WERE CONSTRUCTIVELY
DISMISSED CONTRARY TO THE FACTUAL FINDINGS OF THE
LABOR ARBITER AND THE NLRC AND WITHOUT SHOWING ANY
EVIDENCE TO OVERTURN SUCH FINDING OF FACT.42
The respondents oppose these grounds in their Comment.43 In support
of their arguments, the respondents submit with their Comment copies
of the CAs Decision44 and Resolution45 in CA-G.R. SP No. 73880 and
CA-G.R. SP No. 74619, and this Courts Resolutions46 in G.R. Nos.
180078-79.

The Court resolves to deny the petition.

Factual findings of labor officials
may be examined by the courts
when there is a showing that they
were arrived at arbitrarily or in
disregard of evidence on record.
As regards the first ground, the petitioner questions the CAs reversal
of LA Gutierrezs and the NLRCs rulings, and argues that said rulings
should have been accorded great weight and finality by the appellate
court as these were allegedly supported by substantial evidence.
On this matter, the settled rule is that factual findings of labor officials,
who are deemed to have acquired expertise in matters within their
jurisdiction, are generally accorded not only respect but even finality by
the courts when supported by substantial evidence, i.e., the amount of
relevant evidence which a reasonable mind might accept as adequate
to support a conclusion. We emphasize, nonetheless, that these
findings are not infallible. When there is a showing that they were
arrived at arbitrarily or in disregard of the evidence on record, they may
be examined by the courts. The CA can then grant a petition
for certiorari if it finds that the NLRC, in its assailed decision or
resolution, has made a factual finding that is not supported by
substantial evidence. It is within the jurisdiction of the CA, whose
jurisdiction over labor cases has been expanded to review the findings
of the NLRC.47
We have thus explained in Cocomangas Hotel Beach Resort v.
Visca48 that the CA can take cognizance of a petition for certiorari if it
finds that the NLRC committed grave abuse of discretion by
capriciously, whimsically, or arbitrarily disregarding evidence which are
material to or decisive of the controversy. The CA cannot make this
determination without looking into the evidence presented by the
parties. The appellate court needs to evaluate the materiality or
significance of the evidence, which are alleged to have been
capriciously, whimsically, or arbitrarily disregarded by the NLRC, in
relation to all other evidence on record.
This case falls within the exception to the general rule that findings of
fact of labor officials are to be accorded respect and finality on appeal.
As our discussions in the other grounds that are raised in this petition
will demonstrate, the CA has correctly held that the NLRC has
disregarded facts and evidence that are material to the outcome of the
respondents case. No error can be ascribed to the appellate court for
making its own assessment of the facts that are significant to the case
to determine the presence or absence of grave abuse of discretion on
the part of the NLRC, even if the CAs findings turn out to be different
from the factual findings of both the LA and NLRC.
Norkis Trading is the principal
employer of the respondents,
considering that PASAKA is a mere
labor-only contractor.
The second and third grounds, being interrelated as they both pertain
to the CAs finding that an employer-employee relationship existed
between the petitioner and the respondents, shall be discussed jointly.
In its decision, the CA cited the findings of the Regional Director in
LSED Case No. RO700-9906-CI-CS-168 and declared that the NLRC
committed a grave abuse of discretion when it ignored said findings.
The issue of whether or not the respondents shall be regarded as
employees of the petitioner hinges mainly on the question of whether
or not PASAKA is a labor-only contractor. Labor-only contracting, a
prohibited act, is an arrangement where the contractor or
subcontractor merely recruits, supplies, or places workers to perform a
job, work, or service for a principal. In labor-only contracting, the
following elements are present: (a) the contractor or subcontractor
does not have substantial capital or investment to actually perform the
job, work, or service under its own account and responsibility; and (b)

the employees recruited, supplied or placed by such contractor or

subcontractor perform activities which are directly related to the main
business of the principal. These differentiate it from permissible or
legitimate job contracting or subcontracting, which refers to an
arrangement whereby a principal agrees to put out or farm out with the
contractor or subcontractor the performance or completion of a specific
job, work, or service within a definite or predetermined period,
regardless of whether such job, work, or service is to be performed or
completed within or outside the premises of the principal. A person is
considered engaged in legitimate job contracting or subcontracting if
the following conditions concur: (a) the contractor carries on a distinct
and independent business and partakes the contract work on his
account under his own responsibility according to his own manner and
method, free from the control and direction of his employer or principal
in all matters connected with the performance of his work except as to
the results thereof; (b) the contractor has substantial capital or
investment; and (c) the agreement between the principal and the
contractor or subcontractor assures the contractual employees
entitlement to all labor and occupational safety and health standards,
free exercise of the right to self-organization, security of tenure, and
social welfare benefits.49
We emphasize that the petitioners arguments against the
respondents claim that PASAKA is a labor-only contractor, which is
thus to be regarded as a mere agent of Norkis Trading for which the
respondents rendered service, are already mooted by the finality of this
Courts Resolutions dated December 5, 2007 and April 14, 2008 in
G.R. Nos. 180078-79, which stems from the CAs and the DOLE
Secretarys review of the DOLE Regional Directors Order dated
August 22, 2000 in LSED Case No. RO700-9906-CI-CS-168.
To recapitulate, Regional Director Balanag issued on August 22, 2000
its Order50 in LSED Case No. RO700-9906-CI-CS-168 and declared
PASAKA as a mere labor-only contractor, and Norkis Trading as the
true employer of herein respondents. He explained that PASAKA failed
to prove during the conduct of a summary investigation that the
cooperative had substantial capital or investment sufficient to enable it
to perform the functions of an independent contractor. The
respondents claim that the machinery, equipment and supplies they
used to perform their duties were owned by Norkis Trading, and not by
PASAKA, was undisputed. While PASAKA reflected in its Statement of
Financial Condition for the year 1996 property and equipment net of
accumulated depreciation at P344,273.02, there was no showing that
the properties covered thereby were actually and directly used in the
conduct of PASAKAs business.51 The DOLE Regional Director
explained:
Herein respondents among them, herein petitioner failed to prove that
their sub-contracting arrangements fall under any of the conditions set
forth in Sec. 6 of D.O. # 10 S. 1997 to qualify as permissible
contracting or subcontracting as provided for as follows:
Sec. 6. Permissible contracting or subcontracting. Subject to conditions
set forth in Sec. 4 (d) and (e) and Section 5 hereof, the principal may
engage the services of a contractor or subcontractor for the
performance of any of the following:
a.) Works or services temporarily or occasionally needed to meet
abnormal increase in the demand of products or services...
b) Works or services temporarily or occasionally needed by the
principal for undertakings requiring expert or highly technical personnel
to improve the management or operations of an enterprise;
c) Services temporarily needed for the introduction or promotion of new
products...;
d) Works or services not directly related or not integral to main
business or operation of the principal including casual work, janitorial,
security, landscaping and messengerial services and work not related
to manufacturing processes in manufacturing establishments.
e) Services involving the public display of manufacturers products...;

f) Specialized works involving the use of some particular, unusual or

peculiar skills... and
g) Unless a reliever system is in place among the regular workforce,
substitute services for absent regular employees...
It is therefore evident that herein respondents are engaged in "laboronly" contracting as defined in Art. 106 of the Labor Code.
Furthermore, such contracting/sub-contracting arrangement not only
falls under labor-only contracting but also fails to qualify as legitimate
subcontracting as defined under Sec. 4 par. e of D.O. #10 S. 1997, to
wit:
"Sec. 4. Definition of terms.
d)
Subject to the provisions of Sections 6, 7 and 8 of this Rule,
contracting or subcontracting shall be legitimate if the following
circumstances concur:
i) The contractor or subcontractor carries on a distinct and independent
business and undertakes to perform the job, work or service on its own
account and under its own responsibility, according to its own manner
and method, and free from the control and direction of the principal in
all matters connected with the performance of the work except to the
results thereof;
ii) The contractor or subcontractor has substantial capital or
investment; and
iii) The agreement between the principal and contractor or
subcontractor assures the contractual employees entitlement to all
labor and occupational and safety and health standards, free exercise
of the right to self-organization, security of tenure and social and
welfare benefits."52 (Emphasis supplied)
Together with his finding that PASAKA evidently lacked substantial
capital or investment required from legitimate job contractors, Regional
Director Balanag ruled that the cooperative failed to dispute the
respondents allegation that officers of Norkis Trading supervised their
work and paid their salaries. In conclusion, PASAKA and Norkis
Trading were declared solidarily liable for the monetary awards made
in favor of therein claimants-employees, which included herein
respondents. A motion for reconsideration of the Order was denied by
the Regional Director.
Upon appeal, then DOLE Sec. Sto. Tomas affirmed the rulings of
Regional Director Balanag. Both Norkis Trading and PASAKA filed
their separate appeals from the orders of the DOLE Secretary to the
CA via the petitions for certiorari docketed as CA-G.R. SP Nos. 73880
and 74619, but said petitions were dismissed for lack of merit by the
CA in its Decision dated May 7, 2007 and Resolution dated October 9,
2007. The CA held:
This Court agrees with the finding of the DOLE Regional Director, as
affirmed by the Secretary of Labor in her assailed Order, that
petitioners among them, herein petitioner were engaged in labor-only
contracting.
First. PASAKA failed to prove that it has substantial capitalization or
investment in the form of tools, equipment, machineries, work
premises, among others, to qualify as an independent contractor.
PASAKAs claim that it has machineries and equipment
worth P 344,273.02 as reflected in its Financial Statements and
Supplementary Schedules is belied by private respondents among
them, herein respondents evidence which consisted of pictures
showing machineries and equipment which were owned by and
located at the premises of petitioner NORKIS TRADING (as earlier
noted, some of the pictures showed some of the private respondents
operating said machines). Indeed it makes one wonder why, if
PASAKA indeed had such machineries and equipment

worth P 344,273.02, private respondents were using machineries and

equipment owned by and located at the premises of NORKIS
TRADING.
Even granting that indeed PASAKA had machineries and equipment
worth P 344,273.02, it was not shown that said machineries and
equipment were actually used in the performance or completion of the
job, work, or service that it was contracted to render under its
supposed job contract.
xxxx
Second. PASAKA likewise did not carry out an independent business
from NORKIS TRADING. While PASAKA was issued its Certificate of
Registration on July 18, 1991, all it could show to prove that it carried
out an independent business as a job contractor were the Project
Contract dated January 2, 1998 with NORKIS TRADING, and the
Project Contract dated December 18, 1998 with NORKIS
INTERNATIONAL. However, as earlier discussed, the Project Contract
dated December 18, 1998 with NORKIS INTERNATIONAL is nothing
more than an afterthought by the petitioners to confuse its workers and
defeat their rightful claims. The same can be said of the Project
Contract with WICKER and VINE, INC., considering that it was
executed only on February 1, 2000. Verily, said contract was submitted
only to strengthen PASAKAs claim that it is a legitimate job contractor.
Third. Private respondents performed activities directly related to the
principal business of NORKIS TRADING. They worked as welders and
machine operators engaged in the production of steel crates which
were sent to Japan for use as containers of motorcycles that are then
sent back to NORKIS TRADING. Private respondents functions
therefore are directly related and vital to NORKIS TRADINGs business
of manufacturing of Yamaha motorcycles.
All the foregoing considerations affirm by more than substantial
evidence that NORKIS TRADING and PASAKA engaged in labor-only
contracting.53 (Citations omitted and emphasis supplied)
When the case was brought before this Court via the petitions for
review on certiorari docketed as G.R. Nos. 180078-79, we resolved to
issue on December 5, 2007 our Resolution dismissing the appeal for,
among other grounds, the failure of Norkis Trading to sufficiently show
any reversible error in the the CA decision. In our Resolution dated
April 14, 2008, we denied with finality Norkis Tradings motion for
reconsideration on the ground that no substantial argument and
compelling reason was adduced to warrant a reconsideration of our
dismissal of the petition. This Courts resolutions, affirming the findings
of the CA, had then become final and executory.
Applying the doctrine of res judicata, all matters that have been fully
resolved with finality by this Courts dismissal of the appeal that
stemmed from Regional Director Balanags Order dated August 22,
2000 in LSED Case No. RO700-9906-CI-CS-168 are already
conclusive between the parties. Res judicata is defined as a matter
adjudged; a thing judicially acted upon or decided; a thing or matter
settled by judgment. Under this doctrine, an existing final judgment or
decree rendered on the merits, and without fraud or collusion, by a
court of competent jurisdiction, upon any matter within its jurisdiction, is
conclusive of the rights of the parties or their privies, in all other actions
or suits in the same or any other judicial tribunal of concurrent
jurisdiction on the points and matters in issue in the first suit.
To state simply, a final judgment or decree on the merits by a court of
competent jurisdiction is conclusive of the rights of the parties or their
privies in all later suits on all points and matters determined in the
former suit.54
Res judicata has two aspects: bar by prior judgment and
conclusiveness of judgment as provided under Section 47(b) and (c),
Rule 39, respectively, of the Rules of Court.55 Under the doctrine of
conclusiveness of judgment, facts and issues actually and directly
resolved in a former suit cannot be raised in any future case between

the same parties, even if the latter suit may involve a different cause of
action.56
Clearly, res judicata in the concept of conclusiveness of judgment has
set in. In the proceedings before the Regional Director and the LA,
there were identity of parties and identity of issues, although the
causes of action in the two actions were different. First, herein
respondents on the one hand, and Norkis Trading on the other hand,
were all parties in the two cases, being therein complainants and
respondent, respectively. As to the second requisite, the issue of
whether PASAKA was a labor-only contractor which would make
Norkis Trading the true employer of the respondents was the main
issue in the two cases, especially since Norkis Trading had been
arguing in both proceedings that it could not be regarded as the herein
respondents employer, harping on the defense that PASAKA was a
legitimate job contractor.
Similarly, in Dole Philippines, Inc. v. Esteva,57 we held that the finding
of the DOLE Regional Director, which had been affirmed by the
Undersecretary of Labor, by authority of the Secretary of Labor, in an
Order that has reached finality and which provided that the cooperative
Cannery Multi-Purpose Cooperative (CAMPCO) was engaged in laboronly contracting should bind the NLRC in a case for illegal dismissal.
We ruled:
While the causes of action in the proceedings before the DOLE and
the NLRC differ, they are, in fact, very closely related. The DOLE
Regional Office conducted an investigation to determine whether
CAMPCO was violating labor laws, particularly, those on labor-only
contracting. Subsequently, it ruled that CAMPCO was indeed engaging
in labor-only contracting activities, and thereafter ordered to cease and
desist from doing so. x x x The matter of whether CAMPCO was a
labor-only contractor was already settled and determined in the DOLE
proceedings, which should be conclusive and binding upon the NLRC.
What were left for the determination of the NLRC were the issues on
whether there was illegal dismissal and whether respondents should
be regularized.
x x x For the NLRC to ignore the findings of DOLE Regional Director
Parel and DOLE Undersecretary Trajano is an unmistakable and
serious undermining of the DOLE officials authority.58
The rule on conclusiveness of judgment then now precludes this Court
from re-opening the issues that were already settled with finality in
G.R. Nos. 180078-79, which effectively affirmed the CAs findings that
PASAKA was engaged in labor-only contracting, and that Norkis
Trading shall be treated as the employer of the respondents.
In the present petition, Norkis Trading still argues that the NLRC
committed no grave abuse of discretion in ignoring the findings of
Regional Director Balanag considering that his Order had not yet
reached finality at the time the NLRC resolved the appeal from the
decision of the LA. This notwithstanding, this Court holds that the CA
still committed no error in finding grave abuse of discretion on the part
of the NLRC by the latters utter disregard of the findings of the
Regional Director that Norkis Trading should be considered the
employer of herein respondents. As correctly observed by the CA in
the assailed Decision dated May 7, 2007:
Surprisingly, the NLRC failed to consider or even make reference to
the said August 22, 2000 Order of the DOLE Regional Director.
Considering the significance of the DOLE Regional Directors findings,
the same cannot just be perfunctorily rejected. For the NLRC to ignore
the findings of DOLE Regional Director is to undermine or disregard of
[sic] the visitorial and enforcement power of the DOLE Secretary and
his authorized representatives under Article 128 of the Labor Code, as
amended. It was grave abuse of discretion then on the part of the
NLRC to ignore or simply sweep under the rug the findings of the
DOLE Regional Director.59 (Citation omitted and emphasis ours)
A reading of the NLRCs Resolution60 dated December 18, 2003
indicates that while it was confronted with opposing findings of the
Regional Director and the LA on the material issue of labor-only
contracting, it failed to even attempt to review thoroughly the matter,

look into the records, reconcile the differing judgments and make its
own appreciation of the evidence presented by the parties. Instead, it
simply brushed aside the rulings of the Regional Director, without due
consideration of the circumstance that said labor official had the
jurisdiction to rule on the issue pursuant to the visitorial and
enforcement powers of the DOLE Secretary and his duly authorized
representatives under Article 12861 of the Labor Code.
The rule in appeals in labor cases provides that the CA can grant a
petition for certiorari if it finds that the NLRC, in its assailed decision or
resolution, committed grave abuse of discretion by capriciously,
whimsically or arbitrarily disregarding evidence which is material or
decisive of the controversy.62 Significantly, the Secretary of Labor had
already affirmed Regional Director Balanags Order when the appeal
from the LAs rulings was resolved. In the NLRC Resolution dated
December 18, 2003, the Commission nonetheless merely held:
The photocopies of the Order of the Honorable Secretary of the
Department of Labor and Employment dated February 7, 2002 and the
Order of the Regional Director of the Regional Office of the
Department of Labor and Employment finding the existence of laboronly contracting between respondent NORKIS [Trading] and
respondent PASAKA do not provide sufficient basis to disturb Our
Decision. We are not convinced that the facts and evidence, which are
totally distinct from this case and which were presented in a separate
proceedings and before another Office, would be a sufficient and valid
basis to divest the Labor Arbiter a quo of his authority which
undoubtedly the law vests upon him as his exclusive jurisdiction. The
jurisdiction conferred by Article 217 of the Labor Code upon the Labor
Arbiter is "original and exclusive", and his authority to hear and decide
case[s] vested upon him is to the exclusion of any other court or quasijudicial body. By reason of their training, experience, and expertise,
Labor Arbiters are in a better position to resolve controversies, for
which they are conferred original and exclusive jurisdiction by law.
Even Article 218 of the Labor Code does not empower the Regional
Director of the Department of Labor and Employment to share original
and exclusive jurisdiction conferred on the Labor Arbiter by Article 217
x x x.63
Such utter disregard by the NLRC of the findings of the Regional
Director and DOLE Secretary amounts to grave abuse of discretion
amounting to lack or excess of jurisdiction. As this Courts review of the
records would confirm, a judicious study of the evidence presented by
the parties would have supported the finding that Norkis Trading
should be treated as the respondents true employer, with PASAKA
being merely an agent of said employer. PASAKA failed to sufficiently
show that it had substantial capital or investment in the form of tools,
equipment, machineries and work premises required from legitimate
job contractors. The work required from the respondents, being
welders and/or operators of industrial machines, were also directly
related to Norkis Tradings principal business of manufacturing. The
job contract supposedly executed by and between PASAKA and
Norkis International in 1999 deserved nil consideration given that the
respondents had claimed early on that they began working for Norkis
Trading on various dates from 1993 to 1994. Moreover, the records
confirm that Norkis Trading was still among the clients of PASAKA as
of July 1999, as clearly indicated in the memoranda it sent to
respondents Buenavista, Fabroa and Dondoyano on July 22, 1999,
which provide:
Please take note that the recent action you have done in filing a case
against one of our clients, Norkis Trading Co., Inc., has greatly
prejudiced the interest and welfare of the Cooperative.64(Emphasis
ours)
This categorical statement of PASAKA that Norkis Trading was among
its clients at the time the memoranda were issued only further bolsters
the respondents claim, and Regional Director Balanags finding, that
said respondents were deployed by PASAKA to Norkis Trading. This
also contradicts petitioners argument that its contract with PASAKA
had ended in 1998.65
Finally, contrary to the insinuations of Norkis Trading, the fact that
PASAKA was a duly-registered cooperative did not preclude the
possibility that it was engaged in labor-only contracting, as confirmed

by the findings of the Regional Director. An entity is characterized as a

labor-only contractor based on the elements and guidelines
established by law and jurisprudence, judging primarily on the
relationship that the said entity has with the company to which the
workers are deployed, and not on any special arrangement that the
entity has with said workers.
Termination of an employment for
no just or authorized cause
amounts to an illegal dismissal.
As to the issue of whether the respondents were illegally dismissed by
Norkis Trading, we answer in the affirmative, although not by
constructive dismissal as declared by the CA, but by actual dismissal.
Where an entity is declared to be a labor-only contractor, the
employees supplied by said contractor to the principal employer
become regular employees of the latter. Having gained regular status,
the employees are entitled to security of tenure and can only be
dismissed for just or authorized causes and after they had been
afforded due process.66 Termination of employment without just or
authorized cause and without observing procedural due process is
illegal.1wphi1
In claiming that they were illegally dismissed from their employment,
the respondents alleged having been informed by PASAKA that they
would be transferred, upon the behest of Norkis Trading, as Multicab
washers or utility workers to Porta Coeli, a sister company of Norkis
Trading. Norkis Trading does not dispute that such job transfer was
relayed by PASAKA unto the respondents, although the company
contends that the transfer was merely an "offer" that did not constitute
a dismissal. It bears mentioning, however, that the respondents were
not given any other option by PASAKA and Norkis Trading but to
accede to said transfer. In fact, there is no showing that Norkis Trading
would still willingly accept the respondents to work for the company.
Worse, it still vehemently denies that the respondents had ever worked
for it. Again, all defenses of Norkis Trading that anchor on the alleged
lack of employer-employee relationship between it and the
respondents no longer merit any consideration, given that this Courts
findings in G.R. Nos. 180078-79 have become conclusive. Thus, the
respondents transfer to Porta Coeli, although relayed to the
respondents by PASAKA was effectively an act of Norkis Trading.
Where labor-only contracting exists, the Labor Code itself establishes
an employer-employee relationship between the employer and the
employees of the labor-only contractor. The statute establishes this
relationship for a comprehensive purpose: to prevent a circumvention
of labor laws. The contractor is considered merely an agent of the
principal employer and the latter is responsible to the employees of the
labor-only contractor as if such employees had been directly employed
by the principal employer.67
No further evidence or document should then be required from the
respondents to prove such fact of dismissal, especially since Norkis
Trading maintains that it has no duty to admit and treat said
respondents as its employees. Considering that Porta Coeli is an entity
separate and distinct from Norkis Trading, the respondents
employment with Norkis Trading was necessarily severed by the
change in work assignment. It then did not even matter whether or not
the transfer involved a demotion in the respondents rank and work
functions; the intention to dismiss, and the actual dismissal of the
respondents were sufficiently established.
In the absence of a clear showing that the respondents dismissal was
for just or authorized causes, the termination of the respondents
employment was illegal. What may be reasonably deduced from the
records was that Norkis Trading decided on the transfer, after the
respondents had earlier filed their complaint for labor-only contracting
against the company. Even Norkis Tradings contention that the
transfer may be deemed a valid exercise of management prerogative
is misplaced. First, the exercise of management prerogative
presupposes that the transfer is only for positions within the business
establishment. Second, the exercise of management prerogative by
employers is not absolute, as it is limited by law and the general
principles of fair play and justice.

WHEREFORE, premises considered, the petition is DENIED.

13

Id. at 86-87.

SO ORDERED.

14

Id. at 73.

BIENVENIDO L. REYES
Associate Justice

15

Id. at 91-94.

16

Id. at 106-110.

17

Id. at 210-220.

18

Id. at 219.

19

Id. at 217-218.

20

Id. at 223-239.

21

Id. at 236.

22

Id. at 233.

23

Id. at 234.

24

Id. at 235.

25

Id. at 236.

26

Id. at 237.

27

Id.

28

Id. at 238-239.

29

Id. at 221-222.

30

Id. at 268.

31

Id. at 267-287.

32

Id. at 288-289.

33

Id. at 290-291.

34

Id. at 292-293.

35

Id. at 240-245.

36

Id. at 244.

37

Id. at 245.

38

Id. at 246-247.

WE CONCUR:
MARIA LOURDES P. A. SERENO
Chief Justice
Chairperson
TERESITA J. LEONARDO-DE
CASTRO
Associate Justice

LUCAS P. BERSAMIN
Associate Justice

MARTIN S. VILLARAMA, JR.

Associate Justice
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, 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.
MARIA LOURDES P. A. SERENO
Chief Justice

Footnotes
1

Penned by Associate Justice francisco P. Acosta, with

Associate Justices Arsenio J. Magpale and Agustin S. Dizon,
concurring; rollo, pp. 54-65.
2

Id. at 67-69.

Id. at 71.

Id. at 72.

Id. at 70-79.

Id. at 71-72.

The other complainants in LSED Case No. RO700-9906CI-CS-168 were Bernardo Tumulak, Jr., Efren Dadol,
Melecio Bontuyan, Jose Ramil Suico, Constancio Layasan,
Renato Montaner, Ronilo Bordario, Profil Suico and
Florencio Capangpangan.
8

Rollo, p. 72.

39

Id. at 64.

Id. at 83.

40

Id. at 60-61.

10

Id. at 80-82.

41

Id. at 67-69.

11

Id. at 72.

42

Id. at 27-28.

12

Id. at 84-85.

43

Id. at 250-266.

44

Id. at 267-287.

45

Id. at 288-289.

46

Id. at 290-291 and 292-293.

have access to employers records and premises at any time

of the day or night whenever work is being undertaken
therein, and the right to copy therefrom, to question any
employee and investigate any fact, condition or matter which
may be necessary to determine violations or which may aid
in the enforcement of this Code and of any labor law, wage
order or rules and regulations pursuant thereto.

47

Prince Transport, Inc. v. Garcia, G.R. No. 167291, January

12, 2011, 639 SCRA 312, 325, citing Emcor Incorporated v.
Sienes, G.R. No. 152101, September 8, 2009, 598 SCRA
617, 632.
48

(b) Notwithstanding the provisions of Articles 129

and 217 of this Code to the contrary, and in cases
where the relationship of employer-employee still
exists, the Secretary of Labor and Employment or
his duly authorized representatives shall have the
power to issue compliance orders to give effect to
the labor standards provisions of this Code and
other labor legislation based on the findings of
labor employment and enforcement officers or
industrial safety engineers made in the course of
inspection. The Secretary or his duly authorized
representatives shall issue writs of execution to
the appropriate authority for the enforcement of
their orders, except in cases where the employer
contests the findings of the labor employment and
enforcement officer and raises issues supported
by documentary proofs which were not considered
in the course of inspection.

G.R. No. 167045, August 29, 2008, 563 SCRA 705.

49

Babas v. Lorenzo Shipping Corporation, G.R. No. 186091,

December 15, 2010, 638 SCRA 735, 745-746, citing Vinoya
v. NLRC, 381 Phil. 460, 472-473 (2000).
50

Rollo, pp. 223-239.

51

Id. at 234.

52

Id. at 236-237.

53

Id. at 283-285.

An order issued by the duly authorized

representative of the Secretary of Labor and
Employment under this Article may be appealed to
the latter. In case said order involves a monetary
award, an appeal by the employer may be
perfected only upon the posting of a cash or surety
bond issued by a reputable bonding company duly
accredited by the Secretary of Labor and
Employment in the amount equivalent to the
monetary award in the order appealed from. (As
amended by R.A. No. 7730, June 2, 1994).

54

Antonio v. Sayman Vda. de Monje, G.R. No. 149624,

September 29, 2010, 631 SCRA 471, 479-480, citing
Agustin v. Delos Santos, G.R. No. 168139, January 20,
2009, 576 SCRA 576, 585.
55

Sec. 47. Effects of judgments or final orders. The effect of

a judgment or final order rendered by a court of the
Philippines, having jurisdiction to pronounce the judgment or
final order, may be as follows:
62

xxxx
(b) In other cases, the judgment or final order is,
with respect to the matter directly adjudged or as
to any other matter that could have been raised in
relation thereto, conclusive between the parties
and their successors in interest by title subsequent
to the commencement of the action or special
proceeding, litigating for the same thing and under
the same title and in the same capacity; and
(c) In any other litigation between the same parties
or their successors in interest, that only is deemed
to have been adjudged in a former judgment or
final order which appears upon its face to have
been so adjudged, or which was actually and
necessarily included therein or necessary thereto.

AMA Computer College, Inc. v. Garcia, G.R. No. 166703,

April 14, 2008, 551 SCRA 254, 270.
63

Rollo, pp. 246-247.

64

Id. at 80-82.

65

Id. at 103.

66

Supra note 49, at 747.

67

Aliviado v. Procter and Gamble Phils., Inc., G.R. No.

160506, June 6, 2011, 650 SCRA 400, 417, citing PCI
Automation Center, Inc. v. NLRC, 322 Phil. 536, 548 (1996).
Republic of the Philippines
SUPREME COURT
Manila

56

Tan v. Court of Appeals, 415 Phil. 675, 681-682 (2001),

citing Mata v. Court of Appeals, 376 Phil. 525, 540 (1999).

FIRST DIVISION
57

538 Phil. 817 (2006).

58

Id. at 863-864.

59

Rollo, pp. 61-62.

60

Id. at 246-247.

G.R. No. 153511

July 18, 2012

LEGEND HOTEL (MANILA), owned by TITANIUM CORPORATION,

and/or, NELSON NAPUD, in his capacity as the President of
Petitioner Corporation, Petitioner,
vs.
HERNANI S. REALUYO, also known as JOEY ROA, Respondent.

61

Art. 128. Visitorial and enforcement power. (a) The

Secretary of Labor and Employment or his duly authorized
representatives, including labor regulation officers, shall

DECISION

BERSAMIN, J.:
This labor case for illegal dismissal involves a pianist employed to
perform in the restaurant of a hotel. On August 9, 1999, respondent,
whose stage name was Joey R. Roa, filed a complaint for alleged
unfair labor practice, constructive illegal dismissal, and the
underpayment/nonpayment of his premium pay for holidays,
separation pay, service incentive leave pay, and 13111 month pay. He
prayed for attorney's fees, moral damages off P100,000.00 and
exemplary damages for P100,000.00.1

Respondent appealed, but the National Labor Relations Commission

(NLRC) affirmed the LA on May 31, 2001.5
Respondent assailed the decision of the NLRC in the Court of Appeals
(CA) on certiorari.
On February 11, 2002, the CA set aside the decision of the
NLRC,6 holding:
xxx

Respondent averred that he had worked as a pianist at the Legend

Hotels Tanglaw Restaurant from September 1992 with an initial rate of
P400.00/night that was given to him after each nights performance;
that his rate had increased to P750.00/night; and that during his
employment, he could not choose the time of performance, which had
been fixed from 7:00 pm to 10:00 pm for three to six times/week. He
added that the Legend Hotels restaurant manager had required him to
conform with the venues motif; that he had been subjected to the rules
on employees representation checks and chits, a privilege granted to
other employees; that on July 9, 1999, the management had notified
him that as a cost-cutting measure his services as a pianist would no
longer be required effective July 30, 1999; that he disputed the excuse,
insisting that Legend Hotel had been lucratively operating as of the
filing of his complaint; and that the loss of his employment made him
bring his complaint.2
In its defense, petitioner denied the existence of an employeremployee relationship with respondent, insisting that he had been only
a talent engaged to provide live music at Legend Hotels Madison
Coffee Shop for three hours/day on two days each week; and stated
that the economic crisis that had hit the country constrained
management to dispense with his services.
On December 29, 1999, the Labor Arbiter (LA) dismissed the
complaint for lack of merit upon finding that the parties had no
employer-employee relationship.3 The LA explained thusly:
xxx
On the pivotal issue of whether or not there existed an employeremployee relationship between the parties, our finding is in the
negative. The finding finds support in the service contract dated
September 1, 1992 xxx.

Applying the above-enumerated elements of the employee-employer

relationship in this case, the question to be asked is, are those
elements present in this case?
The answer to this question is in the affirmative.
xxx
Well settled is the rule that of the four (4) elements of employeremployee relationship, it is the power of control that is more decisive.
In this regard, public respondent failed to take into consideration that in
petitioners line of work, he was supervised and controlled by
respondents restaurant manager who at certain times would require
him to perform only tagalog songs or music, or wear barong tagalog to
conform with Filipiniana motif of the place and the time of his
performance is fixed by the respondents from 7:00 pm to 10:00 pm,
three to six times a week. Petitioner could not choose the time of his
performance. xxx.
As to the status of petitioner, he is considered a regular employee of
private respondents since the job of the petitioner was in furtherance of
the restaurant business of respondent hotel. Granting that petitioner
was initially a contractual employee, by the sheer length of service he
had rendered for private respondents, he had been converted into a
regular employee xxx.
xxx
xxx In other words, the dismissal was due to retrenchment in order to
avoid or minimize business losses, which is recognized by law under
Article 283 of the Labor Code, xxx.

xxx
xxx
Even if we grant the initial non-existence of the service contract, as
complainant suggests in his reply (third paragraph, page 4), the picture
would not change because of the admission by complainant in his
letter dated October 8, 1996 (Annex "C") that what he was receiving
was talent fee and not salary.

WHEREFORE, foregoing premises considered, this petition is

GRANTED. xxx.7
Issues

This is reinforced by the undisputed fact that complainant received his

talent fee nightly, unlike the regular employees of the hotel who are
paid by monthly xxx.
xxx
And thus, absent the power to control with respect to the means and
methods by which his work was to be accomplished, there is no
employer-employee relationship between the parties xxx.
xxx
WHEREFORE, this case must be, as it is hereby, DISMISSED for lack
of merit.
SO ORDERED.4

In this appeal, petitioner contends that the CA erred:

I. XXX WHEN IT RULED THAT THERE IS THE
EXISTENCE OF EMPLOYER-EMPLOYEE RELATIONSHIP
BETWEEN THE PETITIONER HOTEL AND RESPONDENT
ROA.
II. XXX IN FINDING THAT ROA IS A REGULAR
EMPLOYEE AND THAT THE TERMINATION OF HIS
SERVICES WAS ILLEGAL. THE CA LIKEWISE ERRED
WHEN IT DECLARED THE REINSTATEMENT OF ROA TO
HIS FORMER POSITION OR BE GIVEN A SEPARATION
PAY EQUIVALENT TO ONE MONTH FOR EVERY YEAR
OF SERVICE FROM SEPTEMBER 1999 UNTIL JULY 30,
1999 CONSIDERING THE ABSENCE OF AN
EMPLOYMENT RELATIONSHIP BETWEEN THE PARTIES.

III. XXX WHEN IT DECLARED THAT ROA IS ENTITLED TO

BACKWAGES, SERVICE INCENTIVE LEAVE AND OTHER
BENEFITS CONSIDERING THAT THERE IS NO
EMPLOYER EMPLOYEE RELATIONSHIP BETWEEN THE
PARTIES.
IV. XXX WHEN IT NULLIFIED THE DECISION DATED MAY
31, 2001 IN NLRC NCR CA NO. 023404-2000 OF THE
NLRC AS WELL AS ITS RESOLUTION DATED JUNE 29,
2001 IN FAVOR OF HEREIN PETITIONER HOTEL WHEN
HEREIN RESPONDENT ROA FAILED TO SHOW PROOF
THAT THE NLRC AND THE LABOR ARBITER HAVE
COMMITTED GRAVE ABUSE OF DISCRETION OR LACK
OF JURISDICTION IN THEIR RESPECTIVE DECISIONS.
V. XXX WHEN IT OVERLOOKED THE FACT THAT THE
PETITION WHICH ROA FILED IS IMPROPER SINCE IT
RAISED QUESTIONS OF FACT.
VI. XXX WHEN IT GAVE DUE COURSE TO THE PETITION
FILED BY ROA WHEN IT IS CLEARLY IMPROPER AND
SHOULD HAVE BEEN DISMISSED OUTRIGHT
CONSIDERING THAT A PETITION FOR CERTIORARI
UNDER RULE 65 IS LIMITED ONLY TO QUESTIONS OR
ISSUES OF GRAVE ABUSE OF DISCRETION OR LACK
OF JURISDICTION COMMITTED BY THE NLRC OR THE
LABOR ARBITER, WHICH ISSUES ARE NOT PRESENT IN
THE CASE AT BAR.
The assigned errors are divided into the procedural issue of whether or
not the petition for certiorari filed in the CA was the proper recourse;
and into two substantive issues, namely: (a) whether or not respondent
was an employee of petitioner; and (b) if respondent was petitioners
employee, whether he was validly terminated.
Ruling
The appeal fails.
Procedural Issue:
Certiorari was a proper recourse
Petitioner contends that respondents petition for certiorari was
improper as a remedy against the NLRC due to its raising mainly
questions of fact and because it did not demonstrate that the NLRC
was guilty of grave abuse of discretion.
The contention is unwarranted. There is no longer any doubt that a
petition for certiorari brought to assail the decision of the NLRC may
raise factual issues, and the CA may then review the decision of the
NLRC and pass upon such factual issues in the process. 8 The power
of the CA to review factual issues in the exercise of its original
jurisdiction to issue writs of certiorari is based on Section 9 of Batas
Pambansa Blg. 129, which pertinently provides that the CA "shall have
the power to try cases and conduct hearings, receive evidence and
perform any and all acts necessary to resolve factual issues raised in
cases falling within its original and appellate jurisdiction, including the
power to grant and conduct new trials or further proceedings."
Substantive Issue No. 1:
Employer-employee relationship existed between the parties
We next ascertain if the CA correctly found that an employer-employee
relationship existed between the parties.
The issue of whether or not an employer-employee relationship existed
between petitioner and respondent is essentially a question of
fact.9 The factors that determine the issue include who has the power

to select the employee, who pays the employees wages, who has the
power to dismiss the employee, and who exercises control of the
methods and results by which the work of the employee is
accomplished.10 Although no particular form of evidence is required to
prove the existence of the relationship, and any competent and
relevant evidence to prove the relationship may be admitted,11 a finding
that the relationship exists must nonetheless rest on substantial
evidence, which is that amount of relevant evidence that a reasonable
mind might accept as adequate to justify a conclusion.12
Generally, the Court does not review factual questions, primarily
because the Court is not a trier of facts. However, where, like here,
there is a conflict between the factual findings of the Labor Arbiter and
the NLRC, on the one hand, and those of the CA, on the other hand, it
becomes proper for the Court, in the exercise of its equity jurisdiction,
to review and re-evaluate the factual issues and to look into the
records of the case and re-examine the questioned findings.13
A review of the circumstances reveals that respondent was, indeed,
petitioners employee. He was undeniably employed as a pianist in
petitioners Madison Coffee Shop/Tanglaw Restaurant from September
1992 until his services were terminated on July 9, 1999.
First of all, petitioner actually wielded the power of selection at the time
it entered into the service contract dated September 1, 1992 with
respondent. This is true, notwithstanding petitioners insistence that
respondent had only offered his services to provide live music at
petitioners Tanglaw Restaurant, and despite petitioners position that
what had really transpired was a negotiation of his rate and time of
availability. The power of selection was firmly evidenced by, among
others, the express written recommendation dated January 12, 1998
by Christine Velazco, petitioners restaurant manager, for the increase
of his remuneration.14
Petitioner could not seek refuge behind the service contract entered
into with respondent. It is the law that defines and governs an
employment relationship, whose terms are not restricted to those fixed
in the written contract, for other factors, like the nature of the work the
employee has been called upon to perform, are also considered. The
law affords protection to an employee, and does not countenance any
attempt to subvert its spirit and intent. Any stipulation in writing can be
ignored when the employer utilizes the stipulation to deprive the
employee of his security of tenure. The inequality that characterizes
employer-employee relations generally tips the scales in favor of the
employer, such that the employee is often scarcely provided real and
better options.15
Secondly, petitioner argues that whatever remuneration was given to
respondent were only his talent fees that were not included in the
definition of wage under the Labor Code; and that such talent fees
were but the consideration for the service contract entered into
between them.
The argument is baseless.
Respondent was paid P400.00 per three hours of performance from
7:00 pm to 10:00 pm, three to six nights a week. Such rate of
remuneration was later increased to P750.00 upon restaurant manager
Velazcos recommendation. There is no denying that the remuneration
denominated as talent fees was fixed on the basis of his talent and skill
and the quality of the music he played during the hours of performance
each night, taking into account the prevailing rate for similar talents in
the entertainment industry.16
Respondents remuneration, albeit denominated as talent fees, was
still considered as included in the term wage in the sense and context
of the Labor Code, regardless of how petitioner chose to designate the
remuneration. Anent this, Article 97(f) of the Labor Code clearly states:
xxx wage paid to any employee shall mean the remuneration or
earnings, however designated, capable of being expressed in terms of
money, whether fixed or ascertained on a time, task, piece, or
commission basis, or other method of calculating the same, which is

payable by an employer to an employee under a written or unwritten

contract of employment for work done or to be done, or for services
rendered or to be rendered, and includes the fair and reasonable
value, as determined by the Secretary of Labor, of board, lodging, or
other facilities customarily furnished by the employer to the employee.
Clearly, respondent received compensation for the services he
rendered as a pianist in petitioners hotel. Petitioner cannot use the
service contract to rid itself of the consequences of its employment of
respondent. There is no denying that whatever amounts he received
for his performance, howsoever designated by petitioner, were his
wages.
It is notable that under the Rules Implementing the Labor Code and as
held in Tan v. Lagrama,17 every employer is required to pay his
employees by means of a payroll, which should show in each case,
among others, the employees rate of pay, deductions made from such
pay, and the amounts actually paid to the employee. Yet, petitioner did
not present the payroll of its employees to bolster its insistence of
respondent not being its employee.
That respondent worked for less than eight hours/day was of no
consequence and did not detract from the CAs finding on the
existence of the employer-employee relationship. In providing that the "
normal hours of work of any employee shall not exceed eight (8) hours
a day," Article 83 of the Labor Code only set a maximum of number of
hours as "normal hours of work" but did not prohibit work of less than
eight hours.
Thirdly, the power of the employer to control the work of the employee
is considered the most significant determinant of the existence of an
employer-employee relationship.18 This is the so-called control test,
and is premised on whether the person for whom the services are
performed reserves the right to control both the end achieved and the
manner and means used to achieve that end.19
Petitioner submits that it did not exercise the power of control over
respondent and cites the following to buttress its submission, namely:
(a) respondent could beg off from his nightly performances in the
restaurant for other engagements; (b) he had the sole prerogative to
play and perform any musical arrangements that he wished; (c)
although petitioner, through its manager, required him to play at certain
times a particular music or song, the music, songs, or arrangements,
including the beat or tempo, were under his discretion, control and
direction; (d) the requirement for him to wear barong Tagalog to
conform with the Filipiniana motif of the venue whenever he performed
was by no means evidence of control; (e) petitioner could not require
him to do any other work in the restaurant or to play the piano in any
other places, areas, or establishments, whether or not owned or
operated by petitioner, during the three hour period from 7:00 pm to
10:00 pm, three to six times a week; and (f) respondent could not be
required to sing, dance or play another musical instrument.
A review of the records shows, however, that respondent performed
his work as a pianist under petitioners supervision and control.
Specifically, petitioners control of both the end achieved and the
manner and means used to achieve that end was demonstrated by the
following, to wit:
a. He could not choose the time of his performance, which
petitioners had fixed from 7:00 pm to 10:00 pm, three to six
times a week;
b. He could not choose the place of his performance;
c. The restaurants manager required him at certain times to
perform only Tagalog songs or music, or to wear barong
Tagalog to conform to the Filipiniana motif; and
d. He was subjected to the rules on employees
representation check and chits, a privilege granted to other
employees.

Relevantly, it is worth remembering that the employer need not actually

supervise the performance of duties by the employee, for it sufficed
that the employer has the right to wield that power.
Lastly, petitioner claims that it had no power to dismiss respondent due
to his not being even subject to its Code of Discipline, and that the
power to terminate the working relationship was mutually vested in the
parties, in that either party might terminate at will, with or without
cause.
The claim is contrary to the records. Indeed, the memorandum
informing respondent of the discontinuance of his service because of
the present business or financial condition of petitioner20 showed that
the latter had the power to dismiss him from employment.21
Substantive Issue No. 2:
Validity of the Termination
Having established that respondent was an employee whom petitioner
terminated to prevent losses, the conclusion that his termination was
by reason of retrenchment due to an authorized cause under the Labor
Code is inevitable.
Retrenchment is one of the authorized causes for the dismissal of
employees recognized by the Labor Code. It is a management
prerogative resorted to by employers to avoid or to minimize business
losses. On this matter, Article 283 of the Labor Code states:
Article 283. Closure of establishment and reduction of personnel.
The employer may also terminate the employment of any employee
due to the installation of labor-saving devices, redundancy,
retrenchment to prevent losses or the closing or cessation of operation
of the establishment or undertaking unless the closing is for the
purpose of circumventing the provisions of this Title, by serving a
written notice on the workers and the Ministry of Labor and
Employment at least one (1) month before the intended date thereof.
xxx. 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.
The Court has laid down the following standards that an employer
should meet to justify retrenchment and to foil abuse, namely:
(a) The expected losses should be substantial and not
merely de minimis in extent;
(b) The substantial losses apprehended must be reasonably
imminent;
(c) The retrenchment must be reasonably necessary and
likely to effectively prevent the expected losses; and
(d) The alleged losses, if already incurred, and the expected
imminent losses sought to be forestalled must be proved by
sufficient and convincing evidence.22
Anent the last standard of sufficient and convincing evidence, it ought
to be pointed out that a less exacting standard of proof would render
too easy the abuse of retrenchment as a ground for termination of
services of employees.23
Was the retrenchment of respondent valid?
In termination cases, the burden of proving that the dismissal was for a
valid or authorized cause rests upon the employer. Here, petitioner did
not submit evidence of the losses to its business operations and the

economic havoc it would thereby imminently sustain. It only claimed

that respondents termination was due to its "present business/financial
condition." This bare statement fell short of the norm to show a valid
retrenchment. Hence, we hold that there was no valid cause for the
retrenchment of respondent.
Indeed, not every loss incurred or expected to be incurred by an
employer can justify retrenchment.1wphi1 The employer must prove,
among others, that the losses are substantial and that the
retrenchment is reasonably necessary to avert such losses. Thus, by
its failure to present sufficient and convincing evidence to prove that
retrenchment was necessary, respondents termination due to
retrenchment is not allowed.
The Court realizes that the lapse of time since the retrenchment might
have rendered respondent's reinstatement to his former job no longer
feasible. If that should be true, then petitioner should instead pay to
him separation pay at the rate of one. month pay for every year of
service computed from September 1992 (when he commenced to work
for the petitioners) until the finality of this decision, and full backwages
from the time his compensation was withheld until the finality of this
decision.
WHEREFORE, we DENY the petition for review on certiorari, and
AFFIRM the decision of the Court of Appeals promulgated on February
11, 2002, subject to the modification that should reinstatement be no
longer feasible, petitioner shall pay to respondent separation pay of
one month for every year of service computed from September 1992
until the finality of this decision, and full backwages from the time his
compensation was withheld until the finality of this decision.

ANTONIO T. CARPIO
Senior Associate Justice
(Per Section 12 R.A. 296, The Judiciary Act of 1948, as amended)

Footnotes
*

Vice Justice Teresita J. Leonardo-De Castro, who is on

wellness leave, per Special Order No. 1252 issued on July
12, 2012.
1

Rollo. p. 45.

Id. at 53-54.

Id. at 53-58.

Id. at 55-58.

Id. at 60-64.

Id. at 67-77; penned by Associate Justice Mercedes GozoDadole (retired), with Associate Justice Salvador J. Valdez,
Jr. (retired/deceased) and Associate Justice Juan Q.
Enriquez, Jr. (retired) concurring.

Costs of suit to be paid by the petitioners.

SO ORDERED.

Id. at 71-76.

Leonardo v. Court of Appeals, G.R. No. 152459, June 15,

2006, 490 SCRA 691, 697; St. Martin Funeral Homes v.
NLRC, G.R. No. 130866, September 16, 1998, 295 SCRA
494, 502.

LUCAS P. BERSAMIN
Associate justice
Acting Chairperson, First Division

Lopez v. Bodega City, G.R. No. 155731, September 3,

2007, 532 SCRA 56, 64; Manila Water Company, Inc. v.
Pea, G.R. No. 158255, July 8, 2004, 434 SCRA 53, 58.

WE CONCUR:
MARIANO C. DEL CASTILLO
Associate justice

10

Leonardo v. Court of Appeals, supra, note 8, p. 700.

11

ROBERTO A. ABAD*
Associate Justice

MARTIN S. VILLARAMA, JR.

Associate Justice

Opulencia Ice Plant and Storage v. NLRC, G.R. No.

98368, December 15, 1993, 228 SCRA 473, 478.
12

ESTELA M. PERLAS-BERNABE
Associate justice

Section 5, Rule 133, Rules of Court; Peoples

Broadcasting (Bombo Radyo Phils., Inc.) v. Secretary of the
Department of Labor and Employment, G.R. No. 179652,
May 8, 2009, 587 SCRA 724, 753.

ATTESTATION
13

l 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 Courts Division.

Lopez v. Bodega City, supra, p. 64; Manila Water

Company, Inc. v. Pena, supra, pp. 58-59; Tiu v. Pasaol, Sr.,
G.R. No. 139876, April 30, 2003, 402 SCRA 312, 319.
14

LUCAS P. BERSAMIN
Associate justice
Acting Chairperson, First Division
CERTIFICATION
Pursuant to Section 13, Article VII of the Constitution and the Division
Acting 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.

Rollo, p. 47.

15

Paguio v. National Labor Relations Commission, G.R. No.

147816, May 9, 2003, 403 SCRA 190, 198.
16

Rollo, p. 14.

17

G.R. No. 151228, August 15, 2002, 387 SCRA 393.

18

Coca Cola Bottlers Phils., Inc. v. NLRC, G.R. No. 120466,

May 17, 1999, 307 SCRA 131, 139.
19

Leonardo v. Court of Appeals, supra, note 8, p. 700.

20

Rollo, p. 46.

21

Television and Production Exponents, Inc. v. Servaa,

G.R. No. 167648, January 28, 2008, 542 SCRA 578, 587.
22

Oriental Petroleum and Minerals Corporation v. Fuentes,

G.R. No. 151818, October 14, 2005, 473 SCRA 106, 115;
Anino v. National Labor Relations Commission, G.R. No.
123226, May 21, 1998, 290 SCRA 489, 502.
23

Oriental Petroleum and Minerals Corporation v. Fuentes,

supra, pp. 115-116.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 171118

September 10, 2012

PARK HOTEL, J's PLAYHOUSE BURGOS CORP., INC., and/or

GREGG HARBUTT, General Manager, ATTY. ROBERTO
ENRIQUEZ, President, and BILL PERCY, Petitioners,
vs.
MANOLO SORIANO, LESTER GONZALES, and YOLANDA
BADILLA, Respondents.

Harbutt shouted at him for having participated in the formation of a

union. He was later dismissed from work. For his part, Gonzales
averred that he was coerced to resign by Percy and Harbutt in the
presence of their goons. Badilla10 claimed that she was also forced by
Percy and Harbutt to sign a resignation letter, but she refused to do so
because she was innocent of the charges against her. She was
nevertheless dismissed from service.
The three (3) respondents averred that they never received the
memoranda containing their alleged violation of company rules and
they argued that these memoranda were fabricated to give a
semblance of cause to their termination. Soriano and Gonzales further
claimed that the complaint filed against them was only an afterthought
as the same was filed after petitioners learned that a complaint for
illegal dismissal was already instituted against them.
On September 27, 1998, the LA rendered a Decision11 finding that
respondents were illegally dismissed because the alleged violations
they were charged with were not reduced in writing and were not made
known to them, thus, denying them due process. The LA found that
respondents did not actually receive the memoranda allegedly issued
by petitioners, and that the same were mere afterthought to conceal
the illegal dismissal. The dispositive portion of the Decision reads:
WHEREFORE, premises all considered, respondents (petitioners
herein) are hereby ordered, jointly and severally:
a. To reinstate within ten (10) days herein complainants to
their former positions without loss of seniority rights with full
backwages from actual dismissal to actual reinstatement;

DECISION
PERALTA, J.:
Before this Court is a petition for review on certiorari under Rule 45 of
the Rules of Court seeking to set aside the Decision1 and the
Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No. 67766.
The antecedents are as follows:
Petitioner Park Hotel3 is a corporation engaged in the hotel business.
Petitioners Gregg Harbutt4 (Harbutt) and Bill Percy5 (Percy) are the
General Manager and owner, respectively, of Park Hotel. Percy,
Harbutt and Atty. Roberto Enriquez are also the officers and
stockholders of Burgos Corporation (Burgos),6 a sister company of
Park Hotel.
Respondent Manolo Soriano (Soriano) was hired by Park Hotel in July
1990 as Maintenance Electrician, and then transferred to Burgos in
1992. Respondent Lester Gonzales (Gonzales) was employed by
Burgos as Doorman, and later promoted as Supervisor. Respondent
Yolanda Badilla (Badilla) was a bartender of J's Playhouse operated by
Burgos.
In October of 1997, Soriano, Gonzales and Badilla7 were dismissed
from work for allegedly stealing company properties. As a result,
respondents filed complaints for illegal dismissal, unfair labor practice,
and payment of moral and exemplary damages and attorney's fees,
before the Labor Arbiter (LA). In their complaints, respondents alleged
that the real reason for their dismissal was that they were organizing a
union for the company's employees.
On the other hand, petitioners alleged that aside from the charge of
theft, Soriano and Gonzales have violated various company rules and
regulations8 contained in several memoranda issued to them. After
dismissing respondents, Burgos filed a case for qualified theft against
Soriano and Gonzales before the Makati City Prosecutor's Office, but
the case was dismissed for insufficiency of evidence.
In his Affidavit,9 Soriano claimed that on October 4, 1997, he was
barred from entering the company premises and that the following day,

b. To declare the respondents (petitioners herein) guilty of

unfair labor practice for terminating complainants due to their
union activities, which is union-busting, and to pay a fine of
Ten Thousand Pesos (P 10,000.00) pursuant to Article 288
of the Labor Code, as amended, payable to the Commission;
c. To pay the amount of One Hundred Fifty Thousand
[Pesos] (P 150,000.00) each to complainants by way of
moral and exemplary damages, plus ten percent (10%)
attorney's fees of the total award, chargeable to the
respondents (petitioners herein).
SO ORDERED.12
Unsatisfied with the LA's decision, petitioners appealed to the National
Labor Relations Commission (NLRC). On August 31, 1999, the NLRC,
First Division, rendered a Decision13 remanding the case to the
arbitration branch of origin for further proceedings.14 On August 3,
2000, the LA rendered a new Decision, the dispositive portion of which
reads as follows:
WHEREFORE, premises all considered, respondents (petitioners
herein) are hereby ORDERED, jointly and severally:
a. to reinstate within ten (10) days herein three (3)
complainants to their former positions without loss of
seniority rights with full backwages from actual dismissal to
actual reinstatement; to pay complainant Soriano his unpaid
wages for seven (7) days in the amount of P 1,680.00, his
five (5) days incentive leave pay in the amount of P 1,200,00
(P 240x5), unpaid proportionate 13th month pay in the
amount of P 4,992.00, plus other benefits;
b. to cease and desist from committing unfair labor practice
against the complainant and to pay a fine of Ten Thousand
(P 10,000.00) Pesos pursuant to Art. 288 of the Labor Code,
payable to the Commission; and
c. to pay the amount of P 150,000.0015 each to the
complainants by way of moral and exemplary damages, plus

ten percent (10%) attorney's fees of the total award,

chargeable to the respondents (petitioners herein).

dismissed; and (2) if petitioners are liable, whether Park Hotel, Percy
and Harbutt are jointly and severally liable with Burgos for the
dismissal of respondents.

SO ORDERED.16
Discontented with the LA's decision, petitioners again appealed to the
NLRC. On February 1, 2001, the NLRC affirmed the LA's decision and
dismissed the appeal for lack of merit.17 Petitioners filed a motion for
reconsideration, but it was denied for lack of merit.18
Undaunted, Park Hotel, Percy, and Harbutt filed a petition
for certiorari with the CA ascribing grave abuse of discretion amounting
to lack or excess of jurisdiction on the part of the NLRC in holding Park
Hotel, Harbutt and Percy jointly and severally liable to respondents.
On January 24, 2005, the CA rendered a Decision19 dismissing the
petition and affirming with modification the ruling of the NLRC, the
dispositive portion of which states:
WHEREFORE, the instant Petition is DISMISSED for lack of merit and
the assailed Decision dated 1 February 2001 of the 1st Division of the
NLRC is hereby AFFIRMED with MODIFICATION in that the award of
damages is reduced to P 100,000.00 in favor of each of the Private
Respondents, including 10% of the total amount of wages to be
received as attorney's fees.
SO ORDERED.20
The CA ruled that petitioners failed to observe the mandatory
requirements provided by law in the conduct of terminating
respondents, i.e., lack of due process and just cause. The CA also
found that petitioners' primary objective in terminating respondents'
employment was to suppress their right to self-organization.
Petitioners filed a Motion for Reconsideration, but was denied in the
Resolution21 dated January 13, 2006.
Hence, the instant petition assigning the following errors:
I
THE HONORABLE COURT OF APPEALS GRAVELY
ABUSED ITS DISCRETION AND ACTED WITHOUT
AUTHORITY IN FINDING PARK HOTEL, BILL PERCY AND
[GREGORY] HARBUTT, TOGETHER WITH BURGOS
CORPORATION AND ITS PRESIDENT, AS ONE AND THE
SAME ENTITY.
II
THE HONORABLE COURT OF APPEALS COMMITTED
ERROR WHEN IT OVERLOOKED MATERIAL
CIRCUMSTANCES AND FACTS, WHICH IF TAKEN INTO
ACCOUNT, WOULD ALTER THE RESULTS OF ITS
DECISION, PARTICULARLY IN FINDING [THAT] THE SAID
ENTITIES WERE FORMED IN PURSUANCE TO THE
COMMISSION OF FRAUD.
III
THE HONORABLE COURT OF APPEALS GRAVELY
ABUSED ITS DISCRETION AND ACTED WITHOUT
AUTHORITY IN FINDING PARK HOTEL, BILL PERCY AND
GREGORY HARBUTT, TOGETHER WITH BURGOS
CORPORATION AND ITS PRESIDENT, GUILTY OF
UNFAIR LABOR PRACTICE.22
For brevity and clarity, the issues in this case may be re-stated and
simplified as follows: (1) whether the respondents were validly

Park Hotel argued that it is not liable on the ground that respondents
were not its employees. On the other hand, Percy and Harbutt argued
that the CA committed error in piercing the corporate veil between
them and respondent corporations, thereby making them all solidarily
liable to the respondents.
To begin with, it is significant to note that the LA, the NLRC and the CA
were unanimous in their findings that respondents were dismissed
without just cause and due process. They were also in agreement that
unfair labor practice was committed against respondents. We reiterate
the rule that findings of fact of the Court of Appeals, particularly where
it is in absolute agreement with that of the NLRC and the LA, as in this
case, are accorded not only respect but even finality and are deemed
binding upon this Court so long as they are supported by substantial
evidence.23 The function of this Court is limited to the review of the
appellate courts alleged errors of law. It is not required to weigh all
over again the factual evidence already considered in the proceedings
below.24In any event, we found no compelling reason to disturb the
unanimous findings and conclusions of the CA, the NLRC and the LA
with respect to the finding of illegal dismissal.
The requisites for a valid dismissal are: (a) the employee must be
afforded due process, i.e., he must be given an opportunity to be heard
and defend himself; and (b) the dismissal must be for a valid cause as
provided in Article 282 of the Labor Code, or for any of the authorized
causes under Articles 283 and 284 of the same Code. 25 In the case
before us, both elements are completely lacking. Respondents were
dismissed without any just or authorized cause and without being given
the opportunity to be heard and defend themselves. The law mandates
that the burden of proving the validity of the termination of employment
rests with the employer. Failure to discharge this evidentiary burden
would necessarily mean that the dismissal was not justified and,
therefore, illegal. Unsubstantiated suspicions, accusations, and
conclusions of employers do not provide for legal justification for
dismissing employees. In case of doubt, such cases should be
resolved in favor of labor, pursuant to the social justice policy of labor
laws and the Constitution.26
Anent the unfair labor practice, Article 248 (a) of the Labor
Code27 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 an association.28 In order to
show that the employer committed unfair labor practice under the
Labor Code, substantial evidence is 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.29 In the case at bar, respondents were indeed
unceremoniously dismissed from work by reason of their intent to form
and organize a union. As found by the LA:
The immediate impulse of respondents (petitioners herein), as in the
case at bar, was to terminate the organizers. Respondents (petitioners
herein) have to cripple the union at sight, to frustrate attempts of
employees from joining or supporting it, preventing them, at all cost
and to frustrate the employees bid to exercise their right to selforganization. x x x30
Having settled that respondents were illegally dismissed and were
victims of unfair labor practice, the question that comes to fore is who
are liable for the illegal dismissal and unfair labor practice?
A perusal of the records would show that Burgos is the respondents'
employer at the time they were dismissed. Notwithstanding, the CA
held that despite Soriano's transfer to Burgos in 1992, he was still an
employee of Park Hotel at the time of his dismissal in 1997. The Court,
however, rules that the CA's finding is clearly contrary to the evidence
presented. From the documents presented by Soriano, it appears that
Soriano's payroll passbook31contained withdrawals and deposits, made
in 1991, and that Soriano's payslip32 issued by Park Hotel covered the
period from September to October 1990. Hence, these documents

merely show that Soriano was employed by Park Hotel before he was
transferred to Burgos in 1992. Nowhere in these documents does it
state that Soriano continued to work for Park Hotel in 1992 and
onwards. Clearly therefore, Park Hotel cannot be made liable for illegal
dismissal as it no longer had Soriano in its employ at the time he was
dismissed from work.
As to whether Park Hotel may be held solidarily liable with Burgos, the
Court rules that before a corporation can be held accountable for the
corporate liabilities of another, the veil of corporate fiction must first be
pierced.33 Thus, before Park Hotel can be held answerable for the
obligations of Burgos to its employees, it must be sufficiently
established that the two companies are actually a single corporate
entity, such that the liability of one is the liability of the other. 34
A corporation is an artificial being invested by law with a personality
separate and distinct from that of its stockholders and from that of
other corporations to which it may be connected.35 While a corporation
may exist for any lawful purpose, the law will regard it as an
association of persons or, in case of two corporations, merge them into
one, when its corporate legal entity is used as a cloak for fraud or
illegality. This is the doctrine of piercing the veil of corporate fiction.
The doctrine applies only when such 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.36 To disregard the separate juridical
personality of a corporation, the wrongdoing must be established
clearly and convincingly. It cannot be presumed.37
In the case at bar, respondents utterly failed to prove by competent
evidence that Park Hotel was a mere instrumentality, agency, conduit
or adjunct of Burgos, or that its separate corporate veil had been used
to cover any fraud or illegality committed by Burgos against the
respondents. Accordingly, Park Hotel and Burgos cannot be
considered as one and the same entity, and Park Hotel cannot be held
solidary liable with Burgos.
Nonetheless, although the corporate veil between Park Hotel and
Burgos cannot be pierced, it does not necessarily mean that Percy and
Harbutt are exempt from liability towards respondents. Verily, a
corporation, being a juridical entity, may act only through its directors,
officers and employees. Obligations incurred by them, while acting as
corporate agents, are not their personal liability but the direct
accountability of the corporation they represent.38 However, corporate
officers may be deemed solidarily liable with the corporation for the
termination of employees if they acted with malice or bad faith. 39 In the
present case, the lower tribunals unanimously found that Percy and
Harbutt, in their capacity as corporate officers of Burgos, acted
maliciously in terminating the services of respondents without any valid
ground and in order to suppress their right to self-organization.
Section 3140 of the Corporation Code makes a director personally liable
for corporate debts if he willfully and knowingly votes for or assents to
patently unlawful acts of the corporation. It also makes a director
personally liable if he is guilty of gross negligence or bad faith in
directing the affairs of the corporation.1wphi1 Thus, Percy and
Harbutt, having acted in bad faith in directing the affairs of Burgos, are
jointly and severally liable with the latter for respondents' dismissal.
In cases when an employee is unjustly dismissed from work, he shall
be entitled to reinstatement without loss of seniority rights and other
privileges, inclusive of allowances, and other benefits or their monetary
equivalent from the time the compensation was withheld up to the time
of actual reinstatement.41
In the case at bar, the Court finds that it would be best to award
separation pay instead of reinstatement, in view of the passage of a
long period of time since respondents' dismissal. In St. Luke's Medical
Center, Inc. v. Notario,42the Court held that if reinstatement proves
impracticable, and hardly in the best interest of the parties, due to the

lapse of time since the employee's dismissal, the latter should be

awarded separation pay in lieu of reinstatement.
In view of the foregoing, respondents are entitled to the payment of full
backwages, inclusive of allowances, and other benefits or their
monetary equivalent, and separation pay in lieu of reinstatement
equivalent to one month salary for every year of service.43 The awards
of separation pay and backwages are not mutually exclusive, and both
may be given to respondents.44
The awards of moral and exemplary damages45 in favor of respondents
are also in order. Moral damages may be recovered where the
dismissal of the employee was tainted by bad faith or fraud, or where it
constituted an act oppressive to labor, and done in a manner contrary
to morals, good customs or public policy, while exemplary damages
are recoverable only if the dismissal was done in a wanton,
oppressive, or malevolent manner.46 The grant of attorney's fees is
likewise proper. Attorney's fees may likewise be awarded to
respondents who were illegally dismissed in bad faith and were
compelled to litigate or incur expenses to protect their rights by reason
of the oppressive acts47 of petitioners. The unjustified act of petitioners
had obviously compelled respondents to institute an action primarily to
protect their rights and interests which warrants the granting of the
award.
WHEREFORE, the Decision and Resolution of the Court of Appeals in
CA-G.R. SP No. 67766, dated January 24, 2005 and January 13,
2006, respectively, are AFFIRMED with the
following MODIFICATIONS: (a) Petitioner Park Hotel is exonerated
from any liability to respondents; and (b) The award of reinstatement is
deleted, and in lieu thereof, respondents are awarded separation pay.
The case is REMANDED to the Labor Arbiter for the purpose of
computing respondents' full backwages, inclusive of allowances, and
other benefits or their monetary equivalent, computed from the date of
their dismissal up to the finality of the decision, and separation pay in
lieu of reinstatement equivalent to one month salary for every year of
service, computed from the time of their engagement up to the finality
of this Decision.
SO ORDERED:
DIOSDADO M. PERALTA
Associate Justice
WE CONCUR:
PRESBITERO J. VELASCO, JR.
Associate Justice
Chairperson
ROBERTO A. ABAD
Associate Justice

JOSE PORTUGAL PEREZ*

Associate Justice

JOSE CATRAL MENDOZA

Associate Justice
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.
PRESBITERO J. VELASCO, JR.
Associate Justice
Chairperson, Third Division
CERTIFICATION

16

CA rollo, pp. 161-174.

17

Rollo, pp. 233-234.

18

Resolution dated August 15, 2001, id. at 262.

19

Rollo, pp. 12-26.

20

Id. at 26.

Footnotes

21

Id. at 10.

22

Id. at 37.

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.
MARIA LOURDES P.A. SERENO
Chief Justice

Designated Acting Member, per Special Order No. 1299

dated August 28, 2012.

23
1

Penned by Associate Justice Noel G. Tijam, with Associate

Justices Jose L. Sabio, Jr. and Edgardo P. Cruz,
concurring; rolla, pp. 12-26.
2

Hantex Trading Co., Inc. v. Court of Appeals, 438 Phil.

737, 743 (2002).
24

Quezon City Government v. Dacara, 460 SCRA 243, 251

(2005).

Id. at 10.
25

Represented in this case by Mr. William Victor Percy, per

Secretary's Certificate dated February 2, 2006,rollo, p. 8.

Estacio v. Pampanga I Electric Cooperative, Inc., G.R. No.

183196, August 19, 2009, 596 SCRA 542, 563-564.
26

Whose complete name is Gregory Robert Harbutt.

Whose complete name is William Victor Percy.

Times Transportation Co., Inc. v. National Labor Relations

Commission, G.R. Nos. 148500-01, November 29, 2006,
508 SCRA 435, 443.
27

Represented in this case by Mr. William Victor Percy, per

Secretary's Certificate dated February 2, 2006,rollo, p. 8.
7

Gonzales and Badilla were dismissed on October 2, 1997

and Soriano was dismissed on October 6, 1997.
8

Soriano's alleged violations include: (1) dereliction of

duties, (2) loitering during work time, (3) taking unscheduled
day-off, (4) persistently absenting himself without leave, (5)
arriving late and leaving early, and (6) leaving the work
premises to buy something not in relation to his duties. With
respect to Gonzales, his alleged infractions include: (1)
drinking while on duty, (2) switching his day-off without the
company's consent, (3) using the store house for immoral
purposes, (4) having his time record punched in and out by
others to cover his absences, and (5) general neglect of
duties.
9

CA rollo, pp. 69-70.

Article 248. UNFAIR LABOR PRACTICE It shall be

unlawful for an employer to commit any of the following
unfair labor practices: (a) To interfere with, restrain or coerce
employees in the exercise of their right to self-organization; x
x x.
28

Standard Chartered Bank Employees Union v. Hon.

Confesor, 476 Phil. 346, 367 (2004).
29

Id.

30

LA decision dated August 3, 2000, CA rollo, p. 171.

31

With an indication that the addressee is Park Hotel.

(CA rollo, p. 225.)
32

CA rollo, p. 226.

33

Siemens Philippines, Inc. v. Domingo, G.R. No. 150488,

July 28, 2008, 560 SCRA 86, 99.

10

Who allegedly: (1) misrepresented her time of arrival at

work, (2) changed her day-off without the knowledge of her
supervisors, and (3) stole the company's table cloth.

34

Id.

35

McLeod v. National Labor Relations Commission, G.R.

No. 146667, January 23, 2007, 512 SCRA 222, 245.

11

Rollo, pp. 110-119.

12

Id. at 119.

36

Id. at 246.

13

Id. at 138-142.

37

Lim v. Court of Appeals, 380 Phil. 60, 77 (2000).

14

The NLRC ruled that there was no substantial evidence to

support either the charge of theft against respondents or the
LA's conclusion that petitioners are guilty of union-busting.
The NLRC likewise required additional facts to be pleaded to
justify the grant of moral and exemplary damages being
claimed by respondents.

38

Siemens Philippines, Inc. v. Domingo, supra note 33 at

100.
39

40
15

Broken down as follows: P 100,000.00 as moral damages

and P 50,000.00 as exemplary damages. (Rollo, p. 173.)

Id.

Sec. 31. Liability of directors, trustees or officers.

Directors or trustees who willfully and knowingly vote for or
assent to patently unlawful acts of the corporation or who are

guilty of gross negligence or bad faith in directing the affairs

of the corporation or acquire any personal or pecuniary
interest in conflict with their duty as such directors or
trustees shall be liable jointly and severally for all damages
resulting therefrom suffered by the corporation, its
stockholders or members and other persons.
xxxx

On July 3, 2000, the initial conference was held where the Union
clarified the issues cited in the NOS. On July 5, 2000, the Union held
its strike vote balloting where the members voted in favor of a strike.
On July 10, 2000, Bankard asked the Office of the Secretary of Labor
to assume jurisdiction over the labor dispute or to certify the same to
the NLRC for compulsory arbitration. On July 12, 2000, Secretary
Bienvenido Laguesma (Labor Secretary) of the Department of Labor
and Employment (DOLE) issued the order certifying the labor dispute
to the NLRC.6

41

Aliviado v. Procter & Gamble Philippines, Inc., G.R. No.

160506, March 9, 2010, 614 SCRA 563, 588.
42

G.R. No. 152166, October 20, 2010, 634 SCRA 67, 80-81.

43

Eastern Telecommunications Phils., Inc. v. Diamse, G.R.

No. 169299, June 16, 2006, 491 SCRA 239, 251.
44

Century Canning Corporation v. Ramil, G.R. No. 171630,

August 9, 2010, 627 SCRA 192, 206.

On July 25, 2000, the Union declared a CBA bargaining deadlock. The
following day, the Union filed its second NOS, docketed as NS-07-26500,7 alleging bargaining in bad faith on the part of Bankard. Bankard
then again asked the Office of the Secretary of Labor to assume
jurisdiction, which was granted. Thus, the Order, dated August 9, 2000,
certifying the labor dispute to the NLRC, was issued.8
The Union, despite the two certification orders issued by the Labor
Secretary enjoining them from conducting a strike or lockout and from
committing any act that would exacerbate the situation, went on strike
on August 11, 2000.9

45

The CA awarded the amount of PhP 100,000.00 as moral

and exemplary damages, in favor of each of the
respondents, which is to be broken down as follows:
PhP 50,000.00 as moral damages and PhP50,000.00 as
exemplary damages.
46

Timoteo H. Sarona v. National Labor Relations

Commission, Royale Security Agency (Formerly Sceptre
Security Agency) and Cesar S. Tan, G.R. No. 185280,
January 18, 2012.

During the conciliatory conferences, the parties failed to amicably

settle their dispute. Consequently, they were asked to submit their
respective position papers. Both agreed to the following issues:
1. Whether job contractualization or outsourcing or
contracting-out is an unfair labor practice on the part of the
management.
2. Whether there was bad faith on the part of the
management when it bargained with the Union.10

47

Aliviado v. Procter & Gamble Philippines, Inc., supra note

41.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 171664

March 6, 2013

BANKARD, INC., Petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION- FIRST DIVISION,
PAULO BUENCONSEJO,BANKARD EMPLOYEES UNIONAWATU, Respondents.
DECISION
MENDOZA, J.:
This Petition for Review on Certiorari under Rule 45 of the Rules of
Court seeks to review, reverse and set aside the October 20, 2005
Decision1 and the February 21, 2006 Resolution2 of the Court of
Appeals {CA), in CA-G.R. SP No. 68303, which affirmed the May 31,
2001 Resolution3 and the September 24, 2001 Order4 of the National
Labor Relations Commission (NLRC) in Certified Cases No. 000-18500 and 000-191-00.
The Facts
On June 26, 2000, respondent Bankard Employees Union-AWATU
(Union) filed before the National Conciliation and Mediation Board
(NCMB) its first Notice of Strike (NOS), docketed as NS-06-22500,5 alleging commission of unfair labor practices by petitioner
Bankard, Inc. (Bankard), to wit: 1) job contractualization; 2)
outsourcing/contracting-out jobs; 3) manpower rationalizing program;
and 4) discrimination.

As regards the first issue, it was Bankards position that job

contractualization or outsourcing or contracting-out of jobs was a
legitimate exercise of management prerogative and did not constitute
unfair labor practice. It had to implement new policies and programs,
one of which was the Manpower Rationalization Program (MRP) in
December 1999, to further enhance its efficiency and be more
competitive in the credit card industry. The MRP was an invitation to
the employees to tender their voluntary resignation, with entitlement to
separation pay equivalent to at least two (2) months salary for every
year of service. Those eligible under the companys retirement plan
would still receive additional pay. Thereafter, majority of the Phone
Center and the Service Fulfilment Division availed of the MRP. Thus,
Bankard contracted an independent agency to handle its call center
needs.11
As to the second issue, Bankard denied that there was bad faith on its
part in bargaining with the Union. It came up with counter-offers to the
Unions proposals, but the latters demands were far beyond what
management could give. Nonetheless, Bankard continued to negotiate
in good faith until the Memorandum of Agreement (MOA) renegotiating the provisions of the 1997-2002, Collective Bargaining
Agreement (CBA) was entered into between Bankard and the Union.
The CBA was overwhelmingly ratified by the Union members. For said
reason, Bankard contended that the issue of bad faith in bargaining
had become moot and academic.12
On the other hand, the Union alleged that contractualization started in
Bankard in 1995 in the Records Communications Management
Division, particularly in the mailing unit, which was composed of two (2)
employees and fourteen (14) messengers. They were hired as
contractual workers to perform the functions of the regular employees
who had earlier resigned and availed of the MRP.13 According to the
Union, there were other departments in Bankard utilizing messengers
to perform work load considered for regular employees, like the
Marketing Department, Voice Authorizational Department, Computer
Services Department, and Records Retention Department. The Union
contended that the number of regular employees had been reduced
substantially through the management scheme of freeze-hiring policy
on positions vacated by regular employees on the basis of cost-cutting
measures and the introduction of a more drastic formula of
streamlining its regular employees through the MRP.14

With regard to the second issue, the Union averred that Bankards
proposals were way below their demands, showing that the
management had no intention of reaching an agreement. It was a
scheme calculated to force the Union to declare a bargaining
deadlock.15
On May 31, 2001, the NLRC issued its Resolution16 declaring that the
management committed acts considered as unfair labor practice (ULP)
under Article 248(c) of the Labor Code. It ruled that:
The act of management of reducing its number of employees thru
application of the Manpower Rationalization Program and
subsequently contracting the same to other contractual employees
defeats the purpose or reason for streamlining the employees. The
ultimate effect is to reduce the number of union members and
increasing the number of contractual employees who could never be
members of the union for lack of qualification. Consequently, the union
was effectively restrained in their movements as a union on their rights
to self-organization. Management had successfully limited and
prevented the growth of the Union and the acts are clear violation of
the provisions of the Labor Code and could be considered as Unfair
Labor Practice in the light of the provisions of Article 248 paragraph (c)
of the Labor Code.17
The NLRC, however, agreed with Bankard that the issue of bargaining
in bad faith was rendered moot and academic by virtue of the
finalization and signing of the CBA between the management and the
Union.18
Unsatisfied, both parties filed their respective motions for partial
reconsideration.1wphi1 Bankard assailed the NLRC's finding of acts
of ULP on its part. The Union, on the other hand, assailed the NLRC
ruling on the issue of bad faith bargaining.
On September 24, 2001, the NLRC issued the Order19 denying both
parties' motions for lack of merit.
On December 28, 2001, Bankard filed a petition for certiorari under
Rule 65 with the CA arguing that the NLRC gravely abused its
discretion amounting to lack or excess of jurisdiction when:
1. It issued the Resolution, dated May 31, 2001, particularly
in finding that Bankard committed acts of unfair labor
practice; and,
2. It issued the Order dated September 24, 2001 denying
Bankard's partial motion for reconsideration.20
The Union filed two (2) comments, dated January 22, 2002, through its
NCR Director, Cornelio Santiago, and another, dated February 6,
2002, through its President, Paulo Buenconsejo, both praying for the
dismissal of the petition and insisting that Bankard's resort to
contractualization or outsourcing of contracts constituted ULP. It further
alleged that Bankard committed ULP when it conducted CBA
negotiations in bad faith with the Union.
Ruling of the Court of Appeals
The CA dismissed the petition, finding that the NLRC ruling was
supported by substantial evidence.
The CA agreed with Bankard that job contracting, outsourcing and/or
contracting out of jobs did not per se constitute ULP, especially when
made in good faith and for valid purposes. Despite Bankard's claim of
good faith in resorting to job contractualization for purposes of costefficient operations and its non-interference with the employees' right
to self-organization, the CA agreed with the NLRC that Bankard's acts
impaired the employees right to self-organization and should be struck
down as illegal and invalid pursuant to Article 248(c)21 of the Labor
Code. The CA thus, ruled in this wise:

We cannot agree more with public respondent. Incontrovertible is the

fact that petitioner's acts, particularly its promotion of the program
enticing employees to tender their voluntary resignation in exchange
for financial packages, resulted to a union dramatically reduced in
numbers. Coupled with the management's policy of "freeze-hiring" of
regular employees and contracting out jobs to contractual workers,
petitioner was able to limit and prevent the growth of the Union, an act
that clearly constituted unfair labor practice.22
In its assailed decision, the CA affirmed the May 31, 2001 Resolution
and the September 24, 2001 Order of the NLRC.
Aggrieved, Bankard filed a motion for reconsideration. The CA
subsequently denied it for being a mere repetition of the grounds
previously raised. Hence, the present petition bringing up this lone
issue:
THE COURT OF APPEALS ERRED IN FINDING THAT PETITIONER
BANKARD, INC. COMMITTED ACTS OF UNFAIR LABOR PRACTICE
WHEN IT DISMISSED THE PETITION FOR CERTIORARI AND
DENIED THE MOTION FOR RECONSIDERATION FILED BY
PETITIONER.23
Ruling of the Court
The Court finds merit in the petition.
Well-settled is the rule that "factual findings of labor officials, who are
deemed to have acquired expertise in matters within their jurisdiction,
are generally accorded not only respect but even finality by the courts
when supported by substantial evidence."24 Furthermore, the factual
findings of the NLRC, when affirmed by the CA, are generally
conclusive on this Court.25 When the petitioner, however, persuasively
alleges that there is insufficient or insubstantial evidence on record to
support the factual findings of the tribunal or court a quo, then the
Court, exceptionally, may review factual issues raised in a petition
under Rule 45 in the exercise of its discretionary appellate
jurisdiction.26
This case involves determination of whether or not Bankard committed
acts considered as ULP. The underlying concept of ULP is found in
Article 247 of the Labor Code, to wit:
Article 247. Concept of unfair labor practice and procedure for
prosecution thereof. -- Unfair labor practices violate the constitutional
right of workers and employees to self-organization, are inimical to the
legitimate interests of both labor and management, including their right
to bargain collectively and otherwise deal with each other in an
atmosphere of freedom and mutual respect, disrupt industrial peace
and hinder the promotion of healthy and stable labor-management
relations. x x x
The Court has ruled that the prohibited acts considered as ULP relate
to the workers right to self-organization and to the observance of a
CBA. It refers to "acts that violate the workers right to
organize."27 Without that element, the acts, even if unfair, are not
ULP.28 Thus, an employer may only be held liable for unfair labor
practice if it can be shown that his acts affect in whatever manner the
right of his employees to self-organize.29
In this case, the Union claims that Bankard, in implementing its MRP
which eventually reduced the number of employees, clearly violated
Article 248(c) of the Labor Code which states that:
Art. 248. Unfair labor practices of employers. It shall be unlawful for
an employer to commit any of the following unfair labor practice:
xxxx

(c) To contract out services or functions being performed by union

members when such will interfere with, restrain or coerce employees in
the exercise of their rights to self-organization;
xxxx
Because of said reduction, Bankard subsequently contracted out the
jobs held by former employees to other contractual employees. The
Union specifically alleges that there were other departments in
Bankard, Inc. which utilized messengers to perform work load
considered for regular employees like the Marketing Department,
Voice Authorizational Department, Computer Services Department,
and Records Retention Department.30 As a result, the number of union
members was reduced, and the number of contractual employees, who
were never eligible for union membership for lack of qualification,
increased.
The general principle is that the one who makes an allegation has the
burden of proving it.1avvphi1 While there are exceptions to this
general rule, in ULP cases, the alleging party has the burden of
proving the ULP;31 and in order to show that the employer committed
ULP under the Labor Code, substantial evidence is required to support
the claim.32 Such principle finds justification in the fact that ULP is
punishable with both civil and/or criminal sanctions. 33
Aside from the bare allegations of the Union, nothing in the records
strongly proves that Bankard intended its program, the MRP, as a tool
to drastically and deliberately reduce union membership. Contrary to
the findings and conclusions of both the NLRC and the CA, there was
no proof that the program was meant to encourage the employees to
disassociate themselves from the Union or to restrain them from
joining any union or organization. There was no showing that it was
intentionally implemented to stunt the growth of the Union or that
Bankard discriminated, or in any way singled out the union members
who had availed of the retirement package under the MRP. True, the
program might have affected the number of union membership
because of the employees voluntary resignation and availment of the
package, but it does not necessarily follow that Bankard indeed
purposely sought such result. It must be recalled that the MRP was
implemented as a valid cost-cutting measure, well within the ambit of
the so-called management prerogatives. Bankard contracted an
independent agency to meet business exigencies. In the absence of
any showing that Bankard was motivated by ill will, bad faith or malice,
or that it was aimed at interfering with its employees right to selforganize, it cannot be said to have committed an act of unfair labor
practice.34
"Substantial evidence is more than a mere scintilla of evidence. It
means such relevant evidence as a reasonable mind might accept as
adequate to support a conclusion, even if other minds equally
reasonable might conceivably opine otherwise."35 Unfortunately, the
Union, which had the burden of adducing substantial evidence to
support its allegations of ULP, failed to discharge such burden.36
The employers right to conduct the affairs of its business, according to
its own discretion and judgment, is well-recognized.37 Management has
a wide latitude to conduct its own affairs in accordance with the
necessities of its business.38 As the Court once said:
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.
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.39
Contracting out of services is an exercise of business judgment or
management prerogative. Absent any proof that management acted in

a malicious or arbitrary manner, the Court will not interfere with the
exercise of judgment by an employer.40Furthermore, bear in mind that
ULP is punishable with both civil and/or criminal sanctions. 41 As such,
the party so alleging must necessarily prove it by substantial evidence.
The Union, as earlier noted, failed to do this. Bankard merely validly
exercised its management prerogative. Not shown to have acted
maliciously or arbitrarily, no act of ULP can be imputed against it.
WHEREFORE, the petition is GRANTED. The Decision of the Court of
Appeals in CA-G.R. SP No. 68303, dated October 20, 2005, and its
Resolution, dated February 21, 2006, are REVERSED and SET
ASIDE. Petitioner Bankard, Inc. is hereby declared as not having
committed any act constituting Unfair Labor Practice under Article 248
of the Labor Code.
SO ORDERED.
JOSE CATRAL MENDOZA
Associate Justice
WE CONCUR:
PRESBITERO J. VELASCO, JR.
Associate Justice
Chairperson
DISODADO M. PERALTA
Associate Justice

ROBERTO A. ABAD
Associate Justice

MARVIC MARIO VICTOR F. LEONEN

Associate Justice
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.
PRESBITERO J. VELASCO, JR.
Associate Justice
Chairperson, Third Division

Footnotes
1

Rollo, pp. 31-38. Penned by Associate Justice Monin,,

Arevalo-Zenarosa, with Associate Justices Andres B. Reyes,
Jr. and Rosmari D.. Carandang, concurring.
2

Id. at 40-41.

Id. at 69-76.

Id. at 78-79.

Id. at 43-44.

Id. at 32.

Id. at 46-47.

Id. at 32-33.

Id. at 33.

10

Id. at 71-72.

11

Id. at 71.

31

UST Faculty Union v. UST, G.R. No. 180892, April 7,

2009, 584 SCRA 648, 656.
32

Id., citing Standard Chartered Bank Employees Union

(NUBE) v. Confesor, 476 Phil. 346, 367 (2004).

12

Id. at 73.

13

Id.

14

Id. at 73-74.

15

Id. at 74.

16

Id. at 69-76.

17

Id. at 75.

18

Id.

36

Id. at 78-79.

37

33

Id., citing Labor Code, Art. 247.

34

General Santos Coca-Cola Plant Free Workers UnionTupas v. Coca-Cola Bottlers Phil., Inc. (General Santos
City), supra note 28.
35

19

20

Nia Jewelry Manufacturing of Metal Arts, Inc. v.

Montecillo, G.R. No. 188169, November 28, 2011, 661
SCRA 416, 432, citing Honorable Ombudsman Simeon
Marcelo v. Leopoldo Bungubung, G.R. No. 175201, April 23,
2008, 552 SCRA 589, 608.
Supra note 28.

The Coca-Cola Export Corporation v. Gacayan, G.R. No.

149433, December 15, 2010, 638 SCRA 377, 398.

Id. at 54-55.
38

21

Art. 248. UNFAIR LABOR PRACTICES OF EMPLOYERS.

- It shall be unlawful for an employer to commit any of the
following unfair labor practices:

Julies Bakeshop v. Arnaiz, G.R. No. 173882, February 15,

2012, 666 SCRA 101, 104.
39

Phi/com Employees Union v. Philippine Global

Communications, 527 Phil. 540, 562-563 (2006).

xxxx
40

(c) to contract out services or function being

performed by union member when such will
interfere with, restrain or coerce employees in the
exercise of their right to self-organization.

Manila Electric Company v. Quisumbing, 383 Phil 47, 60

(2000).
41

UST Faculty Union v. UST, supra note 31.

Republic of the Philippines
SUPREME COURT
Manila

xxxx
22

Rollo, p. 36.

23

Id. at 17.

SPECIAL SECOND DIVISION

G.R. No. 155109

March 14, 2012

24

Prince Transport, Inc. v. Garcia, G..R. No. 167291,

January 12, 2011, 639 SCRA 312, 324.
25

Career Philippines Shipmanagement, Inc. .v. Serna, G.R.

No. 172086, December 3, 2012, citing Cootauco v. MMS
Phil. Maritime Services, Inc., G.R. No. 184722, March 15,
2010, 615 SCRA 529, 541.
26

Id.

27

Culili v. Eastern Telecommunications Philippines, Inc.,

G.R. No. 165381, February 9, 2011, 642 SCRA 338, 360,
citing Tunay na Pagkakaisa ng Manggagawa sa Asia
Brewery v. Asia Brewery, Inc., G.R. No. 162025, August 3,
2010, 626 SCRA 376, 388.
28

General Santos Coca-Cola Plant Free Workers UnionTupas v. Coca-Cola Bottlers Phils., Inc (General Santos
City), G.R. No. 178647, February 13, 2009, 579 SCRA 414,
419, citing Philcom Employees Union v. Philippine Global
Communication, 527 Phil. 540, 557 (2006).
29

Supra note 27, at 361, citing Great Pacific Life Employees

Union v. Great Pacific Life Assurance Corporation, 362 Phil.
452, 464 (1999).
30

Rollo, p. 208.

C. ALCANTARA & SONS, INC., Petitioner,

vs.
COURT OF APPEALS, LABOR ARBITER ANTONIO M.
VILLANUEVA, LABOR ARBITER ARTURO L. GAMOLO, SHERIFF
OF NLRC RAB-XI-DAVAO CITY, NAGKAHIUSANG MAMUMUO SA
ALSONS-SPFL (NAMAAL-SPFL), FELIXBERTO IRAG, JOSHUA
BARREDO, ERNESTO CUARIO, EDGAR MONDAY, EDILBERTO
DEMETRIA, HERMINIO ROBILLO, ROMULO LUNGAY, MATROIL
DELOS SANTOS, BONERME MATURAN, RAUL CANTIGA,
EDUARDO CAMPUSO, RUDY ANADON, GILBERTO GABRONINO,
BONIFACIO SALVADOR, CIRILO MINO, ROBERTO ABONADO,
WARLITO MONTE, PEDRO ESQUIERDO, ALFREDO TROPICO,
DANILO MEJOS, HECTOR ESTUITA, BARTOLOME
CASTILLANES, EDUARDO CAPUYAN, SATURNINO CAGAS,
ALEJANDRO HARDER, EDUARDO LARENA, JAIME
MONTEDERAMOS, ERMELANDO BASADRE, REYNALDO
LIMPAJAN, ELPIDIO LIBRANZA, TEDDY SUELO, JOSE AMOYLIN,
TRANQUILINO ORALLO, CARLOS BALDOS, MANOLITO
SABELLANO, CARMELITO TOBIAS, PRIMITIVO GARCIA,
JUANITO ALDEPOLLA, LUDIVICO ABAD, WENCISLAO INGHUG,
RICARDO ALTO, EPIFANIO JARABAY, FELICIANO AMPER,
ALEXANDER JUDILLA, ROBERTO ANDRADE, ALFREDO
LESULA, JULIO ANINO, BENITO MAGPUSAO, PEDRO AQUINO,
EDDIE MANSANADES, ROMEO ARANETA, ARGUILLAO
MANTICA, CONSTANCIO ARNAIZ, ERNESTO HOTOY, JUSTINO
ASCANO, RICARDO MATURAN, EDILBERTO YAMBAO, ANTONIO
MELARGO, JESUS BERITAN, ARSENIO MELICOR, DIOSDADO
BONGABONG, LAURO MONTENEGRO, CARLITO BURILLO, LEO

MORA, PABLO BUTIL, ARMANDO GUCILA, JEREMIAH CAGARA,

MARIO NAMOC, CARLITO CAL, GERWINO NATIVIDAD, ROLANDO
CAPUYAN, EDGARDO ORDIZ, LEONARDO CASURRA,
PATROCINIO ORTEGA, FILEMON CESAR, MARIO PATAN,
ROMEO COMPRADO, JESUS PATOC, RAMON CONSTANTINO,
ALBERTO PIELAGO, SAMUEL DELA LLANA, NICASIO PLAZA,
ROSALDO DAGONDON, TITO GUADES, BONIFACIO DINAGUDOS,
PROCOPIO RAMOS, JOSE EBORAN, ROSENDO SAJOL,
FRANCISCO EMPUERTO, PATRICIO SALOMON, NESTOR
ENDAYA, MARIO SALVALEON, ERNESTO ESTILO, BONIFACIO
SIGUE, VICENTE FABROA, JAIME SUCUAHI, CELSO HUISO,
ALEX TAUTO-AN, SATURNINO YAGON, CLAUDIO TIROL,
SULPECIO GAGNI, JOSE TOLERO, FERVIE GALVEZ, ALFREDO
TORALBA and EDUARDO GENELSA,Respondents.
x-----------------------x
G.R. No. 155135
NAGKAHIUSANG MAMUMUO SA ALSONS-SPFL (NAMAAL-SPFL),
FELIXBERTO IRAG, JOSHUA BARREDO, ERNESTO CUARIO,
EDGAR MONDAY, EDILBERTO DEMETRIA, HERMINIO ROBILLO,
ROMULO LUNGAY, MATROIL DELOS SANTOS, BONERME
MATURAN, RAUL CANTIGA, EDUARDO CAMPUSO, RUDY
ANADON, GILBERTO GABRONINO, BONIFACIO SALVADOR,
CIRILO MINO, ROBERTO ABONADO, WARLITO MONTE, PEDRO
ESQUIERDO, ALFREDO TROPICO, DANILO MEJOS, HECTOR
ESTUITA, BARTOLOME CASTILLANES, EDUARDO CAPUYAN,
SATURNINO CAGAS, ALEJANDRO HARDER, EDUARDO
LARENA, JAIME MONTEDERAMOS, ERMELANDO BASADRE,
REYNALDO LIMPAJAN, ELPIDIO LIBRANZA, TEDDY SUELO,
JOSE AMOYLIN, TRANQUILINO ORALLO, CARLOS BALDOS,
MANOLITO SABELLANO, CARMELITO TOBIAS, PRIMITIVO
GARCIA, JUANITO ALDEPOLLA, LUDIVICO ABAD, WENCISLAO
INGHUG, RICARDO ALTO, EPIFANIO JARABAY, FELICIANO
AMPER, ALEXANDER JUDILLA, ROBERTO ANDRADE, ALFREDO
LESULA, JULIO ANINO, BENITO MAGPUSAO, PEDRO AQUINO,
EDDIE MANSANADES, ROMEO ARANETA, ARGUILLAO
MANTICA, CONSTANCIO ARNAIZ, ERNESTO HOTOY, JUSTINO
ASCANO, RICARDO MATURAN, EDILBERTO YAMBAO, ANTONIO
MELARGO, JESUS BERITAN, ARSENIO MELICOR, DIOSDADO
BONGABONG, LAURO MONTENEGRO, CARLITO BURILLO, LEO
MORA, PABLO BUTIL, ARMANDO GUCILA, JEREMIAH CAGARA,
MARIO NAMOC, CARLITO CAL, GERWINO NATIVIDAD, ROLANDO
CAPUYAN, JUANITO NISNISAN, AURELIO CARIN, PRIMO
OPLIMO, ANGELITO CASTANEDA, EDGARDO ORDIZ,
LEONARDO CASURRA, PATROCINIO ORTEGA, FILEMON
CESAR, MARIO PATAN, ROMEO COMPRADO, JESUS PATOC,
RAMON CONSTANTINO, MANUEL PIAPE, ROY CONSTANTINO,
ALBERTO PIELAGO, SAMUEL DELA LLANA, NICASIO PLAZA,
ROSALDO DAGONDON, TITO GUADES, BONIFACIO DINAGUDOS,
PROCOPIO RAMOS, JOSE EBORAN, ROSENDO SAJOL,
FRANCISCO EMPUERTO, PATRICIO SALOMON, NESTOR
ENDAYA, MARIO SALVALEON, ERNESTO ESTILO, BONIFACIO
SIGUE, VICENTE FABROA, JAIME SUCUAHI, CELSO HUISO,
ALEX TAUTO-AN, SATURNINO YAGON, CLAUDIO TIROL,
SULPECIO GAGNI, JOSE TOLERO, FERVIE GALVEZ, ALFREDO
TORALBA and EDUARDO GENELSA, Petitioners,
vs.
C. ALCANTARA & SONS, INC., EDITHA I. ALCANTARA, ATTY.
NELIA A. CLAUDIO, CORNELIO E. CAGUIAT, JESUS S. DELA
CRUZ, ROLANDO Z. ANDRES and JOSE MA. MANUEL
YRASUEGUI, Respondents.

PERALTA, J.:
For resolution are the (1) Motion for Partial Reconsideration1 filed by C.
Alcantara & Sons, Inc. (CASI) and (2) Motion for Reconsideration2 filed
by Nagkahiusang Mamumuo sa Alsons-SPFL (the Union) and the
Union officers3and their striking members4 of the Courts
Decision5 dated September 29, 2010. In a Resolution6 dated
December 13, 2010, the parties were required to submit their
respective Comments. After several motions for extension, the parties
submitted the required comments. Hence, this resolution.
For a proper perspective, we state briefly the facts of the case.
The negotiation between CASI and the Union on the economic
provisions of the Collective Bargaining Agreement (CBA) ended in a
deadlock prompting the Union to stage a strike,7 but the strike was
later declared by the Labor Arbiter (LA) to be illegal having been
staged in violation of the CBAs no strike-no lockout
provision.8Consequently, the Union officers were deemed to have
forfeited their employment with the company and made them liable for
actual damages plus interest and attorneys fees, while the Union
members were ordered to be reinstated without backwages there
being no proof that they actually committed illegal acts during the
strike.9
Notwithstanding the provision of the Labor Code mandating that the
reinstatement aspect of the decision be immediately executory, the LA
refused to reinstate the dismissed Union members. On November 8,
1999, the NLRC affirmed the LA decision insofar as it declared the
strike illegal and ordered the Union officers dismissed from
employment and liable for damages but modified the same by
considering the Union members to have been validly dismissed from
employment for committing prohibited and illegal acts.10
On petition for certiorari, the Court of Appeals (CA) annulled the NLRC
decision and reinstated that of the LA. Aggrieved, CASI, the Union and
the Union officers and members elevated the matter to this Court. The
cases were docketed as G.R. Nos. 155109 and 155135. 11
During the pendency of the cases, the affected Union members (who
were ordered reinstated) filed with the LA a motion for reinstatement
pending appeal and the computation of their backwages. Instead of
reinstating the Union members, the LA awarded separation pay and
other benefits.12 On appeal, the NLRC denied the Union members
claim for separation pay, accrued wages and other benefits. 13 When
elevated to the CA, the appellate court held that reinstatement pending
appeal applies only to illegal dismissal cases under Article 223 of the
Labor Code and not to cases under Article 263.14 Hence, the petition
by the Union and its officers and members in G.R. No. 179220.
G.R. Nos. 155109, 155135, and 179220 were consolidated. On
September 29, 2010, the Court rendered a decision the dispositive
portion of which reads:
WHEREFORE, the Court DENIES the petition of the Nagkahiusang
Mamumuo sa Alsons-SPFL and its officers and members in G.R. No.
155135 for lack of merit, and REVERSES and SETS ASIDE the
decision of the Court of Appeals in CA-G.R. SP 59604 dated March 20,
2002. The Court, on the other hand, GRANTS the petition of C.
Alcantara & Sons, Inc. in G.R. 155109 and REINSTATES the decision
of the National Labor Relations Commission in NLRC CA M-004996-99
dated November 8, 1999.

x-----------------------x
G.R. No. 179220
NAGKAHIUSANG MAMUMUO SA ALSONS-SPFL (NAMAAL-SPFL),
AND ITS MEMBERS whose names are listed below, Petitioners,
vs.
C. ALCANTARA & SONS, INC., Respondent.
RESOLUTION

Further, the Court PARTIALLY GRANTS the petition of the

Nagkahiusang Mamumuo sa Alsons-SPFL and their dismissed
members in G.R. No. 179220 and ORDERS C. Alcantara & Sons, Inc.
to pay the terminated Union members backwages for four (4) months
and nine (9) days and separation pays equivalent to one-half month
salary for every year of service to the company up to the date of their
termination, with interest of 12% per annum from the time this decision
becomes final and executory until such backwages and separation
pays are paid. The Court DENIES all other claims.

SO ORDERED.15

members, and the award of actual damages and attorneys fees as

well as the denial of their counterclaims against CASI.

The Court agreed with the CA on the illegality of the strike as well as
the termination of the Union officers, but disagreed with the CA insofar
as it affirmed the reinstatement of the Union members. The Court,
instead, sustained the dismissal not only of the Union officers but also
the Union members who, during the illegal strike, committed prohibited
acts by threatening, coercing, and intimidating non-striking employees,
officers, suppliers and customers; obstructing the free ingress to and
egress from the company premises; and resisting and defying the
implementation of the writ of preliminary injunction issued against the
strikers.16
The Court further held that the terminated Union members, who were
ordered reinstated by the LA, should have been immediately reinstated
due to the immediate executory nature of the reinstatement aspect of
the LA decision. In view, however, of CASIs failure to reinstate the
dismissed employees, the Court ordered CASI to pay the terminated
Union members their accrued backwages from the date of the LA
decision until the eventual reversal by the NLRC of the order of
reinstatement.17 In addition to the accrued backwages, the Court
awarded separation pay as a form of financial assistance to the Union
members equivalent to one-half month salary for every year of service
to the company up to the date of their termination.18
Not satisfied, CASI filed a Motion for Partial Reconsideration of the
above decision based on the following grounds:
I.
IT IS RESPECTFULLY SUBMITTED THAT A PRECEDENT
SETTING RULING OF THIS HONORABLE COURT IN
ESCARIO V. NLRC [G.R. No. 160302, 27 SEPTEMBER
2010] PARTICULARLY ON THE PROPER APPLICATION
OF ARTICLES 264 AND 279 OF THE LABOR CODE
SUPPORTS THE AFFIRMATION AND NOT THE
REVERSAL OF THE FINDINGS OF THE COURT OF
APPEALS ["CA"], AND NEGATES THE ENTITLEMENT TO
ACCRUED WAGES OF THE UNION MEMBERS WHO
COMMITTED ILLEGAL ACTS DURING THE ILLEGAL
STRIKE, NOTWITHSTANDING THAT THE LABOR
ARBITER AWARDED THE SAME.
II.
IT IS RESPECTFULY SUBMITTED THAT THIS
HONORABLE COURT ERRED WHEN IT RESOLVED TO
GRANT SEPARATION PAY TO THE UNION MEMBERS
WHO COMMITTED ILLEGAL ACTS DURING THE ILLEGAL
STRIKE CONSIDERING THAT JURISPRUDENCE CITED
TO JUSTIFY THE GRANT OF SEPARATION PAY DO NOT
APPLY TO THE PRESENT CASE AS IT APPLIES ONLY
TO DISMISSALS FOR A JUST CAUSE.19
The Union, its officers and members likewise filed their separate
motion for reconsideration assailing the Courts conclusions that: (1)
the strike is illegal; (2) that the officers of the Union and its appointed
shop stewards automatically forfeited their employment status when
they participated in the strike; (3) that the Union members committed
illegal acts during the strike and are deemed to have lost their
employment status; and (4) that CASI is entitled to actual damages
and attorneys fees.20 They also fault the Court in not finding that: (1)
CASI and its officers are guilty of acts of unfair labor practice or
violation of Article 248 of the Labor Code; (2) the lockout declared by
the company is illegal; (3) CASI and its officers committed acts of
discrimination; (4) CASI and its officers violated Article 254 of the
Labor Code; and (5) CASI and its officers are liable for actual, moral,
and exemplary damages to the Union, its officers and members. 21
Simply stated, CASI only questions the propriety of the award of
backwages and separation pay, while the Union, its officers and
members seek the reversal of the Courts conclusions on the illegality
of the strike, the validity of the termination of the Union officers and

After a careful review of the records of the case, we find it necessary to

reconsider the Courts September 29, 2010 decision, but only as to the
award of separation pay.
The LA, the NLRC, the CA and the Court are one in saying that the
strike staged by the Union, participated in by the Union officers and
members, is illegal being in violation of the no strike-no lockout
provision of the CBA which enjoined both the Union and the company
from resorting to the use of economic weapons available to them under
the law and to instead take recourse to voluntary arbitration in settling
their disputes.22 We, therefore, find no reason to depart from such
conclusion.
Article 264 (a) of the Labor Code lays down the liabilities of the Union
officers and members participating in illegal strikes and/or committing
illegal acts, to wit:
ART. 264. PROHIBITED ACTIVITIES
(a) x x x
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.
Thus, the above-quoted provision 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. 23 In
this case, the Union officers were in clear breach of the above
provision of law when they knowingly participated in the illegal strike.24
As to the Union members, the same provision of law provides that a
member is liable when he knowingly participates in the commission of
illegal acts during a strike. We find no reason to reverse the conclusion
of the Court that CASI presented substantial evidence to show that the
striking Union members committed the following prohibited acts:
a. They threatened, coerced, and intimidated non-striking
employees, officers, suppliers and customers;
b. They obstructed the free ingress to and egress from the
company premises; and
c. They resisted and defied the implementation of the writ of
preliminary injunction issued against the strikers.25
The commission of the above prohibited acts by the striking Union
members warrants their dismissal from employment.
As clearly narrated earlier, the LA found the strike illegal and sustained
the dismissal of the Union officers, but ordered the reinstatement of the
striking Union members for lack of evidence showing that they
committed illegal acts during the illegal strike. This decision, however,
was later reversed by the NLRC. Pursuant to Article 22326 of the Labor
Code and well-established jurisprudence,27 the decision of the LA
reinstating a dismissed or separated employee, insofar as the
reinstatement aspect is concerned, shall immediately be executory,
pending appeal.28The employee shall either be admitted back to work
under the same terms and conditions prevailing prior to his dismissal
or separation, or, at the option of the employee, merely reinstated in
the payroll.29 It is obligatory on the part of the employer to reinstate and
pay the wages of the dismissed employee during the period of appeal

until reversal by the higher court.30 If the employer fails to exercise the
option of re-admitting the employee to work or to reinstate him in the
payroll, the employer must pay the employees salaries during the
period between the LAs order of reinstatement pending appeal and
the resolution of the higher court overturning that of the LA. 31 In this
case, CASI is liable to pay the striking Union members their accrued
wages for four months and nine days, which is the period from the
notice of the LAs order of reinstatement until the reversal thereof by
the NLRC.32
Citing Escario v. National Labor Relations Commission (Third
Division),33 CASI claims that the award of the four-month accrued
salaries to the Union members is not sanctioned by jurisprudence. In
Escario, the Court categorically stated that the strikers were not
entitled to their wages during the period of the strike (even if the strike
might be legal), because they performed no work during the strike. The
Court further held that it was neither fair nor just that the dismissed
employees should litigate against their employer on the latters
time.34 In this case, however, the four-month accrued salaries awarded
to the Union members are not the backwages referred to in Escario. To
be sure, the awards were not given as their salaries during the period
of the strike. Rather, they constitute the employers liability to the
employees for its failure to exercise the option of actual reinstatement
or payroll reinstatement following the LAs decision to reinstate the
Union members as mandated by Article 223 of the Labor Code
adequately discussed earlier. In other words, such monetary award
refers to the Union members accrued salaries by reason of the
reinstatement order of the LA which is self-executory pursuant to
Article 223.35We, therefore, sustain the award of the four-month
accrued salaries.1wphi1
Finally, as regards the separation pay as a form of financial assistance
awarded by the Court, we find it necessary to reconsider the same and
delete the award pursuant to prevailing jurisprudence.
Separation pay may be 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.36 It 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.37 It is oriented towards the immediate future, the
transitional period the dismissed employee must undergo before
locating a replacement job.38 As a general rule, when just causes for
terminating the services of an employee exist, the employee is not
entitled to separation pay because lawbreakers should not benefit from
their illegal acts.39 The rule, however, is subject to exceptions.40 The
Court, in Philippine Long Distance Telephone Co. v. NLRC,41 laid down
the guidelines when separation pay in the form of financial assistance
may be allowed, to wit:
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 x x x.42
We had the occasion to resolve the same issue in Toyota Motor Phils.
Corp. Workers Association (TMPCWA) v. National Labor Relations
Commission.43 Following the declaration that the strike staged by the
Union members is illegal, the Union officers and members were
considered validly dismissed from employment for committing illegal

acts during the illegal strike. The Court affirmed the CAs conclusion
that the commission of illegal acts during the illegal strike constituted
serious misconduct.44 Hence, the award of separation pay to the Union
officials and members was not sustained.45
Indeed, we applied social justice and equity considerations in several
cases to justify the award of financial assistance. In Piero v. National
Labor Relations Commission,46 the Court declared the strike to be
illegal for failure to comply with the procedural requirements. We,
likewise, sustained the dismissal of the Union president for
participating in said illegal strike. Considering, however, that his
infraction is not so reprehensible and unscrupulous as to warrant
complete disregard of his long years of service, and considering further
that he has no previous derogatory records, we granted financial
assistance to support him in the twilight of his life after long years of
service.47 The same compassion was also applied in Aparente, Sr. v.
NLRC48 where the employee was declared to have been validly
terminated from service after having been found guilty of driving
without a valid drivers license, which is a clear violation of the
companys rules and regulations.49 We, likewise, awarded financial
assistance in Salavarria v. Letran College50 to the legally dismissed
teacher for violation of school policy because such infraction neither
amounted to serious misconduct nor reflected that of a morally
depraved person.
However, in a number of cases cited in Toyota Motor Phils. Corp.
Workers Association (TMPCWA) v. National Labor Relations
Commission,51 we 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
the strike.52 In Pilipino Telephone Corporation v. Pilipino Telephone
Employees Association (PILTEA),53the strike was found to be illegal
because of procedural infirmities and for defiance of the Secretary of
Labors assumption order. Hence, we upheld the Union officers
dismissal without granting financial assistance. In Sukhotai Cuisine
and Restaurant v. Court of Appeals,54 and Manila Diamond Hotel and
Resort, Inc. (Manila Diamond Hotel) v. Manila Diamond Hotel
Employees Union,55 the Union officers and members who participated
in and committed illegal acts during the illegal strike were deemed to
have lost their employment status and were not awarded financial
assistance.
In Telefunken Semiconductors Employees Union v. Court of
Appeals,56 the Court held that the strikers open and willful defiance of
the assumption order of the Secretary of Labor constitute serious
misconduct and reflective of their moral character, hence, granting of
financial assistance to them cannot be justified. In Chua v. National
Labor Relations Commission,57 we disallowed the award of financial
assistance to the dismissed employees for their participation in the
unlawful and violent strike which resulted in multiple deaths and
extensive property damage because it constitutes serious misconduct
on their part.
Here, not only did the Court declare the strike illegal, rather, it also
found the Union officers to have knowingly participated in the illegal
strike. Worse, the Union members committed prohibited acts during
the strike. Thus, as we concluded in Toyota, Telefunken, Chua and the
other cases cited above, we delete the award of separation pay as a
form of financial assistance.
WHEREFORE, premises considered, the motion for reconsideration of
the Union, its officers and members are DENIED for lack of merit, while
the motion for partial reconsideration filed by C. Alcantara & Sons, Inc.
is PARTLY GRANTED. The Decision of the Court dated September
29, 2010 is hereby PARTLY RECONSIDERED by deleting the award
of separation pay.
SO ORDERED.
DIOSDADO M. PERALTA
Associate Justice
WE CONCUR:

ANTONIO T. CARPIO
Associate Justice
Chairperson
PRESBITERO J. VELASCO,
JR.
Associate Justice

JOSE CATRAL MENDOZA

Associate Justice

BIENVENIDO L. REYES
Associate Justice

Montenegro, Leo Mora, Ronaldo Naboya, Mario Namoc,

Gerwino Natividad, Juanito Nisnisan, Primo Oplimo,
Edgardo Ordiz, Patrocino Ortega, Mario Patan, Jesus Patoc,
Manuel Piape, Alberto Pielago, Nicasio Plaza, Fausto
Quibod, Procopio Ramos, Rosendo Sajol, Patricio Solomon,
Mario Salvaleon, Bonifacio Sigue, Jaime Sucuahi, Alex
Tauto-an, Claudio Tirol, Jose Tolero, Alfredo Toralba,
Eusebio Tumulak, Hermes Villacarlos, Saturnino Yagon and
Edilberto Yambao.
5

Rollo (G.R. No. 155109), pp. 1467-1484.

ATTESTATION

Id. at 1654-1655.

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 Courts Division.

Id. at 1473.

ANTONIO T. CARPIO
Associate Justice
Special Second Division, Chairperson

The LA decision was rendered on June 29, 1999; id. at

1474.
9

Rollo (G.R. No. 155109), p. 1474.

10

Id. at 1475.

11

Id.

12

Id.

13

Id. at 1475-1476.

14

Id. at 1476.

15

Id. at 1482-1483.

16

Id. at 1478-1479.

17

Id. at 1480-1481.

18

Id. at 1481-1482.

19

Id. at 1486.

20

Id. at 1511-1513.

21

Id. at 1513-1515.

22

Id. at 1477.

CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution and the Division
Chairpersons 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 Courts Division.
RENATO C. CORONA
Chief Justice

Footnotes
1

Rollo (G.R. No. 155109), pp. 1485-1499.

Id. at 1501-1651.

The officers of the Union are the following: Felixberto Irag,

Joshua Barredo, Edilberto Demetria, Romulo Lungay,
Bonerme Maturan, Eduardo Campuso, Gilberto Gabronino,
Cirilo Mino, Roberto Abonado, Fructoso Cabahog, Alfredo
Tropico, Hector Estuita, Eduardo Capuyan, Alejandro
Harder, Jaime Montederamos, Reynaldo Limpajan, Ernesto
Cuario, Edgar Monday, Herminio Robillo, Matroil delos
Santos, Raul Cantiga, Rudy Anadon, Bonifacio Salvador,
Florente Seno, Warlito Monte, Pedro Esquierdo, Danilo
Mejos, Bartolome Castillanes, Saturnino Cagas, Eduardo
Larena, Ermelando Basadre, Elpidio Libranza.Teddy Suelo,
Tranquilino Orallo, Manolito Sabellano, Primitivo Garcia,
Jose Amoylin, Carlos Baldos, Carmelito Tobias and Juanito
Aldepolla.
4

These are Ludivicio Abad, Ricardo Alto, Feliciano Amper,

Roberto Andrade, Julio Anino, Pedro Aquino, Romeo
Araneta, Constancio Arnaiz, Justino Ascano, Ernesto Baino,
Jesus Beritan, Diosdado Bongabong, Carilito Cal, Rolando
Capuyan, Aurelio Carin, Angelito Castaeda, Leonaro
Casurra, Filemon Cesar, Romeo Comprado, Ramon
Constantino, Roy Constantino, Samuel dela Llana, Rosaldo
Dagondon, Bonifacio Dinagudos, Jose Eboran, Francisco
Empuerto, Nestor Endaya, Ernesto Estilo, Vicente Fabroa,
Ramon Fernando, Samson Fulgueras, Sulpecio Gagni,
Fervie Galvez, Eduardo Genelsa, Tito Guades, Armando
Gucila, Ernesto Hotoy, Wencislao Inghug, Epifanio Jarabay,
Alexander Judilla, Alfredo Lesula, Benito Magpusao, Eddie
Mansanades, Arguilao Mantica, Silverio Maranian, Ricardo
Maturan, Antonio Melargo, Arsenio Melicor, Lauro

23

Toyota Motor Phils. Corp. Workers Association

(TMPCWA) v. National Labor Relations Commission, G.R.
Nos. 158786 & 158789, October 19, 2007, 537 SCRA 171,
207.
24

Id.

25

Rollo (G.R. No. 155109), p. 1479.

26

Article 223 Appeal x x x

In any event, the decision of the Labor Arbiter
reinstating a dismissed or separated employee,
insofar as the reinstatement aspect is concerned,
shall immediately be executory, even pending
appeal. The employee shall either be admitted
back to work under the same terms and conditions
prevailing prior to his dismissal or separation or, at
the option of the employer, merely reinstated in

the payroll. The posting of a bond by the employer

shall not stay the execution for reinstatement
provided herein.
x x x.
27

Islriz Trading/Victor Hugo Lu v. Capada, G.R. No. 168501,

January 31, 2011, 641 SCRA 9; Garcia v. Philippine Airlines,
Inc., G.R. No. 164856, January 20, 2009, 576 SCRA 479.
28

Garcia v. Philippine Airlines, Inc., supra, at 489.

29

Id.

30

Id. at 493.

51

Supra note 23.

52

Id. at 225.

53

G.R. Nos. 160058 & 160094, June 22, 2007, 525 SCRA
361.
54

G.R. No. 150437, July 17, 2006, 495 SCRA 336.

55

G.R. No. 158075, June 30, 2006, 494 SCRA 195.

56

401 Phil. 776 (2000).

57

G.R. No. 105775, February 8, 1993, 218 SCRA 545.

Republic of the Philippines
SUPREME COURT
Manila

31

Islriz Trading/Victor Hugo Lu v. Capada, supra note 27, at

24; College of Immaculate Conception v. National Labor
Relations Commission, G.R. No.167563, March 22, 2010,
616 SCRA 299, 309; Garcia v. Philippine Airlines, Inc., supra
note 27, at 493.

SECOND DIVISION

32

Rollo (G.R. No. 155109), p. 1481.

G.R. No. 153799

33

G.R. No. 160302, September 27, 2010, 631 SCRA 261.

34

Id. at 274.

September 17, 2012

40

Id. at 220.

41

247 Phil. 641 (1988).

42

Id. at 649.

43

Supra note 23.

44

Id.

45

Id. at 227.

46

480 Phil. 534 (2004).

SOLIDBANK UNION, EVANGELINE J. GABRIEL, EVELYN A. SIA,

TERESITA C. LUALHATI, ISAGANI P. MAKISIG, REY S. PASCUA,
MA. VICTORIA M. VIDALLON, AUDREY A. ALJIBE, REY ANTHONY
AMPARADO, JOSE A. ANTENOR,1 DEL CASTILLO, AUGUSTO D.
ARANDIA, JR., RUTH SHIELA M. BAGADIONG, STEVE D. BERING,
ALAN ROY I. BUYCO, MANOLO T. CABRERA, RACHEL2 M.
CASTILLO, VICTOR O. CHUA, VIRGILIO CO, JR., LEOPOLDO
DABAY, HUBERT DIMAGIBA, MA. LOURDES CECILIA
EMPERADOR,3 FELIX B. ESTACIO, JR., JULIETA ESTRADA,
MARICEL EVALLA, JOSE GUISADIO, ALEXANDER MARTINEZ,
JOSEPHINE M. ONG, EDNA SARONG, GREGORIO S.
SECRETARIO,4 ROSIE UY, ARVIN D. VALENCIA, FERMIN
JOSEPH5B. VENTURA, JR., EMMANUEL C.
YAPTANGCO,6 ERNESTO C. ZUIGA, ALVIN E. BARICANOSA,
GEORGE MAXIMO P. BARQUEZ, MA. ELENA G. BELLO, MICHAEL
MATTHEW BILLENA, NEPTALI A. CADDARAO, FERDINAND MEL
S. CAPULONG,7 MA. EDNA V. DATOR, RANIEL8 DAYAO, RAGCY
L. DE GUZMAN, LUIS E. DELOS SANTOS, CAROLINA DIZON,
JOCELYN L. ESTROBO, MINERVA S. FALLARME, HERNANE C.
FERMOCIL, RACHEL B. FETIZANAN, SAMUEL A. FLORENTINO,
JOEL S. GARMINO, LESTER MARK Z. GATCHALIAN, GONZALO
GUINIT, FERDINAND S. HABIJAN, JUN HERNANDEZ, MA.
ANGELA JALANDONI,9MANUEL LIM, MA. LOURDES LIM,
EMERSON LUNA, NOLASCO MACATANGAY, NORMAN MAACO,
CHERRY LOU MANGROBANG, EDMUNDO MARASIGAN, ALLEN
M. MARTINEZ, ARLENE P. NOBLE, SHIRLEY ONG, LOTIZ E.
ORTIZ LUIS, PABLITO PALO, GEOFFREY PRADO, OMEGA
MELANIE QUINTANO, AGNES A. RAMIREZ, RICARDO D.
RAMIREZ, DANIEL O. RAQUEL, RAMON REYES, SALVACIO
ROGADO, ELMOR R. ROMANA, JR., LOURDES U. SALVADOR,
ELMER S. SAYLON, BENNARD SIMBULAN, MA. LOURDES
ROCEL SOLIVEN, EMILY10 C. SUYAT, RAYMOND11 D. TANAY,
JOCELYN Y. TAN, CANDIDO G. TISON, MA. THERESA12 O. TISON,
EVELYN T. UYLANGCO, MERVIN S. BAUTISTA, LEOPOLDO DE
LA ROSA, DOROTEO FROILAN and JULIETE L.
JUBAC, Petitioners,
vs.
METROPOLITAN BANK AND TRUST COMPANY, Respondent.

47

Id. at 543-544.

x-----------------------x

48

387 Phil. 96 (2000).

G.R. No. 157169

49

Id.

50

G.R. No. 110396, September 25, 1998, 296 SCRA 184.

METROPOLITAN BANK AND TRUST COMPANY, Petitioner,

vs.
SOLIDBANK UNION, EVANGELINE J. GABRIEL, EVELYN A. SIA,
TERESITA C. LUALHATI, ISAGANI P. MAKISIG, REY S. PASCUA,
MA. VICTORIA M. VIDALLON, AUDREY A. ALJIBE, REY ANTHONY

35

Islriz Trading/Victor Hugo Lu v. Capada, supra note 27, at

16.
36

Gold City Integrated Port Service, Inc. v. NLRC, 315 Phil.

698, 711 (1995).
37

Id. at 712 .

38

Id.

39

Toyota Motor Phils. Corp. Workers Association

(TMPCWA) v. National Labor Relations
Commission,supra note 23, at 219.

AMPARADO, JOSE A. ANTENOR, AUGUSTO D. ARANDIA, JR.,

RUTH SHIELA M. BAGADIONG, STEVE D. BERING, ALAN ROY I.
BUYCO, MANOLO T. CABRERA, RACHEL M. CASTILLO, VICTOR
O. CHUA, VIRGILIO Y. CO, JR., LEOPOLDO S. DABAY, HUBERT V.
DIMAGIBA, MA. LOURDES CECILIA B. EMPARADOR, FELIX B.
ESTACIO, JR., JULIETA T. ESTRADA, MARICEL G. EVALLA,
JOSE G. GUISADIO, ALEXANDER A. MARTINEZ, JOSEPHINE M.
ONG, EDNA M. SARONG, GREGORIO S. SECRETARIO, ROSIE C.
UY, ARVIN D. VALENCIA, FERMIN JOSEPH B. VENTURA, JR.,
EMMANUEL C. YAPTANCO, ERNESTO C. ZUIGA,13 ALVIN E.
BARICANOSA, GEORGE MAXIMO P. BARQUEZ, MA. ELENA G.
BELLO, MICHAEL MATTHEW B. BILLENA, LEOPE L. CABENIAN,
NEPTALI A. CADDARAO, FERDINAND MEL S. CAPULING,
MARGARETTE B. CORDOVA, MA. EDNA V. DATOR, RANIEL C.
DAYAO, RAGCY L. DE GUZMAN, LUIS E. DELOS SANTOS,
CAROLINA C. DIZON, MARCHEL S. ESQUEJO,14 JOCELYN L.
ESTROBO, MINERVA S. FALLARME, HERNANE C. FERMOCIL,
RACHEL B. FETIZANAN, SAMUEL A. FLORENTINO, MENCHIE R.
FRANCISCO, JOEL S. GARMINO, LESTER MARK Z.
GATCHALIAN, MA. GONZALO G. GUINIT, FERDINAND S.
HABIJAN, JUN G. HERNANDEZ, LOURDES D. IBEAS, MA.
ANGELA L. JALANDONI, JULIE T. JORNACION, MANUEL C. LIM,
MA. LOURDES A. LIM, EMERSON V. LUNA, NOLASCO B.
MACATANGAY, NORAMN C. MANACO, CHERRY LOU B.
MANGROBANG, MARASIGAN G. EDMUNDO, ALLEN M.
MARTINEZ, EMELITA C. MONTANO, ARLENE P. NOBLE, SHIRLEY
A. ONG, LOTIZ E. ORTIZ LUIS, PABLITO M. PALO, GEOFFREY T.
PRADO, OMEGA MELANIE M. QUINTANO, AGNES A. RAMIREZ,
RICARDO D. RAMIREZ, DANIEL O. RAQUEL, RAMON B. REYES,
SALVACIO N. ROGADO, ELMOR R. ROMANA, JR., LOURDES U.
SALVADOR, ELMER S. SAYLON, BENHARD E. SIMBULAN, MA.
TERESA S. SOLIS, MA. LOURDES ROCEL E. SOLIVEN, EMILY C.
SUYAT, RAYMOND D. TANAY, JOCELYN Y. TAN, CANDIDO G.
TISON, MA. THERES O. TISON, EVELYN T. UYLANGCO, MERVIN
S. BAUTISTA, LEOPOLDO V. DE LA ROSA, DOROTEO S.
FROILAN, JULIETE L. JUBAC, SOLID BANK CORPORATION
and/or its successor-in-interest, FIRST METRO INVESTMENT
CORPORATION, DEOGRACIAS N. VISTAN and EDGARDO
MENDOZA, JR., Respondents.
x-----------------------x
G.R. No. 157327
SOLID BANK CORPORATION and/or its successor-in-interest,
FIRST METRO INVESTMENT CORPORATION, DEOGRACIAS N.
VISTAN and EDGARDO MENDOZA, JR., Petitioners,
vs.
SOLIDBANK UNION and its dismissed officers and members,
namely: EVANGELINE J. GABRIEL, TERESITA C. LUALHATI,
ISAGANI P. MAKISIG, REY S. PASCUA, EVELYN A. SIA, MA.
VICTORIA M. VIDALLON, AUDREY A. ALJIBE, REY ANTHONY M.
AMPARADO, JOSE A. ANTEENOR, AUGUSTO D. ARANDIA, JR.,
JANICE L. ARRIOLA, RUTH SHIELA M. BAGADIONG, STEVE D.
BERING, ALAN ROY I. BUYCO, MANOLO T. CABRERA, RACHEL
M. CASTILLO, VICTOR O. CHUA, VIRGILIO Y. CO, JR., LEOPOLDO
S. DABAY, ARMAND V. DAYANG-HIRANG, HUBERT V. DIMAGIBA,
MA. LOURDES CECILIA B. EMPARADOR, FELIX B. ESTACIO, JR.,
JULIETA T. ESTRADA, MARICEL G. EVALLA, JOSE G. GUISADIO,
JOSE RAINARIO C. LAOANG, ALEXANDER A. MARTINEZ, JUAN
ALEX C. NAMBONG, JOSEPHINE M. ONG, ARMANDO B.
OROZCO, ARLENE R. RODRIGUEZ, NICOMEDES P. RUIZO, JR.,
DON A. SANTANA, ERNESTO R. SANTOS, JR., EDNA M.
SARONG, GREGORIO S. SEECRETARIO, ELLEN M. SORIANO,
ROSIE C. UY, ARVIN D. VALENCIA, FERMIN JOSSEPH B.
VENTURA, JR., EMMANUEL C. YAPTANCO, ERNESTO C.
ZUNIGA, ARIEL S. ABENDAN, EMMA R. ABENDAN, PAULA
AGNES A. ANGELES, JACQUILINE B. BAQUIRAN, JENNIFER S.
BARCENAS, ALVIN E. BARICANOSA, GEORGE MAXIMO P.
BARQUEZ, MA. ELENA G. BELLO, RODERICK M. BELLO,
MICHAEL MATTHEW B. BILLENA, LEOPE L. CABENIAN, NEPTALI
A. CADDARAO, FERDINAND MEL S. CAPULING, MARGARETTE
B. CORDOVA, MA. EDNA V. DATOR, PRANIEL C. DAYAO, RAGCY
L. DE GUZMAN, LUIS E. DELOS SANTOS, CARMINA M. DEGALA,
EPHRAIM RALPH A. DELFIN, KAREN M. DEOCERA, CAROLINA C.
DIZON, MARCHEL S. ESQUEJJO, JOCELYN L. ESTROBO,

MINERVA S. FALLARME, HERNANE C. FERMOCIL, RACHEL B.

FETIZANAN, SAMUEL A. FLORENTINO, MENCHIE R. FRANCISCO,
ERNESTO U. GAMIEL,15 MACARIO RODOLFO N. GARCIA, JOEL S.
GARMINO, LESTER MARK Z. GATCHALIAN, MA. JINKY P.
GELERA, MA. TERESA G. GONZALES, GONZALO G. GUINIT,
EMILY H. GUINO-O, FERDINAND S. HABIJAN, JUN G.
HERNANDEZ, LOURDES D. IBEAS, MA. ANGELA L.
JALANDDONI, JULIE T. JORNACION, MANUEL C. LIM, MA.
LOURDES A. LIM, EMERSON V. LUNA, NOLASCO B.
MACATANGAY, NORMAN C. MANACO, CHERRY LOU B.
MANGROBANG, MARASIGAN G. EDMUNDO, ALLEN M.
MARTINEZ, EMELITA C. MONTANO, ARLENE P. NOBLE, SHIRLEY
A. ONG, LOTIZ E. ORTIZ LUIS, PABLITO M. PALO, MARY
JAINE16 D. PATINO, GEOFFREY T. PRADO, OMEGA MELANIE M.
QUINTANO, ANES A. RAMIREZ, RICARDO D. RAMIREZ, DANIEL
O. RAQUEL, RAMON B. REYES, SALVACION N. ROGADO,
ELMOR R. ROMANA, JR., LOURDES U. SALVADOR, ELMER S.
SAYLON, BENHARD E. SIMBULAN, MA. TERESA S. SOLIS, MA.
LOURDES ROCEL E. SOLIVEN, EMLY C. SUYAT, EDGAR ALLAN
P. TACSUAN, RAYMONDD D. TANAY, JOCELYN Y. TAN,
CANDIDO G. TISON, MA. THERESA O. TISON, EVELYN T.
UYLANGCO, CION E. YAP, MA. OPHELIA C. DE GUZMAN, MA.
HIDELISA P. IRA, RAYMUND MARTIN A. ANGELES, MERVIN S.
BAUTISTA, ELENA R. CONDEVILLAMAR, CCHERRY T. CO,
LEOPOLDO V. DE LA ROSA, DOROTEO S. FROILAN, EMMANUEL
B. GLORIA, JULIETE L. JUBAC, and ROSEMARIE L.
TANG, Respondents.
x-----------------------x
G.R. No. 157506
SOLIDBANK UNION, EVANGELINE J. GABRIEL, EVELYN A. SIA,
TERESITA C. LUALHATI, ISAGANI P. MAKISIG, REY S. PASCUA,
MA. VICTORIA M. VIDALLON, AUDREY A. ALJIBE, REY ANTHONY
AMPARADO, JOSE A. ANTENOR, AUGUSTO D. ARANDIA, JR.,
RUTH SHIELA M. BAGADIONG, STEVE D. BERING, ALAN ROY I.
BUYCO, MANOLO T. CABRERA, RACHEL M. CASTILLO, VICTOR
O. CHUA, VIRGILIO Y. CO, JR., LEOPOLDO S. DABAY, HUBERT V.
DIMAGIBA, MA. LOURDES CECILIA B. EMPERADOR, FELIX B.
ESTACIO, JR., JULIETA T. ESTRADA, MARICEL G. EVALLA,
JOSE G. GUISADIO, ALEXANDER A. MARTINEZ, JOSEPHINE M.
ONG, EDNA M. SARONG, GREGORIO S. SECRETARIO, ARVIN D.
VALENCIA, FERMIN JOSEPH B. VENTURA, JR., EMMANUEL C.
YAPTANGCO, ERNESTO C. ZUIGA, ALVIN E. BARICANOSA,
GEORGE MAXIMO P. BARQUEZ, MA. ELENA G. BELLO, MICHAEL
MATTHEW B. BILLENA, NEPTALI A. CADDARAO, FERDINAND
MEL S. CAPULONG, MA. EDNA V. DATOR, RANIEL C. DAYAO,
RAGCY L. DE GUZMAN, LUIS E. DELOS SANTOS, CAROLINA C.
DIZON, JOCELYN L. ESTROBO, MINERVA S. FALLARME,
HERNANE C. FERMOCIL, RACHEL B. FETIZANAN, SAMUEL A.
FLORENTINO, JOEL S. GARMINO, LESTER MARK Z.
GATCHALIAN, GONZALO GUINIT, FERDINAND S. HABIJAN, JUN
G. HERNANDEZ, MA. ANGELA L. JALANDONI, MA. LOURDES A.
LIM, EMERSON V. LUNA, NOLASCO B. MACATANGAY, NORMAN
C. MAACO, CHERRY LOU MANGROBANG, EDMUNDO G.
MARASIGAN, ALLEN M. MARTINEZ, ARLENE P. NOBLE, SHIRLEY
A. ONG, LOTIZ E. ORTIZ LUIS, PABLITO M. PALO, GEOFFREY T.
PRADO, OMEGA MELANIE M. QUINTANO, AGNES A. RAMIREZ,
RICARDO D. RAMIREZ, DANIEL O. RAQUEL, RAMON B. REYES,
SALVACIO N. ROGADO, ELMOR R. ROMANA, JR., LOURDES U.
SALVADOR, ELMER S. SA YLON, BENNARD E. SIMBULAN, MA.
LOURDES ROCEL E. SOLIVEN, EMILY C. SUYAT, RAYMOND D.
TANAY, .JOCELYN Y. TAN, CANDIDO G. TISON, MA. THERESA O.
TISON, EVELYN T. UYLANGCO, MERVIN S. BAUTISTA,
LEOPOLDO V. DE LA ROSA, DOROTEO S. FROILAN and JULIETE
L. JUBAC, Petitioners.
vs.
METROPOLITAN BANK AND TRUST COMPANY, Respondent.
DECISION
DEL CASTILLO, J.:

The issues presented in these consolidated petitions have been

squarely resolved by this Court in its November 15, 2010 Decision
in Solidbank Corporation v. Gamier,17 The said Decision constitutes res
judicata in these consolidated petitions.
These petitions for review on certiorari assail the conflicting Decision of
the Court of Appeals (CA) in CA-G.R. SP Nos. 68054 and 68998. In
CA-G.R. SP No. 68054, the CAs Second Division ruled that the public
demonstration conducted by the employees on April 3, 2000 after the
Secretary of Labor assumed jurisdiction over the labor dispute was a
valid exercise of their constitutional rights to freedom of expression, to
peaceful assembly, and to petition the government for redress of their
grievances and, hence, their dismissal from employment was illegal.
Said division of the CA thus set aside the ruling of the National Labor
Relations Commissions (NLRCs) Second Division and reinstated the
Decision18 dated March 16, 2001 of Labor Arbiter Luis D. Flores (Labor
Arbiter Flores).
In CA-G.R. SP No. 68998, however, the Special Third Division of the
CA held that the employees staged an illegal strike. It also held that
Metropolitan Bank and Trust Company (Metrobank) could not be held
jointly and solidarily liable with Solidbank Corporation (Solidbank) and
First Metro Investment Corporation (First Metro) because each of them
have separate and distinct legal personalities.
Factual Antecedents
Solidbank Union (Union) was a legitimate labor organization and the
duly certified sole bargaining representative of all rank-and-file
employees of Solidbank. On November 17, 1999, the Union and
Solidbank negotiated for a new economic package for the remaining
two years of the 1997-2001 collective bargaining agreement (CBA).
However, the parties reached an impasse. Thus, on January 18, 2000,
then Secretary of Labor Bienvenido E. Laguesma (Secretary
Laguesma) assumed jurisdiction over the dispute and enjoined the
parties from holding a strike or lockout or any activity which might
exacerbate the situation.19
Thereaftter, on March 24, 2000, Secretary Laguesma issued an
Order20 disposing as follows:
WHEREFORE, premises considered, judgment is hereby issued:
a. Directing Solidbank Corporation and Solidbank Union to conclude
their Collective Bargaining Agreement for the years 2000 and 2001,
incorporating the dispositions above set forth;
b. Dismissing the unfair labor practice charge against Solidbank
Corporation;
c. Directing Solidbank to deduct or check-off from the employees lump
sum payment an amount equivalent to seven percent (7%) of their
economic benefits for the first (1st) year, inclusive of signing bonuses,
and to remit or turn over the said sum to the Unions authorized
representative, subject to the requirements of check-off;
d. Directing Solidbank to recall the show-cause memos issued to
employees who participated in the mass actions if such memos were in
fact issued.
SO ORDERED.

21

Displeased with Secretary Laguesmas ruling, about 712 union

members and officers skipped work in the morning of April 3, 2000 (a
Monday) and trooped to his office in Intramuros, Manila, not only to
accompany their lawyer in filing the Unions Motion for Reconsideration
but also to stage a brief public demonstration. Other rank and file
employees in the provincial branches of Solidbank also absented
themselves from work that day.

Solidbank also filed its Motion for Reconsideration. With respect to the
mass demonstration conducted by its employees, however, Solidbank
perceived the same to be an illegal strike, a deliberate abandonment of
work calculated to paralyze its operations. Thus, Solidbank issued a
memorandum22 informing all the participants in the mass
demonstration that they had put their jobs at risk. In another
memorandum, Solidbank informed the employees that the bank was
willing to take back those who would report for work on April 6, 2000.
About 513 of the striking employees obliged with the second
memorandum. With regard to the 199 employees who did not comply
with the aforesaid memorandum, another memorandum23 was issued
requiring them to explain within 24 hours from notice thereof why they
should not be dismissed from employment. Pending receipt of
explanations, Solidbank placed the concerned employees under
preventive suspension status.
On April 17, 2000, Solidbank dismissed all 199
employees.24 Eventually, however, it re-admitted 70 employees,
bringing down the number of dismissed employees to 129. On varying
dates, some 21 employees executed a Release, Waiver, and
Quitclaim25 in favor of Solidbank.
On May 8, 2000, Secretary Laguesma issued an Order26 denying the
motions for reconsideration separately filed by Solidbank and the
Union.
Meanwhile, First Metro and Solidbank entered into a merger
agreement, with Solidbank as the surviving entity and First Metro
ceasing to exist as a corporation. However, the surviving corporation
was renamed First Metro Investment Corporation. Subsequently,
Metrobank bought all banking-related assets and liabilities of Solidbank
(renamed First Metro), which ceased operations on August 31, 2000.
Proceedings before the Labor Arbiter
On July 21, 2000, the Union, together with its members who were
dismissed by Solidbank (hereinafter collectively referred to as
complainants), filed, thru E. R. Jabla Law Offices, a Complaint for
illegal dismissal27 against Solidbank, its President and Chief Executive
Officer Deogracias N. Vistan (Vistan), Senior Vice-President Diwata
Castanos (Castanos), and First Metro.This complaint was
subsequently amended by dropping 3228 individual complainants and
Castanos and by impleading Metrobank and its Assistant VicePresident for Human Resources Edgardo Mendoza, Jr. (Mendoza) as
party respondents. Complainants contended that the mass
demonstration they conducted was not a strike but was a legitimate
exercise of their constitutional rights to freedom of expression, to
peaceful assembly and to petition the government for redress of their
grievances.
On September 29, 2000, Sycip Salazar Hernandez and Gatmaitan,
representing the respondents in the Amended Complaint, filed a
Position Paper with Motion to Dismiss (with respect to several
individual complainants).29 Said law firm asserted that Solidbank validly
terminated the employment of those who participated in the strike
which was illegal. And since the dismissal of said employees was
based on justifiable cause, the Unions claim of unfair labor practice
had no leg to stand on.
Said counsel further pointed out that on August 31, 2000, Solidbank
ceased its banking operations. Consequently, pursuant to Article 283
of the Labor Code,30 all of its employees were terminated from
employment on said date.
Ruling of the Labor Arbiter
On March 16, 2001, Labor Arbiter Flores rendered his
Decision31 declaring the disputed April 3, 2000 incident not a strike but
a mere expression of the employees displeasure over the Secretarys
ruling; that the 24-hour deadline imposed by Solidbank within which
the employees should submit their written explanation was not
sufficient to give them reasonable opportunity to refute the charges

against them; and that Solidbank was guilty of unfair labor practice for
using union membership as one of the bases for recalling or
terminating employment. Accordingly, he awarded full backwages and
attorneys fees in favor of the employees. The dispositive portion of the
Labor Arbiters Decision reads as follows:
WHEREFORE, premises considered, judgment is hereby rendered
declaring complainants dismissal as illegal and unjustified and
ordering the respondents Solid Bank Corporation and/or its successorin-interest First Metro Investment Corporation and/or Metropolitan
Bank and Trust Company and/or Deogracias Vistan and/or Edgardo
Mendoza to reinstate complainants to their former positions.
Concomitantly, said respondents are hereby ordered to jointly and
severally pay the complainants their full backwages and other
employees benefits from the time of their dismissal up to the date of
their actual reinstatement; payment of ten (10%) percent attorneys
fees; payment of ONE HUNDRED FIFTY THOUSAND PESOS
(P 150,000.00) each as moral damages and ONE HUNDRED
THOUSAND PESOS (P 100,000.00) each as exemplary damages
which are computed, at the date of this decision in the amount of
THIRTY THREE MILLION SEVEN HUNDRED NINETY FOUR
THOUSAND TWO HUNDRED TWENTY TWO PESOS and 80/100
(P 33,794,222.80), by the Computation and Examination Unit of this
branch and becomes an integral part of this Decision.
SO ORDERED.32
Then on April 26, 2001, complainants filed an Urgent Motion for the
Issuance of A Writ of Execution33 seeking the immediate enforcement
of the Labor Arbiters Decision insofar as the reinstatement aspect was
concerned.
Proceedings before the National Labor Relations Commission
Solidbank and Metrobank separately filed their appeal. In its
Memorandum of Appeal,34 Solidbank imputed to Labor Arbiter Flores
grave abuse of discretion in concluding that the concerted action of the
complainants was a mere expression of displeasure and not a strike in
defiance of Secretary Laguesmas assumption order. Solidbank
likewise alleged that the Labor Arbiter erred in holding that it was guilty
of unfair labor practice; that complainants were denied due process of
law; that the 21 individual complainants who voluntarily settled their
claims against the bank were still entitled to the avails of the suit; that
complainants were entitled to damages and attorneys fees; and, that
the officers of the bank were solidarily liable with it.
Metrobank, for its part, argued that it had a separate and distinct
personality from Solidbank and First Metro and, hence, could not be
held solidarily liable with said entities. It also claimed that the labor
tribunal did not acquire jurisdiction over its person because it was not
served with summons. Metrobank stressed that it never engaged the
services of Sycip Salazar Hernandez and Gatmaitan and only learned
of the pending case when it was informed by First Metro about it. For
these reasons, Metrobank contended that the assailed Decision of the
Labor Arbiter was null and void insofar as it was concerned.
Metrobank likewise claimed that the complaint should have been
outrightly dismissed for violating the rule against forum shopping, as
six35 of the complainants had earlier filed illegal dismissal cases.
Moreover, each of the complainants failed to sign the certificate of nonforum shopping. It also echoed the contentions of Solidbank contained
in the latters Memorandum of Appeal.
On May 21, 2001, the Labor Arbiter issued a Partial Writ of
Execution,36 ordering the reinstatement of the dismissed employees to
their former positions. Whereupon, Metrobank filed a Motion37 seeking
to restrain the enforcement of said writ.
Solidbank likewise filed an Urgent Motion (to Quash or Recall Writ of
Execution),38 claiming that the positions previously held by the
complainants were no longer available because Solidbank had already
ceased operations.

The complainants thereafter filed their Answer (To RespondentsAppellants Memoranda of Appeal).39
On July 23, 2001, the NLRCs Second Division rendered its
Decision40 finding the dismissal of the complainants valid. It opined that
the mass action held on April 3, 2000 was a strike within the
contemplation of Article 212(o)41of the Labor Code and in violation of
the Secretary of Labors January 18, 2000 assumption order. Notably,
however, the NLRC Second Division still awarded separation benefits
in favor of the complainants on equitable grounds.
The NLRC Second Division likewise ruled that Solidbank did not
interfere with complainants right to self-organization and, hence, did
not commit unfair labor practice. It also dismissed the complaint with
respect to complainant Jose A. Antenor for violating the rule against
forum shopping, as well as with respect to the 21 individual
complainants who already executed Release, Waiver and Quitclaim.
The Second Division of the NLRC disposed as follows:
WHEREFORE, premises considered, the decision of the Labor Arbiter
is hereby VACATED and SET ASIDE and a new one entered
dismissing the complaint for illegal dismissal and unfair labor practice
for lack of merit. As equitable relief, respondents are hereby ordered to
pay complainants separation benefits as provided under the CBA at
least one (1) month pay for every year of service whichever is higher
[sic].
SO ORDERED.42
The banks and the complainants filed their respective motions for
reconsideration but these were all denied by the NLRC in its
Resolution43 dated September 28, 2001.
On November 29, 2001, Labor Arbiter Flores issued an Order and an
Alias Partial Writ of Execution directing the banks to pay complainants
their accrued wages and other employees benefits computed from the
date of his Decision up to the date of the reversal thereof by the NLRC
Second Division on July 23, 2001.
Incidentally, other similarly situated employees44 filed their separate
complaints for illegal dismissal against Solidbank, which were
consolidated and assigned to Labor Arbiter Potenciano Canizares, Jr.
(Canizares). On November 14, 2000, Labor Arbiter Canizares issued a
Decision dismissing the complaints. In a Decision dated January 31,
2002, however, the NLRCs Third Division reversed the ruling of the
Labor Arbiter and ruled in favor of said complainants. Thus:
WHEREFORE, the decision appealed from is hereby SET ASIDE and
a new one entered finding the respondent Solidbank Corporation liable
for the illegal dismissal of complainants Ernesto U. Gamier, Elena P.
Condevillamar, Janice L. Arriola and Maria Ophelia C. De Guzman,
and ordering the respondent bank to reinstate the complainants to their
former positions without loss of seniority rights and to pay full
backwages reckoned from the time of their illegal dismissal up to the
time of their actual/payroll reinstatement. Should reinstatement not be
feasible, respondent bank is further ordered to pay in accordance with
the provisions of the subsisting Collective Bargaining Agreement.
All other claims are DISMISSED for lack of merit.
SO ORDERED.45
Proceedings before the Court of Appeals</p>
From the conflicting Decisions of the Second and Third Divisions of the
NLRC stemmed five interrelated petitions for certiorari separately filed
by the parties before the CA.
CA-G.R. SP Nos. 67730 and 70820

CA-G.R. SP No. 67730 was a petition for certiorari filed by Solidbank,

Vistan and Mendoza seeking to nullify the July 23, 2001 Decision of
the NLRCs Second Division insofar as it ordered Solidbank to pay
separation pay. CA-G.R. SP No. 70820, on the other hand, was
another petition for certiorari filed by Solidbank praying for the reversal
of the January 31, 2002 Decision of the NLRCs Third Division. These
cases were consolidated and assigned to the CAs Twelfth Division. In
its March 10, 2003 Decision,46 the CA Twelfth Division denied both
petitions on the ground that the mass action staged by the
complainants was a legitimate exercise of their right to free expression.
Its dispositive portion reads:
WHEREFORE, the twin petitions are hereby DENIED. The dismissal of
private respondents are hereby declared to be illegal. Consequently,
petitioner is ordered to reinstate private respondents to their former
position, consonant with the Decision of this Court in CA-G.R. SP No.
68054.

Subsequently, said five complainants still represented by Jabla

Damian and Associates filed with this Court a Motion for Extension of
Time to File Petition for Review on Certiorari,57 only to withdraw it
afterwards. Accordingly, on February 5, 2003, this Court declared the
case terminated.58
CA-G.R. SP No. 68998
CA-G.R. SP No. 68998 was a petition for certiorari with prayer for
injunctive relief filed by Metrobank seeking to nullify the Decision of the
Second Division of the NLRC insofar as it awarded separation benefits
in favor of the complainants.
During the pendency of said petition, the NLRC issued on January 9,
2002 a Notice of Garnishment59 for the implemention of Labor Arbiter
Floress March 16, 2001 Decision against Solidbank, First Metro or
Metrobank.

SO ORDERED.47
Solidbank then filed with this Court petitions for review
on certiorari questioning the above-mentioned Decision of the CA
Twelfth Division. These petitions docketed as G.R. Nos. 159460 and
159461 were consolidated and raffled to the Third Division of this
Court. On November 15, 2010, the Courts Third Division rendered its
Decision which, as mentioned in our opening paragraph,
constitutes res judicata in these consolidated petitions.
CA-G.R. SP No. 68054
In their petition for certiorari in CA-G.R. SP No. 68054, complainants,
thru Atty. Potenciano A. Flores, Jr., assailed the July 23, 2001 Decision
of the NLRCs Second Division. On August 29, 2002, the Second
Division of the CA rendered its Decision48 finding the April 3, 2000
mass demonstration a valid exercise of complainants right to petition
the government for redress of their grievances.
Thus:
WHEREFORE, premises considered, the instant petition
for certiorari is GRANTED. The Labor Arbiters decision, except with
respect to the award of moral and exemplary damages which are
heretofore lowered to PhP 50,000.00 and PhP 25,000.00, respectively,
is hereby REINSTATED.
SO ORDERED.49
Solidbank and Metrobank separately moved for
reconsideration,50 which drew complainants Consolidated
Comment.51 In a Resolution52 dated January 30, 2003, the CA denied
both motions.
The August 29, 2002 Decision of the CAs Second Division was
assailed by Metrobank and Solidbank before this Court in two separate
petitions for review on certiorari G.R. No. 157169 and G.R. No.
157327, respectively.
CA-G.R. SP No. 68349
Atty. Emmanuel R. Jabla (Atty. Jabla), in collaboration with Attys.
Federico C. Leynes and Jose C. Espinas, and in representation of five
individual complainants, initiated CA-G.R. SP No. 68349.53 However,
on April 24, 2002, the CAs Special Tenth Division issued a
Resolution54 outrightly dismissing the petition on the following grounds:
(i) there was no proof that the signatories in the verification and
certification against forum shopping were authorized to sign the same;
(ii) violation of the rule against forum shopping; and, (iii) noncompliance with Section 11, Rule 13 of the Rules of Court. 55
A motion for reconsideration was filed, but the same was denied in a
Resolution56 dated October 16, 2002.

On January 14, 2002, the Fourth Division of the CA, thru Justice
Bernardo P. Abesamis, issued a Resolution60granting Metrobanks
request for a temporary restraining order. Then on February 20, 2002,
upon Metrobanks filing of a Supplemental Motion, the Special Fourth
Division of the CA issued another Resolution61 granting Metrobanks
prayer for the issuance of a writ of preliminary injunction. It enjoined
the implementation of Labor Arbiter Floress Decision,62
November 29, 2001 Order and Alias Partial Writ of Execution, as well
as the NLRC Second Divisions July 23, 2001 Decision63 and
September 28, 2001 Resolution.64
In view of this turn of events, and believing that they can no longer
expect fair and impartial justice, complainants filed a Motion to Inhibit
Justice Bernardo P. Abesamis.65 They averred that the issuance of the
two resolutions granting Metrobanks prayer for injunctive relief was a
blatant display of Justice Abesamiss bias and prejudice, if not gross
ignorance of the law. Complainants also sought reconsideration of the
above-mentioned resolutions on the ground that the reinstatement
aspect of Labor Arbiter Floress Decision was immediately
executory.1wphi1
In a Resolution66 dated May 30, 2002, however, the CAs Third Division
denied both motions, ratiocinating that the Labor Codes provision on
the executory nature of the reinstatement aspect, even pending
appeal, is not applicable to cases pending with the CA. With regard to
complainants motion to inhibit, the CA opined that the reasons stated
therein do not constitute grounds for disqualification or inhibition of
judges.
With the denial of their motion for reconsideration to set aside the CAs
resolutions granting injunctive relief, complainants filed with this Court
on July 18, 2002 a petition for review on certiorari. This was docketed
as G.R. No. 153799.
Pending resolution of G.R. No. 153799, the CAs Special Third Division
rendered its Decision67 in CA-G.R. SP No. 68998 in favor of
Metrobank. It held that since Metrobank was not duly served with
summons, the Decisions of the labor tribunals insofar as said bank is
concerned are null and void. In addition, the CA Special Third Division
ruled that complainants are not entitled to separation pay because the
mass demonstration they conducted on April 3, 2000 violated
Secretary Laguesmas assumption order. Moreover, even assuming
that complainants are entitled to separation pay, the CA opined that
Metrobank cannot be held solidarily liable because there was no
merger between Metrobank and Solidbank. Metrobank, which has a
separate and distinct personality of its own, merely bought the
banking-related assets and liabilities of Solidbank.
The dispositive portion of the July 26, 2002 Decision of the CA Special
Third Division in CA-G.R. SP No. 68998 reads:
WHEREFORE, premises considered, the instant petition is hereby
GIVEN DUE COURSE and GRANTED. The Decision of the National

Labor Relations Commission dated July 23, 2001 with respect to the
portion reading: "the decision of the Labor Arbiter is hereby VACATED
and SET ASIDE and a new one entered dismissing the complaint for
illegal dismissal and unfair labor practice for lack of merit", is
AFFIRMED; and the portion of the same decision which reads: "As
equitable relief, respondents are hereby ordered to pay complainants
separation benefits as provided under the CBA at least one (1) month
pay for every year of service whichever is higher" [sic], is REVERSED
and SET ASIDE.
SO ORDERED.68
Complainants filed a Motion for Reconsideration69 but the same was
denied in the Resolution70 dated March 6, 2003. This prompted
complainants to file with this Court a Petition for Review on Certiorari,
which was docketed as G.R. No. 157506.
Issues
G.R. No. 153799
Citing Article 223 of the Labor Code,71 complainants contend that the
reinstatement aspect of Labor Arbiter Floress ruling is immediately
executory, even pending appeal.
In resisting the petition, Metrobank counter-argues that complainants
resort to a petition for review on certiorariunder Rule 45 of the Rules of
Court is improper because it is available only to correct judgment or
final order or resolution of the CA. Here, what complainants are
assailing are interlocutory resolutions of the CA granting Metrobanks
prayer for injunctive relief. Also, with the promulgation of the CA
Special Third Divisions Decision in CA-G.R. SP No. 68998 on July 26,
2002, this petition (G.R. No. 153799) has become moot and
academic.72
Metrobank likewise argues that at the time the controversy reached the
CA, the Decision of Labor Arbiter Flores was no longer on appeal.
Therefore, the CAs Special Third Division was correct in holding that
the provision of Article 223 of the Labor Code was then no longer
applicable. Furthermore, Metrobank asserts that the labor tribunals did
not acquire jurisdiction over its person and that it cannot be held
solidarily liable with Solidbank and First Metro.
G.R. No. 157506
In their petition, complainants contend, among others, that the April 3,
2000 mass demonstration was a legitimate exercise of their
constitutional rights to freedom of expression, to peaceful assembly
and to petition the government for redress of wrong; that Metrobank
was not deprived of its right to due process, and that it should be held
solidarily liable with its co-petitioners by reason of corporate affinity;
that the Decision in CA-G.R. SP No. 68998 violated several
constitutional provisions relative to labor; that the punishment of
dismissal imposed upon the

Finally, complainants seek reinstatement of the award of damages

granted them by Labor Arbiter Flores. They claim that Solidbank
violated Article 277(b) of the Labor Code requiring employers to
observe and comply with the two-notice rule and to conduct an inquiry
before dismissing their employees. Hence, in view of these wrongful
omissions in effecting their dismissal, Vistan and Mendoza should be
held jointly and severally liable with Solidbank, First Metro and
Metrobank.
G.R. Nos. 157169 and 157327
Metrobank and Solidbank separately filed their respective petitions for
review on certiorari assailing the August 29, 2002 Decision73 of the
CAs Second Division in CA-G.R. SP No. 68054. On April 9, 2003,
these petitions docketed as G.R. Nos. 157169 and 157327 were
consolidated.74
In G.R. No. 157169, Metrobank maintains that the April 3, 2000 mass
demonstration was an illegal strike; that the person against whom the
mass action is directed as well as the true intention of the
complainants in staging the mass action, is immaterial and has no
bearing in determining whether said mass action is an illegal strike;
that once the Secretary of Labor assumed jurisdiction over the dispute,
the striking employees were prohibited from committing acts that would
exacerbate the situation; and the mass action did not only take place in
front of the office of Secretary Laguesma but also in front of
Solidbanks Binondo branch and in the provinces.75
Metrobank likewise insists that the CA Second Division should have
outrightly dismissed CA-G.R. SP No. 68054 because complainants
violated the rule against forum shopping. For Metrobank, the following
circumstances indubitably constitute forum shopping:
7.24 Attys. Emmanuel R. Jabla, Federico C. Leynes and Jose C.
Espinas continue to represent Solidbank Union and its Members,
despite the fact that Atty. Potenciano A. Flores, Jr. filed a similar but
allegedly separate Petition with the Court of Appeals docketed as CAG.R. SP No. 68054. It might be important to restate that the petition in
CA-G.R. SP No. 68349 was already dismissed by the Court of Appeals
primarily on the ground of forum shopping and such dismissal was
declared final and executory by this Honorable Supreme Court in its
Resolution in G.R. 156097 dated 05 February 2003. Nevertheless,
Attys. Emmanuel R. Jabla, Federico C. Leynes and Jose C. Espinas
were not disturbed by such adverse decision because they are now
using to the benefit of Solidbank Union and its dismissed
Members/employees the favorable decision obtained by Atty.
Potenciano Flores, Jr. in CA-G.R. SP No. 68054. x x x
xxxx
7.25 Furthermore, the Unions president, Evangeline J. Gabriel, after
signing and verifying the Petition in CA-G.R. SP No. 68054 prepared
by Atty. Potenciano Flores, verified several pleadings prepared by
Attys. Emmanuel R. Jabla, Federico C. Leynes and Jose C. Espinas.
xxxx

129 employees is not commensurate to their half-day absence from

work; that they believed in good faith that the April 3, 2000 mass
demonstration was an ordinary protest action directed against
Secretary Laguesma; and that Solidbank is guilty of illegal dismissal for
hastily and unceremoniously carrying out their mass dismissal from
work.
Complainants further state that Solidbank did not reinstate the 129
employees because of their membership in the union, which amounts
to interference with the employees right to self-organization and,
hence, constitutes unfair labor practice; that Solidbank is equally guilty
of illegal lockout for refusing to admit them back to work; that the 24
hours given them to show cause was unreasonably short; and worse,
their preventive suspension practically prevented them from submitting
their explanation because they were barred entry to the banks
premises.

7.26 If Attys. Emmanuel R. Jabla, Federico C. Leynes and Jose C.

Espinas do not recognize Atty. Potenciano Flores as the counsel of
Solidbank Union and its Members/Employees, then they should not
recognize much less benefit from the favorable Decision obtained by
Atty. Potenciano Flores in CA-G.R. SP No. 68054.76
Metrobank likewise contends that complainants are not entitled to
moral damages because the same are recoverable only where the
dismissal or suspension of the employee was attended with bad faith
and fraud; or constituted an act oppressive to labor; or was done in a
manner contrary to morals, good customs or public policy. This,
according to Metrobank, is absent in this case.
Metrobank also points out that the Second Division of the CA
grievously erred in reinstating the Decision of Labor Arbiter Flores with

respect to those who (i) were excluded as party complainants, (ii) were
found guilty of forum shopping, or (iii) have executed quitclaims.
Metrobank claims that several Union members/ employees can no
longer benefit from the reinstatement aspect of said Labor Arbiters
Decision, considering that 3277 of them were dropped from the original
list of complainants, and that the NLRC had long ago considered the
case dismissed insofar as they were concerned. In addition, there were
2178 employees who executed Release, Waiver and Quitclaim
documents discharging Solidbank, its parent company, and affiliate or
subsidiary companies, from any action, claim or other obligations
arising from their employment with Solidbank. Thus, the NLRC
dismissed the complaint with respect to said 21 employees. This was
never questioned by the complainants in any of the cases that reached
the CA.
Moreover, there were 3579 individuals who were not included as partypetitioners in CA-G.R. SP No. 68054. But with the reinstatement of
Labor Arbiter Floress Decision, these 35 individuals will benefit
therefrom despite the fact that they did not appeal Labor Arbiter
Floress Decision to the NLRC.
Furthermore, additional 2180 Union members were included as
complainants in G.R. No. 157506 despite their non-inclusion as party
complainants in CA-G.R. SP No. 68998. Citing People v.
Velez,81 Metrobank asserts that said 21 new complainants are not real
parties in interest in this case and, hence, the same should be
dismissed insofar as they are concerned.
Metrobank prays for the reversal of the August 29, 2002 Decision of
the CAs Second Division in CA-G.R. SP No. 68054.
With regard to G.R. No. 157327,82 Solidbank claims that the CAs
Second Division erred in exercising certiorarijurisdiction over the NLRC
because, as can be readily seen from its Decision, there is nothing
which says that the Second Division of the NLRC acted with grave
abuse of discretion amounting to lack or excess of jurisdiction in
arriving at its conclusion. On the contrary, the NLRCs Second Division
Decision is supported by substantial evidence and, hence, should be
respected and accorded finality.
Solidbank stresses that complainants unjustified stoppage of work was
actually an illegal strike and violated Article 264(a). Hence, for
knowingly participating in an illegal activity, complainants are deemed
to have lost their employment status.
Solidbank avers that the Second Division of the CA overlooked the fact
that it had already ceased banking operations since August 31, 2000.
Hence, it is legally impossible for it to comply with said courts Decision
ordering the reinstatement of complainants to their former position.
Solidbank cries denial of due process claiming that it was not given the
opportunity to file its comment on complainants petition for certiorari. It
alleges that on January 24, 2002 it filed a Manifestation83 informing the
CA that there are two identical petitions for certiorari (CA-G.R. SP No.
68054 and CA-G.R. SP No. 68349) filed by the complainants and that
while it was furnished a copy of the petition in CA-G.R. SP No. 68349,
complainants did not serve it with a copy of the petition in CA-G.R. SP
No. 68054. Acting on Solidbanks Manifestation, the CAs Special
Second Division issued a Resolution84 dated June 14, 2002 dismissing
CA-G.R. SP No. 68054 on the ground of forum shopping. Nonetheless,
upon complainants motion, the CA reinstated the petition and forthwith
declared it submitted for decision, oblivious of the fact that Solidbank
was not served with a copy of the petition in CA-G.R. SP No. 68054
nor given a chance to comment thereon.85 To date, complainants have
yet to furnish Solidbank with a copy of said petition. Worse, the CA,
relying on complainants allegations, sent its notices, orders, and
resolutions to Solidbanks former principal office at 777 Paseo de
Roxas, 1226 Makati City instead of at its new office address at First
Metro Investment Corporation, 2nd Floor, GT Tower International,
Ayala Avenue corner H. V. dela Costa St., Makati City.
Solidbank agrees with Metrobank in claiming that the CAs Second
Division erred in ordering the reinstatement of Labor Arbiter Floress
Decision with respect to the 2186 complainants who had previously

executed Release, Waiver and Quitclaim in the presence of Mr.

Reynaldo R. Ubaldo, a labor representative of the Labor Relations
Division of DOLE.
In seeking to delete the award of damages, Solidbank invokes the
principle of damnum absque injuria. It contends that the law affords no
remedy for damages resulting from an act which does not amount to a
legal injury or wrong. In the present case, since the dismissal of
complainants is not a wrong but in accordance with law and settled
jurisprudence, complainants are not entitled to damages.
Finally, in urging this Court to set aside the Decision of the CAs
Second Division, Solidbank posits that to sustain the CA would create
an absurd situation wherein the extraordinary authority of the Secretary
of Labor under Article 263(g) of the Labor Code would be rendered
nugatory.
On September 4, 2003, complainants filed thru Jabla Damian and
Associates a Manifestation and Motion87alleging, among others, that
per attached Board Resolution88 dated August 25, 2003 complainants
terminated the services of Atty. Potenciano A. Flores, Jr. (Atty. Flores)
as their counsel for loss of trust and confidence. This drew Atty.
Floress Comment/Counter-Manifestation and Opposition to
Motion,89 claiming that what were stated in the Manifestation and
Motion were "malicious, grossly misleading and twisted allegations."
Atty. Flores did not dispute the fact that the original counsel of
complainants was Jabla Damian and Associates, who appeared before
the labor tribunals. However, on October 20, 2001, the Union, through
its President, wrote Atty. Jabla a letter terminating his services as
counsel for the Union and sent him (Atty. Flores) a copy of their
Kasunduan Bilang Abogado. Accordingly, complainants filed a
Manifestation dated March 13, 2002 informing the CA in CA-G.R. SP
No. 67730 that their counsel was Atty. Flores and that they did not hire
or engage the services of Atty. Jabla to represent them in said case.
Atty. Flores likewise averred that none of the complainants ever
approached him to withdraw his appearance from any of the cases he
handled for the Union. With respect to the Board Resolution alluded to
by Jabla Damian and Associates, Atty. Flores posited that it was not
valid because of the six members composing the Union Board, only
one of them affixed her signature thereto.90 Atty. Flores averred that
8.05.5 These lawyers did not represent the union, its officers and
members, in the proceedings before the two (2) divisions of the Court
of Appeals chaired by Justices Rodrigo V. Cosico and Romeo
Brawner. Therefore, it is unethical for them to file a motion for issuance
of an alias writ of execution with the said labor arbiter relying on the
decisions rendered by the two (2) divisions of the Court of Appeals
wherein they did not participate or exert any effort to reinstate the
decision of Labor Arbiter Luis Dizon Flores. Yet, they assisted the
signatories to the said "Board Resolution" in the immoral scheme to
ease out the undersigned counsel from participating in the executorial
stage of the case at bar.91
The counsels bickering did not end with Atty. Floress
Comment/Counter-Manifestation. In its Reply,92 Jabla Damian and
Associates retaliated by claiming that complainants never sent any
word terminating its legal services. Said law firm also alleged that:
5. Had the Union officers made clear their intention of terminating Atty.
Jablas services, or had there been a valid notice and substitution of
counsel, the undersigned counsels would not have gone to great
lengths to file complainants petition for certiorari in the Court of
Appeals in CA.-G.R. SP No. 68349 which they felt obligated to do, lest
they would be accused of being remiss in their professional duties as
counsel.
6. At the time they filed their petition in the Court of Appeals,
undersigned counsels were unaware that some individual respondents
had already gone to Atty. Flores to engage his services in filing their
petition for certiorari with the Court of Appeals which was eventually
docketed therein as CA-G.R. SP No. 68054.
7. Their belated discovery of this separate petition filed by Atty. Flores
in behalf of some respondents constrained the undersigned counsels

to withdraw their appeal to the Supreme Court from the decision of the
Court of Appeals in CA-G.R. SP No. 68349 for fear that, in addition to
the reasons cited in their motion to withdraw, pursuing the same could
only confuse the docket or adversely affect the other proceeding in CAG.R. SP No. 68054 which case had been filed earlier.
8. There is therefore no truth to Atty. Floress allegation that the period
for its filing lapsed that is why the undersigned counsels withdrew their
petition for review with the Supreme Court.
9. Assuming without admitting that Atty. Flores did send a Notice of
Appearance and Urgent Manifestation and Motion to Atty. Jabla at his
former office at Suite 2106 Cityland Condominium 10, Tower 1, H. V.
dela Costa Street corner Ayala Avenue, Makati City, this was only in
connection with the petition for certiorari filed by petitioner Solidbank
Corporation in CA-G.R. SP No. 67730. There was no similar notice in
the petition filed by petitioner Metropolitan Bank & Trust Company in
CA-G.R. SP-UDK-4431 (68998) and in CA-G.R. SP No. 153799 [sic],
the very petition filed by Atty. Flores himself in behalf of some of the
respondents.
10. Finally, it is improper for Atty. Flores to boast of his victory in the
Court of Appeals as if the same is a product of his uncommon
brilliance. A cursory reading of Atty. Floress petition will reveal that it
contains nothing but a repetition or restatement of the arguments
raised by the undersigned counsels before the labor arbiter below. x x
x93
Jabla Damian and Associates also accused Atty. Flores of violating
Canon 11 of the Canons of Professional Responsibility for not
conducting himself with courtesy, fairness and candor towards his
professional colleagues.94

The Courts Third Division likewise held in its November 15, 2010
Decision in G.R. Nos. 159460and 159461 that since reinstatement was
no longer feasible due to the considerable lapse of time and the
closure of Solidbank, respondents therein were awarded separation
pay equivalent to one-month salary for every year of service. For those
employees who executed quitclaims, their separation pay should be
net of the amounts they had already received.107
As regards Metrobank, the Courts Third Division held that it cannot be
held solidarily liable with Solidbank because it is not Solidbanks
successor-in-interest.108 Vistan and Mendoza were likewise not held
solidarily liable with Solidbank, there being no showing that they acted
with malice, ill-will, or bad faith.109 The dispositive portion of the said
November 15, 2010 Decision reads:
WHEREFORE, the petitions are PARTLY GRANTED. The Decision
dated March 10, 2003 of the Court of Appeals in CA-G.R. SP Nos.
67730 and 70820 is hereby SET ASIDE. Petitioner Solidbank
Corporation (now FMIC) is hereby ORDERED to pay each of the
above-named individual respondents, except union officers who are
hereby declared validly dismissed, separation pay equivalent to one (1)
month salary for every year of service. Whatever sums already
received from petitioners under any release, waiver or quitclaim shall
be deducted from the total separation pay due to each of them.
The NLRC is hereby directed to determine who among the individual
respondents are union members entitled to the separation pay herein
awarded, and those union officers who were validly dismissed and
hence excluded from the said award.
No costs.
SO ORDERED.110

Then on January 18, 2005, complainant Jose Antenor filed his own
Memorandum95 alleging among others that of the 19 employees of
Solidbank Bacolod City Branch who joined the nationwide expression
of displeasure he was the only one who was dismissed. He also claims
that his suspension and eventual dismissal were not based on just or
authorized cause; that he was not accorded procedural due process;
and that he is entitled to full backwages.
Our Ruling
At balance, supposedly, in these consolidated cases is the
managements right to discipline its employees who, without its
permission, joined a public demonstration to protest the ruling of the
Secretary of Labor vis--vis the employees constitutional rights to
freedom of expression, to peaceful assembly and to petition the
government for redress of their grievances. This issue, however, had
already been resolved and passed upon by this Court in its November
15, 2010 Decision in G.R. Nos. 159460 and 159461,96 which reversed
and set aside the March 10, 2003 Decision of the CAs Twelfth Division
in CA-G.R. SP Nos. 67730 and 70820.
In G.R. Nos. 159460 and 159461, the Courts Third Division resolved
the following issues: "(1) whether the protest rally and concerted work
abandonment/ boycott staged by the respondents violated the Order
dated January 18, 2000 of the Secretary of Labor; (2) whether the
respondents were validly terminated; and (3) whether the respondents
are entitled to separation pay or financial assistance."97 In said
November 15, 2010 Decision, this Court ruled that complainants
concerted mass action was actually a strike and not a legitimate
exercise of their right to freedom of expression;98 that complainants
violated the January 18, 2000 Order of Secretary Laguesma;99 that the
union officers dismissal was valid;100 and that petitioners therein failed
to present proof that the union members participated in the
commission of an illegal act during the said strike;101 hence, their
dismissal was unjustified.102 This Court likewise specified the individual
rights and liabilities of all the parties, including those who were
dropped from the original complaint;103 had executed Release, Waiver
and Quitclaim;104 did not appeal to the CA but, with the reinstatement
of the Labor Arbiters Decision, will still benefit from the appellate
courts Decision;105 and were included in the appeal though not
impleaded as parties in the original complaint.106

The Decision of this Court in G.R. Nos. 159460 and 159461, therefore,
constitutes res judicata to the present consolidated cases. "Res
judicata means a matter adjudged; a thing judicially acted upon or
decided; a thing or matter settled by judgment."111 It denotes "that a
final judgment or decree on the merits by a court of competent
jurisdiction is conclusive of the rights of the parties or their privies in all
later suits on all points and matters determined in the former
suit."112 For res judicata, in its concept as a bar by former judgment to
apply, the following must be present:
1. The former judgment or order is final;
2. It is rendered by a court having jurisdiction over the
subject matter and the parties;
3. It is a judgment or an order on the merits; and,
4. There is between the first and the second action identity of
parties, identity of subject matter, and identity of causes of
action.113
The Decision of this Court in G.R. Nos. 159460 and 159461 became
final and executory on May 20, 2011. It is a decision based on the
merits of the case and rendered by this Court in the exercise of its
appellate jurisdiction after the parties invoked its jurisdiction. There is
also, between the two sets of consolidated cases, identity of the
parties, subject matter and causes of action. The parties in G.R. Nos.
159460 and 159461 are also impleaded as parties in these
consolidated cases. And while some of the parties herein are not
included in G.R. Nos. 159460 and 159461, the same are only few. In
any event, it is well-settled that only substantial, and not absolute,
identity of the parties is required for res judicata to lie. "There is
substantial identity of the parties when there is a community of interest
between a party in the first case and a party in the second case albeit
the latter was not impleaded in the first case."114
With regard to identity of causes of action, it has been held that there is
identity of causes of action when the same evidence will sustain both

actions or when the facts essential to the maintenance of the two

actions are identical.115
Here, the bone of contention in both sets of consolidated cases boils
down to the nature and consequences of complainants April 3, 2000
mass action. The antecedent facts that gave rise to all the cases were
the same. Necessarily, therefore, the same evidence would sustain all
actions. Such similarity in the evidence required to sustain all actions is
also borne out by the identity of the issues involved in all these cases.
While the parties have presented a plethora of arguments which we
earlier discussed at length, the same nonetheless boil down to the
same crucial issues formulated in G.R. Nos. 159460 and 159461.
G.R. No. 153799 is also barred by res judicata.
It should be recalled that in G.R. No. 153799, the complainants
assailed the Resolutions dated January 14, 2002116 and February 20,
2002117 of the CAs Fourth Division granting Metrobanks request for
injunctive reliefs. They claimed that the reinstatement aspect of the
Labor Arbiters Decision is immediately executory. Hence, they are
entitled to backwages from the time the Labor Arbiter promulgated his
Decision until it was reversed by the NLRC.
As discussed above, however, the November 15, 2010 Decision of this
Court in G.R. Nos. 159460 and 159461 already adjudicated the
respective rights and liabilities of the parties. Said Decision
pronouncing the monetary awards to which the parties herein are
entitled became final and executory on May 20, 2011. Under the rule
on immutability of judgment, this Court cannot alter or modify said
Decision. It is a well-established rule that once a judgment has become
final and executory, it is no longer susceptible to any modification. 118
On a final note, we find it lamentable that while complainants are
embroiled in a perturbing legal battle, their counsels still manage to
quibble over money, unabashedly unmindful that their bickering would
only further muddle the already complicated issues in these cases. If
any one of them truly believes that the other is guilty of unethical
conduct, then he should bring the appropriate action before the proper
forum.

CERTIFICATION
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.
MARIA LOURDES P. A. SERENO
Chief Justice

Footnotes
1

Also spelled as Anteenor in some parts of the records.

Also spelled as Rache in some parts of the records.

Also spelled as Emparador in some parts of the records.

Also spelled as Seecretario in some parts of the records.

Also spelled as Josseph in some parts of the records.

Also spelled as Yaptanco in some parts of the records.

Also spelled as Capuling in some parts of the records.

Also spelled as Praniel in some parts of the records.

Also spelled as Jalanddoni in some parts of the records.

10

Also spelled as Emly in some parts of the records.

11

Also spelled as Raymondd in some parts of the records.

12

Also spelled as Theres in some parts of the records.

SO ORDERED.

13

Also spelled as Zuniga in some parts of the records.

MARIANO C. DEL CASTILLO

Associate Justice

14

Also spelled as Esquejjo in some parts of the records.

15

Also spelled as Gamier in some parts of the records.

16

Also spelled as Jane in some parts of the records.

WHEREFORE, these consolidated petitions are DISMISSED. No

costs.

WE CONCUR:
ANTONIO T. CARPIO
Associate Justice
Chairperson
ARTURO D. BRION
Associate Justice

JOSE PORTUGAL PEREZ

Associate Justice

ESTELA M. PERLAS-BERNABE
Associate Justice

17

G.R. No. 159460 and 159461, November 15, 2010, 634

SCRA 554; penned by Associate Justice Martin S. Villarama,
Jr. and concurred in by Associate Justices Conchita Carpio
Morales, Arturo D. Brion, Lucas P. Bersamin and Maria
Lourdes P. A. Sereno, now Chief Justice.
18

Records (G.R. No. 153799), Vol. I, pp. 436-453.

19

See Order of even date, id. at 50-51.

20

Id. at 52-58.

21

Id. at 57-58.

22

See sample copy, id. at 181.

23

See sample copy, id. at 180.

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
Chairperson

24

See sample memorandum of even date, id. at 179.

25

See sample copies, id. at 105-120.

26

Rollo (G.R. No. 157169), pp. 1028-1029.

(o) "Strike" means any temporary stoppage of

work by the concerted action of employees as a
result of an industrial or labor dispute.
42

Records (G.R. No. 153799), Vol. I, p. 393.

43

Id. at 397-401.

27

Docketed as NLRC Case No. 30-07-02920-00; records

(G.R. No. 153799), Vol. I, pp. 2-6.
28

Namely: 1) Janice L. Arriola; 2) Rachel M. Castillo; 3)

Armand V. Dayanhirang; 4) Hubert V. Dimagiba; 5) Juan
Alex C. Nambong; 6) Armando B. Orozco; 7) Arlene R.
Rodriquez; 8) Don A. Santana; 9) Ernesto R. Santos, Jr.; 10)
Ellen M. Soriano; 11) Arvin D. Valencia; 12) Emmanuel C.
Yaptangco; 13) Jacquiline B. Baquiran; 14) Jennifer S.
Barcenas; 15) Alvin F. Baricanosa; 16) Ferdinand Mel S.
Capulong; 17) Ma. Edna V. Dator; 18) Ragcy L. De Guzman;
19) Karen M. Deocera; 20) Ernesto U. Gamiel; 21) Ma. Jinky
P. Gelera; 22) Gonzalo G. Guinit; 23) Emily H. Guinoo; 24)
Lourdes D. Ibeas; 25) Ma. Angela L. Jalandoni; 26) Allen M.
Martinez; 27) Jocelyn Y. Tan; 28) Cion E. Yap; 29) Ma.
Ophelia C. De Guzman; 30) Elena R. Condevillamar; 31)
Emmanuel B. Gloria and 32) Rosemarie L. Tang.

44

Namely, Ernesto U. Gamier, Elena R. Condevillamar,

Janice Arriola and Maria Ophelia C. de Guzman.
45

See March 1, 2003 Decision of the CAs Twelfth Division,

rollo (G.R. No. 153799), pp. 485-499; penned by Associate
Justice Romeo A. Brawner and concurred in by Associate
Justices Bienvenido L. Reyes and Danilo B. Pine. See also
Solidbank Corporation v. Gamier, supra note 17 at 567-568.
46

See March 1, 2003 Decision of the CAs Twelfth Division,

id.
47

Id. at 498.

48
29

Records (G.R. No. 153799), Vol. I, pp. 27-49.

30

Article 283. Closure of establishment and reduction of

personnel. The employer may also terminate the
employment of any employee due to the installation of laborsaving devices, redundancy, retrenchment to prevent losses
or the closing or cessation of operation of the establishment
or undertaking unless the closing is for the purpose of
circumventing the provisions of this Title, by serving a written
notice on the workers and the Ministry of Labor and
Employment at least one (1) month before the intended date
thereof. x x x
31

Records (G.R. No. 153799), Vol. I, pp. 436-453.

32

Id. at 452-453.

33

Id. at 462-464.

34

Records (G.R. No. 153799), Vol. II, pp. 16-64.

CA rollo (GA-G.R. SP No. 68054), pp. 565-579; penned by

Associate Justice Rodrigo V. Cosico and concurred in by
Associate Justices Buenaventura J. Guerrero and Perlita J.
Tria Tirona.
49

Id. at 846.

50

See Motion for Partial Reconsideration, id. at 877-915, and

Motion for Reconsideration, id. at 916-931.
51

Id. at 954-987.

52

Id. at 1370.

53

A petition for certiorari under Rule 65 of the Rules of

Court.
54

Rollo (G.R. No. 157169), pp. 752-755; penned by

Associate Justice Remedios A. Salazar-Fernando and
concurred in by Associate Justices Eliezer R. Delos Santos
and Edgardo F. Sundiam.

35

Namely, Jose A. Antenor (RAB Case No. 05-10414-00),

Elena R. Condevillamar and Janice L. Arriola (NLRC NCR
Case No. 30-05-03002-00), Ma. Ophelia De Guzman (NLRC
Case No. 30-05-02253-00), Rosemarie L. Tang (SUB-RAB05-05-00147-00), Juan Alex C. Nambong (NLRC NCR Case
No. 30-04-01808-00), and Ernesto Gamier (NLRC NCR
Case No. 30-04-01891-00).
36

37

55

Section 11. Priorities in modes of service and filing.

Whenever practicable, the service and filing of pleadings and
other papers shall be done personally. Except with respect
to papers emanating from the court, a resort to other modes
must be accompanied by a written explanation why the
service or filing was not done personally. A violation of this
Rule may be cause to consider the paper as not filed.

CA rollo (CA-G.R. SP No. 68998), Vol. II, pp. 597-599.

56

Records (G.R. No. 153799), Vol. I, pp. 204-215.

57

38

CA rollo (CA-G.R. SP No. 68998), Vol. II, pp. 600-607.

39

Records (G.R No. 153799), Vol. I, pp. 122-150.

CA rollo (CA-G.R. SP No. 68054), pp. 1365-1366.

Docketed as G.R. No. 156097; rollo (G.R. No. 157169),

pp. 757-761.
58

Id. at 762.

59

Id. at 379-394; penned by Commissioner Victoriano R.

Calaycay and concurred in by Presiding Commissioner Raul
T. Aquino and Commissioner Angelita A. Gacutan.

CA rollo (CA-G.R. SP No. 68998), Vol. IV, p. 1485. Annex

"A" of Metrobank's Supplemental Motion for the Issuance of
Temporary Restraining Order and Writ of Preliminary
Injunction, id. at 1479-1484.

41

60

40

Article 212. Definitions. x x x

Id. at 1477-1478; penned by Associate Justice Bernardo

P. Abesamis and concurred in by Associate Justices Eubulo
G. Verzola and Perlita J. Tria Tirona.

61

Id. at 1516-1520; penned by Associate Justice Bernardo

P. Abesamis and concurred in by Associate Justices
Bienvenido L. Reyes and Perlita J. Tria Tirona.
62

To discourage frivolous or dilatory appeals, the

Commission or the Labor Arbiter shall impose
reasonable penalty, including fines or censures,
upon the erring parties.

Records (G.R. No. 153799), Vol. I, pp. 436-453.

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

63

Id. at 379-394.

64

Id. at 397-401.

65

CA rollo (CA-G.R. SP No. 68998), Vol. IV, pp. 1587-1609.

The Commission shall decide all cases within

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

66

Id. at 1716-1720; penned by Associate Justice Bernardo

P. Abesamis and concurred in by Associate Justices Eubulo
G. Verzola and Josefina Guevara-Salonga.

Any law enforcement agency may be deputized by

the Secretary of Labor and Employment or the
Commission in the enforcement of decisions,
awards, or orders. (Emphasis supplied.)

67

Id. at 1722-1732; penned by Associate Justice Bernardo

P. Abesamis and concurred in by Associate Justices
Josefina Guevara-Salonga and Amelita G. Tolentino.
68

Id. at 1732.

72

See Metrobank's Memorandum, rollo (G.R. No. 153799),

pp. 687-721.

69

Id. at 2081-2165 .

70

Id. Vol. V, at 2303-2307.

73

71

Article 223. APPEAL - Decisions, 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. Such
appeal may be entertained only on any of the following
grounds:
(a) If there is prima facie evidence of
grave abuse of discretion on the part of
the Labor Arbiter;
(b) If the decision, order or award was
secured through fraud or coercion,
including graft and corruption;
(c) If made purely on questions of law;
and
(d) If serious errors in the findings of
facts are raised which would cause
grave or irreparable damage or injury to
the appellant.
In case of a judgment involving a monetary award,
an appeal by the employer may be perfected only
upon the posting of a cash or surety bond issued
by a reputable bonding company duly accredited
by the Commission in the amount equivalent to the
monetary award in the judgment appealed from.
In any event, the decision of the Labor Arbiter
reinstating a dismissed or separated employee,
insofar as the reinstatement aspect is concerned,
shall immediately be executory, even pending
appeal.The employee shall either be admitted
back to work under the same terms and conditions
prevailing prior to his dismissal or separation or, at
the option of the employer, merely reinstated in
the payroll. The posting of a bond by the employer
shall not stay the execution for reinstatement
provided herein.

CA rollo (CA-G.R. SP No. 68054), pp. 835-846; penned by

Associate Justice Rodrigo V. Cosico and concurred in by
Associate Justices Buenaventura J. Guerrero and Perlita J.
Tria Tirona.
74

Rollo (G.R. No. 157169), p. 1101.

75

"35. Disappointed and dissatisfied with the said order

which they viewed as grossly disadvantageous to them,
seven hundred [twelve] (712) regular rank and file
employees of the bank, including individual petitioners
herein, skipped their work in the morning of April 3, 2000 and
they trooped to the office of said Secretary located at
Intramuros, Manila, and staged a rally and demonstration to
express their complaints, protests and indignation over the
actuation of the Secretary. The occasion turned into a
peaceful and orderly picketing in front of the said office.
Other rank and file employees in the provincial branches of
the bank, e.g., Cebu, Iloilo, Bacolod and Naga, followed suit
and absented themselves from work." CA rollo (CA-G.R. SP
No. 68054), p. 19.
76

Rollo (G.R. No. 157169), pp. 42-44.

77

Namely: 1) Janice L. Arriola; 2) Rachel M. Castillo; 3)

Armand V. Dayanghirang; 4) Hubert V. Dimagiba; 5) Juan
Alex C. Nambong; 6) Armando B. Orozco; 7) Arlene R.
Rodriquez; 8) Don A. Santana; 9) Ernesto R. Ramos, Jr.; 10)
Ellen M. Soriano; 11) Arvin D. Valencia; 12) Emmanuel C.
Yaptangco; 13) Jacquiline B. Baquiran; 14) Jennifer S.
Barcenas; 15) Alvin F. Baricanosa; 16) Ferdinand Mel S.
Capulong; 17) Ma. Edna V. Dator; 18) Ragcy L. De Guzman;
19) Karen M. Deocera; 20) Ernesto U. [Gamiel]; 21) Ma.
Jinky P. Gelera; 22) Gonzalo G. Guinit; 23) Emily H. Ginoo;
24) Lourdes D. Ibeas; 25) Ma. Angela L. Jalandoni; 26) Allen
M. Martinez; 27) Jocelyn Y. Tan; 28) Cion E. Yap; 29) Ma.
Ophelia C. De Guzman; 30) Elena R. Condevillamar; 31)
Emmanuel R. Gloria; and, 32) Rosemarie L. Tan.
78

Namely: 1) Raymond Martin A. Angeles; 2) Lester Mark Z.

Gatchalian; 3) Doroteo S. Froilan; 4) Armando B. Orozco; 5)
Ma. Lourdes Cecilia B. Emperador; 6) Arvin D. Valencia; 7)
Ragcy L. De Guzman; 8) Gonzalo G. Guinit; 9) Ferdinand
Mel S. Capulong; 10) Allen M. Martinez; 11) Ma. Edna V.
Dator; 12) Paula Agnes A. Angeles; 13) Audrey A. Aljibe; 14)
Ma. Teresa G. Gonzales; 15) Nolasco B. Macatangay; 16)
Arlene R. Rodriquez; 17) Hubert V. Dimagiba; 18) Ma. Jinky

R. Gelera; 19) Alvin E. Baricanosa; 20) Rachel M. Castillo;

and, 21) Emmanuel C. Yaptangco.

90

Note that Annexes "A" and "B," the supposed proof of Atty.
Flores, were not attached to his Comment/CounterManifestation and Opposition to Motion.

79

Namely: 1) Armand V. Dayanghirang; 2) Jose Rainario C.

Laong; 3) Juan Alex C. Nambong; 4) Armando B. Orozco; 5)
Arlene R. Rodriguez; 6) Nicomedes P. Ruizo, Jr.; 7) Don A.
Santana; 8) Ernesto R. Santos, Jr.; 9) Ellen M. Soriano; 10)
Ariel S. Abendan; 11) Emma R. Abendan; 12) Paula Agnes
A. Angeles; 13) Jacquiline B. Baquiran; 14) Jennifer S.
Barcenas; 15) Roderick M. Bello; 16) Carmina M. Degala;
17) Ephraim Ralph A. Delfin; 18) Karen M. Deocera; 19)
Ernesto U. Gamiel; 20) Macario Rodolfo N. Garcia; 21) Jinky
P. Galera; 22) Ma. Teresa G. Gonzales; 23) Emily H.
Guinoo; 24) Janice L. Arriola; 25) Mary Jane D. Patino; 26)
Margarette Cordova; 27) Cion E. Yap; 28) Ma. Ophelia C.
De Guzman; 29) M. Hidelisa P. Ira; 30) Raymund Martin A.
Angeles; 31) Elena R. Condevillamar; 32) Cherry T. Co; 33)
Emmanuel B. Gloria; 34) Rosemarie L. Tang; and, 35)
Lourdes D. Ibeas.

91

Rollo (G.R. No. 157327), p. 711.

92

Id. at 773-779.

93

Id. at 774-776.

94

Id. at 924.

95

Id. at 996-1006.

96

Solidbank Corporation v. Gamier, supra note 17.

97

Id. at 574.

98

Id. at 575.

99

Id. at 576-577.

80

Namely: 1) Ma. Edna V. Dator; 2) Ma. Angela Jalandoni;

3) Ma. Lourdes Emparador; 4) Doroteo Froilan; 5) Ma.
Theresa O. Tison; 6) Jocelyn Y. Tan; 7) Hubert V. Dimagiba;
8) Emmanuel C. Yaptanco; 9) Rachel M. Castillo; 10)
Jennifer S. Barcenas; 11) Audrey A. Aljibe; 12) Ragcy L. De
Guzman; 13) Jose A. Antenor; 14) Gonzalo Guinit; 15) Arvin
Valencia; 16) Nolasco Macatangay; 17) Alvin E. Baricanosa;
18) Allen M. Martinez; 19) Mel S. Capulong; 20) Agnes A.
Ramirez; and, 21) Lester Mark Z. Gatchalian.
81

445 Phil. 784 (2003).

100

Id. at 579.

101

Id. at 580.

102

Id.

103

Supra note 77.

104

Supra note 78.

82

Captioned as "Solidbank Corporation and/or its successorin-interest First Metro Investment Corporation, Deogracias
N. Vistan and Edgardo Mendoza, Jr. v. Solidbank Union, et
al."
83

CA rollo (CA-G.R. SP No. 68054), pp. 521-525.

105

Supra note 79.

84

Id. at 683-684.

106

Supra note 80.

107

Solidbank Corporation v. Gamier, supra note 17 at 582.

108

Id. at 583.

109

Id. at 583-585.

110

Id. at 585.

85

See Resolution dated July 25, 2002, id. at 706-707. The

dispositive portion thereof reads:
WHEREFORE, premises considered, the instant petition
for certiorari is hereby REINSTATED and, with the
submission of the required pleadings, the same is now
submitted for decision.
SO ORDERED.

111
86

Supra note 77.

87

Rollo (G.R. No. 157327), pp. 611-616.

88

Signed by Evangeline J. Gabriel, President, and with the

conformity of: 1) Julie T. Jornacion; 2) Augusto D. Arandia,
Jr; 3) Roderick M. Bello; 4) Ma. Elena G. Bello; 5) Jocelyn Y.
Tan; 6) Jose G. Guisado; 7) Felix Estacio, Jr.; 8) Manuel
Lim; 9) Ma. Lourdes A. Lim; 10) Fermin Joseph B. Ventura;
11) Armand V. Dayang-Hirang; 12) Neptali Caddarao; 13)
Salvacion N. Rogado; 14) Joel S. Garmino; 15) Ernesto
Gamier; 16) Leope Cabenian; 17) Candido Tison; 18) Ma.
Theresa Tison; 19) Elena Condevillamar; 20) Janice Arriola;
21) Margarette B. Cordova; 22) Mary Jane Patino; 23)
Jennifer S. Barcenas; 24) Macario Rodolfo N. Garcia; 25)
Carmina M. Degala; and, 26) Doroteo S. Froilan, id. at 617619.
89

Id. at 696-719.

Heirs of Panfilo F. Abalos v. Bucal, G.R. No. 156224,

February 19, 2008, 546 SCRA 252, 271; Alamayri v. Pabale,
G.R. No. 151243, April 30, 2008, 553 SCRA 146, 157;
Garcia v. Philippine Airlines, G.R. No. 162868, July 14,
2008, 558 SCRA 171, 186-187; Layos v. Fil-Estate Golf and
Development, Inc., G.R. No. 150470, August 6, 2008, 561
SCRA 75, 102.
112

Taganas v. Hon. Emuslan, 457 Phil. 305, 311 (2003).

113

Id. at 311-312.

114

Sempio v. Court of Appeals, 348 Phil. 627, 636 (1998),

citing Santos v. Court of Appeals, G.R. No. 101818,
September 21, 1993, 226 SCRA 630, 637.
115

Escareal v. Philippine Airlines, Inc., 495 Phil, 107, 119

(2005).
116

Supra note 60.

117

Supra note 61.

118

Airline Pilots Association of the Philippines v. Philippine

Airlines, Inc., G.R. No. 168382, June 6, 2011, 650 SCRA
545, 547.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 196830

February 29, 2012

CESAR V. GARCIA, CARLOS RAZON, ALBERTO DE GUZMAN,

TOMAS RAZON, OMER E. PALO, RIZALDE VALENCIA, ALLAN
BASA, JESSIE GARCIA,JUANITO PARAS, ALEJANDRO ORAG,
ROMMEL PANGAN, RUEL SOLIMAN, and CENEN CANLAPAN,
represented by SERENO, and CESAR V. GARCIA, Petitioners,
vs.
KJ COMMERCIAL and REYNALDO QUE, Respondents.
DECISION
CARPIO, J.:
The Case
This is a petition1 for review on certiorari under Rule 45 of the Rules of
Court. The petition challenges the 29 April 2011 Decision2 of the Court
of Appeals in CA-G.R. SP No. 115851, affirming the 8 February3 and
25 June4 2010 Resolutions of the National Labor Relations
Commission (NLRC) in NLRC-LAC-No. 12-004061-08. The NLRC set
aside the 30 October 2008 Decision5 of the Labor Arbiter in NLRC
Case No. RAB-III-02-9779-06.
The Facts
Respondent KJ Commercial is a sole proprietorship. It owns trucks and
engages in the business of distributing cement products. On different
dates, KJ Commercial employed as truck drivers and truck helpers
petitioners Cesar V. Garcia, Carlos Razon, Alberto De Guzman,
Tomas Razon, Omer E. Palo, Rizalde Valencia, Allan Basa, Jessie
Garcia, Juanito Paras, Alejandro Orag, Rommel Pangan, Ruel
Soliman, and Cenen Canlapan (petitioners).
On 2 January 2006, petitioners demanded for a P40 daily salary
increase. To pressure KJ Commercial to grant their demand, they
stopped working and abandoned their trucks at the Northern Cement
Plant Station in Sison, Pangasinan. They also blocked other workers
from reporting to work.
On 3 February 2006, petitioners filed with the Labor Arbiter a
complaint6 for illegal dismissal, underpayment of salary and nonpayment of service incentive leave and thirteenth month pay.
The Labor Arbiters Ruling
In his 30 October 2008 Decision, the Labor Arbiter held that KJ
Commercial illegally dismissed petitioners. The Labor Arbiter held:
After a careful examination and evaluation of the facts and evidences
adduced by both parties, we find valid and cogent reasons to declare
that these complainants were illegally dismissed from their work to be
entitled to their separation in lieu of reinstatement equivalent to their
salary for one (1) month for every year of service and backwages from
the time that they were terminated on January 2, 2006 up to the date of
this Decision.

We carefully examined the defense set up by the respondents that

these complainants were not terminated from their employment but
were the one [sic] who abandoned their work by staging strike and
refused to perform their work as drivers of the trucks owned by the
respondents on January 2, 2006, vis--vis, he [sic] allegations and
claims of the complainants that when they asked for an increase of
their salary for P40.00, they were illegally dismissed from their
employment without due process, and we gave more credence and
value to the allegations of the complainants that they were illegally
dismissed from their employment without due process and did not
abandoned [sic] their work as the respondents wanted to project. We
examined the narration of facts of the respondents in their Position
Paper and Supplemental Position Paper and we concluded that these
complainants were actually terminated on January 2, 2006 and did not
abandoned [sic] their jobs as claimed by the respondents when the
respondents, in their Position Paper, admitted that their cement plant
was shutdown on January 3, 2006 and when it resumed its operation
on January 7, 2006, they ordered the other drivers to get the trucks in
order that the hauling of the cements will not incur further delay and
that their business will not be prejudiced.
Granting for the sake of discussion that indeed these complainants
abandoned their work on January 2, 2006, why then that [sic] the
cement plant was shutdown on January 3, 2006 and resumed
operation on January 7, 2006, when there are fifty (50) drivers of the
respondents and only thirteen (13) of them were allegedly stopped
from working. Further, if these complainants actually abandoned their
work, as claimed by the respondents, they miserably failed to show by
substantial evidence that these complainants deliberately and
unjustifiably refused to resume their employment.
xxxx
The acts of these complainants in filing this instant case a month after
they were terminated from their work is more than sufficient evidence
to prove and show that they do not have the intention of abandoning
their work. While we acknowledged the offer of the respondents for
these complainants to return back to work during the mandatory
conference, the fact that these complainants were illegally terminated
and prevented from performing their work as truck drivers of the
respondents and that there was no compliance with the substantive
and procedural due process of terminating an employee, their
subsequent offer to return to work will not cure the defect that there
was already illegal dismissal committed against these complainants. 7
KJ Commercial appealed to the NLRC. It filed before the NLRC a
motion to reduce bond and posted a P50,000 cash bond.
The NLRCs Ruling
In its 9 March 2009 Decision,8 the NLRC dismissed the appeal. The
NLRC held:
Filed with respondents-appellants Appeal Memorandum is a Motion to
Reduce Appeal Bond and a cash bond ofP50,000.00 only. x x x
We find no merit on [sic] the respondents-appellants Motion. It must
be stressed that under Section 6, Rule VI of the 2005 Revised Rules of
this Commission, a motion to reduce bond shall only be entertained
when the following requisites concur:
1. The motion is founded on meritorious ground; and
2. A bond of reasonable amount in relation to the monetary
award is posted.
We note that while respondents-appellants claim that they could not
possibly produce enough cash for the required appeal bond, they are
unwilling to at least put up a property to secure a surety bond.
Understandably, no surety agency would normally accept a surety
obligation involving a substantial amount without a guarantee that it
would be indemnified in case the surety bond posted is forfeited in

favor of a judgment creditor. Respondents-appellants insinuation that

no surety company can finish the processing of a surety bond in ten
days time is not worthy of belief as it is contrary to ordinary business
experience. What is obvious is that respondents-appellants are not
willing to accept the usual conditions of a surety agreement that is why
no surety bond could be processed. The reduction of the required bond
is not a matter of right o[n] the part of the movant but lies within the
sound discretion of the NLRC upon showing of meritorious grounds x x
x. In this case, we find that the instant motion is not founded on a
meritorious ground. x x x Moreover, we note that the P50,000.00 cash
bond posted by respondents-appellants which represents less than two
(2) percent of the monetary award is dismally disproportionate to the
monetary award of P2,612,930.00 and that the amount of bond posted
by respondents-appellants is not reasonable in relation to the monetary
award. x x x A motion to reduce bond that does not satisfy the
conditions required under NLRC Rules shall not stop the running of the
period to perfect an appeal x x x.

had not even alleged that they were specifically told that they were
dismissed after they demanded for a salary increase or any statement
to that effect. Neither had they alleged that they were prevented from
reporting for work. This only shows there was never a dismissal to
begin with.

Conversely, respondents-appellants failed to perfect an appeal for

failure to post the required bond.9

Petitioners filed a motion for reconsideration. In its 25 June 2010

Resolution, the NLRC denied the motion for lack of merit. The NLRC
held:

KJ Commercial filed a motion10 for reconsideration and posted

a P2,562,930 surety bond. In its 8 February 2010 Resolution, the
NLRC granted the motion and set aside the Labor Arbiters 30 October
2008 Decision. The NLRC held:
x x x [T]his Commission opts to resolve and grant the Motion for
Reconsideration filed by respondent-appellant seeking for
reconsideration of Our Decision promulgated on March 9, 2009
dismissing the Appeal for non-perfection, there being an honest effort
by the appellants to comply with putting up the full amount of the
required appeal bond. Moreover, considering the merit of the appeal,
by granting the motion for reconsideration, the paramount interest of
justice is better served in the resolution of this case.
xxxx
Going over the record of the case, this Commission noted that in
respondents Supplemental Position Paper, in denying complainants
imputation of illegal dismissal, respondents categorically alleged "..[.]
that complainants were not illegally dismissed but on January 2, 2006,
they abandoned their work by means of []work stoppage[] or they
engaged in an []illegal strike[] when they demanded for a higher
rate..[.] that while their respective assigned trucks were all in the
cement plant ready to be loaded, complainants paralyzed respondents
hauling or trucking operation by staging a work stoppage at the
premises of KJ Commercial compound by further blocking their codrivers not to report for work." We have observed that despite these
damaging allegations, complainants never bothered to dispute nor
contradicted these material allegations. Complainants silence on these
material allegations consequently lends support to respondentsappellants[] contention that complainants were never dismissed at all
but had stopped driving the hauler truck assigned to each of them
when their demand for salary increase in the amount they wish was not
granted by respondents-appellants.
Moreover, contrary to the findings of the Labor Arbiter, the purported
shutdown of the cement plant being cited by the Labor Arbiter a quo as
the principal cause of complainants purported dismissal cannot be
attributed to respondents because it was never established by
evidence that respondents were the owner [sic] of the cement plant
where complainants as truck drivers were hauling cargoes of cement
with trucks owned by respondents whose business is confined to that
of a cement distributor and cargo truck hauler. Based on the
undisputed account of respondents-appellants, it appears that the
cement plant was compelled to shut down because the hauling or
trucking operation was paralyzed due to complainants resort to work
stoppage by refusing to drive their hauler trucks despite the order of
the management for them to get the trucks which blockaded the
cement plant.
Furthermore, a perusal of the complainants position paper and
amended position paper failed to allege the overt acts showing how
they were in fact dismissed on 02 January 2006. The complainants

xxxx
We cannot affirm the Labor Arbiters conclusions absent showing a fact
of termination or circumstances under which the dismissal was
effected. Though only substantial evidence is required in proceedings
before the Labor Arbiter to support a litigants claim, the same still
requires evidence separate and different, and something which
supports the allegations affirmatively made. The complainants claim
that they were dismissed on 02 January 2006, absent proof thereof or
any supporting evidence thereto is at best self serving.11

We stress that it is within the power and discretion of this Commission

to grant or deny a motion to reduce appeal bond. Having earlier denied
the motion to reduce bond of the respondents-appellants, this
Commission is not precluded from reconsidering its earlier Decision on
second look when it finds meritorious ground to serve the ends of
justice. Settled is the norm in the matter of appeal bonds that letterperfect rules must yield to the broader interest of substantial justice x x
x. In this case, the Decision of the Labor Arbiter had not really become
final and executory as respondents timely filed a Memorandum of
Appeal with a Motion to Reduce Appeal Bond and a partial appeal
bond. Although the respondents[] appeal was dismissed, in the earlier
decision, the same Decision was later reconsidered on considerations
that the Labor Arbiter committed palpable errors in his findings and the
monetary awards to the appellees are secured by a partial bond and
then later, by an appeal bond for the full amount of the monetary
awards.12
Petitioners filed with the Court of Appeals a petition13 for certiorari
under Rule 65 of the Rules of Court.
The Court of Appeals Ruling
In its 29 April 2011 Decision, the Court of Appeals dismissed the
petition and affirmed the NLRCs 8 February and 25 June 2010
Resolutions. The Court of Appeals held:
After scrupulously examining the contrasting positions of the parties,
and the conflicting decisions of the labor tribunals, We find the records
of the case bereft of evidence to substantiate the conclusions reached
by the Labor Arbiter that petitioners were illegally dismissed from
employment.
While petitioners vehemently argue that they were unlawfully
separated from work, records are devoid of evidence to show the fact
of dismissal. Neither was there any evidence offered by petitioners to
prove that they were no longer allowed to perform their duties as truck
drivers or they were prevented from entering KJ Commercials
premises, except for their empty and general allegations that they were
illegally dismissed from employment. Such bare and sweeping
statement contains nothing but empty imputation of a fact that could
hardly be given any evidentiary weight by this Court. At the very least,
petitioners should have detailed or elaborated the circumstances
surrounding their dismissal or substantiate their claims by submitting
evidence to butress such contention. Without a doubt, petitioners
allegation of illegal dismissal has no leg to stand on. Accordingly, they
should not expect this Court to swallow their asseveration hook, line
and sinker in the absence of supporting proof. Allegation that one was
illegally dismissed from work is not a magic word that once invoked will
automatically sway this Court to rule in favor of the party invoking it.
There must first be substantial evidence to prove that indeed there was
illegal dismissal before the employer bears the burden to prove the
contrary.14

Hence, the present petition.

The Issue
Petitioners raise as issue that the Labor Arbiters 30 October 2008
Decision became final and executory; thus, the NLRCs 8 February
and 25 June 2010 Resolutions and the Court of Appeals 29 April 2011
Decision are void for lack of jurisdiction. Petitioners claim that KJ
Commercial failed to perfect an appeal since the motion to reduce
bond did not stop the running of the period to appeal.
The Courts Ruling
The petition is unmeritorious.
When petitioners filed with the Court of Appeals a petition for certiorari,
they did not raise as issue that the Labor Arbiters 30 October 2008
Decision had become final and executory. They enumerated the issues
in their petition:
GROUNDS FOR THE PETITION
I.
THE NLRC COMMITTED GRAVE ABUSE OF DISCRETION
TANTAMOUNT TO LACK OR EXCESS OF JURISDICTION
WHEN IT REVERSED THE DECISION OF THE LABOR
ARBITER A QUO AND PRONOUNCED THAT THE
PETITIONERS WERE NOT ILLEGALLY DISMISSED
DESPITE CLEAR AND SUBSTANTIAL EVIDENCE ON THE
RECORDS SHOWING THAT COMPLAINANTS WERE
REGULAR EMPLOYEES TO BE ENTITLED TO SECURITY
OF TENURE AND WERE ILLEGALLY DISMISSED FROM
THEIR EMPLOYMENT.
II.
THE NLRC HAS COMMITTED GRAVE ABUSE OF
DISCRETION TANTAMOUNT TO LACK OR EXCESS OF
JURISDICTION WHEN IT GIVE [sic] MUCH WEIGHT TO
PRIVATE RESPONDENTS[] BASELESS ALLEGATIONS IN
ITS [sic] MOTION FOR RECONSIDERATION WHEN IT [sic]
ALLEGED THAT COMPLAINANTS HAD ABANDONED
THEIR WORK BY MEANS OF "WORK STOPPAGE" OR
THEY ENGAGED IN AN "ILLEGAL STRIKE" WHEN THEY
DEMANDED FOR A HIGHER RATE.
III.
THE NLRC GRAVELY ERRED TANTAMOUNT TO LACK
OR EXCESS OF JURISDICTION WHEN IT CONCLUDED
THAT "COMPLAINANTS PARALYZED HAULING OR
TRUCKING OPERATION BY STAGING A WORK
STOPPAGE AT THE PREMISES OF KJ COMMERCIAL
COMPOUND BY FURTHER BLOCKING THEIR CODRIVERS NOT TO REPORT FOR WORK" WITHOUT A
SINGLE EVIDENCE TO SUPPORT SUCH ALLEGATIONS
OF PRIVATE RESPONDENTS.
IV.
THE NLRC GRAVELY ERRED WHEN IT CONCLUDED
THAT THE PRINCIPAL CAUSE OF COMPLAINANTS
DISMISSAL WAS DUE TO THE PURPORTED SHUTDOWN
OF THE CEMENT PLANT CITED BY THE LABOR
ARBITER IN HIS DECISION.15
Accordingly, the Court of Appeals limited itself to the resolution of the
enumerated issues. In its 29 April 2011 Decision, the Court of Appeals
held:

Hence, petitioners seek recourse before this Court via this Petition
for Certiorari challenging the NLRC Resolutions and raising the
following issues:
I.
THE NLRC COMMITTED GRAVE ABUSE OF DISCRETION
TANTAMOUNT TO LACK OR EXCESS OF JURISDICTION
WHEN IT REVERSED THE DECISION OF THE LABOR
ARBITER A QUO AND PRONOUNCED THAT
PETITIONERS WERE NOT ILLEGALLY DISMISSED
DESPITE CLEAR AND SUBSTANTIAL EVIDENCE ON THE
RECORDS SHOWING THAT PETITIONERS WERE
REGULAR EMPLOYEES TO BE ENTITLED TO SECURITY
OF TENURE AND WERE ILLEGALLY DISMISSED FROM
THEIR EMPLOYMENT.
II.
THE NLRC HAS COMMITTED GRAVE ABUSE OF
DISCRETION TANTAMOUNT TO LACK OR EXCESS OF
JURISDICTION WHEN IT GAVE MUCH WEIGHT TO
PRIVATE RESPONDENTS BASELESS ALLEGATIONS IN
ITS [sic] MOTION FOR RECONSIDERATION WHEN IT [sic]
ALLEGED THAT PETITIONERS HAD ABANDONED THEIR
WORK BY MEANS OF "WORK STOPPAGE" OR THEY
ENGAGED IN AN "ILLEGAL STRIKE" WHEN THEY
DEMANDED FOR A HIGHER RATE.
III.
THE NLRC GRAVELY ERRED WHEN IT CONCLUDED
THAT "PETITIONERS PARALYZED HAULING AND
TRUCKING OPERATION BY STAGING A WORK
STOPPAGE AT THE PREMISES OF KJ COMMERCIAL
COMPOUND BY FURTHER BLOCKING THEIR CODRIVERS NOT TO REPORT FOR WORK" WITHOUT A
SINGLE EVIDENCE TO SUPPORT SUCH ALLEGATIONS
OF PRIVATE RESPONDENTS.
IV.
THE NLRC GRAVELY ERRED WHEN IT CONCLUDED
THAT THE PRINCIPAL CAUSE OF PETITIONERS
DISMISSAL WAS DUE TO THE PURPORTED SHUTDOWN
OF THE CEMENT PLANT CITED BY THE LABOR
ARBITER IN HIS DECISION.16
Petitoners cannot, for the first time, raise as issue in their petition filed
with this Court that the Labor Arbiters 30 October 2008 Decision had
become final and executory. Points of law, theories and arguments not
raised before the Court of Appeals will not be considered by this Court.
Otherwise, KJ Commercial will be denied its right to due process.
In Tolosa v. National Labor Relations Commission,17 the Court held:
Petitioner contends that the labor arbiters monetary award has already
reached finality, since private respondents were not able to file a timely
appeal before the NLRC.
This argument cannot be passed upon in this appeal, because it
was not raised in the tribunals a quo. Well-settled is the rule that
issues not raised below cannot be raised for the first time on
appeal. Thus, points of law, theories, and arguments not brought
to the attention of the Court of Appeals need not and ordinarily
will not be considered by this Court. Petitioners allegation
cannot be accepted by this Court on its face; to do so would be
tantamount to a denial of respondents right to due process.
Furthermore, whether respondents were able to appeal on time is a
question of fact that cannot be entertained in a petition for review
under Rule 45 of the Rules of Court. In general, the jurisdiction of this
Court in cases brought before it from the Court of Appeals is limited to

a review of errors of law allegedly committed by the court a

quo.18(Emphasis supplied)
KJ Commercials filing of a motion to reduce bond and delayed posting
of the P2,562,930 surety bond did not render the Labor Arbiters 30
October 2008 Decision final and executory. The Rules of Procedure of
the NLRC allows the filing of a motion to reduce bond subject to two
conditions: (1) there is meritorious ground, and (2) a bond in a
reasonable amount is posted. Section 6 of Article VI states:
No motion to reduce bond shall be entertained except on meritorious
grounds and upon the posting of a bond in a reasonable amount in
relation to the monetary award.
The mere filing of the motion to reduce bond without compliance with
the requisites in the preceding paragraph shall not stop the running of
the period to perfect an appeal.
The filing of a motion to reduce bond and compliance with the two
conditions stop the running of the period to perfect an appeal.
In McBurnie v. Ganzon,19 the Court held:
x x x [T]he bond may be reduced upon motion by the employer, this is
subject to the conditions that (1) the motion to reduce the bond shall be
based on meritorious grounds; and (2) a reasonable amount in relation
to the monetary award is posted by the appellant, otherwise the filing
of the motion to reduce bond shall not stop the running of the period to
perfect an appeal.20
The NLRC has full discretion to grant or deny the motion to reduce
bond,21 and it may rule on the motion beyond the 10-day period within
which to perfect an appeal. Obviously, at the time of the filing of the
motion to reduce bond and posting of a bond in a reasonable amount,
there is no assurance whether the appellants motion is indeed based
on "meritorious ground" and whether the bond he or she posted is of a
"reasonable amount." Thus, the appellant always runs the risk of failing
to perfect an appeal.
Section 2, Article I of the Rules of Procedure of the NLRC states that,
"These Rules shall be liberally construed to carry out the objectives of
the Constitution, the Labor Code of the Philippines and other relevant
legislations, and to assist the parties in obtaining just, expeditious and
inexpensive resolution and settlement of labor disputes." In order to
give full effect to the provisions on motion to reduce bond, the
appellant must be allowed to wait for the ruling of the NLRC on the
motion even beyond the 10-day period to perfect an appeal. If the
NLRC grants the motion and rules that there is indeed meritorious
ground and that the amount of the bond posted is reasonable, then the
appeal is perfected. If the NLRC denies the motion, the appellant may
still file a motion for reconsideration as provided under Section 15,
Rule VII of the Rules. If the NLRC grants the motion for
reconsideration and rules that there is indeed meritorious ground and
that the amount of the bond posted is reasonable, then the appeal is
perfected. If the NLRC denies the motion, then the decision of the
labor arbiter becomes final and executory.
In the present case, KJ Commercial filed a motion to reduce bond and
posted a P50,000 cash bond. When the NLRC denied its motion, KJ
Commercial filed a motion for reconsideration and posted the
full P2,562,930 surety bond. The NLRC then granted the motion for
reconsideration.
In any case, the rule that the filing of a motion to reduce bond shall not
stop the running of the period to perfect an appeal is not absolute. The
Court may relax the rule. In Intertranz Container Lines, Inc. v.
Bautista,22 the Court held:
Jurisprudence tells us that in labor cases, an appeal from a decision
involving a monetary award may be perfected only upon the posting of
a cash or surety bond. The Court, however, has relaxed this
requirement under certain exceptional circumstances in order to
resolve controversies on their merits. These circumstances include: (1)
fundamental consideration of substantial justice; (2) prevention of

miscarriage of justice or of unjust enrichment; and (3) special

circumstances of the case combined with its legal merits, and the
amount and the issue involved.23
In Rosewood Processing, Inc. v. NLRC,24 the Court held:
The perfection of an appeal within the reglementary period and in the
manner prescribed by law is jurisdictional, and noncompliance with
such legal requirement is fatal and effectively renders the judgment
final and executory. The Labor Code provides:
ART. 223. Appeal. Decisions, 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.
In case of a judgment involving a monetary award, an appeal by the
employer may be perfected only upon the posting of a cash or surety
bond issued by a reputable bonding company duly accredited by the
Commission in the amount equivalent to the monetary award in the
judgment appealed from.
Indisputable is the legal doctrine that the appeal of a decision involving
a monetary award in labor cases may be perfected "only upon the
posting of a cash or surety bond." The lawmakers intended the posting
of the bond to be an indispensable requirement to perfect an
employers appeal.
However, in a number of cases, this Court has relaxed this
requirement in order to bring about the immediate and appropriate
resolution of controversies on the merits. Some of these cases include:
"(a) counsels reliance on the footnote of the notice of the decision of
the labor arbiter that the aggrieved party may appeal within ten (10)
working days; (b) fundamental consideration of substantial justice; (c)
prevention of miscarriage of justice or of unjust enrichment, as where
the tardy appeal is from a decision granting separation pay which was
already granted in an earlier final decision; and (d) special
circumstances of the case combined with its legal merits or the amount
and the issue involved."
In Quiambao vs. National Labor Relations Commission, this Court
ruled that a relaxation of the appeal bond requirement could be
justified by substantial compliance with the rule.
In Globe General Services and Security Agency vs. National Labor
Relations Commission, the Court observed that the NLRC, in actual
practice, allows the reduction of the appeal bond upon motion of the
appellant and on meritorious grounds; hence, petitioners in that case
should have filed a motion to reduce the bond within the reglementary
period for appeal.
That is the exact situation in the case at bar. Here, petitioner claims to
have received the labor arbiters Decision on April 6, 1993. On April 16,
1993, it filed, together with its memorandum on appeal and notice of
appeal, a motion to reduce the appeal bond accompanied by a surety
bond for fifty thousand pesos issued by Prudential Guarantee and
Assurance, Inc. Ignoring petitioners motion (to reduce bond),
Respondent Commission rendered its assailed Resolution dismissing
the appeal due to the late filing of the appeal bond.
The solicitor general argues for the affirmation of the assailed
Resolution for the sole reason that the appeal bond, even if it was filed
on time, was defective, as it was not in an amount "equivalent to the
monetary award in the judgment appealed from." The Court disagrees.
We hold that petitioners motion to reduce the bond is a substantial
compliance with the Labor Code. This holding is consistent with the
norm that letter-perfect rules must yield to the broader interest of
substantial justice.25
In Ong v. Court of Appeals,26 the Court held that the bond requirement
on appeals may be relaxed when there is substantial compliance with

the Rules of Procedure of the NLRC or when the appellant shows

willingness to post a partial bond. The Court held that, "While the bond
requirement on appeals involving monetary awards has been relaxed
in certain cases, this can only be done where there was substantial
compliance of the Rules or where the appellants, at the very least,
exhibited willingness to pay by posting a partial bond."27
In the present case, KJ Commercial showed willingness to post a
partial bond.1wphi1 In fact, it posted a P50,000 cash bond. In Ong,
the Court held that, "Petitioner in the said case substantially complied
with the rules by posting a partial surety bond of fifty thousand pesos
issued by Prudential Guarantee and Assurance, Inc. while his motion
to reduce appeal bond was pending before the NLRC."28
Aside from posting a partial bond, KJ Commercial immediately posted
the full amount of the bond when it filed its motion for reconsideration
of the NLRCs 9 March 2009 Decision. In Dr. Postigo v. Philippine
Tuberculosis Society, Inc.,29 the Court held:
x x x [T]he respondent immediately submitted a supersedeas bond
with its motion for reconsideration of the NLRC resolution dismissing
its appeal. In Ong v. Court of Appeals, we ruled that the aggrieved
party may file the appeal bond within the ten-day reglementary period
following the receipt of the resolution of the NLRC to forestall the
finality of such resolution. Hence, while the appeal of a decision
involving a monetary award in labor cases may be perfected only upon
the posting of a cash or surety bond and the posting of the bond is an
indispensable requirement to perfect such an appeal, a relaxation of
the appeal bond requirement could be justified by substantial
compliance with the rule.30
WHEREFORE, the Court DENIES the petition and AFFIRMS the 29
April 2011 Decision of the Court of Appeals in CA-G.R. SP No.
115851.

RENATO C. CORONA
Chief Justice

Footnotes
1

Rollo, pp. 11-41.

Id. at 48-55. Penned by Associate Justice Samuel H.

Gaerlan, with Associate Justices Rosmari D. Carandang and
Ramon R. Garcia concurring.
3

Id. at 149-157. Penned by Presiding Commissioner

Herminio V. Suelo, with Commissioners Angelo Ang Palana
and Numeriano D. Villena concurring.
4

Id. at 163-167.

Id. at 102-119. Penned by Labor Arbiter Mariano L. Bactin.

Id. at 62.

Id. at 108-111.

Id. at 132-136.

Id. at 133-135.

10

Id. at 137-138.

11

Id. at 150-156.

12

Id. at 166.

13

Id. at 168-188.

14

Id. at 53.

15

Id. at 174-176.

16

Id. at 51-52.

SO ORDERED.
ANTONIO T. CARPIO
Associate Justice
WE CONCUR:
ARTURO D. BRION
Associate Justice

JOSE PORTUGAL PEREZ

Associate Justice

MARIA LOURDES P. A.
SERENO
Associate Justice

17

BIENVENIDO L. REYES
Associate Justice

449 Phil. 271 (2003).

18

Id. at 284-285.

ATTESTATION

19

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 Courts Division.

G.R. Nos. 178034, 178117, 186984 and 186985, 18

September 2009, 600 SCRA 658.
20

Id. at 669.

21

Id. at 671.

22

G.R. No. 187693, 13 July 2010, 625 SCRA 75.

CERTIFICATION

23

Id. at 84.

Pursuant to Section 13, Article VIII of the Constitution, and the Division
Chairpersons 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 Courts Division.

24

352 Phil. 1013 (1998).

25

Id. at 1028-1031.

ANTONIO T. CARPIO
Associate Justice
Chairperson

26

482 Phil. 170 (2004).

27

Id. at 181.

28

Id. at 181-182.

29

515 Phil. 601 (2006).

30

Id. at 607-608.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION

G.R. No. 189947

January 25, 2012

MANILA PAVILION HOTEL, owned and operated by ACESITE

(PHILS.) Hotel Corporation, Petitioner,
vs.
HENRY DELADA, Respondent.
DECISION
SERENO, J.:
Before the Court is a Petition for Review on Certiorari filed under Rule
45 of the Revised Rules of Court, assailing the 27 July 2009 Decision
and 12 October 2009 Resolution of the Court of Appeals (CA).1
Facts
The present Petition stems from a grievance filed by respondent Henry
Delada against petitioner Manila Pavilion Hotel (MPH). Delada was the
Union President of the Manila Pavilion Supervisors Association at
MPH. He was originally assigned as Head Waiter of Rotisserie, a finedining restaurant operated by petitioner. Pursuant to a supervisory
personnel reorganization program, MPH reassigned him as Head
Waiter of Seasons Coffee Shop, another restaurant operated by
petitioner at the same hotel. Respondent declined the inter-outlet
transfer and instead asked for a grievance meeting on the matter,
pursuant to their Collective Bargaining Agreement (CBA). He also
requested his retention as Head Waiter of Rotisserie while the
grievance procedure was ongoing.
MPH replied and told respondent to report to his new assignment for
the time being, without prejudice to the resolution of the grievance
involving the transfer. He adamantly refused to assume his new post at
the Seasons Coffee Shop and instead continued to report to his
previous assignment at Rotisserie. Thus, MPH sent him several
memoranda on various dates, requiring him to explain in writing why
he should not be penalized for the following offenses: serious
misconduct; willful disobedience of the lawful orders of the employer;
gross insubordination; gross and habitual neglect of duties; and willful
breach of trust.
Despite the notices from MPH, Delada persistently rebuffed orders for
him to report to his new assignment. According to him, since the
grievance machinery under their CBA had already been initiated, his
transfer must be held in abeyance. Thus, on 9 May 2007, MPH
initiated administrative proceedings against him. He attended the
hearings together with union representatives.
Meanwhile, the parties failed to reach a settlement during the
grievance meeting concerning the validity of MPHs transfer order.
Respondent then elevated his grievance to the Peers Resources
Development Director. Still, no settlement between the parties was
reached. Respondent appealed the matter to the Grievance Committee

level. The committee recommended that he proceed to the next level

of the grievance procedure, as it was unable to reach a decision on the
matter. Consequently, on 20 April 2007, Delada lodged a Complaint
before the National Conciliation and Mediation Board. On 25 May
2007, the parties agreed to submit the following issues for voluntary
arbitration:
I. Whether or not the transfer of the union president from
head waiter at Rotisserie to head waiter at seasons
restaurant is valid and justified;
II. Whether or not the preventive suspension of the
complainant is valid and justified;
III. Whether or not the preventive suspension of the
complainant is a valid ground to strike;
IV. Whether or not the respondent may be held liable for
moral and exemplary damages and attorneys fees; and
V. Whether or not the complainant may be held liable for
moral and exemplary damages and attorneys fees. 2
While respondents Complaint concerning the validity of his transfer
was pending before the Panel of Voluntary Arbitrators (PVA), MPH
continued with the disciplinary action against him for his refusal to
report to his new post at Seasons Coffee Shop. Citing security and
safety reasons, petitioner also placed respondent on a 30-day
preventive suspension. On 8 June 2007, MPH issued a Decision,
which found him guilty of insubordination based on his repeated and
willful disobedience of the transfer order. The Decision imposed on
Delada the penalty of 90-day suspension. He opposed the Decision,
arguing that MPH had lost its authority to proceed with the disciplinary
action against him, since the matter had already been included in the
voluntary arbitration.
On 14 December 2007, the PVA issued a Decision and ruled that the
transfer of Delada was a valid exercise of management prerogative.
According to the panel, the transfer order was done in the interest of
the efficient and economic operations of MPH, and that there was no
malice, bad faith, or improper motive attendant upon the transfer of
Delada to Seasons Coffee Shop. They found that the mere fact that he
was the Union President did not "put color or ill motive and purpose" to
his transfer. On the contrary, the PVA found that the real reason why
he refused to obey the transfer order was that he asked for additional
monetary benefits as a condition for his transfer. Furthermore, the
panel ruled that his transfer from Rotisserie to Seasons Coffee Shop
did not prejudice or inconvenience him. Neither did it result in
diminution of salaries or demotion in rank. The PVA thus pronounced
that Delada had no valid and justifiable reason to refuse or even to
delay compliance with the managements directive.
The PVA also ruled that there was no legal and factual basis to support
petitioners imposition of preventive suspension on Delada. According
to the panel, the mere assertion of MPH that "it is not far-fetched for
Henry Delada to sabotage the food to be prepared and served to the
respondents dining guest and employees because of the hostile
relationship then existing" was more imagined than real. It also found
that MPH went beyond the 30-day period of preventive suspension
prescribed by the Implementing Rules of the Labor Code when
petitioner proceeded to impose a separate penalty of 90-day
suspension on him. Furthermore, the PVA ruled that MPH lost its
authority to continue with the administrative proceedings for
insubordination and willful disobedience of the transfer order and to
impose the penalty of 90-day suspension on respondent. According to
the panel, it acquired exclusive jurisdiction over the issue when the
parties submitted the aforementioned issues before it. The panel
reasoned that the joint submission to it of the issue on the validity of
the transfer order encompassed, by necessary implication, the issue of
respondents insubordination and willful disobedience of the transfer
order. Thus, MPH effectively relinquished its power to impose
disciplinary action on Delada.3

As to the other issues, the panel found that there was no valid
justification to conduct any strike or concerted action as a result of
Deladas preventive suspension. It also ruled that since the 30-day
preventive suspension and the penalty of 90-day suspension was
invalid, then MPH was liable to pay back wages and other benefits.
The CA affirmed the Decision of the PVA and denied petitioners
Motion for Reconsideration. Consequently, MPH filed the instant
Petition.
Issue
Despite the various issues surrounding the case, MPH limited its
appeal to the following:
I. Whether MPH retained the authority to continue with the
administrative case against Delada for insubordination and
willful disobedience of the transfer order.
II. Whether MPH is liable to pay back wages.
Discussion
Petitioner argues that it did not lose its authority to discipline Delada
notwithstanding the joint submission to the PVA of the issue of the
validity of the transfer order. According to petitioner, the specific issue
of whether respondent could be held liable for his refusal to assume
the new assignment was not raised before the PVA, and that the
panels ruling was limited to the validity of the transfer order. Thus,
petitioner maintains that it cannot be deemed to have surrendered its
authority to impose the penalty of suspension.
In Sime Darby Pilipinas, Inc. v. Deputy Administrator Magsalin, 4 we
ruled 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. In that case, the specific issue presented was
"the issue of performance bonus." We then held that the arbitrator had
the authority to determine not only the issue of whether or not a
performance bonus was to be granted, but also the related question of
the amount of bonus, were it to be granted. We then said that there
was no indication at all that the parties to the arbitration agreement had
regarded "the issue of performance bonus" as a two-tiered issue, only
one aspect of which was being submitted to arbitration; thus, we held
that the failure of the parties to specifically limit the issues to that which
was stated allowed the arbitrator to assume jurisdiction over the
related issue.
A more recent case is Ludo & Luym Corporation v. Saornido.5 In that
case, we recognized that voluntary arbitrators are generally expected
to decide only those questions expressly delineated by the submission
agreement; that, nevertheless, they can assume that they have the
necessary power to make a final settlement on the related issues,
since arbitration is the final resort for the adjudication of disputes.
Thus, we ruled that even if the specific issue brought before the
arbitrators merely mentioned the question of "whether an employee
was discharged for just cause," they could reasonably assume that
their powers extended beyond the determination thereof to include the
power to reinstate the employee or to grant back wages. In the same
vein, if the specific issue brought before the arbitrators referred to the
date of regularization of the employee, law and jurisprudence gave
them enough leeway as well as adequate prerogative to determine the
entitlement of the employees to higher benefits in accordance with the
finding of regularization. Indeed, to require the parties to file another
action for payment of those benefits would certainly undermine labor
proceedings and contravene the constitutional mandate providing full
protection to labor and speedy labor justice.
Consequently, could the PVA herein view that the issue presented
before it the question of the validity of the transfer order necessarily
included the question of respondent Deladas insubordination and
willful disobedience of the transfer order?

Pursuant to the doctrines in Sime Darby Pilipinas and Ludo & Luym
Corporation, the PVA was authorized to assume jurisdiction over the
related issue of insubordination and willful disobedience of the transfer
order. Nevertheless, the doctrine in the aforementioned cases is
inapplicable to the present Petition. In those cases, the voluntary
arbitrators did in fact assume jurisdiction over the related issues and
made rulings on the matter. In the present case, however, the PVA did
not make a ruling on the specific issue of insubordination and willful
disobedience of the transfer order. The PVA merely said that its
disagreement with the 90-day penalty of suspension stemmed from the
fact that the penalty went beyond the 30-day limit for preventive
suspension:
But to us, what militates against the validity of Deladas preventive
suspension is the fact that it went beyond the 30-day period prescribed
by the Implementing Rules of the Labor Code (Section 4, Rules XIV,
Book V). The preventive suspension of Delada is supposed to expire
on 09 June 2007, but without notifying Delada, the MPH proceeded to
impose a separate penalty of 90-days suspension to him which took
effect only on 18 June 2007, or way beyond the 30-day rule mandated
by the Rules. While the intention of the MPH is to impose the 90-day
suspension as a separate penalty against Delada, the former is
already proscribed from doing so because as of 05 June 2007, the
dispute at hand is now under the exclusive jurisdiction of the panel of
arbitrators. In fact, by its own admission, the MPH categorically stated
in its Position Paper that as of 25 May 2007, or before the suspension
order was issued, MPH and Delada had already formulated and
submitted the issues for arbitration. For all legal intents and purposes,
therefore, the MPH has now relinquished its authority to suspend
Delada because the issue at this juncture is now within the Panels
ambit of jurisdiction. MPHs authority to impose disciplinary action to
Delada must now give way to the jurisdiction of this panel of arbitrators
to rule on the issues at hand. By necessary implication, this Panel is
thus constrained to declare both the preventive suspension and the
separate suspension of 90-days meted to Delada to be not valid and
justified.6
First, it must be pointed out that the basis of the 30-day preventive
suspension imposed on Delada was different from that of the 90-day
penalty of suspension. The 30-day preventive suspension was
imposed by MPH on the assertion that Delada might sabotage hotel
operations if preventive suspension would not be imposed on him. On
the other hand, the penalty of 90-day suspension was imposed on
respondent as a form of disciplinary action. It was the outcome of the
administrative proceedings conducted against him. Preventive
suspension is a disciplinary measure resorted to by the employer
pending investigation of an alleged malfeasance or misfeasance
committed by an employee.7 The employer temporarily bars the
employee from working if his continued employment poses a serious
and imminent threat to the life or property of the employer or of his coworkers.8 On the other hand, the penalty of suspension refers to the
disciplinary action imposed on the employee after an official
investigation or administrative hearing is conducted.9 The employer
exercises its right to discipline erring employees pursuant to company
rules and regulations.10 Thus, a finding of validity of the penalty of 90day suspension will not embrace the issue of the validity of the 30-day
preventive suspension. In any event, petitioner no longer assails the
ruling of the CA on the illegality of the 30-day preventive suspension.11
It can be seen that, unlike in Sime Darby Pilipinas and Ludo & Luym
Corporation, the PVA herein did not make a definitive ruling on the
merits of the validity of the 90-day suspension. The panel only held
that MPH lost its jurisdiction to impose disciplinary action on
respondent. Accordingly, we rule in this case that MPH did not lose its
authority to discipline respondent for his continued refusal to report to
his new assignment. In relation to this point, we recall our Decision in
Allied Banking Corporation v. Court of Appeals.12
In Allied Banking Corporation,13 employer Allied Bank reassigned
respondent Galanida from its Cebu City branch to its Bacolod and
Tagbilaran branches. He refused to follow the transfer order and
instead filed a Complaint before the Labor Arbiter for constructive
dismissal. While the case was pending, Allied Bank insisted that he
report to his new assignment. When he continued to refuse, it directed
him to explain in writing why no disciplinary action should be meted out
to him. Due to his continued refusal to report to his new assignment,

Allied Bank eventually terminated his services. When the issue of

whether he could validly refuse to obey the transfer orders was brought
before this Court, we ruled thus:

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 Courts Division.

The refusal to obey a valid transfer order constitutes willful

disobedience of a lawful order of an employer.1wphi1Employees may
object to, negotiate and seek redress against employers for rules or
orders that they regard as unjust or illegal. However, until and unless
these rules or orders are declared illegal or improper by competent
authority, the employees ignore or disobey them at their peril. For
Galanidas continued refusal to obey Allied Bank's transfer orders, we
hold that the bank dismissed Galanida for just cause in accordance
with Article 282(a) of the Labor Code. Galanida is thus not entitled to
reinstatement or to separation pay. (Emphasis supplied, citations
omitted).14

ANTONIO T. CARPIO
Associate Justice
Chairperson, Second Division

It is important to note what the PVA said on Deladas defiance of the

transfer order:

RENATO C. CORONA
Chief Justice

In fact, Delada cannot hide under the legal cloak of the grievance
machinery of the CBA or the voluntary arbitration proceedings to
disobey a valid order of transfer from the management of the hotel.
While it is true that Deladas transfer to Seasons is the subject of the
grievance machinery in accordance with the provisions of their CBA,
Delada is expected to comply first with the said lawful directive while
awaiting the results of the decision in the grievance proceedings. This
issue falls squarely in the case of Allied Banking Corporation vs. Court
of Appeals x x x.15
Pursuant to Allied Banking, unless the order of MPH is rendered
invalid, there is a presumption of the validity of that order. Since the
PVA eventually ruled that the transfer order was a valid exercise of
management prerogative, we hereby reverse the Decision and the
Resolution of the CA affirming the Decision of the PVA in this respect.
MPH had the authority to continue with the administrative proceedings
for insubordination and willful disobedience against Delada and to
impose on him the penalty of suspension. As a consequence,
petitioner is not liable to pay back wages and other benefits for the
period corresponding to the penalty of 90-day suspension.

CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, and the Division
Chairpersons 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 Courts Division.

Footnotes
*

Designated as Acting Member of the Second Division vice

Associate Justice Arturo D. Brion per Special Order No.
1174 dated January 9, 2012.
1

Both the Decision and the Resolution in CA-G.R. SP No.

101931 were penned by Associate Justice Sixto C. Marella
Jr. and concurred in by Associate Justices Rebecca de
Guia-Salvador and Japar B. Dimaampao.
2

Decision of PVA, pp. 1-2; rollo, pp. 66-67.

Decision of PVA, p. 13; rollo p. 78.

WHEREFORE, the Petition is GRANTED. The Decision and the

Resolution of the Court of Appeals are hereby MODIFIED. We rule that
petitioner Manila Pavilion Hotel had the authority to continue with the
administrative proceedings for insubordination and willful disobedience
against Delada and to impose on him the penalty of suspension.
Consequently, petitioner is not liable to pay back wages and other
benefits for the period corresponding to the penalty of 90-day
suspension.

Sime Darby Pilipinas, Inc. v. Deputy Administrator

Magsalin, 259 Phil. 658 (1989).
5

Ludo & Luym Corporation v. Saornido, 443 Phil. 554

(2003).
6

Decision of PVA, p. 13; rollo, p. 78.

Gatbonton v. National Labor Relations Commission, 515

Phil. 387 (2006).

SO ORDERED.

MARIA LOURDES P. A. SERENO

Associate Justice

Id.

See Deles v. National Labor Relations Commission, 384

Phil. 271 (2000).

WE CONCUR:
ANTONIO T. CARPIO
Associate Justice
Chairperson
JOSE PORTUGAL PEREZ
Associate Justice

BIENVENIDO L. REYES
Associate Justice

10

Id.

11

Petition of MPH, p. 21; rollo, p. 34.

12

461 Phil. 517 (2003).

13

ESTELA M. PERLAS-BERNABE*
Associate Justice

Id.

14

Id.

ATTESTATION

15

Decision of PVA, p. 11; rollo, p. 76.

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 181995

July 16, 2012

BIBIANO C. ELEGIR, Petitioner,

vs.
PHILIPPINE AIRLINES, INC., Respondent.

petitioner filed a complaint for non-payment of retirement pay, moral

damages, exemplary damages and attorneys fees against PAL. 8
On February 6, 1998, the Labor Arbiter (LA) rendered a Decision, 9the
pertinent portions of which read:
From the foregoing, it is manifestly clear that an employees retirement
benefits under any collective bargaining agreement shall not be less
than those provided under the New Retirement Pay Law and if such
benefits are less, the employee shall pay the difference between the
amount due the employee and that provided under the CBA or
individual agreement or retirement plan (Par. 3.2, Sec. 3, rules
Implementing the New Retirement Pay Law).

DECISION
REYES, J.:
This is a petition for review on certiorari under Rule 45 of the Rules of
Court seeking to annul and set aside the Decision1 dated August 6,
2007 of the Court of Appeals (CA) in CA-G.R. SP No. 79111, which
reversed and set aside the Decision2 dated March 18, 2002 and
Order3 dated June 30, 2003 of the National Labor Relations
Commission (NLRC) in NLRC NCR Case No. 00-08-06135-97 and
NLRC NCR CA No. 015030-98.
Factual Antecedents
As culled from the records, the instant case stemmed from the
following factual antecedents:

Thus, applying the pertinent CBA provision in correlation with the New
Retirement Pay Law, complainant should receive the following amount,
to wit:
22.5 x 26 yrs. x P138,447.00= P2,700,301.50
If we were to follow the PALs computation of petitioners retirement
pay, the latters retirement benefits in the amount of P125,000.00
based on Section 2, Article VII of the Retirement Plan of the CBA at
P5,000.00 per every year of service would be much less than his
monthly salary of P138,477.00 at the time of his retirement. This was
never envisioned by the law. Instead, it is the clear intention of our law
makers to provide a bigger and better retirement pay or benefits under
existing laws and/or existing CBA or other agreements.
xxxx

Petitioner Bibiano C. Elegir (petitioner) was hired by Philippine Airlines,

Inc. (PAL) as a commercial pilot, specifically designated as HS748
Limited First Officer, on March 16, 1971.4
In 1995, PAL embarked on a refleeting program and acquired new and
highly sophisticated aircrafts. Subsequently, it sent an invitation to bid
to all its flight deck crew, announcing the opening of eight (8) B747-400
Captain positions that were created by the refleeting program. The
petitioner, who was then holding the position of A-300 Captain,
submitted his bid and was fortunately awarded the same. 5 The
petitioner, together with seven (7) other pilots, was sent for training at
Boeing in Seattle, Washington, United States of America on May 8,
1995, to acquire the necessary skills and knowledge in handling the
new aircraft. He completed his training on September 19, 1995.6
On November 5, 1996, after rendering twenty-five (25) years, eight (8)
months and twenty (20) days of continuous service, the petitioner
applied for optional retirement authorized under the Collective
Bargaining Agreement (CBA) between PAL and the Airline Pilots
Association of the
Philippines (ALPAP), in which he was a member of good standing. In
response, PAL asked him to reconsider his decision, asseverating that
the company has yet to recover the full value of the costs of his
training. It warned him that if he leaves PAL before he has rendered
service for at least three (3) years, it shall be constrained to deduct the
costs of his training from his retirement pay.7
On November 6, 1996, the petitioner went on terminal leave for thirty
(30) days and thereafter made effective his retirement from service.
Upon securing his clearance, however, he was informed that the costs
of his training will be deducted from his retirement pay, which will be
computed at the rate of P 5,000.00 per year of service. The petitioner,
through his counsel, sent PAL a correspondence, asserting that his
retirement benefits should be based on the computation stated in
Article 287 of the Labor Code, as amended by Republic Act (R.A.) No.
7641, and that the costs of his training should not be deducted
therefrom. In its Reply dated August 4, 1997, PAL refused to yield to
the petitioners demand and maintained that his retirement pay should
be based on PAL-ALPAP Retirement Plan of 1967 (PAL-ALPAP
Retirement Plan) and that he should reimburse the company with the
proportionate costs of his training. Thus, on August 27, 1997, the

WHEREFORE, in view of the foregoing, we find PAL liable to the

petitioner for the payment of his retirement benefits as follows:

Retirement Benefits
(22.5 x 26 years x P138,477.00)

P 2,700,301.50

Accrued Trip Leave

760,299.37

Accrued Vacation Leave

386,546.44

1996 Unutilized days off

105,089.46

Nov. 96 Prod. Allow. (net)

1,726.92

Unpaid Salary 12/1/-5/96

22,416.65

1996 w/tax refund

2,464.42

13th month backpay for the year

1988-1991

171,262.50

TOTAL

P 4,150,106.20

plus legal interest of 12% per annum from November 06, 1996.
Finally, ten percent (10%) of all sums owing to petitioner is hereby
adjudged as attorneys fees.
SO ORDERED.10
The LA ratiocinated that PAL had no right to withhold the payment of
the petitioners retirement benefits simply because he retired from
service before the lapse of three (3) years. To begin with, there was no
document evidencing the fact that the petitioner was required to stay
with PAL for three (3) years from the completion of his training or that
he was bound to reimburse the company of the costs of his training
should he retire from service before the completion of the period. The
LA likewise dismissed the theory espoused by PAL that the petitioners
submission of his bid for the new position which necessarily requires

training created an innominate contract of du ut facias between him

and the company since their relationship is governed by the CBA
between the management and the ALPAP.11
On appeal, the NLRC took a different stance and modified the decision
of the LA in its Decision dated March 18, 2002, which pertinently
states:
Considering that [petitioner] was only fifty-two (52) years when he
opted to retire on November 6, 1996, he was, strictly, not yet qualified
to receive the benefits provided under said Article 287 of the Labor
Code, as amended by R.A. 7641. However, petitioner is eligible for
retirement under the CBA between respondent PAL and ALPAP, as he
had already served for more than 25 years with said respondent. This
is covered by the provision in the first paragraph of Article 287 of the
Labor Code which states that an employee may be retired upon
reaching the retirement age established in the collective bargaining
agreement or other applicable employment contract, inasmuch as the
CBA in question does not provide for any retirement age, but limited
itself to the number of years of service or flying hours of the employee
concerned. Consequently, anytime that an employee of respondent
PAL reaches twenty (20) years of service or 20,000 (flying) hours as a
pilot of PAL, then his age at that precise time would be considered as
the retirement age, as far as he is concerned.
The retirement benefits of petitioner should, therefore, be computed in
accordance with both Article 287 of the Labor Code and the
Retirement Plan in the CBA of PAL and ALPAP.
On the second issue, we rule that petitioner is under obligation to
reimburse a portion of the expenses incurred for his training as B747400 Captain.
It would be grossly unfair and unjust to PAL if the petitioner would be
allowed to reap the fruits of this training, which upgraded his
knowledge and skills that would enable him to demand higher pay, if
he would not be made to return said benefits in the form of service for
a reasonable period of time, say three (3) years as PALs company
policy demands. x x x
xxxx
Thus, with the adjudged reimbursement for training expenses of
P921,281.71 (sic), the awards due to petitioner shall be, as follows:

TOTAL
RETIREMENT PAY STILL PAYABLE

IN VIEW OF THE FOREGOING, the decision of the Labor Arbiter

should be MODIFIED by increasing the awards to the petitioner to
ONE MILLION FOUR HUNDRED SIXTY SIX THOUSAND SEVEN
HUNDRED SIXTY-NINE and 84/100 (P1,466,769.84) PESOS as
computed above.
SO ORDERED.12
Both PAL and petitioner filed their respective motions for partial
reconsideration from the decision of the NLRC. In its Motion for Partial
Reconsideration,13 PAL asseverated that the decision of the NLRC,
directing the computation of the petitioners retirement benefits based
on Article 287 of the Labor Code, instead of the CBA, was inconsistent
with the disposition of this Court in Philippine Airlines, Inc. v. Airline
Pilots Association of the Philippines.14 It emphasized that in said case,
this Court sustained PALs position and directed the payment of
retirement benefits of the complainant pilot in accordance with the
PAL-ALPAP Retirement Plan. However, in an Order15 dated June 30,
2003, the NLRC denied PALs motion for reconsideration.
Unyielding, PAL filed a petition for certiorari with the CA. In said
petition, PAL emphasized that the petitioners case should be decided
in light of the ruling in Philippine Airlines, Inc., where this Court held
that the computation of the retirement pay of a PAL pilot who retired
before reaching the retirement age of sixty (60) should be based on the
PAL-ALPAP Retirement Plan or at the rate of P5,000.00 for every year
of service.16
In its Decision dated August 6, 2007, the CA ruled that the petitioners
retirement pay should be computed in accordance with PAL-ALPAP
Retirement Plan and the PAL Pilots Retirement Benefit Plan as was
held in Philippine Airlines, Inc. It held, thus:
The present case squarely falls within the state of facts upon which the
ruling in Philippine Airlines, Inc., vs. Airline Pilots Association of the
Philippines was enunciated. Petitioner herein applies for retirement at
an age below 60. A distinction was made between a pilot who retires at
the age of sixty and another who retires earlier. The Supreme Court
was explicit when it declared:
"A pilot who retires after twenty years of service or after flying 20,000
hours- would
still be in the prime of his life and at the peak of his career,
P1,800,201.00
compared to one who retires at the age of 60 years old."
23,074.50

Retirement Pay (P138,477.00 divided by 2 times 26)

Service Incentive Leave (P138,477.00 divided by 30 x 5)

Furthermore, petitioner would not be getting less if his retirement pay is

386,546.44
computed on the PAL-ALPAP retirement plan rather than the formula
provided by the Labor Code. Petitioner did not refute that he already
138,477.00
got retirement benefits from another retirement plan the PAL

Accrued Trip Leave

13th Month Pay
1996 Unutilized days off

105,089.48
Pilots Retirement Plan. It appearing that the retirement benefits
1,726.92
amounting
to P1,800,201.00 being the main bone of contention herein,
this Court proceeds to compute the balance of Capt. Elegirs retirement
- as
22,416.63
benefits
follows:

Nov. 1996 Productive Allowance (net)

Unpaid salary 12/1-5/96
1996 w/ tax refund

TOTAL

LESS:
Reimbursement of training expenses

981,281.71

1996 13thmonth pay overpayment

19,837.16

1996 Christmas bonus overpayment

11,539.75

PESALA

567.93

2,464.42
Retirement Pay (P5,000 x 25 years)
[P] 2,479.996.39
Trip Leave Pay

P125,000.00

Vacation Leave Pay

385,155.76

1996 Unutilized Day-Off

104,711.38

Productivity Allowance for 1996

1,726.92

Unpaid Salary for December 1-5, 1996

22,335.00

1996 Withholding Tax Refund

2,464.42

757,564.04

P1,398,957.52
Less Accountabilities:
Training Cost

P981,281.71

1996 13th Month Pay

Overpayment

19,837.16

1996 Christmas Bonus

11,539.75

PESALA

567.93

BALANCE

1,013,226.55
P 385,730.97

pursuant to the ruling in G.R. No. 143686.

xxxx
WHEREFORE, the petition is GRANTED. The Decision of public
respondent dated March 18, 2002 and its Order of June 30, 2003 are
REVERSED and SET ASIDE. The retirement benefits of petitioner
Capt. Bibiano Elegir shall be based on the 1967 PAL-ALPAP
Retirement Plan andthe PAL Pilots Retirement Benefit Plan and the
balance still due him, pegged at P385,730.97.
SO ORDERED.17 (Citation omitted and emphasis supplied)
The petitioner filed a motion for reconsideration but the same was
denied in a Resolution18 dated February 21, 2008. Aggrieved, the
petitioner appealed to this Court.

asseverating that the retirement of Collantes constituted illegal

dismissal and union busting. The Secretary of Labor assumed
jurisdiction and eventually upheld PALs action of retiring Collantes as
a valid exercise of its option under Section 2, Article VII of the PALALPAP Retirement Plan. It further directed for the computation of
Collantes retirement benefits on the basis of Article 287 of the Labor
Code.20 Acting on Collantes petition for certiorari, the CA held that the
pilots retirement benefits should be based on Article 287 of the Labor
Code and not on the PAL-ALPAP Retirement Plan. On appeal to this
Court, we reversed the CA and ruled that Collantes retirement benefits
should be computed based on the PAL-ALPAP Retirement Plan and
the PAL Pilots Retirement Benefit Plan and not on Article 287 of the
Labor Code since the benefits under the two (2) plans are substantially
higher than the latter. The dispositive portion of the decision reads:
WHEREFORE, in view of all the foregoing, the petition is GRANTED.
The March 2, 2000 Decision and the June 19, 2000 Resolution of the
Court of Appeals in CA-G.R. SP No. 54403 are REVERSED and SET
ASIDE. The Order of the Secretary of Labor in NCMB-NCR-N.S. 12514-97 dated June 13, 1998, is MODIFIED as follows: The retirement
benefits to be awarded to Captain Albino Collantes shall be based on
the 1967 PAL-ALPAP Retirement Plan and the PAL Pilots Retirement
Benefit Plan. The directive contained in subparagraph (2) of the
dispositive portion thereof, which required petitioner to consult the pilot
involved before exercising its option to retire him, is DELETED. The
said Order is AFFIRMED in all other respects.
SO ORDERED.21 (Emphasis supplied)
It bears reiterating that there are only two retirement schemes at point
in this case: (1) Article 287 of the Labor Code, and; (2) the PAL-ALPAP
Retirement Plan and the PAL Pilots Retirement Benefit Plan. The two
retirement schemes are alternative in nature such that the retired pilot
can only be entitled to that which provides for superior benefits.
Article 287 of the Labor Code states:

Essentially, we are called upon to rule on the following issues:

1. Whether the petitioners retirement benefits should be
computed based on Article 287 of the Labor Code or on
PALs retirement plans;
2. Whether the petitioner should reimburse PAL with the
proportionate costs of his training; and
3. Whether interest should be imposed on the monetary
award in favor of the petitioner.
The Ruling of this Court
The petitioners retirement pay should be computed based on PALs
retirement plans.
The petitioner maintains that it is Article 287 of the Labor Code which
should be applied in the computation of his retirement pay since the
same provides for higher benefits. He contends that the CA
erroneously resorted to the ruling in Philippine Airlines, Inc. since the
circumstances in the said case, which led this Court to rule in favor of
the applicability of PALs retirement plans in computing retirement
benefits, are unavailing in the present case. Specifically, he pointed out
that the pilot in Philippine Airlines, Inc. retired at the age of forty-five
(45), while he opted to retire at fifty-two (52). He further emphasized
that the ruling was anchored on a finding that the retirement benefits
that the pilot would get under Article 287 of the Labor Code are less
than those he would get under PALs retirement plans.19
Apparently, the petitioner failed to appreciate the heart behind the
ruling in Philippine Airlines, Inc. To recapitulate, the case stemmed
from PALs unilateral act of retiring airline pilot Captain Albino
Collantes (Collantes) under the authority of Section 2, Article VII of the
PAL-ALPAP Retirement Plan. Thereafter, ALPAP filed a Notice of
Strike with the Department of Labor and Employment (DOLE),

Art. 287. Retirement. - Any employee may be retired upon reaching the
retirement age established in the collective bargaining agreement or
other applicable employment contract.
In case of retirement, the employee shall be entitled to receive such
retirement benefits as he may have earned under existing laws and
any collective bargaining agreement and other agreements: provided,
however, that an employees retirement benefits under any collective
bargaining and other agreements shall not be less than those provided
herein.
In the absence of a retirement plan or agreement plan providing for
retirement benefits of employees in the establishment, an employee
upon reaching the age of sixty (60) years or more, but not beyond
sixty-five (65) years which is hereby declared as the compulsory
retirement age, who has served at least five (5) years in the said
establishment, may retire and shall be entitled to retirement pay
equivalent to at least one-half (1/2) month salary for every year of
service, a fraction of at least six (6) months being considered as one
whole year.
Unless the parties provide for broader inclusions, the term one-half
(1/2) month salary shallmean fifteen (15) days plus one-twelfth (1/12)
of the 13th month pay and the cash equivalent of not more than five (5)
days of service incentive leaves. x x x (Emphasis supplied)
It can be clearly inferred from the language of the foregoing provision
that it is applicable only to a situation where (1) there is no CBA or
other applicable employment contract providing for retirement benefits
for an employee, or (2) there is a CBA or other applicable employment
contract providing for retirement benefits for an employee, but it is
below the requirement set by law. The rationale for the first situation is
to prevent the absurd situation where an employee, deserving to
receive retirement benefits, is denied them through the nefarious
scheme of employers to deprive employees of the benefits due them

under existing labor laws. On the other hand, the second situation aims
to prevent private contracts from derogating from the public law. 22
The primary application of existing CBA in computing retirement
benefits is implied in the title of R.A. No. 7641 which amended Article
287 of the Labor Code. The complete title of R.A. No. 7641 reads: "An
Act Amending Article 287 of Presidential Decree No. 442, As
Amended, otherwise known as the Labor Code of the Philippines, By
Providing for Retirement Pay to Qualified Private Sector in the
Absence of Any Retirement Plan in the Establishment."23
Emphasis must be placed on the fact that the purpose of the
amendment is not merely to establish precedence in application or
accord blanket priority to existing CBAs in computing retirement
benefits. The determining factor in choosing which retirement scheme
to apply is still superiority in terms of benefits provided. Thus, even if
there is an existing CBA but the same does not provide for retirement
benefits equal or superior to that which is provided under Article 287 of
the Labor Code, the latter will apply. In this manner, the employee can
be assured of a reasonable amount of retirement pay for his
sustenance.
Consistent with the purpose of the law, the CA correctly ruled for the
computation of the petitioners retirement benefits based on the two (2)
PAL retirement plans because it is under the same that he will reap the
most benefits. Under the PAL-ALPAP Retirement Plan, the petitioner,
who qualified for late retirement after rendering more than twenty (20)
years of service as a pilot, is entitled to a lump sum payment of
P125,000.00 for his twenty-five (25) years of service to PAL. Section 2,
Article VII of the PAL-ALPAP Retirement Plan provides:
Section 2. Late Retirement. Any member who remains in the service of
the company after his normal retirement date may retire either at his
option or at the option of the Company, and when so retired he shall be
entitled either: (a) to a lump sum payment of P5,000.00 for each
completed year of service rendered as a pilot, or (b) to such
termination pay benefits to which he may be entitled under existing
laws, whichever is the greater amount.24
Apart from the abovementioned benefit, the petitioner is also entitled to
the equity of the retirement fund under PAL Pilots Retirement Benefit
Plan, which pertains to the retirement fund raised from contributions
exclusively from PAL of amounts equivalent to 20% of each pilots
gross monthly pay. Each pilot stands to receive the full amount of the
contribution upon his retirement which is equivalent to 240% of his
gross monthly income for every year of service he rendered to PAL.
This is in addition to the amount of not less than P100,000.00 that he
shall receive under the PAL-ALPAP Retirement Plan.25
In sum, therefore, the petitioner will receive the following retirement
benefits:
(1) P125,000.00 (25 years x P5,000.00) for his 25 years of
service to PAL under the PAL-ALPAP Retirement Plan, and;

entitlement under the PAL Pilots Retirement Benefit Plan nor did he
question the propriety of the amount tendered. Thus, we can
reasonably assume that he received the rightful amount of his
entitlement under the plan.
On the other hand, under Article 287 of the Labor Code, the petitioner
would only be receiving a retirement pay equivalent to at least one-half
(1/2) of his monthly salary for every year of service, a fraction of at
least six (6) months being considered as one whole year. To stress,
one-half (1/2) month salary means 22.5 days: 15 days plus 2.5 days
representing one-twelfth (1/12) of the 13th month pay and the
remaining 5 days for service incentive leave.27
Comparing the benefits under the two (2) retirement schemes, it can
readily be perceived that the 22.5 days worth of salary for every year of
service provided under Article 287 of the Labor Code cannot match the
240% of salary or almost two and a half worth of monthly salary per
year of service provided under the PAL Pilots Retirement Benefit Plan,
which will be further added to the P125,000.00 to which the petitioner
is entitled under the PAL-ALPAP Retirement Plan. Clearly then, it is to
the petitioners advantage that PALs retirement plans were applied in
the computation of his retirement benefits.
The petitioner should reimburse PAL with the costs of his training.
As regards the issue of whether the petitioner should be obliged to
reimburse PAL with the costs of his training, the ruling in Almario v.
Philippine Airlines, Inc.28 is controlling. Essentially, in the mentioned
case, this Court recognized the right of PAL to recoup the costs of a
pilots training in the form of service for a period of at least three (3)
years. This right emanated from the CBA between PAL and ALPAP,
which must be complied with good faith by the parties. Thus:
"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."
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:
xxxx

(2) 240% of his gross monthly salary for every year of his
employment or, more specifically, the summation of PALs
monthly contribution of an amount equivalent to 20% of his
actual monthly salary, under the PAL Pilots Retirement
Benefit Plan.
As stated in the records, the petitioner already received the amount
due to him under the PAL Pilots Retirement Benefit Plan.26 As much
as we would like to demonstrate with specificity the amount of the
petitioners entitlement under said plan, we are precluded from doing
so because there is no record of the petitioners salary, including
increments thereto, attached to the records of this case. To reiterate,
the benefit under the PAL Pilots Retirement Benefit Plan pertains to
the totality of PALs monthly contribution for every pilot, which amounts
to 20% of the actual monthly salary. Necessarily, the computation of
this benefit requires a record of the petitioners salary, which was
unfortunately not submitted by either of the parties. At any rate, the
petitioner did not dispute the fact that he already received his

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 Companys turbo-jet operations. Pilots fifty-five (55) years of
age or over who have previously qualified in the companys 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 Companys 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.
PALs 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 pilots 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 pilots 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 Companys 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. But if 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.1wphi1 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 the companys turbo-jet
fleet.29 (Citations omitted and emphasis supplied)
Further, we considered PALs act of sending its crew for training as an
investment which expects an equitable return in the form of service
within a reasonable period of time such that a pilot who decides to
leave the company before it is able to regain the full value of the
investment must proportionately reimburse the latter for the costs of his
training. We ratiocinated:
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
Almarios 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 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 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.
x x x x"

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
Almarios services for at least three years. The expectation of PAL was
not fully realized, however, due to Almarios 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.30 (Citation omitted and
emphasis supplied)
After perusing the records of this case, we fail to find any significant
fact or circumstance that could warrant a departure from the
established jurisprudence. The petitioner admitted that as in Almario,
the prevailing CBA between PAL and ALPAP at the time of his
retirement incorporated the same stipulation in Section 1, Article XXIII
of the 1985-1987 CBA31 which provides:
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 the companys turbo-jet fleet.32
As discussed in Almario, the above provision initially set the age of
fifty-five (55) years as the reckoning point when a pilot becomes
disqualified to bid for a higher position. The age of disqualification was
set at 55 years old to enable PAL to fully recover the costs of the pilots
training within a period of five (5) years before the pilot reaches the
compulsory retirement age of sixty (60). The DOLE Secretary however
lowered the age to fifty-seven (57), thereby cutting the supposed
period of recovery of investment to three (3) years. The DOLE
Secretary justified the amendment in that the "prohibitive training costs
are more than offset by the maturity, expertise and the experience of
the pilot."33
By carrying over the same stipulation in the present CBA, both PAL
and ALPAP recognized that the companys effort in sending pilots for
training abroad is an investment which necessarily expects a
reasonable return in the form of service for a period of at least three (3)
years. This stipulation had been repeatedly adopted by the parties in
the succeeding renewals of their CBA, thus validating the impression
that it is a reasonable and acceptable term to both PAL and ALPAP.
Consequently, the petitioner cannot conveniently disregard this
stipulation by simply raising the absence of a contract expressly
requiring the pilot to remain within PALs employ within a period of 3
years after he has been sent on training. The supposed absence of
contract being raised by the petitioner cannot stand as the CBA clearly
covered the petitioners obligation to render service to PAL within 3
years to enable it to recoup the costs of its investment.
Further, to allow the petitioner to leave the company before it has
fulfilled the reasonable expectation of service on his part will amount to
unjust enrichment. Pertinently, Article 22 of the New Civil Code states:
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.
There is unjust enrichment when a person unjustly retains a benefit at
the loss of another, or when a person retains the money or property of
another against the fundamental principles of justice, equity and good
conscience. Two conditions must concur: (1) a person is unjustly
benefited; and (2) such benefit is derived at the expense of or with
damages to another. The main objective of the principle of unjust
enrichment is to prevent one from enriching oneself at the expense of
another. It is commonly accepted that this doctrine simply means that a
person shall not be allowed to profit or enrich himself inequitably at
anothers expense.34 The enrichment may consist of a patrimonial,
physical, or moral advantage, so long as it is appreciable in money. 35 It
must have a correlative prejudice, disadvantage or injury to the plaintiff
which may consist, not only of the loss of the property or the
deprivation of its enjoyment, but also of the 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 what the latter would have obtained.36

1169, Civil Code) but when such certainty cannot

be so reasonably established at the time the
demand is made, the interest shall begin to run
only from the date the judgment of the court is
made (at which time the quantification of damages
may be deemed to have been reasonably
ascertained). The actual base for the computation
of legal interest shall, in any case, be on the
amount finally adjudged.

As can be gathered from the facts, PAL invested a considerable

amount of money in sending the petitioner abroad to undergo training
to prepare him for his new appointment as B747-400 Captain. In the
process, the petitioner acquired new knowledge and skills which
effectively enriched his technical know-how. As all other investors, PAL
expects a return on investment in the form of service by the petitioner
for a period of 3 years, which is the estimated length of time within
which the costs of the latters training can be fully recovered. The
petitioner is, thus, expected to work for PAL and utilize whatever
knowledge he had learned from the training for the benefit of the
company. However, after only one (1) year of service, the petitioner
opted to retire from service, leaving PAL stripped of a necessary
manpower.
Undeniably, the petitioner was enriched at the expense of PAL. After
undergoing the training fully shouldered by PAL, he acquired a higher
level of technical competence which, in the professional realm,
translates to a higher compensation. To prove this point, his monthly
salary of P125,692.00 was increased to P131,703.00 while he was still
undergoing training. After his training, his salary was further increased
to P137,977.00.37 Further, his training broadened his opportunities for
a better employment as in fact he was able to transfer to another
airline company immediately after he left PAL.38 To allow the petitioner
to simply leave the company without reimbursing it for the
proportionate amount of the expenses it incurred for his training will
only magnify the financial disadvantage sustained by PAL. Reason and
fairness dictate that he must return to the company a proportionate
amount of the costs of his training.
Award of interest not warranted under the circumstances.
The petitioner claims that the CA should have imposed interest on the
monetary award in his favor. To support his claim, he cited the case of
Eastern Shipping Lines, Inc. v. Court of Appeals,39 where this Court
summarized the rules in the imposition of the proper interest rates:
I. When an obligation, regardless of its source, i.e., law,
contracts, quasi-contracts, delicts or quasi-delicts is
breached, the contravenor can be held liable for damages.
The provisions under Title XVIII on "Damages" of the Civil
Code govern in determining the measure of recoverable
damages.
II. With regard particularly to an award of interest in the
concept of actual and compensatory damages, the rate of
interest, as well as the accrual thereof, is imposed, as
follows:
1. When the obligation is breached, and it consists
in the payment of a sum of money, i.e., a loan or
forbearance of money, the interest due should be
that which may have been stipulated in writing.
Furthermore, the interest due shall itself earn legal
interest from the time it is judicially demanded. In
the absence of stipulation, the rate of interest shall
be 12% per annum to be computed from default,
i.e., from judicial or extrajudicial demand under
and subject to the provisions of Article 1169 of the
Civil Code.
2. When an obligation, not constituting a loan or
forbearance of money, is breached, an interest on
the amount of damages awarded may be imposed
at the discretion of the court at the rate of 6% per
annum. No interest, however, shall be adjudged
on unliquidated claims or damages except when
or until the demand can be established with
reasonable certainty. Accordingly, where the
demand is established with reasonable certainty,
the interest shall begin to run from the time the
claim is made judicially or extrajudicially (Art.

3. When the judgment of the court awarding a sum

of money becomes final and executory, the rate of
legal interest, whether the case falls under
paragraph 1 or paragraph 2, above, shall be 12%
per annum from such finality until its satisfaction,
this interim period being deemed to be by then an
equivalent to a forbearance of credit.40 (Citations
omitted and emphasis supplied)
The petitioner, however, took the foregoing guidelines out of context
and entertained a misplaced supposition that all judgments which
include a monetary award must be imposed with interest. The
jurisprudential guideline clearly referred to breach of an obligation
consisting of a forbearance of money, goods or credit before the
imposition of a legal interest of 12% can be warranted. Such essential
element is nowhere to be found in the facts of this case. Even granting
that an interest of 6% may be imposed in cases of breached
obligations not constituting loan or forbearance of money, loan or
credit, such depends upon the discretion of the court. If at all, the
monetary award in favor of the petitioner will earn legal interest from
the time the judgment becomes final and executory until the same is
fully satisfied, regardless of the nature of the breached obligation. The
imposition is justified considering that the interim period from the
finality of judgment, awarding a monetary claim and until payment
thereof, is deemed to be equivalent to a forbearance of credit.41
WHEREFORE, in view of the foregoing disquisitions, the petition is
DENIED. The Decision dated August 6, 2007 of the Court of Appeals
in CA-G.R. SP No. 79111 is AFFIRMED. The Labor Arbiter is hereby
DIRECTED to compute Bibiano C. Elegir's retirement pay based on the
1967 PAL-ALPAP Retirement Plan and the PAL Pilots' Retirement
Benefit Plan, crediting Philippine Airlines, Inc. for the amount it had
already paid the petitioner under the mentioned plans.
SO ORDERED.
BIENVENIDO L. REYES
Associate justice
WE CONCUR:
ANTONIO T. CARPIO
Senior Associate Justice
Chairperson, Second Division
ARTURO D. BRION
Associate Justice

JOSE PORTUGAL PEREZ

Associate Justice

MARIA LOURDES P.A. SERENO

Associate justice
CERTIFICATION
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 Cout1's Division.
ANTONIO T. CARPIO
Senior Associate Justice
(Per Section 12, R.A. 296, The Judiciary Act of 1948, as Amended)

24

Rollo, p. 119.

25

Supra note 14, at 363.

26

Rollo, p. 36.

27

Capitol Wireless, Inc. v. Confesor, 332 Phil. 78, 89 (1996).

28

G.R. No. 170928, September 11, 2007, 532 SCRA 614.

Footnotes
1

Penned by Associate Justice Arcangelita M. RomillaLontok, with Associate Justices Mariano C. del Castillo (now
a member of this Court) and Romeo F. Barza, concurring;
rollo, pp. 29-37.
2

Penned by Presiding Commissioner Roy V. Seeres, with

Commissioners Vicente S.E. Veloso (inhibited) and Alberto
R. Quimpo, concurring; id. at 111-125.
3

Penned by Presiding Commissioner Roy V. Seeres, with

Commissioners Romeo L. Go and Vicente S.E. Veloso
(inhibited), concurring; id. at 137.
4

29

Id. at 623-625, citing Samahang Manggagawa sa Top

Form Mfg. v. NLRC, 356 Phil. 480, 490-491 (1998).
30

Id. at 627-628, citing Tolentino, COMMENTARIES AND

JURISPRUDENCE, Vol. I, pp. 80-81, 83, 2nd Ed.
31

Id. at 625.

32

Id. at 624.

33

Id.

Id. at 70.

Id. at 50-51.

Id.

Id. at 71.

Id. at 41-42.

Id. at 70-77.

34

Grandteq Industrial Steel Products, Inc. v. Margallo, G.R.

No. 181393, July 28, 2009, 594 SCRA 223, 238, citing Hulst
v. PR Builders, Inc., G.R. No. 156364, September 3, 2007,
532 SCRA 74, 96.
35

10

11

12

13

14

15

Id. at 74-77.

36

Id. at 80.

Id. at 75-76.

37

Rollo, p. 91.

Id. at 121-124.

38

Id. at 93.

Id. at 126-131.

39

G.R. No. 97412, July 12, 1994, 234 SCRA 78.

424 Phil. 356 (2002).

40

Id. at 95-97.

Rollo, pp. 137-138.

41

16

Id. at 149.

17

Id. at 35-37.

18

Penned by Associate Justice Arcangelita M. RomillaLontok, with Associate Justices Mariano C. del Castillo (now
a member of this Court) and Romeo F. Barza, concurring; id.
at 39.
19

Id. at 16-17.

20

Supra note 14, at 359.

21

Id. at 365.

22

Obusan v. Philippine National Bank, G.R. No. 181178,

July 26, 2010, 625 SCRA 542, citing Oxales v. United
Laboratories, Inc., G.R. No. 152991, July 21, 2008, 559
SCRA 26, 42.
23

Tolentino, CIVIL CODE OF THE PHILIPPINES,

COMMENTARIES AND JURISPRUDENCE, Vol. I, p. 78.

Oxales v. United Laboratories, Inc., G.R. No. 152991, July

21, 2008, 559 SCRA 26, 45.

Suatengco v. Reyes, G.R. No. 162729, December 17,

2008, 574 SCRA 187.